enron japan commercial support model sally i just want to summarize / clarify our discussions so far on the commercial support model for enron japan . my background : in europe the commercial support function was divided into a middle office ( mo ) and a back office ( bo ) part , with a european controller ( fearnley dyson ) responsible for both functions . for scandinavia , the only trading office in europe outside of london , i was responsible for both functions , as local office controller , reporting into barry pearce , who reported to fearnley . in japan i also have this local office controller function , as being responsible for mo / bo activities in this region . the mo would consist of the trading related functions : documentation ( capture & confirmation ) , risk management , settlement and trade accounting . the bo would consist of g & a ' s , salaries & wages , tax , management reporting , statutory reporting and vat . back office : i report directly to cassandra scultz ( vp & cao of enron apachi ) . as much as possible are to be outsourced to our sydney office ( heidi mason , who also reports to cassandra ) , but some work has to be done in tokyo . the reasons for this outsourcing decision is enclosed in the power point presentation enclosed below . for payments we use houston treasury , as they are the only ones that can exercise a payment in the banking systems . middle office : mandate what i have in writing is a section from joe hirl ' s memo ( request for japan power trading positions ( draft ) ) to rick buy and greg whalley dated april 19 this year ( please find enclosed ) back office operations : jan erland bekeng in cooperation with sally beck will look to establish the local risk books in tokyo and define any system modifications necessary given the characteristics of the japanese electricity market . enron japan will handle trade capture and risk management while confirmations and settlements will occur in houston under sally beck  , s supervision . it support and system modification will be overseen by anthony dayao and performed in houston . discussion - current & future situation i see more commodities than power . metals will arrive september 25 , weather is on the way from sydney , and garry hickerson will from september 1 have a guy here doing irfx , agri and maybe equity . we are also looking into oil deals , and have plans for gas , coal , pulp & paper , credit and emissions . also ebs is on the way . i only see metals , irfx and weather as active desks this year , maybe oil . power will take some more time to get active , due to the very closed market situation here right now . on the origination side we might see some structures / cross commidity / finance deals go through . thus we have a mix of activites from enron apachi , enron global markets , ebs and enron metals . basically everyone wants to do some business in japan . to coordinate all these activities we need to build the most cost efficient , independent , segregated , automised and service minded japanese commercial support function possible . to accomplish these objectives , outsourcing to sydney is an alternative that has been discussed extensive lately , and is highly recommended from our side . labour costs in sydney is 25 % of the costs in tokyo . due to sydney ' s experience and size they are ready to expand and take on this project . they already have the segregation and independence in place , and would give us an extra layer of segregation in the sense of being an intermideary between tokyo and houston . bilingual staff would be hired to perform japanese services , which is widely available in sydney . and there is only one hour in difference between us . outsourcing these activities from japan to australia is a growing trend , and many large corporations have done it this way . there will be some time from the first trades until functions and commodities are moved to sydney . tokyo want and needs to learn , understand all details , automise , make routines and calibrate systems first . on the confirmation side our legal department would be heavily involved in th start , compared to later stages . proposed mo structure for enron japan a ) responsibility for all commercial support activities in japan to be sourced to enron japan , under enron japan ' s cfo . b ) outsource programmable tasks to sydney : - documentation ( capture & confirmation ) - settlement - trade accounting c ) risk management in tokyo . i look forward to hear from you . regards jan - erland