Witness testifies that company managing Sun Ho's career was a 'shell'
The convoluted financing arrangements City Harvest Church (CHC), entered into under an alleged round-tripping scheme, had another layer added to it yesterday, as the court heard of monies lent by Xtron Productions to Indonesian businessman Wahju Hanafi.
Mr Hanafi told the court that Ultimate Assets (UA), the company that took over the management of Sun Ho's music career from Xtron, was essentially a "shell company", casting doubts on loans UA made to and received from parties involved in the alleged round-tripping.
Deputy Public Prosecutor Tan Kiat Pheng showed the court an e-mail from former CHC finance manager and board member Serina Wee to Mr Hanafi, which had been copied to CHC deputy senior pastor Tan Ye Peng, dated Dec 2, 2007. In the e-mail, Wee said that $674,000 would be sent to Mr Hanafi as a "repayment of loan to you from Xtron" and another "$990,000 from (Xtron director Koh) Siow Ngea being loan from him to you".
The e-mail added: "(Xtron director Choong) Kar Weng feels that it is better to have a loan agreement between Siow Ngea and yourself, as the one you signed between Xtron and yourself will not be valid in a court of law."
It is unclear what validity issue Wee had in mind at the time.
DPP Tan asked why Xtron could afford to lend the money to Mr Hanafi when it was said to be in need of funds itself - to the point that it had to issue $13 million in convertible bonds to CHC.
Mr Hanafi replied that he could not explain this, as the decision was made by Tan.
DPP Tan asked: "The money came from Xtron. Pastor Tan represents the church. What does a representative of the church have to do with deciding on money coming from Xtron? You, as a director of Xtron (then), should be making the decision, not Pastor Tan, wouldn't you agree?"
Mr Hanafi agreed, but said he thought Tan could make the decision because "I think it's just for temporary measure . . . (that) I will find the money to pay back as soon as I can".
He added: "In my mind, I've been giving to the church since 1998, maybe about $5 (million) to $6 million. For me to receive this amount, it's not a big (sum) that the church couldn't afford to do it. So it's just the legality of it . . . I didn't realise at that point that the money came from Xtron."
He also said he desperately needed the money then as his company, The First National Glassware (Firna), was facing cash-flow problems and could not pay its suppliers; he needed about $2 million to pay its workers, and a further $500,000 to pay for his eldest daughter's wedding.
According to other pieces of e-mail produced by DPP Tan preceding the one sent by Wee, Mr Hanafi could not fund these payments himself at that time as the six properties he held - including the Ocean Front @ Sentosa Cove penthouse he still co-owns with CHC founder Kong Hee - could not be sold.
When Mr Hanafi had e-mailed Kong to share his problems, Kong had replied that he felt "bad" about having run up an "extra burden" for Mr Hanafi through "the Ocean Front project". Mr Hanafi told Kong that the unit was "not a burden, but something I thought to bless you (with) this year".
Mr Hanafi told the court that the prices of the units at Ocean Front were climbing rapidly at that point. "I normally would bless Pastor Kong every year with a love offering, and I was thinking this year that, instead of me giving him a love offering, maybe I (would) give him the opportunity to (make a quick profit)," he said.
Mr Hanafi also testified yesterday that UA, a company incorporated in the British Virgin Islands in 2006 and wholly owned by him and controlled by him and his wife, was a "shell company". He said it "did not really" have financial statements or anyone maintaining its accounts, and had no cash flow.
It is the prosecution's case that $11.4 million of CHC's building funds - purportedly invested in a fund managed by former CHC board member Chew Eng Han's AMAC Capital Partners - was instead round-tripped to redeem $11 million in "sham" bonds issued by Firna to CHC; it claims this was done by AMAC lending the monies to UA, which, in turn, then lent the monies to Firna, which then purported to redeem the Firna bonds.
On Monday, former CHC trustee Susan Ong, when asked if she believed Xtron's $13-million bond issue to CHC was a scam, said: "Xtron is not a shell company. In order for Xtron to issue sham bonds, Xtron has to be a shell company that does nothing."
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