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.