Subject: RE: Smith Enron Cogeneration Plant - shareholder complaint/Attorney Client Privilege
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Tue, 16 Jan 2001 10:04:00 -0800 (PST)

Letter is fine with me.        Thanks,     Otto

Michelle Blaine
01/16/2001 01:00 PM
To: Otto Gonzalez/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Katrin Haux/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mariella 
Mahan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David 
Shields/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Eggie 
Pichardo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard B Sanders@ECT 

Subject: RE: Smith Enron Cogeneration Plant - shareholder complaint/Attorney 
Client Privilege  

I have confirmed that Mr. Badger and his wife are both named plaintiffs in 
the Costambar litigation against SECLP.  Because they are involved in pending 
litigation against us, we really cannot give them anything but a "non-answer" 
answer attached.  If there are no objections I'll send this to Mr. Badger. 
thanks! 
Michelle 

Otto Gonzalez   01/11/2001 09:01 AM

To: Katrin Haux/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Mariella Mahan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David 
Shields/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michelle 
Blaine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Eggie 
Pichardo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: RE: Smith Enron Cogeneration Plant - shareholder complaint  

Katrin,

This is indeed a sensitive matter and must be treated accordingly. I do 
strongly suggest that before anything you talk to Michelle Blaine of our 
litigation team who is very up to date on the class action cases the 
Costamabar comunity has against SECLP. There are many half truths and many 
lies involved. The plant team has for long been aware of the responsability 
and are very diligent and careful to comply with the environmental standards 
applicable. 

One problem here is that across the bay from where we are, there are two 
other power plants (one of them which I managed) and also produce "noise" and 
air emissions, one within applicable World Bank standards but no the other, 
which belongs to a third group. The prevailing winds bring the emissions from 
those plants directly to our plant and the Costambar community. Our air 
emissions (within WB standards - monitored during the year) mostly go down 
wind southeast away from Costambar. So there are many variables involved.

We must be careful with the shareholder letter since it is very likely the 
person may be part of the class action and is fishing for something. But 
Michelle can advice you appropriately. If you need any further data from the 
plant after talking to Michelle please let me know.

Many thanks,          Otto

   

	From:  Katrin Haux                           01/10/2001 07:41 PM

To: Otto Gonzalez/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Mariella Mahan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: RE: Smith Enron Cogeneration Plant - shareholder complaint

Otto,

The following shareholder complaint about Smith Enron's plant in Puerto Plata 
was sent to Investor Relations and today forwarded to our attention, 
requesting assistance with this matter.  The gentlemen sending the complaint 
owns a home in Costambar, a residential community, which, according to his 
e-mail, has been  negatively affected by our plant.  He mentions a disturbing 
noise level, decreased air quality, dwindling property value and power 
outages worse than prior to the plant going online.  The fact that we take 
any shareholder complaint very serious, I am preparing a response to this 
letter and I am asking for your help.  Could you provide me with any 
background information on the alleged complaints and confirm or deny the 
issues at matter?  Are there any plans on the way to address any possible 
issues?  It had been my impression that the Smith Enron plant not only had no 
negative effects on the environment but that great efforts were made to 
improve the local community through community relations programs like the 
public park adoption, supply of school materials, shipment of medical 
supplies and the municipal nursery support.  Can you expand on this?  

I realize that this matter has to be managed with extreme caution.  I clearly 
will coordinate my reply with you and seek additional approval from legal 
prior to responding to the gentlemen.

Thank you in advance for your support and cooperation.  Best regards.  -- 
Katrin

-----Original Message-----
From: Gordon Badger [mailto:[email-masked]]
Sent: Friday, December 15, 2000 10:08 AM
To: [email-masked]
Cc: [email-masked]
Subject: Smith Enron Cogeneration Plant - Puerto Plata, Dominican Republic

?
Iam an Enron shareholder through my holding company First Foundation 
Financial Services Inc.

Five or six years ago Smith Enron floated in and installed a power generation 
plant at Puerto Plata in the Dominican Republic generating power to sell to 
the Dominican power agency. Presentations were made at the time to the local 
(mostly American and Canadian) residents in the community of Costambar, where 
the plant was to be (and was) built, that:

???????? The noise would not exceed &the sound of the ocean8,

???????? That there would be no air quality damage, and 

???????? That the power outs in Costambar would cease.

I have a home in Costambar about a half mile away and over a large hill from 
the plant. 

???????? The sound is audible in the entire neighborhood; 

???????? When they clear the boilers it is oppressive/ear shattering for the 
entire community of 800 homes ) in spite of the retrofit silencers; 

???????? There is often molecular ash falling and on occasion ) well 
documented with pictures ) total black soot coverage down wind for a quarter 
mile or more;

???????? Costambar is on the country,s grid and has power outs for an average 
of two or more hours per day ) worse than before. 

In other words, all of the well-documented and witnessed undertakings have 
been proven false.

I was proud of Enron at the beginning because there seemed to be a legitimate 
attempt to do the right thing. As time has progressed, however, it has become 
clear that there is no solution to the continuing problems. It is also 
obvious that the ONLY right thing is to pull up stakes and float the plant to 
the original alternate location down the coast ) or to another country. 

The problems are insoluble. You simply can,t plop a large energy burning 
facility beside an upscale community without event. For a company as 
knowledgeable as Enron should be concerning the effects to nearby residents, 
it borders on inexcusable that the plant would have been built where it is in 
the first place. Having attempted any number of solutions and now recognizing 
the absence of solution, the continuing inexcusable action is to &carry on 
regardless8 as ahs been the case for the past two or more years.

Enron has been sued by the adjacent (large) hotel which, although only two or 
three years old when the plant was built, had to shut down because of 
unending guest complaints and refund demands. It now sits as a rotting 
monument to the problems. Unfortunately for Enron, the owners are a prominent 
Dominican family. I am told they already have a large judgement - but are 
going for more. If they haven,t already they surely will ) and they surely 
should. What was once an attractive and productive facility is useless and 
will remain fallow as long as the plant is there. Soon it will fall totally 
beyond repair and there will be no alternative but to raze it.

Houses in the immediate area ) say ? mile/100 homes ) have fallen 50% to 75% 
in value, and houses in the community at large have fallen 10% to 50% in 
value dependent upon their proximity to the plant. Whereas the hotel value is 
in the low millions and the ultimate award will likely be commensurate, the 
loss in value to the homes is in the tens of millions. Beyond these financial 
events, some of the people in the community are beginning to complain about 
new respiratory and other pollution related ailments. The rough estimate of 
damages ranges between US$100 million and $150 million without considering 
the health issues.

The community has sensible and responsible leadership and has responded in a 
sensible and responsible way.? Dissatisfied with the failure to solve the 
problem in any approaching a timely fashion, the homeowners have recently 
retained competent counsel. Nearly 400 homeowners have joined the class 
action to recover their lost property value. The issue of determining lost 
value is about to formally begin and the total loss calculated. Soon there 
will be no turning back because of the homeowners, investment in the action.

If there were an announcement that the plant is to be moved the claim from 
the community would almost certainly go away with the possible exception of 
damages for? the few homes that have changed hands during the plant,s life 
here. If the plant remains, the action will proceed ) and all things being 
equitable, which they ultimately become in the Dominican court system, there 
will be large claims awarded. I imagine they will massively overshadow the 
few million dollars to move or dismantle the plant.

?

?

I now take off my homeowner,s hat and return to my position as shareholder. 
The following (italicized) statements form part of the Enron Mission 
Statement. As noted above the company has so far failed to implement these 
visions as noted.

?

environment 
In everything we do, we operate safely and with concern for the environment. 
The way we do a job will affect how our children and our neighbors' children 
will live in the future. This is a responsibility we take seriously in all 
the different places around the world where we do business.

The Costambar environment has been seriously effected from a noise and air 
pollution point of view.

?

integrity 
We work with customers and prospects openly, honestly, and sincerely. When we 
say we will do something, we will do it; when we say we cannot or will not do 
something, then we won't do it.

The community was seriously misled and Enron has been unable to develop 
solutions to restore or correct their documented assertions.

?

creativity
We think the entrepreneurial approach stimulates creativity. It calls for new 
insights, new ways of looking at problems and opportunities, and a strong 
sense of urgency.

The problems have persisted for several years with no recent new initiatives 
directed at solving them.

?

respect 
We treat others as we would like to be treated ourselves. We do not tolerate 
abusive or disrespectful treatment. Ruthlessness, callousness, and arrogance 
don't belong here. 

The Golden Rule has long since gone wanting in this situation.

?

It is simply not responsible for Enron to continue with a facility that has 
and continues to damage a community, financially and from a health point of 
view. And it is not financially responsible of Enron management to risk the 
payment of tens of millions in claims arising from damages that can otherwise 
be avoided at quantifiable and much lower cost. 

I,m sure the company has a thick file on this issue already. I,m equally 
sure, however, that the measure of damages is reaching a new phase and is 
approaching the point where there will be no will by the litigants to turn 
back. The plant was constructed during the waning days of the environmentally 
insensitive Beleaguer government. The country has undergone substantial 
changes since then including changes in The Rule of Law and the judiciary. 
There is now a new liberal government that is likely to be very generous with 
one of its previously model communities if the matter reaches the courts.

The loss to the shareholders of Enron from inactivity of management is likely 
to be immense ) and is avoidable.

I would appreciate a comment on management,s views as quickly as possible.

?

?

Sincerely,

D. Gordon Badger

?

?

[email-masked]

Puerto Plata

tel - 809 970 7184; fax - 970 7134

?

?

?

?