CHC trial: Suspicious financial transactions reported in 2005 (Today: 29 Jan 2014)

SINGAPORE — Suspicious financial transactions linked to City Harvest Church were first reported to the authorities in 2005, about five years before news broke that the church was being investigated by white-collar crime busters.

The latest revelation in the long-running trial emerged in court yesterday as defence lawyers grilled the Commercial Affairs Department (CAD) officer who led investigations culminating in criminal charges against six church leaders.

The reports were filed by financial institutions to the CAD’s Suspicious Transaction Reporting Office — the Republic’s financial intelligence unit aimed at detecting money laundering, terrorism financing and other criminal offences.

How the transactions involved the church, however, was not revealed as lead prosecutor Mavis Chionh strenuously argued that they were “privileged, confidential and inadmissible” under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act. The identities of the financial institutions were also not revealed.

CAD officer Kevin Han Tong Kim, who took the stand as a prosecution witness, was asked by Senior Counsel Michael Khoo, who represents the church’s former investment manager Chew Eng Han, if the first police report on a possible crime for this case was made on May 3, 2010 — three days after he was appointed lead investigator.

Mr Han replied that the earliest of a number of first information reports was lodged in 2005. Mr Khoo then asked if the 2005 report had anything to do with the charges of criminal breach of trust and falsification of accounts brought in June and July 2012 against the accused.

The defence sought to gain access to the report filed before 2010, which Ms Chionh objected to, citing laws protecting the identity of informers. The defence was on a “fishing expedition”, she added. Both sides will argue today before Chief District Judge See Kee Oon on whether the document can be admitted in court.

Earlier yesterday, defence lawyer Edwin Tong — who represents church co-founder Kong Hee — sought to show that the CAD’s seizure of documents in its investigation was not thorough.

The prosecution had made reference to a church member retracting a 2003 allegation of church funds being misused for the music career of Kong’s wife, Ms Ho Yeow Sun, in its opening statement, but CAD officers did not seize auditing firm Baker Tilly’s audit work papers for the church for its 2003 and 2004 financial years.

It appeared that investigation officers had “applied their minds to not seizing” some documents, Mr Tong remarked, triggering one of many verbal jousts with the prosecution yesterday.

Ms Chionh called the statement “gratuitous and baseless”. She later asked if Mr Tong was accusing the investigation of bias and said the defence could apply for relevant documents to be produced. He replied that he did not intend to make any application. The trial continues.

Mystery report suggests authorities alerted in 2005 (ST: 29 Jan 2014)

A MYSTERY report mentioned for the first time in court yesterday suggests that City Harvest Church had come under the authorities' radar as early as 2005.

That is several years before founder Kong Hee and five other members of the mega-church allegedly funnelled millions in church funds through bogus deals - the subject of the current trial - to either finance the pop music career of his wife Ho Yeow Sun or to cover this up.

Prosecution witness Kevin Han, who has led the Commercial Affairs Department's (CAD) investigation into these transactions since April 2010, said a first information report related to the criminal charges was filed in 2005.

He had explained earlier that such reports are "the first instance when the police receive information about a possible crime".

When defence lawyer Michael Khoo tried to clarify whether the 2005 report had "anything to do with the charges the accused are facing today", which are related to transactions that took place between 2007 and 2009, Deputy Public Prosecutor Mavis Chionh interrupted. She said that under the Evidence Act, investigating officers could not be asked about their sources of information.

As Ms Chionh offered to show the report to the judge to explain why it could not be disclosed publicly in court, Mr Khoo said: "I'm astounded that the prosecution is offering to show your Honour reports which the defence will not be seeing."

But Ms Chionh insisted that there was "no big sinister secret".

Instead, the report detailed suspicious transactions highlighted by financial institutions, she explained. She also reiterated how the law protects informers by not disclosing during trial their identity or the information they gave.

Senior District Judge See Kee Oon said he would hear from both sides on the matter today.

Earlier yesterday, defence lawyer Edwin Tong suggested that CAD's Mr Han and his team had not been thorough when seizing documents relevant to the trial, which began last May.

They had not, for example, taken auditing firm Baker Tilly's work papers related to its special audit of City Harvest in 2003, after a church member raised allegations about the misuse of church funds. They also had not seized any of the accounting firm's electronic storage devices such as hard discs.

Mr Tong alleged this was done on purpose.

Objecting to this as "gratuitous and baseless", Ms Chionh asked whether he intended to make the "serious allegation" that the CAD investigation was biased to an extent that how it did its work was affected.

Mr Tong said there was "no present intention" to do so.

Ms Chionh repeatedly pointed out that if there was useful evidence that had not been seized, Mr Tong could apply to the court to have it produced. "But if he is not making the application... then I take it that he is unable to show why the item of evidence is necessary or desirable for the purposes of this trial."

CHC trial: Reports of possible breach of law made in 2005, says lead investigator (CNA: 28 Jan 2014)

SINGAPORE: From as early as 2005, financial institutions have reported to the authorities their suspicions of a possible breach of law by the six leaders of City Harvest Church.

This was two years after former church member Roland Poon issued a public apology after he questioned whether the church used its members' donations for singer Sun Ho's music career.

The court was told about the suspicions during the cross-examination of a new prosecution witness, Mr Kevin Han, who is the lead Commercial Affairs Department investigator of this case.

Lawyer Michael Khoo had asked Mr Han when the first information report, which is when police first receive information about a possible crime, was filed.

Mr Han said there were a few, and the earliest was filed in 2005.

Mr Khoo followed up by asking if the report had anything to do with the charges the six accused are currently facing.

However, this was was met with strong objections from prosecutor Mavis Chionh, who repeatedly asked about the relevance of the questions.

She said: "Your Honour, I think that the fact that I am objecting means that Counsel, my learned friend, is unfortunately and regrettably going off on a fishing expedition."

Ms Chionh explained that the law makes it clear that "no part of the information provided to the investigation officer is admissible" in the court as it is confidential and privileged.

But Mr Khoo argued that his question was relevant to what Mr Han had testified.

District Judge See Kee Oon will hear submissions on this from both parties on Wednesday.

Earlier in the day, the prosecution and the defence also traded barbs over the line of questioning that was put to Mr Han on the seizure of documents.

Church founder Kong Hee and five deputies are facing charges of misusing millions of the church's building fund by channeling the money into singer, Ms Ho's career via "sham bond transactions".

Lead CAD officer in probe to take stand tomorrow (ST: 27 Jan 2014)

Hearing adjourned last week for parties to discuss evidence tendered

THE lead Commercial Affairs Department (CAD) officer in the probe against six City Harvest Church figures for alleged fraud is expected to take the stand tomorrow.

The hearing was stood down last Friday after barely two hours as parties sought an adjournment to iron out administrative matters.

Under discussion were exhibits - understood to be mostly e-mail involving the accused - to be tendered as evidence in court through the CAD officer.

Pastor Kong Hee and five others are contesting charges of criminal breach of trust and falsifying accounts by misappropriating $24 million in bogus bond investments and another $26.6 million to throw auditors off their scent.

In the third tranche of the trial, which started two weeks ago, Baker Tilly assurance partner Tiang Yii and managing partner Sim Guan Seng have testified as prosecution witnesses.

Ms Tiang led the church's audit as engagement partner from January 2006 to June 2007, and did the same for church-linked music production firm Xtron in 2006 and 2007.

Mr Sim then took over, presiding over the church's audit in financial years 2008 and 2009, and Xtron in 2008.

He had repeatedly raised the red flag about church money going to Xtron, saying that it was "not exactly the most financially healthy company".

The audit manager for the two Baker Tilly partners' respective audit years, Ms Foong Ai Fang, is expected to testify as a prosecution witness following the CAD officer.

The defence has argued that Baker Tilly, as a firm, would have been well aware of the transactions entered into by the church during the material period.

Some information in documents and e-mail shown by the prosecution to Mr Sim - who said he was seeing them for the first time - had long existed in Baker Tilly's archives.

The City Harvest leaders were communicating with the firm's then-managing partner Foong Daw Ching, a long-time churchgoer endearingly known to them as "Bro Foong". They would have expected him to pass on the information, defence counsel argued.

E-mail presented in court have shown at least one "off-the-record" meeting with Bro Foong.

Mr Sim said an auditor's key role was not to detect fraud, and he had deemed the accounts intact when he signed them off.

Defence lawyers have also argued that church leaders only entered into the transactions on the advice given by Mr Sim to "keep it simple", saying that this impression precipitated the early redemption of bonds so they would no longer appear on the books.

Mr Sim said: "I did not tell the client that I wanted the bonds off the books."

Asked to confirm if several entries in the church books, recorded as "investments", were accurate and not misleading or false, Mr Sim said "yes".

But he added a caveat during re-examination that the answers were based on what he knew when he signed off the audits.

He said an auditor's role was not to detect fraud, and if privy to documents and e-mail that may suggest that the transactions were "actually not real investments", he would not have agreed to the classification.

"The way it is recorded is actually the client's responsibility," he said. "If it's supposed to be a transaction done to hide something, obviously they will not record it properly."

On the point that the money was eventually repaid with interest, the prosecution asked: "If the return on investment is, in fact, paid with the investors' own money, would that be considered a genuine return on investment?"

Mr Sim replied: "No."

Defence counsel seek to show that CHC members not hiding anything (BT: 24 Jan 2014)

[SINGAPORE] Defence counsel continued their cross-examination of City Harvest Church's (CHC) one-time external auditor Sim Guan Seng yesterday.

Senior Counsel Kenneth Tan, who represents CHC board member John Lam, established during his cross-examination that Mr Sim had met his client on only a few occasions during his audit of the church and Xtron Productions (a music production house that helped manage CHC's evangelisation-through-pop-music Crossover Project).

Mr Sim testified that on the three occasions he met Lam, he had the sense that Lam was "forthcoming" and "tried to assist (Mr Sim) the best he could". Among other things, he said Lam had discussed with him the bond issues made by Xtron to CHC, and had brought up the fact that the people running Xtron and those in CHC "have a common interest".

"John Lam was making a disclosure in a forthright way, that there was clearly a link (between Xtron and CHC) because they are church members?" Mr Tan put to Mr Sim.

But, Mr Sim said: "If you are saying that John Lam tried to tell me that the two entities are related, then why was it signed off in the financial accounts as them being unrelated parties? Why was there no disclosure? They (the board) signed the accounts, they approved the accounts.

"You're right in saying that John Lam said they wanted to maintain an arms-length (relationship between the two entities). For governance purposes, the board should maintain an arms-length view of all transactions . . . But I don't see how you can jump back to how he disclosed anything to me," Mr Sim added.

Mr Tan then asked: "However, in your view, after considering all the responses, which you obtained (from a meeting with relevant CHC members), you were comfortable with signing off the FY2008 accounts as it was signed off eventually? Which did not include Xtron as a related party of CHC?"
"Yes," Mr Sim said.

The line of questioning came after several e-mails were tendered as evidence by the prosecution earlier this week.

One was an e-mail from former CHC finance manager Serina Wee to deputy senior pastor Tan Ye Peng in June 2009, expressing her concern that Mr Sim might "say that CHC is running Xtron".
Another was an e-mail from former CHC board member Chew Eng Han to Wee and Tan in July 2008, which said that "we don't want them (the auditors) to think we control Xtron".

Mr Sim had said then that the e-mails seemed to suggest the CHC members were eager to hide any link between Xtron and CHC from him, and that the e-mails would make him question the bond issues made by Xtron to CHC - "is there something more to (the bond issues) than what is represented to us?"

Senior Counsel Andre Maniam, who represents Wee, then sought to show that CHC members had not attempted to hide such issues, as they had raised them with Baker Tilly TFW's then-managing partner and CHC's first audit engagement partner, Foong Daw Ching.

Mr Maniam showed Mr Sim, who is the current managing partner of Baker Tilly TFW, CHC correspondence and documentation - such as minutes of meetings - which seemed to show that any concerns the CHC members had about the Xtron bonds and the possible link between Xtron and CHC had been raised and discussed with Mr Foong on several occasions.

These were documents which Mr Sim said he had not seen during his audit of CHC and Xtron, nor before this trial.

The hearing continues.

City Harvest trial: Hearing adjourned to Tuesday, CAD investigator expected to testify (ST: 24 Jan 2014)

The trial against six City Harvest Church figures for various counts of criminal breach of trust and falsifying accounts was barely a two-hour affair on Friday.

This, after parties sought an adjournment to iron out an agreed list of exhibits to be tendered as evidence through the next prosecution witness. The Straits Times understands that the exhibits under discussion are largely e-mail communications involving the accused.

The lead Commercial Affairs Department investigation officer for this case is expected to take the stand when the trial resumes next Tuesday.

In Friday's hearing, Deputy Public Prosecutor Christopher Ong re-examined Baker Tilly managing partner Sim Guan Seng on key issues raised by the defence during cross-examination. Mr Sim had presided over the church's audit in financial years 2008 and 2009, and for music production firm Xtron in 2008.

He reinforced his position that as an auditor, his key role was not to detect fraud, and that he had determined that the accounts were intact when he signed off on them.

Defence counsel N. Sreenivasan and Michael Khoo - acting for deputy senior pastor Tan Ye Peng and director of church investment manager AMAC Capital Partners Chew Eng Han respectively - had asked Mr Sim to confirm if several entries in the church books, recorded as "investments", were accurate and not misleading or false.

Although Mr Sim agreed at the time, he added a caveat on Friday that he based his answers on what he knew at the time he signed off on his audit.

If he had been privy to other information, such as documents and e-mails cited by Mr Ong in suggesting that church transactions were "actually not real investments", he would not have agreed to the classification as an "investment" on the books.

He said: "The way it is recorded is actually the client's responsibility...If it's supposed to be a transaction done to hide something, obviously they will not record it properly."

Earlier, Mr Khoo had raised the point that the monies taken from the church were eventually repaid - with interest. In relation to this point, Mr Ong asked: "If the return on investment is, in fact, paid with the investors' own money, would that be considered a genuine return on investment?"

Mr Sim replied: "No."

CHC trial: Auditor says wouldn’t have signed off on church’s accounts (CNA, 24 Jan 2014)

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 trial: Church leaders followed advice to 'keep it simple' - defence (ST: 23 Jan 2014)

Defence counsels for the City Harvest Six, on trial for various counts of criminal breach of trust and falsifying accounts, on Thursday said their clients were simply acting on the instructions of audit firm Baker Tilly managing partner Sim Guan Seng.

These impressions - warranted or misguided - formed the crux of their argument as they tried to poke holes into Mr Sim's earlier testimony, even as they reinforced their position that Baker Tilly should have full awareness of church transactions.

The court heard that City Harvest's board had fully acted on Mr Sim's advice to "keep it simple" on matters regarding bond investments in two church-linked companies - music production firm Xtron and glass manufacturer Firna.

Mr N. Sreenivasan, representing deputy senior pastor Tan Ye Peng, said in his cross-examination of Mr Sim: "I'm not insisting that their understanding was right or wrong, but I'm told the understanding was you wanted the Xtron and Firna bonds off (the church's books) as an asset because they were creating too many problems."

Mr Sim agreed: "I think it's quite (a) fair (understanding) that the client would get the impression, because I was asking a lot of questions about valuations, security and risk of default," he said. "It would be a recurring question for the next 10 years since the Xtron bond has a 10-year maturity, and for Firna, as a commercial paper, my comment was why don't you buy Capitaland or something that is safer."

The defence counsels cited an e-mail sent by church finance manager Sharon Tan, writing about what Mr Sim had told her in a "conversation" after an on-the-record meeting with her, deputy senior pastor Tan Ye Peng, and board member John Lam.

She reported to pastor Tan and Lam that Mr Sim "still does not agree with the valuation (of the bonds) done but for this time he will just pass it first", and that he "hopes to see this Xtron issue being solved this financial year."

It is with this impression that the board might have proceeded to restructure the bonds such that they would no longer appear in the books, suggested defence counsel Michael Khoo, who represents Chew Eng Han, the director of the church's investment manager AMAC Capital Partners. Mr Sim said bond restructuring was "one of the options".

Mr Sreenivasan also reiterated that the church board should not be faulted for thinking that communications they had with Baker Tilly's then-managing partner Foong Daw Ching would eventually be passed on to the firm's auditors working on their accounts.

"At a law firm, as managing partner, when clients call me and tell me something, they can assume that they are talking to Straits Law LLP, because they think I'm the boss," said the lawyer.

Mr Sim replied: "That's not how an audit firm works."

CHC trial: Transaction with Xtron ‘accurately recorded’ (Today: 24 Jan 2014)

SINGAPORE — Between April and October 2009, when City Harvest Church was looking at properties to acquire, its investment manager Chew Eng Han — one of six church leaders facing criminal charges for misappropriation of funds — looked at seven properties, including the Singapore Flyer, Capitol Theatre, the future SportsHub and the then-defunct Hollywood Theatre beside Lion City Hotel.

Along the way, he had difficulty getting financing from banks, showed emails tabled yesterday by his lawyer, Senior Counsel Michael Khoo.

These were events leading up to the church entering into a S$46 million advance rental agreement with audio-visual firm Xtron Productions in October 2009. The church had intended for some of the funds to be used by Xtron to secure a property on its behalf.

Mr Khoo was trying to show that reasons for entering into the advance rental agreement were genuine in his cross-examination of prosecution witness and Baker Tilly auditor Sim Guan Seng yesterday.

The prosecution’s case is that the agreement was a sham and that S$12 million paid by the church under the agreement was “round-tripped” — used to buy bonds from Indonesian firm PT The First National Glassware, which then used it to repay a previous loan from investment firm AMAC Capital Partners, which is owned by Chew. The money was then allegedly used by AMAC to redeem an investment made earlier by the church.

Four of the six accused church leaders — Serina Wee, Tan Ye Peng, Sharon Tan and Chew, who has left the church — are charged with criminal breach of trust and falsification of accounts for S$26.6 million of allegedly misappropriated church funds, which includes the S$12 million.

Yesterday, defence lawyer N Sreenivasan, who represents Tan Ye Peng, sought to show there was no falsification of accounts. When questioned by Senior Counsel Sreenivasan, Mr Sim agreed that when Xtron redeemed bonds worth S$21.5 million issued to the church via the advance rental agreement, the transaction was “truly, fairly and accurately” reflected by removing the bonds from the church’s accounts and entering the sum as an asset — the prepayment of rental. The defence’s position is also that no money related to the criminal charges was lost.

Mr Sim also agreed with Mr Sreenivasan that some emails among Wee, Sharon Tan and Tan Ye Peng discussing transactions would not have been submitted to auditors for audit purposes. The prosecution had earlier shown some of these emails to Mr Sim and the auditor said they would have raised red flags, had he been privy to the information.

The prosecution re-examines Mr Sim today.

CHC trial: Defence seeks to show prosecution's questioning was flawed (CNA: 23 Jan 2014)

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".

Doubts based on an initial reading, not a firm conclusion: Sim (BT: 23 Jan 2014)

[SINGAPORE] The defence launched its cross-examination of City Harvest Church's (CHC) one-time external auditor yesterday with Kong Hee's lawyer establishing that the auditor had no grounds on which to give any direct evidence on the CHC founder and senior pastor.

Sim Guan Seng, managing partner of local public accounting firm Baker Tilly TFW, testified yesterday that he had no contact, communication or dealings with Kong during his entire time as the audit engagement partner of CHC and Xtron Productions (a music production house that helped manage CHC's evangelisation-through-pop- music Crossover Project).

Mr Sim said he could not testify as to what Kong did, knew or was aware of - in relation to the evidence that the auditor had tendered on Monday and Tuesday - given that he had no dealings with Kong throughout the entire audit period.

Mr Sim had spent the first two days of the week on the stand, answering the prosecution's questions. Among various things, he had said that the emails and documents - mostly internal correspondence between senior CHC members - shown to him by the prosecution had raised "a lot" of doubts and concerns about the veracity of CHC's bond investments in Xtron and another company, The First National Glassware (Firna).

Under cross-examination by the defence counsel, Mr Sim clarified that he had not seen any of the emails and other documents shown to him by the prosecution before seeing them in court this week.

Therefore, the doubts and concerns he raised about the various transactions were merely questions he had, based on his initial reading of the documents. He said he was not drawing any conclusions on them, and could not do so, without understanding their context.

"My answers are based on what was shown to me . . . I can't form a conclusion unless I have an opportunity to talk to those who are involved in the email and seek an explanation (from them)," Mr Sim said.

"And evaluate the entire context and circumstances behind the particular email, correct?" Edwin Tong, defence counsel for Kong, asked.

"Yes," Mr Sim answered.

He also testified that he knew that the bond issues were paid for using money from CHC's Building Fund, which he said could be used for investments.

"The Building Fund can be used to make an investment and I don't think that is a problem . . . Based on the information shown to me, the issue or doubts I have are whether these transactions are investments or not," he said.

He testified on Tuesday that, based on a spreadsheet prepared by CHC which he was shown - which laid out the timeline of funds paid out from CHC for its various investments - it appeared to him that the funds had been roundtripped, using the various entities laid out in the timeline.

He said on Tuesday that the spreadsheet "leads me to question whether the investments by CHC . . . are really investments in the first place".

This evidence was revisited yesterday by Senior Counsel Kannan Ramesh, counsel for CHC finance manager Sharon Tan.

Mr Ramesh said the prosecution had posed questions to Mr Sim, using the assumption that the transactions in the spreadsheet "were transactions which were carried out only with the knowledge and planning of certain members of management, including the accused".

"If I ask you to tell me whether your views would 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?" Mr Ramesh asked.

"My answer would still be the same," Mr Sim said.

"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?" Mr Ramesh pressed.

Mr Sim replied: "Just the matter of it having been approved doesn't mean very much to me as an auditor. The whole board could be in collusion to approve this. It makes no difference to the substance of the actual flow of funds."

The hearing continues.

Auditors should have been aware (ST: 23 Jan 2014)

DEFENCE lawyers yesterday argued that audit firm Baker Tilly should have been fully aware of the transactions of City Harvest Church.

They noted that the firm's managing partner Sim Guan Seng had established that there was no fraud or illegalities when he signed off on church audits for financial years 2008 and 2009.

He did so too for music production firm Xtron in 2008.

In the long-running case, City Harvest founder Kong Hee and five others are accused of various counts of criminal breach of trust and falsifying accounts to misappropriate $24 million in bogus bond investments and another $26.6 million.

Defence lawyers yesterday tried to refute the prosecution's argument that church auditors did not have the whole picture.

Mr Edwin Tong, representing Kong, said the prosecution had tried to prove this point in a "piecemeal" way.

Just because Mr Sim had not seen certain documents did not mean that the information was not provided to the audit firm, he argued.

He noted that some of this information that was "new" to Mr Sim, such as Kong discussing projected Xtron cash flows with deputy senior pastor Tan Ye Peng, had existed in the firm's archives.

Mr Tong also produced Baker Tilly work papers from December 2006, which stated that Kong had volunteered to liaise with American producers for the launch of his wife Sun Ho's English album there.

This was in response to Mr Sim's comments on Monday that it was unusual for church leaders to be involved in evaluating Xtron's music project.

Meanwhile, the lawyer of the church's finance manager Sharon Tan suggested that the alleged "round-tripping" - involving money being funnelled among various entities to disguise alleged misappropriation - was approved by the church's board.

Mr Kannan Ramesh also cited an e-mail suggesting that Baker Tilly's then managing partner Foong Daw Ching was informed of the arrangement.

Mr Sim said it was "unusual" that Mr Foong had not told him of this. He added that the church's board members could have colluded in approving the transactions.

The trial continues today.

CHC money went one round, says auditor (BT: 22 Jan 2014)

He wondered: was it really an investment in SOF?

[SINGAPORE] City Harvest Church's (CHC) one-time external auditor testified in court yesterday that he believed senior church members roundtripped funds in what was set up to look like a series of genuine investment transactions.

"The money has gone one round," said Sim Guan Seng, referring to a timeline of the transactions prepared in 2009 by one of the accused, Serina Wee (blogger's note: please note that this timeline is prepared by Serina Wee), which was tendered as evidence to the court.

 "Looking at the Excel sheet (the timeline of transactions) leads me to question whether the investments by CHC . . . are really investments in the first place," he said.

Mr Sim is managing partner of local public accounting firm Baker Tilly TFW and was the audit engagement partner for CHC and Xtron Productions, a music production house set up by CHC members from around 2008 to 2011.

He said his understanding of the timeline prepared by Wee, which detailed the movement of funds and entities involved in the investments made by CHC, concurred with the prosecution's allegations of how the money was roundtripped.

The prosecution is seeking to prove that senior CHC members - including its founder and senior pastor, Kong Hee - had dishonestly misappropriated $24 million of the church's building funds to finance the music career of Kong's wife, Sun Ho, and then sought to disguise that with a series of roundtripping transactions.

When asked how he interpreted the timeline, Mr Sim said: "It would appear that CHC had invested in a Special Opportunity Fund (SOF, run by AMAC Capital Partners, a company owned and managed by former CHC board member Chew Eng Han), and AMAC then used that same money to loan it to UA (Ultimate Assets, a company owned by Indonesian businessman and CHC member Wahju Hanafi), and then UA used that same sum of money and loaned it to Firna (The First National Glassware, another of Mr Hanafi's companies), and Firna used that same money to redeem the Firna bonds (issued to CHC)."

As for the next part of the transactions, Mr Sim said: "It would appear that the advanced rental (ARLA) from the church that was paid to Xtron was used by Xtron to invest in Firna bonds; Firna then repaid the loan from UA, and UA used the money to repay the loan from AMAC, and that allowed AMAC to redeem the $11.4 million SOF fund investment to CHC.

"So the money has gone one round," Mr Sim concluded.

"Looking at the (timeline), it leads me to question whether the investment by CHC in the SOF is really an investment in the first place, or (something) to facilitate or to help Firna redeem the bonds that CHC had invested in.

"As for the advanced rental agreement, if it was entered into just to enable the church to advance money to Xtron and then, through that process, enable AMAC to pay back the SOF, then I would say the intention of the ARLA is definitely not what was represented to me," Mr Sim added.

In addition, the auditor pointed out that the net effect of these transactions was that the bonds issued by Xtron to CHC were fully redeemed and CHC's SOF investment was fully repaid.

"Would you have continued to ask (CHC) questions about the SOF investment (and the bonds, in your audit of the subsequent year's accounts)?" Deputy Public Prosecutor Christopher Ong asked Mr Sim yesterday.

"No . . . once they are redeemed, I am no longer concerned with them," Mr Sim said.

The prosecution also focused on the ARLA signed between CHC and Xtron, which involved CHC paying Xtron advanced rental of some $56 million - or $7 million rental per year, for eight years.

Mr Sim said the agreement raised concerns for him during the audit. "That's a big sum of money to pay to a company like Xtron . . . a company which is not considered financially healthy . . . On top of that, the lease Xtron had at that point would be expiring in (two years' time), so in a sense you are paying for a rental commitment, which Xtron did not have the lease to back up. Commercially, it just didn't make sense.

"I have been an accountant for many years. This is the first time I've seen people paying rental in advance for eight years."

He also noted that "there wasn't very much consideration being put in writing (by CHC) as to the reason and the rationale why the church considered this a good arrangement to enter into".

DPP Ong then showed Mr Sim an email - which had been tendered as evidence last year, in an earlier part of this trial - where Wee said the $7 million was "just an arbitrary figure".

Mr Sim said that if he had known of this email before, "it would raise even more concerns on my part as to the real motive behind (CHC) entering such an agreement with Xtron".

He also testified that while the audit team was aware of CHC's $11.4 million investment in the SOF, it took "many rounds of discussion (with CHC, before) it was eventually determined by the church that (the SOF invests in) fixed-income instruments".

The prosecution then showed Mr Sim an email from Chew to CHC finance manager Sharon Tan, which said that, in their upcoming discussion of audit issues with Mr Sim, they should "steer away from the topic of what (the SOF) invests in . . . the $11.4 million outstanding was all to UA, and we don't want that to surface".

Mr Sim said the email would have made him question "why this information is so confidential that it cannot be surfaced".

The hearing continues.

CHC trial: Prosecution's evidence is "piecemeal", says defence (CNA: 22 Jan 2014)

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.

The trial continues.

Investment funds appeared to have made rounds (Today: 22 Jan 2014)

In the latest turn of events in the ongoing trial of Singapore's City Harvest Church, auditor Sim Guan Seng had asked for the prospectus and valuation of a fund that City Harvest Church had pumped S$11.4 million in, but did not receive any.

Yesterday, Baker Tilly auditor Sim Guan Seng said the money appeared to have made the rounds via a series of transactions, creating the impression that the church’s investment had been redeemed.

Sim, a prosecution witness taking the stand for the third day yesterday in the trial of six City Harvest Church leaders, was shown a table on the movement of funds that was shared in emails in October 2009 among three of the accused, Serina Wee, Sharon Tan and Chew Eng Han, who has since left the church.

Chew’s company, AMAC Capital Partners, was the church’s investment manager. The other accused are church co-founder Kong Hee, his deputy Tan Ye Peng and former board member John Lam.

It is the prosecution’s case that in addition to funnelling S$24 million of church building funds into sham bonds, the accused “round-tripped” another S$26.6 million to cover up the initial amount and throw auditors off the scent of the bogus bonds. The S$11.4 million was part of the “round-tripping”, where investments were purportedly redeemed by moving money among various entities.

Sim said that from the table on the movement of funds, it appeared the money was invested in AMAC Capital Partners’ Special Opportunities Fund and then loaned to Indonesian company PT The First National Glassware (Firna) to redeem allegedly sham bonds it had issued to the church. In other words, the church seemed to have used its own money to repay itself for the bonds bought.

Advance rentals paid to audio-visual firm Xtron Productions appeared to have been used to redeem the church’s Firna bonds and then to redeem the Special Opportunities Fund investment. “So, the money has gone one round,” said Sim.

If he had been privy to this information earlier, he would have questioned if the accused were hiding something and if the Special Opportunities Fund was really for investment purposes.

The court heard yesterday that Chew, in an email to Sharon Tan a day before some church staff and board members met Sim and his colleague on December 31, 2009, had said to ask Lam to “try to steer away from the topic of what (the Special Opportunities Fund) invests in”.

Sim was the lead auditor for Xtron in 2008 and for City Harvest from that year. He also testified yesterday that the S$46 million advance rental agreement between the church and Xtron made no commercial sense and that he had never heard of parties paying eight years of rental in advance. The rent charged each year for the Expo hall leased by Xtron was S$7 million and Wee had indicated in an email that the rate was “just an arbitrary figure”.

Sim — who had been called “difficult” by some of the accused in emails — told the court that Baker Tilly, where he is managing partner, has resigned as auditors of both Xtron and the church.

The firm resigned as the church’s auditor last October as “we have not been able to get any satisfactory answers” from the church’s board on issues raised. “We felt that we were unable to discharge our duty as auditors given the circumstances,” Sim said.

As for Xtron, it was the concern over the nature of transactions, given its part in the ongoing trial, he added.

He will be cross-examined by the defence today.

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.

City Harvest Trial: Church's eight-year lease agreement with Xtron "didn't make sense" (ST: 21 Jan 2014)

City Harvest Church's $46.3 million eight-year rental lease agreement with music production firm Xtron puzzled the church's auditor, who on Tuesday said it "didn't make sense".

Under the contract, signed in October 2009, Xtron would have to procure a location to be leased to the church for worship. At the time, its lease of Singapore Expo was to expire on Sept 30, 2011.

Baker Tilly managing partner Sim Guan Seng, who presided over the church's accounts for financial years 2008 and 2009, and for Xtron's in 2009, said: "That's a big sum of money to pay to a company like Xtron."

He was taking the stand for the third day on Tuesday. "In a sense, you are paying for rental commitment when Xtron didn't have a lease to back it up. So we were wondering why was it done. Commercially it just didn't make sense."

The prosecution alluded that the sum of money was used to cover holes in Xtron's account books, after the church invested Building Fund monies into the church-linked firm that was allegedly misappropriated. This forms a part of the "round-tripping" charges faced by four of six current and former senior church leaders, who are on trial for varying counts of criminal breach of trust and falsifying accounts.

The prosecution's case was that the monies paid out to Xtron under the lease agreement were used by Xtron to purchase $11.5 million worth of glass manufacturer Firna's bonds. This sum was then allegedly used by Firna to repay a loan from Ultimate Assets - a company which Mr Sim had never heard off - that took over the management of pastor Kong Hee's wife Ho Yeow Sun's secular pop music career.

Ultimate Assets then allegedly used the money to repay a previous loan from AMAC, which "redeemed" the church's purported investment in the Special Opportunity Fund.

E-mails were also produced in court on Tuesday regarding a December 2009 meeting, where former church treasurer John Lam was advised to steer Mr Sim "away from the topic of what the SOC invested in. The $11.4 million outstanding was all in Ultimate Assets and we don't want it to surface".

Auditor says guarantees raise issues, doubts over bond investment (BT: 21 Jan 2014)

[SINGAPORE] The prosecution yesterday tried to cast more doubt on the veracity of the multi-million-dollar bond transactions entered into by City Harvest Church (CHC) to show that these were nothing more than "shams".

Its witness, Baker Tilly TFW managing partner Sim Guan Seng, who audited the church's accounts, said that documents shown to him for the first time yesterday - which included correspondence between senior CHC members - raised a lot of "doubts" and "issues".

Mr Sim was the audit engagement partner for CHC from October 2008, and that of Xtron Productions from January 2008. Xtron is a production house and artiste management company that managed the church's Crossover Project - CHC's way of evangelising though pop music - and Sun Ho's music career.

The Baker managing partner was shown a personal guarantee signed by Indonesian businessman and CHC member Wahju Hanafi, dated Aug 15, 2007, in which he personally indemnified Xtron against all losses it was to suffer for the Crossover Project.

Mr Sim was then shown another personal guarantee, signed that same day, by CHC founder and senior pastor Kong Hee, CHC deputy senior pastor Tan Ye Peng, Xtron director and CHC member Koh Siow Ngea and former CHC board member Chew Eng Han, who runs AMAC Capital Partners, the church's fund and investment manager. This guarantee, in turn, indemnified Mr Hanafi for any losses he might incur as a result of his indemnity.

Mr Sim, who testified that he had not seen or known of these documents before, was asked how knowledge of them would have affected his audit of CHC and Xtron - specifically, with regard to a $13 million bond issue Xtron made to CHC in 2007, which was to help fund expenses incurred by Xtron for the Crossover Project and Ms Ho's first English music albums.

He replied that if he had known of these guarantees, they would have raised "a lot of issues".
"I would want to know why the four (senior CHC members) are guaranteeing something that has to do with Xtron. Why are they giving a guarantee? Does it mean that there is more to the bond than it seems?" Mr Sim said.

"I would really ask why they need to do this. If it is really an investment, which they think is good, then why are they giving a guarantee? And why are they not disclosing that guarantee?"

Mr Sim also questioned Chew's part in the guarantee, since the latter's AMAC Capital Partners had brought about the bond issue in the first place. "Why is he (Chew) giving a guarantee in the first place if he is recommending the investment in his capacity as fund manager?

"There are basically a lot of doubts in my mind as to the whole transaction."

Deputy Public Prosecutor Christopher Ong then asked: "Mr Sim, what if I told you that these guarantees were actually only prepared in 2010 and backdated to 2007?"

Mr Sim replied: "I'm puzzled by the purpose of this guarantee being prepared in 2010 and backdated to 2007. I can't answer this question."

DPP Ong then showed Mr Sim several emails between CHC's senior members, where they expressed concern about showing a link between Xtron and CHC in the entities' accounts. One was an email from CHC former finance manager Serina Wee to Tan in June 2009, expressing her concern that Mr Sim might "say that CHC is running Xtron". Another was an email from Chew to Wee and Tan in July 2008, which said "we don't want them (the auditors) to think we control Xtron".

When asked if knowledge of such correspondence would have affected his audit, Mr Sim said: "Definitely, it raises more questions. If this email shows that there is some relationship not disclosed to us, maybe more questions would be raised on the actual transaction (bond issue) itself - is there something more to it than what is represented to us?

"Is it really a financial investment? What is the motive behind subscribing to the bonds? And, in fact, a lot of the other representations they have made to us, concerning Xtron, would have to be reviewed and re-evaluated altogether."

He added: "If the emails seem to indicate that they don't want us as auditors to know certain things, then the natural question to ask is: why are they hiding this from us?

"They don't want to show a link. It means they are trying to hide something."

The prosecution is seeking to prove that the bond transactions were shams that formed part of an elaborate round-tripping scheme - undertaken by Kong, Tan, Chew, Wee, CHC board member John Lam and CHC finance manager Sharon Tan - to disguise their attempts to channel the church's building funds into Ms Ho's music career.

The hearing continues.

City Harvest Trial: Auditor: Various matters on Xtron deal create 'a lot of doubts' (ST: 20 Jan 2014)

The auditor who repeatedly sounded alarm bells about church monies going to beleaguered music production firm Xtron explained his concerns on the witness stand Monday.

It emerged that Mr Sim Guan Seng, managing partner of Baker Tilly, was kept unaware of other pertinent matters that he said "create a lot of doubts in my mind about the whole transaction".

Mr Sim was engagement partner, or 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. During the period, Xtron entered an initial bond subscription agreement for $13 million with the church, which was subsequently amended for a total of up to $25 million.

He told the court that he was concerned about the rationale behind City Harvest lending a huge sum of money to Xtron, which will in turn buy a property to be leased back to the church. He said: "If I look at that from just a layman's perspective it doesn't make much sense."

The explanation given to him - which he called "a bit unusual" - was that Xtron would give a discount on rental rates to City Harvest. The rental payments will also help Xtron recover the income lost from buying the property.

He also raised a second concern that Xtron was "not exactly the most financially healthy company". But one of the explanations given to him was that a church could not dabble in commercial properties - which he "didn't quite buy" because he was "personally aware that churches do buy commercial properties".

Later, Deputy Public Prosecutor Christopher Ong cited documents and e-mails that Mr Sim said he had no prior awareness about, and that if he did, more questions would have been raised.

First, dates for the investment committee meetings and board meetings were apparently fudged to avoid auditor scrutiny into deals being purportedly rubber-stamped.

Mr Sim also found puzzling that four of the accused - senior pastor Kong Hee, deputy senior pastor Tan Ye Peng, and former treasurers Chew Eng Han and John Lam Leng Hung - had signed a counter-guarantee to long-time churchgoer Wahju Hanafi's guarantee to indemnify Xtron for any losses that might be incurred by the time bonds are redeemed.

He said: "If I'm aware that the giving of this bond is guaranteed by members of the church, I would really ask why do you need to do this, if it is really an investment. If you think is good, then why are you giving a guarantee? Why are you not disclosing that guarantee?"

He added that it struck him as dubious that Chew, a fund manager, was giving a guarantee when he recommended the investment to begin with.

City Harvest auditor queried over slew of documents (ST: 20 Jan 2014)

CITY Harvest Church's senior figures appeared to describe earnings outside of alleged sham bond investments it made in church-linked companies as "real money", it emerged yesterday.

"Pastor Kong Hee wants to know of the $7 million investment profit we have in the last financial year, how much of it was real money earned outside of bonds between City Harvest-(music production firm) Xtron-(glass manufacturer) Firna," deputy senior pastor Tan Ye Peng wrote in a 2010 BlackBerry message to finance manager Sharon Tan.

"Meaning, actual money in from the 'world'," he added. The reply: "Pastor, the 'real' income is $2.1 million."

Kong, the two Tans and three others are on trial in a district court for various counts of criminal breach of trust and falsifying accounts for allegedly misappropriating $24 million through sham bonds, and then using $26.6 million to cover it up.

Mr Sim Guan Seng, managing partner of auditing firm Baker Tilly, when asked for his opinions about the message, to which he was not privy, said: "The classification is decided by church management and the board. We have no reason to separate the bonds from the other investments."

The prosecution spent the whole of yesterday afternoon presenting Mr Sim, who presided over City Harvest's audit for financial years ending 2008 and 2009, and Xtron's for 2008, with one document after another that he said he had no clue about.

This is contrary to defence counsel N. Sreenivasan's comments last Thursday when he said: "It is our position that Baker Tilly, as a body, and as auditors, knew everything."

Among Mr Sim's responses to the documents were comments such as "it doesn't make sense at all", "it would raise a lot of red flags" and "it would create a lot of doubts in my mind about the whole transaction".

One of these was a July 2007 e-mail sent by Serina Wee, who provided accounting services for Xtron, to deputy senior pastor Tan and Chew Eng Han, who was then vice-president of the City Harvest management board.

Wee had projected English album sales of Kong's pop star wife, Ms Ho Yeow Sun, whom Xtron was managing, to be 200,000 copies, yielding a revenue of $2.17 million. The album was never released.

This was far short of the $13 million bond agreement with a maturity of two years that the church would enter the following month with Xtron.

"Why would the church, with this knowledge, want to subscribe to a $13 million bond for this project? This is on top of why Xtron was discussing this with members of the church board at this point of time," Mr Sim asked.

Even for some things he already knew about during the audit process, Mr Sim had found it puzzling.

He told the court he was concerned about the rationale behind the church lending a huge sum of money to Xtron to buy a property to be leased back to the church. He said: "If I look at that from just a layman's perspective, it doesn't make much sense."

He also said that Xtron was "not exactly the most financially healthy company".

The explanation given to him - which he said was "a bit unusual" - was that Xtron would give a discount on rental rates to City Harvest. The rental payments will then help Xtron recover the income from buying the property.

Mr Sim continues on the stand today.

CHC trial: Auditor says would have further questioned church’s management (CNA: 20 Jan 2014)

SINGAPORE: The lead auditor looking into City Harvest Church's books said he would have pressed the management board on certain issues, if more information had been disclosed to him.

On Monday, Mr Sim Guan Seng from Baker Tilly was asked by the prosecution on the church's investments into singer Sun Ho's former management company, Xtron.

The church had bought S$13 million worth of Xtron bonds initially.

The bond subscription agreement was subsequently amended, and Xtron issued S$25 million worth of bonds to the church.

Mr Sim told the court he initially had various concerns, chief of which was that Xtron was "not the most financially healthy" company.

So, he wondered why the church would invest in Xtron.

Referring to various documents, the prosecution tried to make the point that the dates on the minutes of meetings were inaccurate.

Mr Sim agreed, saying some of the things that were supposedly approved by the church's management board were still being discussed in the emails.

This, he said, would "place doubts" in his mind that the meetings actually took place later than stated on the minutes.

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.

The trial continues.

Church trustees 'kept in the dark': City Harvest trial (ST: 18 Jan 2014)

They trusted the church leaders, but were not told of Building Fund plans

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 yesterday.

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."

waltsim@sph.com.sg



*****************Background Story *****************



Transactions 'a bit unusual'

THE auditor who repeatedly sounded alarm bells about church monies going to music production firm Xtron yesterday 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 yesterday'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."

Sun (W)Ho? Ex-finance Managers’ Blogshop is Where the Harvest Might Be Richest (The Establishment Post, 18 Jan 2014)

Even as six City Harvest Church leaders return to court for the third leg of a high-profile criminal breach of trust trial on charges of the misappropriation and subsequent cover-up of funds totalling some S$50 million (US$39.8 million), it is an online shop venture involving two of the accused – former finance managers Ms Serina Wee and Ms Sharon Tan – that is stealing the show. (See also: City Harvest Church leaders on trial for alleged criminal breach of trust)

State prosecutors charge that City Harvest Church Pastor Kong Hee had conspired with five others – church management board vice-president Mr Tan Ye Peng, board member Mr John Lam Leng Hung, the church’s investment manager Mr Chew Eng Han and finance managers Ms Sharon Tan Shao Yuen and Ms Serina Wee Gek Yin – to redirect the funds in an effort to boost the music career of his wife, Ms Ho Yeow Sun.

But, since the first leg of the trial started in May 2013, it has been Ms Serina Wee that has been hitting all the right notes with her fashion sense. A “Serina Wee” fan page on Facebook has more than 2,000 followers, and describes the 37-year-old mother of three as a “goddess”.

Together with former colleague and long-time friend Ms Sharon Tan, the immaculately dressed Ms Wee this month launched an online fashion shop. Ms Serina Wee’s blogshop, Missy Stella, sells apparel and accessories for women and working professionals. Eagle-eyed observers noted that Ms Wee turned up at the Subordinate Courts on Jan 13 in a two-tone pencil dress, which retails on her website for S$48.

Forget the music career that never took off despite the millions of dollars that were pumped into it. Ms Serina Wee’s blogshop might well prove to be where the harvest is richest.

After all, if the media and the online community are going to religiously follow your “outfit of the day” each time you make a public appearance, it makes for a perfect business opportunity. And plenty of free publicity for Serina Wee’s blogshop.

In 2011, a survey by social network LiveJournal revealed that while it hosted more than 50,000 Singapore-based blogshops, only 10 per cent of these online shops earned more than US$1,500 a month, with the highest reported at US$15,000. The survey found that blogshops on the LiveJournal platform generated more than US$72 million worth of transactions in Singapore in 2011.

“With the Singapore e-commerce market estimated at US$1.2 billion this year (2011), we are proud that LiveJournal drives 6 per cent of that. We believe blogshopping will continue to grow here as e-commerce represents the most cost-effective way to do business,” said Ms Roshni Mahtani, CEO of Tickled Media, the publisher of LiveJournal in the South-East Asian markets, in the 2011 report.

In an interview with Yahoo! Singapore in 2011, owners of blogshop My Glamour Place (MGP), Ms Angela Ang and Mr Keith Tay, claimed that MGP, which the couple started in 2006, rakes in an average revenue of S$30,000 (US$23,567) a month, and more than S$45,000 (US$35,350) a month during festive periods like Chinese New Year and Christmas.

In 2013, business-to-consumer (B2C) e-commerce sales worldwide is expected to grow by some 17 per cent to reach US$1.2 trillion, according to forecasts by market research firm eMarketer. B2C e-commerce sales in Asia-Pacific accounts for close to one-third of all B2C e-commerce sales in the world.

The success of Ms Serina Wee’s blogshop, Missy Stella, will no doubt be boosted by technological advancements, especially in Singapore’s tech-savvy environment, where internet penetration rate currently stands at a healthy 78 per cent.

For example, Paypal’s Asia-Pacific division this week launched mo.bi.pay (mobile built-in payments), a new online payment service for small and medium enterprises. Developed by Vertical Solutions, a development firm in Singapore, the mobile plug-in enables merchants to use PayPal shopping carts on web platforms such as e-commerce websites or online stores.

Already, several online shopping brand names have established themselves in Singapore. Online fashion retailer Zalora, eBay-linked Qoo10, and Japanese e-commerce giant Rakuten, to name a few, have headquarters in Singapore.

Even as the sun is setting on Ms Ho’s music career amid charges of embezzlement by leaders of City Harvest Church, it seems the star is rising for Ms Serina Wee and her aptly-named online shop.

Read more: Sun (W)Ho? Serina Wee's blogshop is Where the Harvest Might Be Richest http://www.establishmentpost.com/sun-ex-finance-managers-blogshop-harvest-might-richest/#ixzz2qv2TVwDx

City Harvest Trial: Trustee said Xtron bond investments 'make sense' to him (ST: 17 Jan 2014)

City Harvest Church trustee Tan Yew Meng was convinced by a good sales pitch that bond investments in beleaguered music production firm Xtron would be a sound move.

In an extraordinary general meeting in August 2008 attended by executive members of the church, they were given "the understanding that the investment would give us good returns of 4 per cent and $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," prosecution witness Mr Tan - a lecturer at Singapore Polytechnic - said on Friday in the ongoing trial against church pastor Kong Hee and five others for varying counts of criminal breach of trust and falsifying accounts. They are accused of misappropriating $24 million through sham investments in Xtron and another church-linked firm, and a further $26.6 million to cover that up.

When various documents that were signed off by Mr Tan were cited, he repeatedly said that he was unaware of any negotiations or deliberations that had gone on in the drafting of the documents.
He said that he had felt the accounts were in good hands managed by fund manager AMAC Capital Partners, which was founded by one-time church treasurer Chew Eng Han - who is also one of the accused.

Deputy Public Prosecutor Tan Kiat Pheng also questioned why Xtron Productions had to take a bank loan of $10.7 million for the Riverwalk property, after the church had already committed $18.2 million in bond subscription agreements. This, after a bank valuation of the property priced it between $17 million and $18 million. The property is used for worship by the church.

He asked: "Did you ever ask the question, 'Why on earth did Xtron have to take a huge loan of $10.7 million to purchase Riverwalk'?"

The witness said it had never occurred to him to do so.

City Harvest trial: 'Full-scale investigation' by auditor, so funds use must have been proper, says defence (ST: 16 Jan 2014)

It was a reversal of roles in court on Thursday as defence lawyer Kannan Ramesh sought to show that an auditor had been "significantly troubled" by City Harvest Church's investment in bonds.

The prosecution believes that the church invested in sham bonds issued by music production firm Xtron Productions, as a way to funnel church money to finance the firm's artiste Ho Yeow Sun's career. Ms Ho is church founder Kong Hee's wife.

Referring to e-mails in which auditor Tiang Yii from the firm Baker Tilly TFW had asked for various documents to make sure the investments were proper use of church funds, Mr Kannan put it to her that she must have been satisfied by her "full-scale investigation" since she eventually signed off on her Xtron audit, which included the period when the bonds were issued.

But Ms Tiang repeatedly disagreed with his portrayal of the events, saying that the questions she asked were "standard" procedure, and that she had only been satisfied that the transactions did not affect her Xtron audit. She was not the auditor in charge of City Harvest for the period when the bonds would have shown up in its books.

Auditor's 'only serious problem was delay of Ho Yeow Sun's album launch' (ST: 16 Jan 2014)

AUDITOR Tiang Yii had only one serious problem with the accounts of City Harvest Church and Xtron Productions when she was auditing their financials.

It had to do with the delay of the launch of Ms Ho Yeow Sun's English-language album, which was meant to make her a big name in the United States.

Xtron, which was managing Ms Ho at the time, had borrowed money from the church by issuing bonds which the church bought. The album delay could jeopardise its ability to return the money, said Ms Tiang in court yesterday.

She said she eventually signed off on the firm's audit after it revised its contract with the church's fund manager to return the funds at a later date.

But she also put a note in the report that the review was based on the assumption that the firm's directors and creditors would continue to provide financial support.

She did, however, agree when questioned by defence lawyers yesterday, that based on her reading of the church's constitution, she did not think buying Xtron bonds with the church's building funds to pay for Ms Ho's pop music foray was illegal.

Prosecutors believe the bonds were shams and the building funds misused by church founder Kong Hee, Ms Ho's husband, and five of his deputies.

Defence lawyer Edwin Tong, who is representing Kong, put it to Ms Tiang: "As far as you know, there is no information you received either during the time you did the audit field work, or subsequently, that the Xtron bonds were fraudulent or shams or unauthorised or in some manner affected the true and fair value of the accounts."

She agreed with this, but noted that her colleague Sim Guan Seng was responsible for auditing City Harvest for the period when it bought the bonds.

Ms Tiang led the audit of Xtron for the period January to December 2007. The bond agreement was signed between Xtron and the church's fund manager AMAC Capital Partners in August that year. Her audit of City Harvest was for the period January 2006 to June 2007, shortly before the agreement was signed.

Mr Sim, who took over, had repeatedly raised concerns about the church monies going to Xtron, but the prosecution and defence lawyers disagreed about the nature of the concerns in a previous tranche of the trial. He is an upcoming witness for the prosecution.

Ms Tiang is expected to finish her time on the stand today. The next witness is church trustee Tan Yew Meng, followed by Mr Sim.

City Harvest trial: Defence says auditors knew church funds went to Ho's career (ST: 15 Jan 2014)

Auditors of City Harvest Church had been kept in the loop about the use of church funds, defence lawyers said on Tuesday.

They produced emails showing that Ms Tiang Yii, a partner at auditing firm Baker Tilly, had been told about the use of the church's building fund to finance the singing career of Ms Ho Yeow Sun, wife of church founder Kong Hee. The prosecution believes that this was an abuse of the fund.

Questioned by defence lawyers, Ms Tiang said she was aware of the various transactions that channelled the money from the church to music production firm Xtron Productions, which managed Ms Ho, but said she could not comment on whether this was an abuse of church funds as she was not the church's auditor for the relevant period.

She had audited City Harvest for the period January 2006 to June 2007, whereas the relevant transactions started only in August 2007. The Baker Tilly auditor who vetted those transactions was Mr Sim Guan Seng, who had raised repeated concerns about the church monies going to Xtron. He is one of the prosecution's upcoming witnesses.