DHL Corporation and Subsidiaries - Page 91

                                         - 18 -                                       
          increase and protect DHL’s international market share.  Although            
          the operating officers of DHLI were not in favor of the                     
          expansion, DHLI benefited because it was able to offer more U.S.            
          delivery destinations to its customers.                                     
               On December 7, 1982, Hillblom acquired 49 percent of the               
          stock of Mattawan, for which he was to contribute $150,000.  At             
          that time, DHLI had retained earnings of HK$433,521,201                     
          (approximately US$56 million).  Around that time, Hillblom                  
          borrowed or withdrew several million dollars from DHLI, and                 
          through the 1990-92 transactions no interest or principal was               
          repaid.  Prior to his 1982 acquisition of Mattawan stock, it was            
          understood that Hillblom had some form of interest in DHLI.                 
               Po Chung also acquired 49 percent of Mattawan’s stock, for             
          which he was to contribute 70 percent of the DHLI stock.  The               
          employee trust of Mattawan held the remaining 2 percent of its              
          stock.  On December 20, 1982, Mattawan acquired 120,000 DHLI                
          shares from DHLI, and on January 24, 1983, Mattawan acquired                
          49,900 DHLI shares from Po Chung and 99 from Helen Wong.  After             
          August 8, 1984, Mattawan held all but 1 of DHLI’s shares.  In               
          1989, Schwartz structured a sale of Hillblom’s 49 percent                   
          Mattawan interest to Po Chung for US$226 million.  The sale                 
          documents were dated December 31, 1989.  During the transaction             
          with the foreign investors, petitioner’s lawyers advised that the           
          sale would not be respected for U.S. tax purposes.                          

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011