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City Harvest trial: Not all church projects are for profit, says defence lawyers
Published on Sep 20, 2013
Defence lawyers for the six accused City Harvest leaders, including Kong Hee (in photo), say not every investment made by charities such as churches need to yield profit, adding that investments may be to further social objectives. -- ST PHOTO: WONG KWAI CHOW
By Feng Zengkun
Not every investment made by charities such as churches need to yield profit. Sometimes these investments may be to further social objectives. Defence lawyers for the six accused City Harvest leaders said this in court on Friday during an on-going trial.
City Harvest Church founder Kong Hee and five of his deputies are accused of criminal breach of trust. They are alleged to have funnelled $24 million meant for the church's new building into sham bond investments in church-linked firms Firna and Xtron Productions. Prosecutors say City Harvest accounts were then falsified to the tune of $26.6 million so the bonds appeared to have been "redeemed".
Defence lawyers said that in the same way the National Kidney Foundation, for example, invests in dialysis machines even though these depreciate in value, City Harvest invested in its Crossover Project to convert people to Christianity. The Crossover Project Crossover Project started in 2001 with the aim of using co-founder Ho Yeow Sun's secular music to evangelise.
In fact, auditor Foong Daw Ching had no objections to the use of City Harvest funds to finance Ms Ho's music albums as this furthered the church's evangelism mission, claimed Mr Michael Khoo, lawyer for former church investment manager Chew Eng Han. This approval supposedly came in a meeting in 2003 between Mr Foong and church leaders, shortly after a special audit was done following allegations that church funds were improperly used to finance Ms Ho's career. Mr Foong, however, said he could not recall this meeting.
SINGAPORE: After 20 days and six witnesses, the second tranche of the trial involving six City Harvest Church leaders ended on September 20.
The trial will resume in January with at least five prosecution witnesses slated to take the stand.
Church founder Kong Hee and five others are accused of misusing S$24 million of the church's building fund to boost singer Sun Ho's music career.
Her music is part of the Crossover Project which aims to evangelise.
It is said another S$26 million were used to cover up the misuse.
The defence had referred to an email dated 28 July 2008 sent by Kong to co-accused Serina Wee and Tan Ye Peng to show that he had been careful in budgeting for his wife Sun Ho’s foray into the United States music scene.
In it, Kong had asked about worst-case scenarios.
He asked Wee and Tan to work out the estimates if only a third of the profit came from Ms Ho's English album.
The prosecution argued that this was not the case.
In a February 2005 email, Kong told American music producer, Justin Herz to "plan as if 'the sky is the limit'".
He added they would then work out how they to get funds for the project.
During the trial, the court heard for the first time how Ms Ho's music career in the US was launched.
She was said to have huge potential and the net profit from her first English album was estimated to surpass US$25 million over seven years from 2007 to 2012, with expected sales of two million copies.
The singer's publicity budget was set at between that of superstars Beyonce (US$17 million) and Shakira (US$12 million).
Concealing of investments?
Another issue was the hiding of information from stakeholders.
The prosecution sought to show this through a chain of emails dated 12 October 2007, between three of the six accused - Chew Eng Han, Serina Wee and John Lam.
In the emails, the three discussed how they could withhold information from the church's investment committee, as well as its (church) board members.
Chew also wanted to keep the close links between Xtron Productions, Ms Ho and Kong to a small circle.
The defence argued that the accused were just being discreet as this is a sensitive issue.
Control over Xtron
In another email raised, the prosecution tried to show that the accused controlled Xtron Productions, which used to manage Ms Ho.
Dated 1 August 2008, Wee told Kong, Tan and Chew that the church's auditor Foong Daw Ching advised them to "just minute down the necessary portions so as not to show too close a relationship or control over XPL (Xtron)".
She added they would have to paint the picture that the church has only "some control over Xtron".
Mr Foong denied providing this advice but the defence charged that Mr Foong was trying to distance himself from the accused.
It added that Mr Foong was the one who had overriding authority over the others in the firm.
Mr Foong disagreed and at one point, he snapped, telling the defence not to put words in his mouth.
Besides Xtron, glassware firm Firna or PT The First National Glassware was also said to be controlled by the church.
The prosecution's point was that the two firms were used by the accused to commit "round-tripping" via "sham bond investments".
It sought to show Xtron directors Choong Kar Weng and Wahju Hanafi as rubber stamps.
The court heard how the church instructed the two on draw down amounts and dates and how church trustees were left out of the loop.
The defence said that Mr Choong and Mr Hanafi are the ones giving the ultimate approval to matters.
Both witnesses agreed.
On the various financial transactions, the defence said auditors and lawyers had gone through them and there was nothing sinister about it.
For example, in 2008, Firna had issued bonds to the church to raise capital.
Defence counsel Kannan Ramesh, who represents Sharon Tan, pointed out to Mr Hanafi that it was only logical to restructure the debts if the church wanted Firna to redeem the bonds before the stipulated three years.
Mr Hanafi agreed.
On the last day of the second tranche, the court also heard Mr Foong testified that the use of the church's building fund to pay for Crossover Project's expenses were "not right".
The witness was re-examined by prosecutor Mavis Chionh, who sought clarification on his earlier answers to defence lawyer Andre Maniam.
Mr Foong had agreed then that concerts and overseas travel expenses of singer Sun Ho should be charged to the church - because she was part of the church's Crossover Project.
But when given the scenario that the church's building fund is meant for the purchase of church property, Mr Foong said monies from the building fund cannot be used to pay for the Crossover Project. - CNA/fa
Donations to the church have fallen in the wake of the criminal trial involving founder Kong Hee (above) and five of his deputies. Its board held special meetings last weekend in a bid to quell talk that the loan was a risky one.
Tan Dawn Wei, Assistant News Editor
The Straits Times
Sunday, Sep 29, 2013
SINGAPORE - City Harvest Church (CHC) defended the new $45 million loan it took out, with its stake in Suntec as collateral, saying it would buy the church time as donations fall in the wake of the criminal trial involving six of its leaders.
The CHC board held special meetings for ordinary and ministry members last weekend, after an earlier session with executive members, in a bid to quell talk that the loan was a risky one.
The six-year loan from Freight Links Express Holdings comes with an average of $5.77 million in interest and other charges every year, which means the church will have to pay back nearly $80 million in total.
But the church explained that it needed the money to pay back another $50 million loan which it took out in 2011 to nearly double its 20 per cent stake in the Suntec Singapore International Convention and Exhibition Centre to 39.2 per cent.
That three-year loan from construction company Galaxy Capital, which had been due next year, charged 10 per cent interest each year, and required a portion of the principal to be paid annually.
But the new loan interest rate was lower at 8 per cent, and required the church to pay back the principal only in 2019.
"While the previous lender (Galaxy Capital) was willing to defer payment for one year, it was not willing to extend the loan repayment beyond August 2014. This meant that CHC would have had to put out a capital outlay of $40 million in less than 11 months," said the church in a special edition of its in-house newsletter, City News Weekly.
But this is a problem as donations to the church's Building Fund have fallen since founder Kong Hee and five of his deputies were hauled to court on charges of having misused church funds.
In its latest collection which ended in April this year, the church took in just $15 million. Previous collections brought in between $21 million and $24 million each, members said they were told.
With the criminal trial, which has been adjourned till January, possibly running till the end of next year, it was "unrealistic" to pay Galaxy Capital, the church said. "As long as the trial is ongoing, it takes its toll on not just the spirit of the church and members, but also its mental, physical and fiscal well-being," it added.
City Harvest case: Trial to last till 2nd half of 2014
Third and last leg of trial will start on Jan 13 and be spread over seven months
Published on Dec 02, 2013
By Tan Dawn Wei Assistant News Editor
The high-profile City Harvest trial will now go on till the second half of next year, in order to accommodate the schedules of the various defence lawyers and prosecutors as well as the trial court itself.
Originally slated for Jan 13 to March 7, the third and last leg of the trial will now be spread out over seven months, lasting as short as two days, and as long as 20 days at a stretch.
It will still start on Jan 13, and go on till Feb 10; the longest will be between Aug 4 and 29.
So far, the prosecution has been building its case in the first two tranches of the trial which started in May, questioning close to 10 witnesses, including directors of church-linked companies and church accountants.
Trial of City Harvest Church leaders to resume next week
SINGAPORE: The third tranche of the trial involving the six leaders of City Harvest Church resumes on Monday.
Church founder Kong Hee and five of his deputies are accused of misusing millions of dollars belonging to the church, between January 2007 and October 2008.
Kong Hee, John Lam, Chew Eng Han, Tan Ye Peng and Serina Wee are accused of channelling S$24 million into two companies - Xtron and PT the First National Glassware (Firna) - to boost singer Sun Ho's career.
Ultimate Assets was a third firm identified by the prosecution that was allegedly used as a financial vehicle.
Firna and Ultimate Assets are owned by Wahju Hanafi, whom the prosecution is alleging has close ties to the church.
Chew Eng Han, Tan Ye Peng, Serina Wee and Sharon Tan face a second set of charges - misappropriation of some S$26 million to cover up the first sum.
The prosecution is alleging that Kong Hee had set out the timeline of monetary transactions to be completed between the church and various companies, in order to use the funds to boost Sun Ho's career.
The order from him was said to have come in an email to Serina Wee, Tan Ye Peng and Chew Eng Han on 29 July 2008.
In the email, Kong Hee asked them to come up with a solution for the projected shortfall in the glassware firm Firna.
Firna is owned by Indonesian church member Mr Hanafi, who was a main supporter of Ms Ho's career.
The timeline also included when Xtron was to sell bonds to AMAC Capital and when Xtron was to redeem the S$13 million bonds.
AMAC is owned by Chew Eng Han, who was responsible for making church investments.
The firm is also said to have been used by the accused as a financial vehicle to commit their alleged offences.
But defence lawyer Edwin Tong argued that Kong Hee had nothing to do with the numerous Firna transactions, including its draw down details and convertibility of bonds.
Firna's owner, Mr Hanafi, testified to this.
The defence described Kong Hee’s attitude as conservative and careful when it came to budgeting his wife’s foray into the American music scene.
In an email dated 28 July 2008, Kong Hee asked co-accused Serina Wee and Tan Ye Peng to provide worst-case scenarios.
He also asked them to work out the estimates if only a third of the profit came from Ms Ho's English album.
Emails dated as early as 2006 between American music producer Justin Herz, Kong Hee and Tan Ye Peng also apparently showed their efforts in managing the budget.
But the prosecution dismissed this.
In a February 2005 email, Kong told American music producer Justin Herz to "plan as if 'the sky is the limit'", before they work out how to get funds for the project.
The trial also shed light on how Ms Ho's music career in the US was launched.
She was deemed to have huge potential.
The net profit from her first English album was estimated to surpass US$25 million with expected sales of two million copies over seven years, from 2007 to 2012.
But the court was told previously that Ms Ho's album only sold 200,000 copies.
The American producers had projected that revenue would exceed the $13 million bonds that Xtron had issued to raise funds for Ms Ho's music.
The glowing estimations meant that the singer's publicity budget was set between that of superstars Beyonce (US$17 million) and Shakira (US$12 million).
So far, the prosecution has based its case on the various financial transactions between the church, Xtron, Ultimate Assets and Firna.
It argued that these were meant to cover up the misuse of funds.
But the defence disagreed, saying auditors and lawyers had gone through them and there was nothing sinister.
For example in 2008, Firna had issued bonds to the church to raise capital.
Posing the question to Mr Hanafi, the defence said it was only logical to restructure the debts if the church wanted Firna to redeem the bonds before the stipulated three years.
Mr Hanafi agreed.
Another issue was keeping stakeholders in the dark.
The prosecution sought to show this through a chain of emails dated 12 October 2007 between three of the six accused - Chew Eng Han, Serina Wee and John Lam.
The three had allegedly discussed how they could withhold information from the church's investment committee and board members.
Chew Eng Han said he wanted to keep the investments the church is making to as small a circle as possible.
But the defence argued that the church had to be discreet about their involvement in the Crossover Project - which serves the church's mission to reach out to the secular world - for it to be successful.
The church's aim for the project was to reach out through Ms Ho's music.
Another area of contention was whether Xtron directors Choong Kar Weng and Mr Hanafi were "rubber stamps".
The court had heard how the church instructed the two on draw down amounts and dates and how church trustees were left out of the loop.
But the defence said Mr Choong and Mr Hanafi were the ones who gave the ultimate approval to matters, to which both witnesses agreed.
The role of the church's trustees also came under scrutiny.
During the 20-day hearing, the court heard Susan Ong defending Xtron as a legitimate firm.
She also testified that the trustees left decisions on church investments to Chew Eng Han, as he had the expertise.
The trial is expected to last until September this year. - CNA
Updated: 01/13/2014 21:25 | By Channel NewsAsia
New prosecution witness takes stand as CHC leaders' trial resumes
SINGAPORE: The trial involving six leaders of City Harvest Church resumed on Monday, with a new prosecution witness taking the stand.
Ms Tiang Yii is a public accountant at Baker Tilly, an external audit firm hired by the church.
Church founder Kong Hee and five of his deputies are fighting allegations that they misused millions of dollars belonging to the church, between January 2007 and October 2008.
They are accused of using the money to boost Kong's wife Sun Ho's music career.
There was a media scrum on Monday morning as the couple appeared outside the court. Ms Sun Ho, in a rare appearance, had come to support her husband.
Kong and his deputies -- John Lam, Chew Eng Han, Tan Ye Peng and Serina Wee -- are accused of channelling S$24 million into two companies, Xtron and PT The First National Glassware (Firna), to boost the singer's career.
Chew, Tan, Wee and another deputy -- Sharon Tan -- face a second set of charges, of misappropriating some S$26 million to cover up the first sum.
The focus of the day's hearing was on the S$13 million of Xtron bonds, which the prosecution described as "sham investments".
In August 2007, S$7 million of those bonds were bought by the church.
Xtron's auditor at that time, Ms Tiang Yii, said she had only seen cash flow projections from Xtron indicating the firm was able to redeem the bonds.
She added that she was unaware that Lam and Tan had discussed concerns that Xtron could not redeem the bonds in time.
The court also heard that emails were exchanged between the accused on matters such as reasons why the maturity date of Xtron bonds were lengthened from a two-year period to 10 years.
Now, the prosecution witness said she did not know the reason.
During the hearing, Ms Tiang also testified that the audits were based on the information provided by the church's management board and its accountants.
Because of this, she pointed out that the audits could not be absolutely accurate.
Updated: 01/15/2014 13:37 | By Channel NewsAsia
Use of building fund not breach of church's constitution: witness
SINGAPORE: The external auditor of the City Harvest Church testified on Wednesday that she did not doubt the veracity of the Xtron bonds bought by the church.
Taking the stand for a third day, Ms Tiang Yii of Baker Tilly said she never doubted the bonds were issued through events company Xtron and bought by AMAC Capital Partners.
AMAC is owned by one of the accused, Chew Eng Han, who was in-charge of the church's investments.
Ms Tiang explained that she only had doubts after news reports of a probe into the alleged misuse of funds came to light in 2010.
During cross-examination, Ms Tiang agreed there was no breach in the church's constitution when the Building Funds was used in the bond subscription.
She testified that the church's subscription to Xtron bonds was authorised.
Xtron was the firm managing singer Sun Ho's music career.
It had a bond subscription agreement with the church to raise funds for Ms Ho's music.
Under the agreement, money from the church was used in the production of the singer's albums.
Ms Tiang agreed that "the use of the proceeds were in line with the stated objectives in the bond".
The prosecution's case is that Xtron was a financial vehicle used by church founder Kong Hee and five deputies to channel the church's Building Funds into Ms Ho's career through what they called "sham bond investments".
The defence also argued that the use of the Building Funds to pay for advance rental was not a technical breach.
Ms Tiang agreed.
However, she added that she would not accept such use of funds as authorised, even if the church's board of directors had approved it.
She said the use of the funds for advance rental payment to Xtron, must, first of all be pre-approved by members.
This was because that's where the "potential donors are", she said.
The court also heard that Ms Tiang's colleague, Mr Foong Daw Ching, had been communicating with the accused on bond issues and the use of the Building Funds.
Ms Tiang said she was not aware of this.
The defence's point is that the accused had been seeking Mr Foong's advice proactively, but this information was not shared with Ms Tiang and that he had failed in his duty.
Previously, Mr Foong testified he had dispensed general advice to the accused in his personal capacity.
The defence also pointed out that accused John Lam was roped in to help with the discussion on the church's accounts and its bond subscription with Xtron due to his educational qualifications.
His lawyer, Kenneth Tan pointed out to Ms Tiang that Lam had studied accounting.
City Harvest auditor found some church transactions "unusual"
SINGAPORE: The lead auditor of the City Harvest Church's accounts said he found some of the church's transactions "a bit unusual".
Taking the stand for the first day on Friday, Sim Guan Seng of Baker Tilly said for the transactions he found unusual, he would then ask the church management board for its business rationale.
Mr Sim is the auditor who posed several questions as to the authenticity of the bond transactions between the church, events firm Xtron and the church's fund manager, AMAC Capital Partners.
Xtron had issued S$13 million worth of bonds which AMAC bought.
The money was then used to produce singer Sun Ho's music albums.
Ms Ho, wife of church founder Kong Hee, is part of the church's Crossover Project
It is the prosecution's case that Kong Hee and five of his deputies misused millions of monies from the building fund, through "sham bond investments" in companies like Xtron and AMAC.
Earlier on Friday, the prosecution referred to the subordination of the church's rights under the Xtron bond agreement to the bank.
Xtron had wanted a S$10.7 million loan from the bank to raise capital to buy a Riverwalk property that cost S$17 million.
But the prosecution pointed out that Xtron had issued S$18 million worth of bonds in total to the church.
This was more than enough to purchase the Riverwalk property.
The prosecution asked the church's longest-serving trustee, Tan Yew Meng, if he knew why Xtron was taking up a loan when it already had money from the issuance of bonds.
Mr Tan said no one explained it to him.
During re-examination, Mr Tan said he did not know that S$13 million was drawn down.
The prosecution charged that the S$13 million was drawn down so it could go towards Ms Ho's album production.
It is also the prosecution's case that this was why Xtron needed a further $10.7 million from the bank to make the property purchase.
Mr Tan later agreed with the defence that it was not unusual for him to not be informed of the various transactions, since it was not under his purview.
The defence also sought to make the point that if Xtron had defaulted, it could have used the proceeds from the sale of the property to pay the bank loan.
Longest-serving trustee of City Harvest Church called to testify
SINGAPORE: The longest-serving trustee of the City Harvest Church testified on Friday in the trial of the six leaders accused of misusing the church's Building Fund monies.
Under the prosecution's questioning, Mr Tan Yew Meng admitted that as a trustee, he approved documents and agreements that were endorsed by the church's management board and executive members.
Prosecutor Tan Kiat Pheng asked if he had refused to sign any documents and Mr Tan said "no".
The prosecution queried Mr Tan on whether he knew why the accused Chew Eng Han's investment firm, AMAC Capital Partners, was chosen by the church to act as its fund manager.
Mr Tan said it was due to Chew's financial expertise and track record.
But he later testified under cross-examination that he was comfortable with the choice of AMAC as the church's fund manager.
When asked by the defence, Mr Tan also agreed that it was up to AMAC to decide what it deemed fit, in terms of investments.
It is the prosecution's case that church founder Kong Hee and five deputies misused millions of the church's Building Fund monies, by channelling them into what they described as "sham bond investments".
The investments in question were made by AMAC and the bonds were issued by events firm Xtron.
Xtron used to be singer Sun Ho's management company.
It had issued S$13 million worth of bonds to the church through AMAC.
The prosecution alleges that Xtron was used by the accused as a financial vehicle to pump money into boosting Ms Ho's music career.
In relation to this, the prosecution referred to the subordination of the church's rights under the Xtron bond agreement to the bank.
Xtron had wanted a S$10 million loan from the bank to raise capital to buy a Riverwalk property.
But the prosecution pointed out that under that agreement between Xtron and the bank, if Xtron defaulted, the church would be in a vulnerable position.
When asked if he knew why Xtron was taking up a loan when it already had money from the issuance of bonds to the church, Mr Tan said no one explained it to him.
The court heard during cross-examination that Mr Tan agreed with the defence that it was not unusual for him to not be informed of the various transactions, since it was not under his purview.
The defence also sought to make the point that if Xtron had defaulted, it could have used the proceeds of the sale of the property to pay the bank loan. Mr Tan agreed.
The witness also agreed with the defence that there was "nothing sinister" about the agreement.
CHC trial: Lead auditor takes issue with CHC's investment in Xtron
SINGAPORE: Some of the financial moves made by the City Harvest Church did not make any sense, said the external lead auditor of the church's book.
Mr Sim Guan Seng of accountancy firm Baker Tilly took the stand on Monday in the trial of the six church leaders accused of misusing millions of church funds.
Mr Sim said he took issue with the investment in Xtron.
The church had bought S$13 million worth of Xtron bonds initially. This bond subscription agreement was subsequently raised to S$18 million and then to S$25 million.
The revision was to raise enough money for Xtron to purchase a Riverwalk property.
Mr Sim said he thought it was possible for the church to buy the property directly without having to invest in Xtron. He then told the church's management to check with their lawyers to see if this was possible.
At the time of the purchase, Xtron, which already had S$18 million, borrowed another S$10 million from the bank.
Referring to email exchanges dated August 2008, between accused Serina Wee, Chew Eng Han, Sharon Tan and Tan Ye Peng, the prosecution asked if there was any reason the four would want to hide the bank loan from auditors.
Mr Sim said he was not aware and added that he found it puzzling that Xtron had to borrow money from the bank when it was supposed to have enough cash.
Later in the day, the court heard that the S$13 million had been drawn down before the property was bought.
Earlier on Monday, Mr Sim had told the court he initially had various concerns, chief of which was that Xtron was "not the most financially healthy" company and he wondered why the church would invest in Xtron.
The court also heard that the witness was not aware of several discussions, one of which involves a letter of guarantee made by businessman and former Xtron director Wahju Hanafi, indemnifying Xtron.
Mr Hanafi was in turn indemnified by four others, including church founder Kong Hee and his deputy Tan Ye Peng.
When asked, Mr Sim said he was not aware of these personal guarantees.
He also questioned why these were not disclosed to the auditors.
When told by the prosecution that the guarantee letter was prepared in 2010 but dated 2007, Mr Sim said he was "puzzled by the purpose of this guarantee" when the audit was already over.
Pointing to various documents produced in court, Mr Sim said that it would seem like the bond transactions between the church, Xtron and another firm, Firna, were set up for specific purposes, which would "raise a lot of red flags".
Firna, a glassware company owned by Mr Hanafi, was allegedly used in what the prosecution calls "sham bond investments".
Kong and five of his deputies are accused of misusing the church's building funds through "sham bond investments" to boost the music career of Ms Ho, Kong's wife.
Mr Sim Guan Seng.
Walter Sim
The Straits Times
Monday, Jan 20, 2014
SINGAPORE - The auditor who repeatedly sounded alarm bells about church monies going to music production firm Xtron on Friday testified for the first time.
Mr Sim Guan Seng, managing partner of Baker Tilly, took the stand for about an hour towards the end of Friday's hearing.
"Some of the transactions were a bit unusual, so I did ask some questions about the business rationale behind the bonds and the agreement," Mr Sim said, referring to an agreement with Xtron in 2007 to purchase $13 million worth of bonds.
In a 2009 e-mail that has been cited in court, deputy senior pastor Tan Ye Peng told former finance manager Serina Wee to arrange for an "off-the-record meeting" with Baker Tilly's then managing partner Foong Daw Ching, who was known familiarly as "Bro Foong" to pastor Kong Hee, Tan, Wee and three others - on trial for varying counts of criminal breach of trust and falsifying accounts.
In the e-mail, Tan wrote: "Explain to Foong that it's precisely because we cannot show a link to City Harvest Church, ask him to advise you how to speak to Sim."
Mr Sim was engagement partner - the lead auditor responsible for signing off on audits - for the church from July 1, 2007 to Oct 31, 2009, and for Xtron from Jan 1, 2008 to Oct 31, 2008. He continued in both roles for the next financial year, but the audits were aborted due to the seizure of records in a Commercial Affairs Department probe.
Mr Sim said of the role of an auditor: "Besides looking at documents, we actually got to exercise judgment where a transaction appears to not make sense commercially."
He added: "Of course we will ask questions as to why this transaction was entered into... (The explanation given) may have some implication in terms of whether the transaction has got merit or there could be something more to it than what it seems on the surface." He will be back on the stand today.
City Harvest trial: Church trustees 'kept in the dark'
Trustee Tan Yew Meng said he was told a bond investment in Xtron was a sound move.
Walter Sim
The Straits Times
Monday, Jan 20, 2014
SINGAPORE - Trustees of City Harvest Church were kept in the dark about plans related to its Building Fund coffers but placed their trust in their church leaders, a district court heard on Friday.
The executive members of the church with voting powers, numbering about 1,000, were also in the dark about where money was coming and going.
City Harvest pastor Kong Hee and five others face varying counts of criminal breach of trust and falsifying accounts for allegedly misappropriating $24 million through sham investments in two church-linked companies, and using $26.6 million to cover it up.
Prosecution witness Tan Yew Meng, the church's longest-serving trustee since 1996, said he was assured that a bond investment in the music production firm Xtron was a sound move.
In an extraordinary general meeting in August 2008, the executive members were given "the understanding that the investment would give us good returns of 4 per cent of $720,000 a year over a period of 10 years".
"We are laypersons, but it makes sense to help them (Xtron) to get this loan," said Mr Tan, who is the director of Singapore Polytechnic's School of Communication, Arts and Social Sciences.
Though he signed documents for the bond agreement, Mr Tan said he was not privy to negotiations in drafting them but his queries were adequately answered.
He said the church's accounts were handled by fund manager AMAC Capital Partners, founded by former church treasurer Chew Eng Han, one of the accused.
Through its Building Fund, the church entered a bond subscription agreement with Xtron worth $13 million in July 2007. This was revised upwards to $18.2 million in August 2008 to enable Xtron to purchase Riverwalk, a property the church intended to use for worship, court documents show. It was valued at $17.55 million.
By this time, however, $13 million of the $18.2 million had already been drawn down.
The prosecution's case is that this was an elaborate ruse to funnel money from the Building Fund into furthering the music career of Kong's wife, Ms Ho Yeow Sun.
Deputy Public Prosecutor Tan Kiat Pheng questioned why, even with the $18.2 million in bonds, Xtron still took out a "huge loan" of $10.7 million to buy Riverwalk.
The trustee said it had never occurred to him to ask. But he kept "wholehearted" faith in the church's Crossover Project mission, a vehicle for Ms Ho.
When asked by defence counsel Paul Seah why the church was so secretive, even to members, he said: "If it is so obvious that we are doing this as a church, we might turn away a lot of potential seekers who do not want to be associated with the church until they become believers."
Updated: 01/21/2014 14:29 | By Channel NewsAsia
CHC trial: Bond investments “do not make sense", says auditor
SINGAPORE: The lead auditor going through the City Harvest Church's books testified on Tuesday that the bond investments made by the church and some related firms "do not make sense" and had "gone one round".
On the stand for the third day, Sim Guan Seng of Baker Tilly was taken through the church's investments, which were subsequently invested in or loaned to other firms.
These related firms were AMAC Capital Partners, Xtron, Firna and Ultimate Assets.
The church had invested in a "special opportunity fund" (SOF) in AMAC, which was owned by accused Chew Eng Han.
AMAC was the fund manager of the church at that time.
Through documents raised in court, Mr Sim said AMAC then loaned the church's money to Ultimate Assets, which in turn used the same sum of money and loaned it to Firna, also known as PT The First National Glassware.
Ultimate Assets and Firna are owned by businessman and long-time church member Wahju Hanafi, who testified in the trial previously.
Mr Sim added that Firna then used the same sum to redeem the Firna bond.
He described this as "round one".
The witness said "the same thing happened" for "round two", where a similar cycle took place.
In all, the church invested S$11.4 million in AMAC's SOF in different tranches.
Mr Sim noted the initial sum of S$11.4 million made "one round".
Mr Sim said adding to the "confusing" transactions was the advanced rental agreement between the church and events company Xtron, which also made "one round".
Mr Sim told the court that the advanced rental from the church paid to Xtron was used by Xtron to invest in Firna bonds.
Firna would then repay the loan it took from Ultimate Assets and then Ultimate Assets would repay the loan to AMAC.
This made it possible for AMAC to redeem the S$11.4 million bonds bought by the church.
When asked about the significance of these transactions, Mr Sim said it meant that the church started off with an investment in Firna and ended up with advanced rental paid to Xtron in their books.
"Looking at the Excel sheet would lead me to question whether the investments by CHC in SOF... are really investments in the first place or if they are done to facilitate or to help Firna repay the Firna bonds that City Harvest had invested in," said Mr Sim.
"The amount transferred seems to facilitate that.
"Just looking at this spreadsheet, it seems to be a plan to enable Firna to repay the bond before the end of the financial year. So, that means the SOF investment itself would be a very questionable investment."
Mr Sim added that this would then raise the doubt that the church and Xtron entered into the advance rental agreement for purposes other than what was represented to him.
The prosecution's case is that church founder Kong Hee and his five deputies misused millions of the church's building fund to boost singer Sun Ho's career.
They alleged that the accused did so through "sham bond investments" in Xtron and Firna.
It is also the prosecution's case that some of the accused tried to cover up the misuse through what it calls "round-tripping".
The court heard that the church had previously declared that no money was lost from its kitty.
This is also part of the accused persons' line of defence.
During the hearing, Mr Sim also said Baker Tilly had resigned as auditors of the church last October.
He said they had conducted their audit for 2010 mid-way and had raised several issues to the management and board but were unable to obtain satisfactory answers, so they decided to step down.
The firm has resigned from Xtron as well.
Mr Sim will be cross-examined by the defence on Wednesday.
CHC trial: Prosecution's evidence is "piecemeal", says defence
SINGAPORE: The defence lawyers of the six leaders of the City Harvest Church suggested that the way the prosecution sought answers from witnesses was out of context.
On Wednesday, Edwin Tong -- the lawyer of church founder Kong Hee -- led the defence team in the cross-examination of the church's former lead auditor Sim Guan Seng.
Referring to several documents, Mr Tong tried to make the point that the prosecution took a "piecemeal" approach by directing Mr Sim to selected pieces of information from the documents.
Mr Sim had previously testified that it was unusual for Kong, a church representative, to be discussing in emails about Ms Sun Ho's album production when music management firm Xtron was taking care of those matters.
On Wednesday, the defence brought up information showing Kong as the liaison between the church and the American music producers.
Mr Sim said he was not aware of this.
Mr Tong said: "This will demystify some of the doubts you had."
"At least partially," replied Mr Sim.
Mr Tong also asked Mr Sim if it was clear that the church's building fund was used to launch Ms Ho's music album.
Mr Sim said: "Yes".
The lawyer then asked if, despite his various concerns about the church's and Xtron's accounts, Mr Sim had eventually signed off on the financial statements as he was satisfied they were dealt with.
Mr Sim agreed that he had done so.
Later in the day, Mr Kannan Ramesh, the lawyer representing church deputy Sharon Tan, sought to refute the prosecution's argument that there were "unusual" and troubling transactions between the church and Xtron, among other things.
Earlier this week, Mr Sim had testified that the bond investments made by the church did not make sense, and that the accused persons' secrecy as shown in the emails would raise "red flags".
Therefore, Mr Ramesh asked if Mr Sim would maintain this view if the transactions were deliberated upon by the church board.
"If I ask you to tell me whether your views will still remain if these transactions, or the substance of these transactions... were disclosed to the board of the church, deliberated upon by the board of the church and approved by the board of the church, would your answers still be the same?" asked Mr Ramesh.
Mr Sim said: "I would think so. My answer would still be the same."
"Would you be able to take that position without speaking to the members of the board to understand why they had given the go-ahead?" asked Mr Ramesh.
"The (way) it has been approved doesn't mean very much to me as an auditor. It could be (that) the whole board (was) in collusion to approve this. It makes no difference to the substance of the actual flow of funds," Mr Sim told the court.
It is the prosecution's case that Kong and five church deputies had misused millions of church monies to fund the career of Ms Ho, who is Kong's wife.
The prosecution alleges that the accused did so through "sham bond investments" in companies like Xtron.
CHC trial: Defence seeks to show prosecution's questioning was flawed
SINGAPORE: Defence lawyers representing the six leaders of City Harvest Church on Thursday sought to show that the prosecution's line of questioning was flawed.
Having charged a day earlier that the prosecution had been selective in the information it had presented to the key witness, defence lawyer N Sreenivasan tried to reinforce the point on Thursday.
He asked the church's former external auditor, Mr Sim Guan Seng, if he answered the prosecution's questions based on documents it provided.
Mr Sim said his answers were based on what he read on the spot.
Mr Sreenivasan then sought to show that the documents produced by the prosecution were irrelevant.
He asked Mr Sim if auditors needed to refer to email correspondences of the church's management in the course of their work.
Mr Sim said it was not necessary.
The defence argues that the investments in Xtron were not "sham" just because Mr Sim said they were not sound.
Later in the day, the lawyer representing accused Chew Eng Han sought to show that his client was actively sourcing for properties for the church.
This, Mr Michael Khoo explained, was why the accused sought the monies through the advanced rental agreement.
Previously, Mr Sim had testified that the agreement between the church and Xtron did not make sense.
Church founder Kong Hee and his five deputies are accused of misusing millions of the church's building fund to boost the music career of singer Sun Ho.
It is the prosecution's case that the accused moved the monies via "sham bond investments".
SINGAPORE: The defence lawyers of the six leaders of City Harvest Church have hinted that the prosecution's line of questioning is flawed.
This follows Wednesday’s accusation that the prosecution based its case on a “piecemeal” approach, where it presented selective information to the key witness.
On Thursday, defence lawyer Mr N Sreenivasan tried to reinforce this point by asking the church's former external auditor, Mr Sim Guan Seng, if he answered the prosecution's questions based on documents it provided.
Mr Sim said his answers were based on what he read on the spot.
Mr Sreenivasan tried to make another point -- that the documents raised by the prosecution were irrelevant to auditors.
He asked Mr Sim if auditors needed to refer to email correspondences of the church's management in the course of their work.
Mr Sim said it was not necessary.
Church founder Kong Hee and five deputies are accused of misusing millions of the church's building fund to boost the music career of singer, Ms Sun Ho.
It is the prosecution's case that the accused moved the monies via "sham bond investments".
Updated: 01/24/2014 14:33 | By Channel NewsAsia
CHC trial: Auditor says wouldn’t have signed off on church’s accounts
SINGAPORE: The lead auditor testifying in the trial of the six leaders of the City Harvest Church said he would not have signed off on the church's accounts if he had been aware of the discussions among the accused and would have raised more questions.
On Friday, the prosecution sought to rebut the defence's argument by asking Mr Sim Guan Seng of Baker Tilly about the signing off on the documents.
This comes after the defence sought to show that the prosecution's case was built on a “piecemeal” approach, where it showed selective information to the witness.
Mr Sim also said on Friday that the amendment of the Xtron bonds would raise a lot of questions.
It is the prosecution's case that church founder Kong Hee and five deputies misused millions of Building Fund monies to boost singer Sun Ho's career.
The accused are accused of doing so via "sham bond investments" in companies like Xtron.
Xtron was the management firm of Ms Ho, who is the wife of Kong.
The trial will resume on Tuesday as both the defence and prosecution sort out some logistics.
City Harvest leaders' trial: Santa makes appearance
Straits Law managing director N. Sreenivasan, representing City Harvest Church (CHC) deputy senior pastor Tan Ye Peng.
Koh Hui Teng
The New Paper
Sunday, Jan 26, 2014
SINGAPORE - Santa Claus "turned up" in court briefly on Thursday - a week after the prosecution "summoned" cartoon character Bart Simpson to the line-up.
Rather than spreading Christmas cheer, Santa became part of an example that defence lawyer N. Sreenivasan - representing City Harvest Church (CHC) deputy senior pastor Tan Ye Peng - posed to Mr Sim Guan Seng, the managing partner of external auditor Baker Tilly.
What would Mr Sim - who had signed off on church accounts previously - do if the CHC management set up a company to lend money to gamblers and told him Santa would return the money if the gamblers could not?
"I don't believe in Santa Claus," Mr Sim said. "I will not accept that."
Mr Sreenivasan asked if Mr Sim would advise his client to get a proper valuation done by a qualified professional. Mr Sim said "yes".
Mr Sreenivasan said that similarly, the church had followed Mr Sim's advice in seeking valuation for the Xtron bonds it bought.
Xtron is the company that used to manage pop singer Sun Ho, wife of CHC founder Kong Hee.
The prosecution accuses Kong and five deputies of misusing more than $50 million of church money through sham bonds to further Ms Ho's singing career and covering up the amount.
Mr Sim also agreed with Mr Sreenivasan that the bond entries were true and accurate.
But he disagreed that his concern about the bonds and advice to "keep it simple" might have given the impression that the bonds should be restructured.
"How can I tell someone I want it (the bonds) off the books?" he said.
