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were susceptible to influence by, petitioner, Mme. Koo,
Radcliffe, BOT, Pioneer and its wholly owned subsidiaries Multi-
Credit and Mandalay, Merit, Forward, and Pempire.
F. Petitioner
Petitioner was a U.S. citizen during the years at issue.
Prior to and during those years, petitioner and Mme. Koo had
close and amicable business and family relationships. Thus, for
example, petitioner was able to borrow from, and give guarantees
for more than he was worth to, banks in Hong Kong because those
banks knew that Mme. Koo would honor his obligations if the need
arose.
At the time of the transactions at issue, petitioner was
familiar with the U.S. withholding tax requirements applicable to
interest from a U.S source that was paid to foreign corporations.
II. Transactions Involving Bangkok Bank Ltd.
A. BB Loan No. 1
By letter dated May 16, 1984 (May 16, 1984 letter), peti-
tioner requested on behalf of Radcliffe that the Hong Kong branch
of Bangkok Bank Ltd. arrange for the Los Angeles branch of that
bank to fund a loan of $1,000,000 to Radcliffe. Bangkok Bank HK
branch complied with that request, and Bangkok Bank LA branch
funded a $1,000,000 loan to Radcliffe on or about May 17, 1984
(original BB Loan No. 1). That loan was due on May 17, 1985.
The proceeds of the original BB Loan No. 1 were used to reimburse
Bangkok Bank HK branch for settling a claim by Hong Kong and
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