CHC trial: Co-accused says investing in junk bonds not dishonest (Today: 17 July 2014)

SINGAPORE — He had recently discharged his lawyer, opting to represent himself in the criminal trial of six City Harvest Church leaders. He had also been singled out this week by defence witness and co-accused John Lam Leng Hung as the person who suggested allegedly sham bond investments in various companies.

So, there was an air of anticipation in the courtroom yesterday as City Harvest’s former investment manager Chew Eng Han began conducting his own defence by cross-examining Lam.

Lam, a former church board and investment committee member, admitted that he was wrong to say the idea to form multimedia firm Xtron Productions was Chew’s, after being presented with emails indicating otherwise.

Xtron issued bonds to the church that prosecutors contend are sham. Formed in 2003, it also managed the career of pop singer Ho Yeow Sun, wife of church co-founder and accused Kong Hee.

Chew, who is facing 10 charges of criminal breach of trust and falsification of accounts, also sought to show yesterday that it was not dishonest to invest in junk bonds or those not rated by ratings agencies, which the defence contends the sham investments to be.

He cited a recent news report of Singapore’s sovereign wealth fund GIC investing in unrated bonds and tried to show that the church has always been a risk-taker. He argued that no investment — not even rated bonds — was without risk and Lam agreed with him that the church had intended to hold its bond investments with Xtron and Indonesian glassware manufacturer, PT The First National Glassware (Firna), to maturity and collect interest.

Chew, with Kong seated close beside him, was composed as he stood in the dock to question Lam. Chew was previously represented by Senior Counsel Michael Khoo.

Yesterday’s trial also saw another defence lawyer suggesting that Chew was the brains behind some transactions that form “round-tripping” charges levelled by prosecutors — relating to S$26.6 million of church funds allegedly used to cover up S$24 million earlier misappropriated to fund Ms Ho’s music career in the United States.

It was Chew who drew a diagram on a whiteboard during a church board meeting on July 18, 2009, showing how rentals paid in advance to Xtron could eventually help Firna redeem its bonds issued to the church, said Senior Counsel Kannan Ramesh, lawyer of Sharon Tan Shao Yuen, one of the co-accused.

The church was trying to acquire property at the time and its auditors were in favour of getting the Xtron and Firna bonds off the church’s financial statements.

No one at the meeting objected to what was presented, said Lam.

Lam, on the witness stand for the third day, yesterday explained why he had signed a secret letter in 2008 that put the church at risk of financial loss.

The church’s bond agreement with Firna allowed the bonds to be converted to shares in Firna. But a Firna shareholder, the father-in-law of church supporter Wahju Hanafi, had objected to it, unless the church undertook to sell those shares back to Firna for US$1, should the conversion occur.

The undertaking was made in the secret letter, which Lam signed because he did not think the church would want to convert the bonds into a stake in a private company not aligned with its core mission.

The trial continues.