Re: In re MV PACIFIC VIRGO - Nov 99 test results

Britt

I checked the files and confirmed with Eric that the 4 November 99 test
results have not been sent to Cliff Bennett.
The sample was drawn in early October 99 by Modec Venture, handed to SGS
Australia and airfreighted to SGS Singapore for testing. All this was done at
ECTRS's request.

There may have been as many as 10 persons involved in the testing because of
shift work at SGS Singapore. The supervisor was Mr Liew Meow Wong and the
test results were signed-off by Mr Freddy Koh (lab manager).

Regards
Matt

From: Britt Davis@ENRON on 07/28/2000 11:32 PM
To: James P Studdert/HOU/ECT@ECT
cc: Rob Cole/HOU/ECT@ECT, Alan Aronowitz/HOU/ECT@ECT, Harry M
Collins/HOU/ECT@ECT, Richard B Sanders/HOU/ECT@ECT, Linda R
Guinn/HOU/ECT@ECT, Deborah Shahmoradi/NA/Enron@Enron, Brenda
McAfee/Corp/Enron@ENRON, Matthias Lee/SIN/ECT@ECT

Subject: In re MV PACIFIC VIRGO

PRIVILEGED AND CONFIDENTIAL: ATTORNEY-CLIENT COMMUNICATION, ATTORNEY WORK
PRODUCT

Jim, I have been asked to assist in the handling of the above-referenced
developing cargo contamination matter. I am writing this to you at the
request of Rob Cole, with whom I discussed a possible "inherent vice"
coverage problem with our cargo policy. No one has raised the issue, but I
wanted you to be aware that it might be raised, based on facts of which I
have recently become aware.

I have been told that ECT had a pre-sale survey performed at Phillips'
facilities of the same or similar product some months before the loading of
the M/V PACIFIC VIRGO. The test revealed that the sample had almost double
the allowed sediment level. The test was reportedly performed in order to
determine whether to purchase this product from Phillips, which ECT
ultimately did. It is unclear at this point why ECT decided to purchase the
product from Phillips despite the off-spec analysis.

At loading, the product reportedly tested within all contract specs for the
end user. Later on, after discharge, it has been reported to me that the
cargo was significantly off-spec for sediment level, as well as other things.

I know that Cliff Bennett of Minton's is following this matter for our cargo
underwriters. I have been told that SGS not only attended the vessel for
ECT,, but also performed the pre-sale sampling and analysis I mention in the
first paragraph. By copy of this e-mail, I am asking Matt Lee to liaise with
Watson, Farley and make sure that they are aware of this and find out who at
SGS performed this pre-sale survey. My sense is that we do not want that SGS
surveyor anywhere near Cliff Bennett or the ship's surveyors. (Matt, if we
have already advised Bennett of this pre-sale survey, I would like to know
that as well).

Let me know if I can provide further information.

B.K.D.