Financial Trading in Brazil

Regards from Houston! I hope you are well and busy.

I just wanted to follow up on our very productive meeting of September 21,
1999. Enron North America and Enron South America are still quite anxious
to continue our analysis of the various components of financial trading. I
believe that you were going to prepare some type of matrix to help identify
the various legal issues and practical aspects associated with financially
transacting in Brazil. We would then add tax and regulatory analyses to the
possibilities. If my memory serves me correctly, we had identified
transactions by the Enron entity ("ENE") as follows:

1. cross-border swaps
(a) ENE offshore FINANCIAL INSTITUTION and Brazilian entity
(b) ENE offshore (not financial institution) through CC-5 Account with
authorized Brazilian bank and Brazilian entity

NOTE: enforceability issues with 1(b)

2. local swaps
(a) ENE onshore entity and Brazilian FINANCIAL INSTITUTION (or ENE onshore
FINANCIAL INSTITUTION and Brazilian resident)
(b) ENE onshore entity and Brazilian entity (not financial institution)
registered with the BM&F or CETIP through intermediary

NOTE: compliance with existing regulations as to specific reference
products is required as to 2(a) and 2(b)

3. "pure" OTC swaps
(a) ENE onshore entity and Brazilian onshore entity
(b) ENE offshore entity and Brazilian offshore entity

NOTE: 3(a) presents enforceability issues under Brazilian law and 3(b)
presents no issues whatsoever

We look forward to your response as soon as possible and would also like to
know when we may hear from you. In connection with your response, please
note that we are interested in the recent changes to the laws for acquiring
banks (bankrupt or otherwise).

Regards to Marcelo and Jose Emilio. Sara