30 September 2014 – Sharon’s Re-examination (Part 1) - (MrsLightnFriends: 13th Oct 2014)

Prosecutor’s Position

Prosecutor’s case is that CHC monies were used to generate the false impression that Firna had redeemed the bonds.

CHC’s monies purportedly invested in T10 and T11 ($5.8M and $5.6m total $11.4m) of the SOF via AMAC was actually round-tripped to redeem the Firna bonds.

ARLA (Advance Rental Licence Agreement) was a sham device for Xtron to use the monies to purchase $11.4m of Xtron-Firna bonds, which monies would in turn be channeled through Firna, UA and AMAC back to CHC to complete the round-tripping.

Sharon’s evidence in court

It was Sharon’s understanding that Xtron bonds had to be removed by the next financial year and for the Firna bond. The auditor would want to look into the details and nature of the Firna bonds and there will be a valuation that would needs to be done.

Sharon testified that Eng Han told her of the new redemption plan and her involvement was to pass the massage to John Lam and Serina. She was concerned about the Related Party Transaction (RPT) disclosure obligation that might arise if Xtron buys back the rights. This is because Sun is the wife of Pastor Kong, and it will be disclosed under CHC’s book. She understands that the Crossover Project is something that the church wanted to be very discreet about, to keep it as secular as possible.

The board was aware of the Xtron and Firna bonds and the board was aware of Mr Sim’s issue and therefore Mr Chew Eng Han was proposing a solution to deal with the issues raised by Mr Sim. The proposed solution was presented to the board on 18 July 2009.

There is the handwritten notes took by Sharon at the board meeting on 18 July 2009.  According to Sharon’s evidence, Mr Chew Eng Han presented the redemption plan to the board. Sharon copied down the diagram in her handwritten notes.

Present in the board meeting on 18 July 2009
Kong Hee – President
Tan Ye Peng – Vice President
Nicholas – Treasurer
Suraj – Secretary
Aries – Board Member
Chiang Pak Shane – Board Member
Choong Tsih Ming – Board Member
John Lam – Board Member
Lee Tat Haur – Board Member
Martin Ong – Board Member

Invited to attend
Chew Eng Han – Fund Manager
Sharon Tan – Finance Manager

Redemption plan diagram on 18 July 2009
(Note: This is not the original diagram in Sharon’s hand written notes.)

Looking at the diagram, it showed the series of planned transactions between Pacific Radiance, AMAC, Firna, Xtron and CHC.

The proposal was for the Firna bonds, Pacific Radiance (John Lam was the CFO at that time) to invest $17m into AMAC and AMAC could in turn loan the $17m to Firna. With the money from AMAC, Firna would redeem the CHC Firna bonds. The Xtron bonds would still be redeemed using the advance rental from CHC.

There are other handwritten notes on 12 September 2009. Sharon copied down the redemption diagram in her handwritten notes.

Redemption plan diagram on 12 September 2009
(Note: This is not the original diagram in Sharon’s hand written notes.)

The following is what Sharon wrote to John Lam and Serina Wee in her email dated 1 May 2009:

Dear John Lam and Serina,
Eng Han told me of a new plan (which is back to the very original plan) which he wants to know your views:
1. CHC pays upfront rental to Xtron. Xtron will use upfront rental to buy shares in JV Co. which will buy Palm Oil. No need to transfer Building Fund.
2. Loan in JV Co. will be serviced by EBIDTA from the other operations of the building.
3. Xtron is also a lessee of the JV Co. Xtron will sub lease to CHC.
4. As there wil be a lot of upfront rental, Xtron can redeem the bonds partially. The other part of the bonds will be redeemed, hopefully, by selling RW.
5. There is also a further plan for JV Co. to get a listing via reverse takeover (RTO). Then hopefully, XPL can sell Riverwalk to the JV Co.
6. Xtron will then use the proceeds to redeem the bonds.
7. Preference is to sell Riverwalk to the listed Co. and clear the bonds for Riverwalk.
8. May use upfront rental to clear Firna bonds too
9. Xtron to buy back rights to Sun from Ultimate Asset.
10. Ultimate Asset pays back Firna and Firna pays back CHC.

DPP’s put statement on 26 September 2014 DPP: “I put it to you, Ms Tan, that when we look at the differences between the official minutes of meeting and what you claim to be your contemporaneous handwritten notes of that meeting. It is clear that your claims, that the handwritten notes in CH-49b (18 July 09 diagram) and CH-50b (12 September 09 diagram) reflect accurately the discussions at the board those meetings, cannot be true. DPP: “I put it to you that even if it true that the board was told of the ARLA after 18 July 2009, the board was not told of the entire series of round-tripping transactions which we see set out in detail in the hand-drawn diagrams in CH-49b (18 July 09 diagram) and CH-50b (12 September 09 diagram).

Sharon explained that she took the notes during the board meeting because she wanted to remember what was had been discussed in the board. After she took the note, she put it in her personal file first and prepared the minutes later.

Ramesh: “You prepared the minutes later. What did you do with the minutes that were prepared in relation to this board meeting?”

Sharon: “Your Honour, after I prepared these minutes, I submit to Suraj for approval.”

Ramesh: “What title did Mr Suraj hold?”

Sharon: “Your Honour, Suraj is the board member as well as a board secretary of City Harvest.”
The handwritten notes shown evidence that the agenda stated has been discussed during the board meeting.

One of the items discussed in the board meeting of 18 July was about Palm Oil. It was in her hand written notes.

Ramesh opened an email evidence to strengthen Sharon’s position.

Sharon Tan wrote to Tan Ye Peng and copied to Chew Eng Han on 19 July 2009.

She wrote:

Dear Pastor Tan,This is a consolidated cash flow for our funds.
Eng Han mentioned in the Board meeting that the amount to put into Palm Oil is $40m and Sport Hub is $10m…

Ramesh: “I have looked through the minutes and I have not seen anything about $40m and Sport Hub being mentioned…?”

Sharon: “Yes, your Honour, it’s not minuted.”

Ramesh: “Why?”

Sharon: “Your Honour, because these are confidential information that I received instruction from the board not to minute down.”

Ramesh: “Why?”

Sharon: “Your Honour, because this has to do with building project, which during the search itself, it is a very sensitive period of time for negotiation and the board doesn’t want the negotiation itself to fail.”

——

The DPP used the new evidence presented on 22 September 2014, which is the blackberry memo extracted from Sharon Tan’s blackberry phone to build the case.

There are 72 images extracted from the blackberry memo and some messages are being redacted. According to the DPP, the content was redacted simply because it was not relevant to the case.

On 30 September 2014, Mr Ramesh introduced the full version of the blackberry memo to cross-examine Sharon. He brought Sharon through images 29 to 35 and put the entire conversations in its proper context.

At that point in time, on 18 July 2009, when the redemption plan was brought up to the board for approval Sharon was concerned about the audit issue.

Image 28
Sharon was talking about solving Firna by October and that being an audit point if not solved. Xtron was not mentioned.

Image 29
Eng Han said to Sharon: “I have a solution for the Xtron and Firna bonds regardless of whether we get the building by October 2009.”

Ramesh: “Eng Han is talking to you. Who was formulating this plan, Ms Tan, this solution?”

Sharon: “Your Honour, it was Eng Han.”

Image 30
Eng Han: “It has to do with prepayment Xtron will contract with CHC to provide a minimum 5k seater every weekend for say the next 25years. Assuming a yearly rental of $4m, total is 100 million. We then discount it back at a 5 percent yield, and the discounted present value is the lump sum payment that CHC makes to Xtron.

Image 31
Xtron is free to use the money to invest in a building or whatever investment to earn a yield so that it can fulfill its commitment to CHC to secure a place.
From this lump sum, Xtron redeems the $21m bonds, it also buys over the rights from Ultimate Assets (UA) to the rights to the crossover for $17m.
Mr Chew Eng Han then goes on to say: “After spending the $38m, the leftover is invested in the building which should earn a yield of 10 percent at least and that will help Xtron’s cashflow to meets its future commitment as it pays rental for CHC.”

Image 32
Eng Han said: “We will pass a board resolution to state the reason why we do this. Because the board recognizes that it is hampered from owning a building and is trying to replicate the scenario by this contract with Xtron.”
Eng Han said: “To make it more attractive, we can insert another condition that Xtron will refund a percentage of any potential total gains it makes from this contract.”

This is after 18 July 2009, when the Suntec bid had failed despite the fact that the Church had bid a larger sum of money.

Ramesh: “Mr Chew is telling you all of this. He describes the plan, he describes what it is intended to achieve, and then he says, “Let’s put it before the board to pass it and minute it.” What did you think was going on in terms of the legality, legitimacy of this transaction this plan?”  He comes up with a plan, and he says, “Put it before the board, pass a resolution, minute it”, what did you think Mr Chew was doing?

Sharon: “Your Honour, Mr Chew was suggesting a plan and to me that is above board and legal because he’s suggesting to pass the resolution to bring it up to the board for approval before going ahead with all the legal documentation.”

Ramesh: “Eng Han goes on in image 32 to make it more attractive, we can insert another condition…. Mr Chew is looking out for whose interest in this transaction?”

Sharon: “Your Honour, Eng Han was looking out for the interest of the church.”

Image 33
Eng Han: “So we try to replicate a deal that makes it as close to the scenario as if CHC owned the building.”
Eng Han: “The reason for doing this is real that CHC can’t get a building as we experienced it many times with the government bias.”

Image 34
Eng Han: “The deal is on regardless of whether Xtron gets a building now. It has its own time to get a good land and building to invest in and meanwhile before it finds one it just has to make sure it finds a place to rent.”
Eng Han: “We document down all the difficulties we face in getting a land in the board minutes and pass the reso.”

On 25 September 2014, the DPP suggested to Sharon that the image 29 and 30 are evidence of the fact that the four of the accused (Sharon Tan, Eng Han, Ye Peng and Serina Wee) were planning or using ARLA as an excuse to redeem bonds, that it was not about buying property, not about securing a site for the church.

DPP’s put statement on 25 September 2014 DPP: “We see at image 29 that Eng Han and you are talking about the redemption of the Xtron and Firna bonds. Eng Han tells you that he has a solution. He goes on, at image 30, to tell you that this solution is basically to do with rental prepayment, Yes?”  Sharon: “Yes, your Honour.” DPP: “If you look back at image 29, we see that Eng Han tells you that this solution for the Xtron and Firna bonds is regardless of whether we get the building by then. So this exchange between Eng Han and you is further evidence of the fact that when the ALRA was eventually planned by the four of you, bidding for a building was not a concern; the concern was to redeem the Xtron and Firna. Correct?” Sharon: “Your Honour, I disagree, firstly, because the plan of ARLA was not conceived by me. Secondly, Eng Han explained to me that the need for ALRA is real and there is a need for the church to mandate Xtron to secure a building for the church.”

Ramesh: “So tell us, Ms Tan was the ARLA about buying property or about redemption of bonds or what? You tell us.”

Sharon: “Your Honour, it has been presented to the board as well as to myself that the ARLA is needed to be given to Xtron for the property, because there is a real need, which was stated by Eng Han in this BB messages that the time is running out and there are not a lot of options for the church. So Xtron is given a responsibility to secure a place for the church, and ALRA, itself, is needed and important to hold Xtron responsible to secure a place for the church, your Honour.”

Ramesh: ‘So the suggestion by the prosecution that it’s a sham, or it’s an accuse, a short response, Ms Tan, to that suggestion?”

Sharon: “Your Honour, I disagree with the prosecution’s case that the ARLA is a sham.”

On 22 September 2014, the DPP suggested to Sharon: “My suggestion is that his proposal of documentation is really intended only as a cover story, to provide an appearance of legitimacy for these transactions. It’s clear that you know, because you go on to express further worry that, “But Mr Sim will know, the same money given to Xtron is being used to buy Firna contract.” Do you agree that that is what is going on here between you and Mr Chew?”

Ramesh brought Sharon to see image 36 and image 38

Image 36
Eng Han said: “We have a sound reason to do this, just document it all down in our minutes. We get lawyers to draft a agreement between CHC and Xtron.”

Ramesh: “I would like you to respond to the prosecution’s suggestion that the documentation of the transaction by the lawyers is nothing but a cover story.”

Sharon: “Your Honour, I disagree because it was already explained by Eng Han and it was also the board’s agreement and view that there is a very sound reason, a very valid reason, and a need for the church to give advance rental to Xtron, to give Xtron the mandate to secure a building for the church.”

Image 38
Sharon: “OIC… so u told Pastor Tan all the above already?”
Eng Han said: “Yes I told him and Pastor Kong…”

Ramesh: “Why was it important to you that Eng Han had briefed Pastor Tan?”

Sharon: “Your Honour, it’s important to me because Pastor Tan is the second in line after Pastor Kong, and he has been in all board meeting leading the discussion, so I wanted to make sure that Pastor Tan is aware about it.”