Capitalising Xtron to fund Sun's career "was Chew's idea" (BT: 14 Aug 2014)

[SINGAPORE] The founder of the City Harvest Church yesterday testified that it was the church's investment manager who mooted the idea of using church funds to capitalise Xtron Productions, so that the firm could help singer Sun Ho launch her debut album in the United States.

Giving evidence for the third day in his own defence, Kong Hee, 49, said that, from May 2007, the directors of Xtron were trying to source for funds for Ms Ho's album.

Xtron is one of two firms alleged to have been used in the cover-up of the misuse of the church's building funds.

In early July 2007, the church engaged AMAC Capital Partners belonging to accused Chew Eng Han, to be its investment manager.

The following month, Xtron issued S$13 million in bonds to the church. Under the agreement, Xtron was to redeem the bonds in August 2009.

Documents raised in court showed that by mid-2008, there were concerns that Xtron was insolvent.

By then, the production of the US album had already been delayed by about three years, but the team needed some S$18 million more for the production of the album over two years. This was on top of the S$5 million that had already been spent.

To help Xtron find a way to redeem the bonds issued to the church, Chew suggested the church pay advance rental to Xtron so that Xtron could purchase a property at Riverwalk. The property could then be rented to the church for it to hold its services and would be a way to "transfer surplus from the church to Xtron".

Kong yesterday said Chew suggested this as they wanted the firm to be commercially viable.

He added that he believed that Chew's proposal would be a "win-win situation" for both Xtron and the church.

But the prosecution's case is that the bond investments were "sham" and that the monies were "round-tripped" to cover up the misuse of church funds.

The court also heard that Kong and his team had sought the church's auditor, Foong Daw Ching's clearance on these matters.

Kong said the disclosure was to let Mr Foong rectify any breach in corporate governance.

The trial continues.