Subject: Berkeley Memo to Price Waterhouse
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 24 Aug 2000 06:59:00 -0700 (PDT)

Is this something we should respond to, both to clarify and defend our 
actions.  There are a lot of untruths in their memo including their "lack of 
support" of what they call "Enron's actions" which were in fact the Board's 
and/or Executive Committee's actions.  They were consulted on most if not all 
of the major issues, including the removal of senior management, financial 
restructuring, etc...  In any event, ENA never acted in a vacuum.  Everything 
was done in concert with the Board of Directors and/or the Executive 
Committee (Milt Datsopoulos, Linda Murdoch and myself) appointed by the Board.

On  Aug 1 we had a meeting in Vancouver when I resigned off the Board and Ray 
Bowen informed them ENA would not fund any longer.  The attendees were:  Ray 
Bowen, Randy Petersen and myself (all from ENA), Ken Swaisland (shareholder), 
Richard Bullock (Berkeley), Linda Murdoch (CFO of Kafus and member of the 
Board) and Milt Datsopoulos (Chairman of the Board).  Once informed of ENA's 
decision, Ken Swaisland immediately replied that this would put the company 
into bankruptcy and immediately began trying to cut a deal offering ENA all 
of Kafus' stock in CanFibre in exchange for its stock in Kafus and full 
forgiveness of all debt at the Kafus level.  We told Ken that ENA was not 
interested in such a deal but was open to discussing alternative 
restructuring proposals and encouraged them to bring ideas, restructuring 
plans, refinancings, etc... to us.  Back as early as May of this year 
(possibly even earlier although my involvement only goes back to May), Mike 
McCabe and Tony Valentine came to us stating they were working on a 
restructuring/refinancing plan.  Such a plan was never presented, although 
they did submit a  very broad (i.e., very few specifics) "cost cutting" 
plan.  In Berkeley's memo of 23, they again ask for an opportunity to present 
a "plan."  Where's the beef?

What I'd like to see their reaction to is questions re: the trading of Kafus 
stock within the first hour after we informed them of ENA's decision not to 
fund the company any more at our Aug 1 meeting in Vancouver.  The volume 
which normally traded in the 50,000 shares/d range had shot up to 150,000 
shares/d the two weeks preceding our Aug 1 meeting and on that very day over 
500,000 shares were sold.  Per Tony Francel, the IR guy at Kafus, all of the 
sales appeared to be coming in thru 3rd party agents from Europe.  Per Tony, 
whoever was executing the trades was taking careful steps to disguise their 
identity.  Chris Helfrich has a chart of the Aug 1 stock volume activity 
broken down into 15 min intervals and I noted on the same chart the timing 
and progress of our meeting that day in Vancouver including who was in the 
room at all times, when specific people left the room, etc.....  Based on the 
volumes being traded, there are only 3 people who could've been dumping that 
much stock over that short a period:  Swaisland, Berkeley and ENA.  We have 
confirmed that ENA has NOT sold any of its stock.

It's also important to note that preceding all of this, Berkeley had tried to 
get a couple of transactions "pushed thru" the Board including Kafus 
International (KIDG) and Hyaton.  In both cases, the Board rejected their 
proposals for two reasons:  1) the value being offered by Berkeley for each 
asset was very suspect to the relative market value and 2) the proposals were 
structured as "forgiveness" of Kafus debt to Berkeley, i.e., non-cash 
transactions.