3: Paragraph 52 The last week of October 1984 I had to go to Basel,
Switzerland, on rather short notice to meet with Owen, Hausman, Walker,
Ward, Craig, and someone from the Swiss bank, and that's when I finally
saw the printout of how the transaction was supposed to work. There
were two kinds of problems with it: One was that the bank wanted Hutton
to sign as the one liable for paying the interest for the term of the
loan and paying back the principal in Swiss francs at the end, so we
would in effect be guaranteeing not only the interest rate on Treasuries
but also the exchange rate, and we wouldn't; the other was that there
were so many finders' fees and up-front points to be paid to the various
players that it would take every bit of income from the Treasuries,
compounded by being repeatedly reinvested over the term of the loan, to
get the principal back to the amount to be repaid, and that didn't leave
anything to pay the income taxes with. When I pointed that out, Owen
said, "But we don't want to pay any income taxes," and I said, "Nobody
wants to pay income taxes, but how do you expect to get out of it?" So
they put me on the telephone to Mills -- whom they always referred to as
"the Chairman" with such reverence that Abbes tried teasing them once by
referring to Fomon the same way, but they were not amused -- back in the
States to find out what the story was on taxes.
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