THE QUESTIONS DON'T DEAL WITH DOMESTIC ACCOUNTS?
A WELL, QUESTION TEN DOES, DOMESTIC OR FOREIGN. A FOREIGN ACCOUNT, OF COURSE, IS SOMEWHAT EASIER TO CONCEAL THAN A DOMESTIC ACCOUNT, IN THAT IN MANY INSTANCES THE RECORDS ARE NOT AVAILABLE TO THE SERVICE IN FOREIGN COUNTRIES.
Q NOW, QUESTION ELEVEN. HOW IS THAT QUESTION RELEVANT TO YOUR INVESTIGATION?
A THIS QUESTION BASICALLY ASKS THAT THE EMPLOYEE THAT WE ARE INTERVIEWING PROVIDE US WITH THE NAME OF ANY FORMER OR PRESENT EMPLOYEE OR CORPORATE OFFICER WHO WOULD HAVE KNOWLEDGE OF ANY OF THE ITEMS IN THE PREVIOUS QUESTIONS. THEY WOULD BE IMPORTANT TO US, BECAUSE THERE ARE CIRCUMSTANCES WHERE AN OFFICER MAY NOT KNOW THE FACTS OF ANY GIVEN TRANSACTION, BUT HE WOULD BE FAMILIAR WITH SOMEONE WHO DID HAVE THE FACTS. HERE WE ARE SIMPLY ASKING THE OFFICERS THAT WE QUESTIONED, DO YOU KNOW OF ANYONE, ANY OFFICER, FORMER EMPLOYEE OR PRESENT EMPLOYEE WHO WOULD HAVE KNOWLEDGE AS FAR AS THESE ITEMS ARE CONCERNED, AND IF SO, WILL YOU GIVE US HIS NAME AND MAYBE WE CAN TALK TO HIM.
THE INDIVIDUAL THAT THESE PEOPLE KNOW THAT COULD HAVE HAD SOME OF THIS KNOWLEDGE MAY BE ABLE TO GET US SOME INFORMATION THAT WOULD BE RELEVANT TO THE TAX LIABILITY OF COASTAL STATES.
Record, Vol II, at 14-22.
APPENDIX II
The following colloquy took place between the Court and counsel for Coastal:
Q NOW, YOU HAVE BEEN CONDUCTING FIRST OF ALL, WHY DO YOU NEED THESE ELEVEN QUESTIONS, WHY CAN'T YOU JUST USE NORMAL AUDIT TECHNIQUES, EXAMINATION OF DOCUMENTS AND RECORDS IN THE VARIOUS CORPORATIONS LOCATED IN THIS COUNTRY?
A IN MANY INSTANCES THE BOOKS AND RECORDS COULD NOT REFLECT THE INTENT OR THE VARIOUS AREAS, THE VARIOUS ITEMS THAT WENT INTO ANY GIVEN TRANSACTION. OF COURSE, ITEMS THAT ARE NOT REPORTED ON THE BOOKS AND RECORDS ARE NOT AVAILABLE IN THE BOOKS AND RECORDS. SO WE DON'T HAVE THOSE TO LOOK AT.
THE OFFICERS THAT WE SELECTED TO TALK TO, TO INTERVIEW, ARE PEOPLE THAT WE FELT LIKE, BECAUSE OF THEIR KNOWLEDGE OF THE CORPORATION, WOULD BE IN A POSITION TO KNOW PAYMENTS AND ITEMS ALONG THE AREAS OF THE ELEVEN QUESTIONS SET OUT. THEIR PERSONAL KNOWLEDGE COULD BE A LOT GREATER THAN WHAT IS REFLECTED IN THE BOOKS AND RECORDS AS FAR AS THE PURPOSE OF ANY GIVEN TRANSACTION.
ANOTHER THING, COASTAL STATES IS A VERY BIG CORPORATION, AND ALL OF THE EXAMINATIONS, THERE ARE HUNDREDS OF THOUSANDS OF TRANSACTIONS, IT IS NOT HUMANLY POSSIBLE TO LOOK AT ALL OF THESE TRANSACTIONS. WE LOOK AT AREAS THAT WE FEEL ARE IMPORTANT. BUT WE CANNOT LOOK AT EVERYTHING. WE NEED TO BE IN POSITION TO ASK QUESTIONS OF PEOPLE WHO HAVE THE KNOWLEDGE OR ARE IN THE DECISION MAKING ASPECTS OF THE CORPORATION IN ORDER TO FIND OUT WHAT IS REALLY TRANSPIRING.
A LOT OF TIMES IT IS COMMON THAT TRANSACTIONS WILL BE MISCLASSIFIED. WE MAY LOOK FOR SOMETHING IN ONE AREA AND IT MAY END UP IN SOME OTHER