CHC members tried to plug 'hole' before investigation, says a director of Xtron
Some three years after City Harvest Church (CHC) devised what the prosecution terms an elaborate scheme involving round-tripping and sham transactions to hide the fact that they were diverting money to fund Sun Ho's career, Ms Ho's husband - CHC pastor Kong Hee - raised his concerns to a church member about the legality of these transactions, the court heard yesterday.
Choong Kar Weng, a director of Xtron Productions - which managed Ms Ho's music career - and a former CHC board member, said that Kong had called him at the end of March 2010, "saying he's concerned with all the bonds and all the transactions".
Kong, deputy senior pastor Tan Ye Peng (Tan YP), former board member Chew Eng Han, board member John Lam Leng Hung, finance manager Sharon Tan and former finance manager and board member Serina Wee stand accused of criminal breach of trust; they are alleged to have misused some $50 million of the church's funds to promote Ms Ho's music career by round-tripping money and setting up fictitious bond transactions, some of which involve Xtron. Chew, Wee and the two Tans are also charged with conspiring to falsify accounts.
Mr Choong, who was spending his second day on the stand as the prosecution's witness, said: "Pastor Kong was just concerned that, with all the bond arrangements, whether things were legal, etc, and he called me to ask me to check it out."
(Blogger's note: *gasp* could he be innocent!?)
The prosecution produced an e-mail Mr Choong sent to Kong the next day, in which he (Choong) raised the question, "If the authorities view all the parties as related and look at all these as one project, will there be a case of CBT (criminal breach of trust)?"
He then answered that question, "I don't think anyone is guilty of CBT here because the way we used CHC's funds are all within the powers of the Management Board. Furthermore, there is no dishonesty here."
He went on to say: "It is very important to prove that CHC is not disadvantaged throughout all these transactions. To do that, we can show that CHC has earned $1.6 million in interest from Xtron's bond transactions and to fill up Xtron's losses."
After that, he sent a BlackBerry message to Ms Ho, Kong, Tan YP and Chew, saying: "Sun, one of the main reason(s) why I proposed the Special Audit is to buy us time to fill up the hole. We don't want all the issues to grow to the exten(t) that the authorities step in BEFORE we fill up the hole. By appointing our auditors, it will be easier to talk and get things done. If the report turns out that we are lacking in some areas, we will improve and change, they can help us, that's why to me it is important to let the relevant authorities know that we initiate a special audit. They will at least not do anything till the report comes out. By then the hole is filled."
"What is this hole that needs to be filled?" asked deputy public prosecutor Christopher Ong.
"This was the losses of Xtron, or the Crossover Project (CHC's idea of evangelising through pop music) that we need to fill," Mr Choong said.
"Which authorities were you talking about that might step in?" deputy public prosecutor Ong asked.
"It could be COC (Commissioner of Charities), it could be anyone. At that time, we did not know of any investigations, nothing," Mr Choong said.
It is the prosecution's case that $11.4 million of CHC's building funds was purportedly "invested" in a Special Opportunities Fund (SOF) managed by Chew's company, AMAC Capital Partners (Pte) Ltd.
This was then "round-tripped" to "redeem" bonds issued by The First National Glassware (Firna), by AMAC lending the monies to a company owned by Indonesian businessman Wahju Hanafi called Ultimate Assets; Ultimate Assets in turn lent the monies to Firna, another of Mr Hanafi's companies, and Firna then purported to redeem the Firna bonds originally issued to CHC as part of the sham bond investments.
Another $12 million in CHC funds was supposedly paid out to Xtron as "purported advance rental", but this "rental" was instead used by Xtron to purchase $11.5 million worth of Firna bonds.
This sum was then used by Firna to repay the loan it received from Ultimate Assets, which in turn used this money to repay the loan previously received from AMAC. AMAC then "redeemed" CHC's purported investment in the SOF.
Mr Hanafi has multiple links to CHC and is expected to take the stand later this week.
The hearing continues today with Mr Choong being cross-examined by the defence counsel.
(Blogger's note: so this is how we plug a hole)
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