- 3 -
opened his shop next to the U.S. embassy, and at first the store
did well. But then, in 1999, Lok discovered that several of his
employees were importing yogurt from France in direct competition
with Gourmet Down Under. Even worse, they were using company
facilities, storage, delivery trucks, and business contacts to do
so. Lok fired five employees. Unfortunately, he fired them
during Chinese New Year--which, as he credibly testified, is a
big taboo in Chinese culture.
Retribution was swift: the storefront was torched, the
office was ransacked, and the bank account was drained.
Everything was destroyed, including the business records. Lok
filed a police report with the Beijing Public Security Bureau,
but made no effort to reconstruct the store’s daily business
records from prior years. The only documentation from the 1998
tax year was a general profit and loss statement and a balance
sheet, both of which Lok sent to Yung in early 1999. There were
no records to support the revenue and expenses that Yung and his
wife reported on their 1998 return, or to prove Yung’s percentage
ownership of the business during the year. The only thing that
can be determined about Yung’s interest, and even that by
testimony alone, is that he owned one-third of the business by
the end of 1998.
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