Issued by CHC to Hanafi, it says that in event bonds are converted to shares, CHC will sell them back at a nominal sum of $1
[Singapore] A SECRET agreement between Indonesian businessman Wahju Hanafi and City Harvest Church (CHC), produced by the prosecution yesterday, called into question the validity of an $11-million convertible bond issue Mr Hanafi's company made to the church in 2008.
The court was shown a confidential letter, on a CHC letterhead, addressed to Mr Hanafi and his father-in-law, Tjandra Kusuma - who both own The First National Glassware (Firna), a family business based in Indonesia.
The letter, dated Oct 7, 2008, refers to the convertible bond agreement signed between Firna and AMAC Capital Partners, the investment vehicle run by former CHC board member Chew Eng Han, dated the same day. Under the bond agreement, Firna was to issue up to $24.5 million in bonds to CHC; and the church, via its trustees, would be entitled to convert the bonds issued into shares in Firna, amounting to 40 per cent of Firna's issued capital.
Eventually, $11 million was transferred from CHC's Building Fund to Firna for its bond issue, in five tranches from Oct 8, 2008, to June 22, 2009.
It is the prosecution's case that, under the guise of this purported investment in Firna bonds, the $11 million of Building Fund monies was dishonestly misappropriated - the bulk of it to fund Sun Ho's music career, and the rest for use by Mr Hanafi.
The confidential letter appeared to support its case; signed by CHC board member John Lam, the letter says, "I hereby confirm, on behalf of the management board of City Harvest Church, that in the event the bonds are converted to shares in your company (Firna), City Harvest Church will undertake to sell back those shares to yourselves at a nominal value of US$1."
When asked about this letter, Jeffrey Cheong - one of the three trustees of the church entitled to convert the Firna bonds into shares, and a witness on the stand yesterday - said he was not consulted about the drafting of this letter.
In fact, he said, that prior to assisting the Commercial Affairs Department (CAD) with its investigations in this case, he had never even seen the letter.
Yesterday's court session also saw the much-awaited appearance of Mr Hanafi himself, whose name has been mentioned countless times during the hearing.
Mr Hanafi - who, in addition to Firna, runs a chain of supermarkets in Papua New Guinea and businesses in Indonesia and Singapore - admitted to the difficulties the frequent mentions have caused him.
"Since the case came up, I've been mocked on the Internet by people calling me 'biggest suckers, biggest crooks, biggest whatever it is'. I came to know this when all my bankers (started) calling back all my loans. People started to doubt my reputation," the 53-year-old told the court.
"The biggest challenge for me (was) when they (the six accused church members) were charged in June (last year). I had a $62 million deal with a French company that was supposed to buy Firna, and that deal was cancelled on the same night the newspaper (report) came (out)," he said.
Mr Hanafi, who will take the stand for a few more days next week, spent much of yesterday being asked by the prosecution about his background.
He talked about how he lost "everything" - later explained to be US$2 million he put in private banking accounts in Singapore and Hong Kong - in the 2008 global financial crisis. "But God is good. I had my last $100,000, which I gave to the church, and that same year, my (supermarket business, Super Value Stores) actually made a record profit of about $26 million," he said.
He talked about how CHC turned his life around when, in 1990, he relocated his family from Indonesia to Singapore. "I enjoy very much the teaching of Pastor Kong (Hee). When I came to church, I was just a shopkeeper, working for my brother-in-law.
"In 1998, when I had (been in) business for 10 years, one of the (CHC) pastors rebuked me (and told me) to do business (with) integrity . . . I realised that I was not honest with my tax . . . I'd been evading (taxes) for 10 years in Papua New Guinea, and I paid them all in 1998 . . . That was the biggest turnaround in my life . . . That year I was really blessed. I had a profit of almost $10 million after paying that $1.5 million tax," he said.
Mr Hanafi told the court he now owns five to six properties in Singapore, all managed by his wife, one of which is the Ocean Front @ Sentosa Cove penthouse he co-owns with Kong.
He said he enjoys a good relationship with all the pastors in CHC, and that they "honour and look after each other". He said the pastors often refer to him as an "elder" of the church. He also said he looks up to Chew "as my adviser".
He said the church invited him to become a director and a sponsor when they set up Xtron Productions, which managed Ms Ho's career before Ultimate Assets. "The first time we had a concert in Singapore, in 2001 or 2002, I saw that there were a lot of young people, souls saved after the concert. And I told Pastor Kong that I would like to sponsor this singing mission that Sun is doing."
CHC pastor Kong Hee, deputy senior pastor Tan Ye Peng, former board member Chew Eng Han, board member John Lam, finance manager Sharon Tan and former finance manager and board member Serina Wee have all been charged with criminal breach of trust; Chew, Wee and the two Tans have also been charged with conspiring to falsify accounts.
The hearing resumes on Monday.
michquah@sph.com.sg
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.
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