January 31, 1995

PRIVATE & CONFIDENTIAL

Dear Mr. Strong:

Implications of Criminal Fraud in Ontario Hydro Technologies

I would like to take the opportunity of replying to your letter to Mr. John Murphy of January 10, 1995, particularly with reference to the Audit Division and Arthur Anderson (AA) investigations.

The Audit Division investigation was faulty. Most obvious, Audit only interviewed one of my four designated witnesses. Not surprisingly, they "found" no evidence for most of my claims. My sources of information were referenced for Audit before the investigation. The Audit investigation would not withstand public scrutiny.

Having not seen the AA report, I can't comment on it. However, AA were given: evidence that the target external company was suspect; written evidence of criminal fraud practices at the same company; plus evidence that Dr. Brown was leading an unstable and financially suspect life. Dr. Brown was connected to this company through suspect external contracts. There was no criminal case, deliberately, because of the potential repercussions. AA seemed duly impressed by the case at the time. Apparently the other OHT witnesses questioned also gave supporting stories.

As my actions show, it has always been my objective to resolve this issue internally, with the minimum of dislocation and the maximum of benefits. I look forward to hearing from you.

Yours sincerely,

Michael Moles

cc. Mr. J. Murphy, President, PWU

Mr. R. Darrah, Orr & Darrah, Barristers and Solicitors