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e) O UNCLASSIFIED To: San Diego From: San Diego Re: 205-SD- N79 , 03/15/2011 Sempra and Mayor Catalan. The memorandum further states that "As a result [of the trust agreement], on August 12, 2003 the Land Use permit was signed by the Mayor." The land use permit was required for Semora to build an LNG plant in Ensenada. The Trust formed the Advisory Council and Technical Committee and Mayor Catalan became the President of the Technical Committee. The memo states that subsequent to. a $500,000 initial contribution to the Trust, Sempra's final permit, the construction license, was signed by the head of the Ensenada City Urban Development Agency, who reported directly to Mayor Catalan. The memo further states ...after the construction license was issued, Sempra contributed the second paymént of $500,000 USD to the Trust..." When Mayor Cesar Mancil Xe was elected in 2004 to replace Catalan, Maricillas became Pres¥dent of the Trust's Technical Committee. The“ memo finally states, "During Q4 2005, subject to no unplanned permitting impediments {emphasis added], Sempra will contribute $5,000, 000 USD to the Trust." The memo concluded that the establishment and funding of the trust was a cost associated with developing the LNG facility and such cost should be capitalized as part of the plant. The statements in the above-described memorandum made by the CFO of the organization clearly indicate the existence of a quid pro quo arrangement with regard to the establishment and incremental funding of the Trust in exchange for key permits required from the city of Ensenada to build the Sempra LNG plant. ' It can be assumed that no "unplanned permitting impediments" were experienced by Sempra since the LNG plant was .constructed and is fully operational today, and the Trust was fully funded for $7 million. Additionally, the Company has been unable to provide evidence that key controls are in place to maintain oversight of the Trust and the designation of charitable contributions made from the Trust. According to the FBI's 2008 FCPA Targeting Assessment, Mexico ranked as the third-highest "at-risk" country for corruption by the Conference Group's survey, and the energy _ ““Séctor had thé most FCPA actions taken against it from 2000 through 2006. STATEMENT THAT REQUISTTE LEVEL OF PREDICATION EXISTS: Based upon the above-described information, to include. the clear indication of a quid pro quo arrangement regarding the Ensenada Trust as documented internally by Sempra LNG's CFO, the apparent lack of controls over distributions from the Trust, and the risk factors related to the country in which Sempra took these actions as well as the business sector in which the Company UNCLASSIFIED 4