Interview Report Summary (as at Nov 18, 2005)
Officer in HK: Madam Agnes Nyugen, Madam Ann Dao Vo
Mr. Jean Chouinard, Mr. Daniel A. Leblanc
Documentation
The income certificate issued by the Chengbao mother company stated 4.8 million of chengbao income made by the PA. The profit and loss statement showed the PA made 5.3 million. The Chengbao financial statements were not audited (the PA only chengbao a department not a whole company so CPA prepared the verification of the PA’s income). The officer insisted again and again to have audited reports.
The PA did not bring the original term deposits slips and only the bank certificates were there.
The income certificate signed in 2005 bearing the chengbao factory seal. The chengbao factory was closed.
Notarization of letter of reference did not confirm the signature being authentic.
Many documents were not notarized at all.
The officer spent more time on the increase of capital. The PA was very clear on this issue and the officer understood very well the explanation.
The officer would like to see business documents between the company and the overseas supplier. The PA did not have them at the interview.
No proof of reception of dividends (e.g. accounting receipts).
It’s not clear whether the PA used own money to invest in the company as no proof that the PA had refunded the spouse money.
Financial Statement
The owner equity in the financial statement showed 11 millions but the PA declared only 6 million.
The PA is the big shareholder but is not the legal rep. of the company.
The officer wanted to see other proof besides the financial reports that the PA received the income (3.9 million), e.g. bank deposit transactions of personal bank account.
The officer said he was quite astonished by the fact the PA has kept all tax receipts for the chengbao. The PA paid for the goods received by bank cheques. The officer did not know China had bank cheques in 1995.
The officer tried to understand how the CPA firm did the audit since no documents seems to be available for 1980s and early 1990s.
The officer could not accept the internal financial statements (the company had been sold to another company recently and the PA could not have the statement verified) to prove the business was profitable from 2002-2005 when the PA was managing it.
Management Experience
The PA’s father is a shareholder and legal rep. of the company where the PA has been hired as a manager. The officer had some doubts that the father was the real manager. The officer asked for CVR which states the date when the PA’s father became a shareholder.
The officer verified the management experience of the PA. He/She did a very good performance at the interview. The officer seemed to appreciate the style of the PA.
Assets/Accumulation of Funds
The officer was very concerned with the accumulation of funds and decided to ask many additional documents, e.g. a table of all the PA’s income for every year since his working history (salary, bonus, others), proof of dividends received (e.g. bank deposit, receipts signed by the PA and as many as possible), proof of payments that the PA made from his/her own pocket to build the plant of the new company and proof of repayments made by the company to the PA, purchase contract for the land (the new plant was built) signed by the PA, proof of money in the bank in an order with a list of all bank accounts and a reference to each copy of the bank account copy.
The 2nd commercial property is under spouse’s name. It will most likely not be considered as assets of the PA. The appraisal report was issued in 2002. The report cannot reflect the value accurately. The officer will probably not consider it.
After several questions asked, the officer expressed his surprise about the PA’s income (more than 0.4 million). It appeared quite high for the period in 1987-1993.
The PA has no proof for his income prior to 1996. The officer would give the benefit of doubt to the PA since it was not a high income amount and the PA was very convincing.
Tax
The PA’s new company built in another city enjoyed tax reduction. The officer noticed that the company did not pay much income tax and the rate was different from one year to another. She found the situation very suspicious. The officer alternatively asked for all the VAT receipts for last year both companies in order to verify the total amount of taxes stated in the financial statements.
Misc.
BIQ office found out that the PA is shareholder in spouse’s company. The spouse is indeed GM and former employer of the PA. The PA claimed that he/she did not pay any investment nor claim any dividend from the spouse company. The PA replied that his/her assets have been accumulated from own working experience and income mainly from the chengbao.
The officer started the interview asking about why the spouse did not show up for the interview.
The spouse did not stop talking during the interview. The PA was not listening to the questions, kept interrupting the officer while the officer was talking. When asked for a specific document, the PA was giving more than asked for. It did not help the case at all but just confused the officer. The interview situation would not be pleasant.
The PA was quite nervous. He/She was not listening to the question, was not answering the questions very clearly and could not remember clearly the documents he/she has. The process was quite painful. | 
