Compliance Officer (9) Environment Audit- June 15, 2004

June 15, 2004

Mr. Fraser Reilly-King
Halifax Initiative
153 Chapel Street, Suite 104
Ottawa ON KIN 1H5

Re: Compliance program file number 2236-4-1-2003

Dear Mr. Reilly-King:

This letter is a follow-up to my letter of May 7, 2004 and should serve as the conclusion of the Halifax Initiative complaint.

Your letter of complaint dated July 28, 2003 regarding the Cernavoda 2 nuclear power plant transaction came within EDC's compliance program. It was accepted and followed the compliance program process. A recommendation that a compliance audit be conducted was made to EDC Executive Management (Management) in October of 2003.

Management accepted the recommendation and the work was divided into two parts.

The first part was a compliance audit into the application of the Disclosure Policy and Code of Business Ethics to the transaction. EDC's Internal Audit and Evaluation (IAE) team conducted the compliance audit and the results were reported out to you on May 7, 2004.

The second part, a compliance audit into the application of EDC's Environmental Review Directive (ERD) to the transaction, is the subject of this correspondence. IAE's Internal Audit Report is enclosed for your review.

You will note that this part of the compliance audit differs in form and content from the first. For this part of the compliance audit, IAE identified five key allegations of non-compliance relating to specific sections of EDC's ERD and the Report notes actions taken by EDC regarding the application of the ERD to this transaction. The Vice President of EDC's IAE team ensures appropriate application of audit standards prescribed by the Institute of Internal Auditors (IIA).

Pursuant to the complaint, EDC's IAE auditors reached the conclusion that EDC was in compliance with all relevant sections of its ERD as applied to the Cernavoda 2 nuclear power plant transaction.

Once again, let me emphasize that EDC took your complaint and allegations seriously and devoted much time and effort in attempting to address all of the issues raised therein.

Trusting that the foregoing is satisfactory, I remain,

Yours truly,

Alison C. Lawford LL.B., LL.M. Compliance Officer