Carl Levin

I think it works to their advantage to do that, to have something that vague that they are able to sign up to.

Would the facts I gave you be relevant, that you have one desk that controls the loans of both those entities?

Are those facts relevant to whether or not there was an arm's-length agreement which led to a transfer agreement which resulted in the $2 billion payment?

So the answer to the question is, even before the PCAOB guideline, you never audited work where you had made recommendations or consulted with HP. Is that fair?

Was that schedule ever violated?

The word says 'schedule.' Read that to me. 'The following schedule.' Why don't you read it?

Of course you could lend from one to another. But that would violate Section 956.

That is what the point is here, trying to avoid Section 956.

Thus, it appears that both courts and the IRS may seek to apply substance over form to transactions that it views as abusive.

You are resisting that word, but now let me take a look at your own documents.

I believe that you said, Mr. Ezrati, that you did not depend heavily upon these funds for your liquidity.

I said it was a schedule when loans could be made and, if they were made, must be made, and must be repaid.

If you cannot give me a yes or no, but just repeat the question and say that is what it is, that to me is a yes.

But 'indefinitely' could mean no definition.

I am personally offended, which I am, but I am not asking you that.

I understand. In order to avoid the application of Section 956, these were guidelines.

You just said there could be a loan from one.

It is also true that----

Take a look at Exhibit 3c, would you?

Were they given different quarter endings so that they would be able to provide a continuous series of loans without crossing over the end quarter?

Do you agree that the loan program that we are talking about contained a prescribed schedule from HP's treasury and tax departments for when loans could be made and when they needed to be repaid in order to comply with Section 956?

But there is a heavy cost to the United States.

If you want to say that Microsoft's tax burden in the United States is not reduced... that is aimed at reducing taxes.

But Microsoft Asia Island Limited, located in Bermuda, has no employees. Is that correct?

But assuming they do not eliminate--I do not disagree at all, but assuming that exception is going to remain, would it not be essential that FASB put out some guidance?