8 September 2014 – Morning Session Part 1 (Mrs Light n Friends: 9th Sept 2014)

Firna bonds

Kong position is that Wahju had made a commitment to use the proceeds of the Firna bonds to independently support the Crossover project. And these Firna bonds also were covered by a personal guarantee signed by Wahju.

DPP produced an email with the subject title “What Firna bonds are used for”.

The top email is from Ye Peng to Sharon Tan.

The second email is from Serina to Ye Peng.

In the email she listed out funds transferred in and loans to Wahju.

Serina wrote:

The following are what the $11m Firna bonds already drawn down are used for.

Attached worksheet under cash flow projection shows the whole picture of what the bonds would be used for assuming there is net profits from the 2 albums, we will be able to redeem the bonds. At the end of the day, out of the whole $17m bonds, $1.473m goes to bond interests payment and the rest are bond album related.

Based on the email DPP said that the $1.473m bonds drawn down by Firna were actually used to pay the interest under the bonds themselves.

DPP: “That’s not consistent with what you’ve just told us. Correct?”

Kong: “In what way was it inconsistent?”

DPP: “Because you told us that Firna was to use album proceeds to pay the interest and the principal upon maturity. But what we see here is that the plan that Serina explains to Ye Peng, the cash flow, shows that, in fact, bond drawdowns are going to pay bond interest payments.”

Kong: “Your Honour, what I meant was that the net profit of the album proceeds would be an amount that should cover the principal and the interest. As to the mechanics of using the cash flow of Firna to pay off the bond interest, I believe that I trust my team that they would do it legally and legitimately. But as to the mechanics of how they actually would do it, I trust them to do everything properly and above board.”

DPP: “Are you saying that you didn’t know that first of all, do you agree that the Firna bond proceeds are actually coming from the church Building Fund? Correct?”

Kong: “Yes, your Honour.”

DPP: “Effectively, if bond proceeds are being used to pay the bond interest, that it’s really the church Building Fund monies that are being recycled back to pay the interest to the church. Correct?”

Kong: “Yes, your Honour, but to the best of my knowledge I don’t believe there was anything wrong with that.”

When DPP asked Kong about the overall plan of the Firna Bond, Kong said he cannot remember and he requested DPP to show him some documents to job his memory.

DPP opened another email. It is an email from Serina Wee to Yee Peng.

Serina wrote:

Because of the delay in the recouping of income as compared to the very original budget, we can only redeem the bonds later, hence resulting in additional bond interest of $1.9m to be incurred.
We need to find additional $1.9m in order to pay CHC these bond interests. Eng Han says we can draw down additional bonds of $2.5m from CHC and then use this to pay back CHC bond interest. It won’t affect CHC cashflow wise as the money will go out and in. We only need this for a bridging period from November 2009 to May 2012 so total drawdowns of bonds during the period will be $17m + $2.5m = 19.5m

DPP: “Eng Han proposes to add to the planned $17m another $2.5m to cover the interest payments. Correct?”

Kong: “Yes, your Honour”

<….some questions and answers related to the additional $2.5m to pay back CHC bond interest and some put statement…>

DPP: “I put it to you that, in fact, it was always planned that the church funds would be channeled to pay the interest on the Firna bonds and that this is yet another piece of evidence that the bonds were actually shams.”