Trial Continues on March 16

Current Trial Schedule
16 – 26 March 2015
30 – 31 March 2015
1 – 17 April 2015
4 – 6 May 2015
11 – 15 May 2015
18 – 20 May 2015
25 – 29 May 2015
2 – 12 June 2015
(Pending confirmation: Additional dates: 27 – 30 April 2015 and 7 – 8 May 2015)

CHC Board and EMs know about church fund being used in the Crossover? (MrsLightnFriends: 10 Feb 2015)

CHC Board and Executive Members know about church fund being used in the Crossover?

During cross-examination, DPP rejected the suggestion that the Crossover project needs to be discreet. To support his point, DPP Ong referred to a script discussed during CHC Annual General Meeting in 2002.
On another occasion the same exhibit was referred to support DPP suggested that Chew knew that the Building Fund was a restricted fund.
Recap on 2 February 2015.
(CH-95) Annual General Meeting script in 2002. 

Kong Hee said:
“The deferred expenditure.. now this is what we spent. Now $231,000, what did we spend on, we spent on this Pastor Sun’s MTV project because we want to use it a tool for evangelism, but this is not just money spent and we won’t recoup because we’re going to recoup it back in a few months time…Now, the cost of the MTV is almost a quarter million dollars, we need to sell 47,000 copies to break even. As of now, 4 weeks later, we actually, today is what.. the 28th of last month was the eve of Easter Good Friday, already we sold 30,000 copies. Now and we haven’t even come to Singapore yet, yes, Amen.”

DPP: …, Kong Hee is actually referring the EMs to a part of CHC of CHC’s FY2001 financial statements and he explains that CHC had spent $231,000 on Sun Ho’s MTV project… so it would appear that, at least in 2002, at the AGM, Kong Hee was openly telling the EMs that church funds had been used to finance Sun Ho’s music career at this stage and told them that it was for evangelism. Do you recall this?

Chew: I can only recall, your Honour, from the script right now.
….
DPP: Now, of course, this kind of transparency and openness about the use of church funds, that changed subsequently, and we’ll be going into that.
Chew: Yes
… Chew gave explanation and the Roland Poon incident….

DPP: So in 2003, when Roland Poon made his allegations, something that in 2002 had no need to be hidden, was perfectly okay to tell the AGM, suddenly became this serious allegation that had to be refuted? Isn’t that correct?

Chew: Yes
DPP: Never mind what the truth was actually was; what was important was that the correct impression was created to protect the church from criticism?
Chew: Yah, I got to qualify this, your Honour, that when the prosecutor says “suddenly became this serious allegation that had to be refuted”, I think it has to be put to me who was this serious to.  To me or to Kong Hee?
…..

DPP referred to a minutes of a CHC board meeting dated 5 May 2002 but was amended in March 2003.

The board minutes record that the CHC board approved that the expenditure of $231,000 on the MTV project would be expensed off in Attributes instead.

In 2003, Kong Hee announced to the EMs that Attributes spent the money donated by Wahju and “never a dollar was used from the church account”.

……

Chew: My first discovery, your Honour, was that the monies that Kong Hee told me that Wahju had given to sponsor the Crossover had already mistakenly gone into Building Fund.  That was my first impression.  And, therefore, to correct that wrong capturing of the transactions, that it had rightfully to be reversed out of Building Fund, and then put to the place where Wahju wanted it to be, which was the Crossover.

Recap on 3 February 2015.
Referred to the same 2002 AGM script that Kong Hee had said.

DPP: Were the donors to the Building Fund told that their donations, besides going towards the building project, might also be used to finance the Crossover Project directly?

Chew: No, your Honour. There was one occasion, and that was in 2002, and that’s in CH-95 (Annual General Meeting in 2002), that was brought up by the prosecution.

DPP: Mr Chew, that wasn’t Building Fund money that was being used, was it?

Chew: In 2002, I’m not sure. Probably not.
……

DPP: Yes, the $231,000 in 2002 the church was told this money had been spent, all right? And you’ve just said you don’t think it was Building Fund money. All right? Then we come to 2003. That $231,000 gets shifted to Attributes, and then the merry-go-round was put in place, to have Wahju’s money backed out of the Building Fund and then used to cover the $231,000. Correct?

Chew: That may not have been what happened because, your Honour, in CH-95 (Annual General Meeting in 2002), in the next few lines after the lines that the prosecution showed to me, Kong Hee actually told the congregation that these are not monies that will be spent and not recouped. In other words he’s saying it’s not going to be expended out. And he went on to say that just in the space of four weeks Sun Ho had already sold 30,000 copies of the album and they were going for a break-even target of 47,000, and therefore the monies would come back within months. So from what I understand at CH-95(Annual General Meeting in 2002), he was telling the congregation, “Don’t worry, this money won’t be expensed off. It’s a short-term loan from the church to the Crossover, and the monies will be recouped. So I’m not sure if in the end the merry-go-round was done to cover this $231k. So now I’m referring to this incident as one of the cases where church funds was directly invested into the album, be it General Fund or Building Fund.

Recap on 4 February 2015.
Referred to the same 2002 AGM script that Kong Hee had said.

DPP: If you look at the investment agreement, the appointment of AMAC in the investment policy. If you need to look at it, you can, but, really, these are silent on anything to do with investments within a mission component. There’s no mention of that. It is purely regarding investments without any distinction. Correct?

Chew: Yes, your Honour, and why do I say there’s precedence is because in prior years, in 2002/2003, when the church had already put money into the Crossover, it was a board decision. It was Kong Hee and the board that decided.

DPP: But, Mr Chew, if you’re talking about 2002/2003, for example the $231,000 that we’ve heard of, that was not framed as investments, whether into the Crossover Project or anything else. They were expenses.

Chew: I beg to differ, your Honour. If we can go to CH-95, right now I can show that it was meant to be an investment. On page 52. If your Honour will allow it.

DPP: Carry on, Mr Chew.

Chew: I think it’s part 1, on page 52. ….This is Kong Hee addressing the AGM. It says: “The deferred expenditure… now this is what we spent. Now $231,000, what did we spend on, we spent on this Pastor Sun’s MTV project because we want to use it as a tool for evangelism, but this is not just monies spent and we won’t recoup because we’re going to recoup it back in a few months’ time.” This is an investment, your Honour: “Now, the cost of the MTV is almost a quarter million dollars, we need to sell 47,000 copies to break even. As of now, 4 weeks later, we actually, today is what the 28^th of last month was the eve of Easter Good Friday, already we sold 30,000 copies. Now and we haven’t even come to Singapore yet, yes, Amen.”

DPP: Mr Chew, I think I shall have to correct you there. If you go back to the beginning of the paragraphs that you’ve just been referring to, what Kong Hee says is: ‘The deferred expenditure, G [he is referring to the line item], now this is what we spent.” He doesn’t say “the investment that you see listed in the accounts”, he doesn’t say “this is what we invested”. Correct?

Chew: Can I take on from here?

DPP: No, correct or not?

Chew: Of course, your Honour. He didn’t use the word “investment” but … it doesn’t mean it is not an investment.

DPP: Because this $231,000 had been recorded and accounted for as expenses. Correct?

SC Maniam who is representing Serina Wee stood up.

Maniam: Your Honour, I object to that question. Mr Foong has given a detailed explanation of the correct accounting treatment and, if my learned friend is going to say that deferred expenditure is expenses, then we’ll have to redo all of the transcript, your Honour. Because deferred expenditure is not expenses from an accounting perspective. I had taken Mr Foong through this at length.

[Mrs Light’s comment: Only the Board and EMs who attended 2002 and 2003 meeting will know better.]

5 Feb 2015 – Chew cross-examined by DPP – Part 2 (MrsLightnFriends: 9 Feb 2015)

Question: Board approval is needed or not needed?

I was confused by what DPP has said on 5 February 2015. If I have listened and processed my thoughts correctly, DPP said Mr Chew knew that he has the discretion to do any investment and he exercised the discretion to avoid board approval and now being charged he pretends that he thought all along the bonds needed board approval and the crossover mission component is an afterthought.

Recap what was cross-examined On 5 February 2015 – PM session.

DPP: I put it to you that you are lying when you say that you believed the board had approved the Xtron bond investments.

Chew: I disagree.

DPP: I put it to you that, in fact, you know that the bond investments didn’t need approval because you could simply exercise your discretion as investment manager to enter into the bonds.

Chew: Your Honour, I take it that it is now the case of the prosecution that no board approval is needed?

DPP: Just answer the question.

SC Sreenivasan stood up.

Sreeni: Your Honour, with respect, I think it’s a very fair question because this time it is put that “you knew that the bond investments didn’t need approval”. I think, with respect, they have to clarify the question to the poor witness.

Chew: I can’t answer the question unless I know the stand of the prosecutor, your Honour, because he’s asserting that the truth is that I could exercise my discretion and that I knew that I could exercise my discretion. Without clarification, I can’t answer this question, because I don’t even agree.

DPP: Mr Chew, if that is how you answer the question, then just go ahead and answer the question.

Judge: In this case, Mr Ong, I have to agree with Mr Chew’s point, which I think Mr Sreeni is going to buttress as well. Your question is framed as, “in fact, you knew the bond investments didn’t need approval.” And you are putting it to him that, in fact, he knew this. Now whether it’s true that the bond investments don’t need approval, you can argue that that’s a separate point, but I think, to be fair to him, it may be better to clarify this.

DPP: Your Honour, I will answer…. assuming that the first Xtron bonds were indeed genuine investments, then because AMAC had been given an investment mandate to invest in bonds, the board was not required to approve the first Xtron BSA.

Defence Council Mr Seah who is representing Sharon, stood up too.

Mr Seah: Your Honour, this is where I’m asking for clarification. This is important for my client’s case. Is the prosecution saying that so long as investments are genuine, board approval is not needed and AMAC can exercise its discretion?

Senior Council Sreeni stood up and he requested for clarification.

Sreeni: “Assuming” is a hypothetical, he doesn’t want assumption. He wants to know what is the prosecution’s case before his client Tan Ye Peng gives evidence.

DPP: Your Honour, I think it’s been very clear throughout the trial, during the prosecution’s case as well as the defence case, that our case is that these were sham investments. In other words, that they are not investments at all.

So on that premise, for the purposes of our case, to approve that these were sham investments, not intended to create genuine legal obligations, it is really irrelevant whether board approval is required, because there is no question of board approval of something that is not an investment in the first place. As I have said earlier, the reason why this issue of board approval has been explored at length with this witness is because he is basing his defence on a supposed reliance on the board approving the investment, when, on the basis that these really are investments, such approval isn’t actually required. I would have thought that this would have been clear. I’ve stated to your Honour, and I think your Honour probably knew this from our submissions at the close of the prosecution’s case, that this is our position, and this is our case.

……

After lunch Sreeni stoop up again and he told the court that the prosecution position was not written in the submission document.

Almost 2.5 hours of cross-examination related to the topic on board approval.

DPP:….Mr Chew, I put it to you that this claim that you believed that board approval should be obtained for the Xtron bonds because of its mission component is a lie.

Chew: I disagree.

DPP: I put it to you that it is something you are raising during this trial to try and distance yourself from the decision that was made to enter into the sham Xtron bonds.

Chew: Your Honour, is the prosecution laying the case that I was part of that decision-making?

DPP: Yes, Mr Chew. That’s why you are giving evidence now.

Chew: I disagree.

Click here to read “Recap what was cross-examined on 3 February 2015 – PM session“

3 Feb 2015 – Chew cross-examined by DPP – Part 2 (MrsLightnFriends: 9 Feb 2015)

Xtron Bond is Investment and mission (Crossover Project)?

Chew said the decision to buy Xtron and Firna bonds was made because of mission and investment component.

Recap what was cross-examined on 3 February 2015 – PM session.

DPP: Witness, I put it to you that your explanation that all along you considered these to be the Xtron and Firna bonds to be hybrid investments with a dual purpose of making returns and furthering the mission objective of the church is an afterthought.

Chew: No your Honour. I came out with those statements soon after we were raided.

DPP: I put it to you that at no time in 2007 and 2008 were the executive members ever told that these Xtron and Firna bonds that the church was entering into were some kind of hybrid investment.

Chew: Yes, I agree.

DPP referred to another question in the CAD statement. In the CAD statement Chew said, “the Xtron bond is not a pure investment. It has a component of missions in it. It is a decision for Pastor Kong and the Board to decide whether to fund this Crossover. But having said that, it does not mean that I did not have confidence that the Crossover would be successful.

Chew: Yes. Yah, so this is one reference to mixed motive, your Honour. What I’m saying is that because of the missions component, the second component, it cannot be a pure investment decision for AMAC to decide. Because if it was just for financial returns, then, yes, most likely I would be the one deciding. But now because there’s additional mission component, which is the church objective, therefore I say it’s for Pastor Kong Hee and the board to decide….. I went on to say in the next few lines, in question 694, that “There was expected to be income from the sale of albums…”

DPP: Well, I put it to you that the answer you’ve given as with the earlier answer that I referred you to, really suggests that any returns, if the Crossover was successful, would be a bonus, and that the real purpose of the investments was to fund the Crossover, which is why it was up to Kong Hee and the board to approve them, according to you.

Chew: No, your Honour. The reason why Kong Hee has to approve it and the board has to approve it is because now they have to decide…….because there’s a missions component in this whole evaluation, of course the fund manager can’t be the one deciding. Because I can’t decide how important is this missions component to the church. But in no way am I saying that it’s just missions that’s important, that financial return is just an added bonus. If that was the case, your Honour, then we should have just gone for a missions fund, which I was totally open to, and then just put the money out for the crossover and see whether it makes money. Your honour, I’ve already showed evidence that, even from early 2002, and even at board meetings, it was said that the albums were expected to break even or even make profits. There was never any change in that perception, at least for me.

DPP: I put it to you that, at the material time, that is, at the time the bonds were entered in 2007 and 2008, neither the board nor the auditors were told that they were hybrid investments.

Chew: Yes, I think they were not specifically told, your Honour.

DPP: I put it to you that it was consistently represented to the board and to the auditors that these were investments purely for the purpose of returns.

Chew: Your Honour, at that time I believe that the board knew there were two purposes and it was missions and financial returns.

Chew suggested Xtron reap profits from church: Prosecutor (Today: 7 Feb 2015)

SINGAPORE — When Xtron Productions ran into cash flow problems, five of City Harvest Church’s leaders currently on trial scrambled to find ways to repay money it owed the church, with former investment manager Chew Eng Han even suggesting that Xtron Productions reap its profits from the megachurch.

When the accused were told that Xtron Productions would not be able to pay up when the bonds that it issued City Harvest matured in August 2008, the five extended the bond term from two to 10 years. They also tried to “manipulate the earnings of Xtron Productions from the church” to ensure that the interest liability could be met, Deputy Public Prosecutor Christopher Ong argued yesterday.

Prosecutors yesterday charged that Chew and his alleged co-conspirators hid their scheme of using church funds to invest in sham bonds, including a S$13 million bond issued by Xtron Productions, to boost the music career of Ms Ho Yeow Sun, the wife of founding pastor Kong Hee.

Chew and Kong are among six church leaders being prosecuted for misusing more than S$50 million in church buildings funds to finance Ms Ho’s foray into the United States. The church had sought to use Ms Ho’s pop music to evangelise through what it called the Crossover Project.

The prosecution believes S$24 million in church building funds were used to buy sham bonds in two companies, including Xtron Productions.

Another S$26.6 million was then allegedly circulated through complex transactions to cover up the first sum.

To prove his point that five of the accused, and not Xtron Productions’ directors, called the shots in the firm, DPP Ong presented pre-signed bond certificates with neither the values nor dates filled in.

The firm’s former director Wahju Hanafi had previously testified that those were “blank cheques” that allowed for drawdowns without any permission needed from the directors.

Chew’s defence was that the measures were simply part of what he called a “contingency” plan.

DPP Ong further contended that Chew, 54, tried to cover this up when presenting investment updates to the church’s board members, despite knowing full well that the bond would not be repaid in time.

Pointing to a series of minutes taken at meetings, DPP Ong told the court that Chew, in his attempt to keep the sham under wraps, instead attempted to reinforce the belief that the corporate bonds were good investments at the time.

Rejecting the proposition, Chew said he did not tell the board because “it didn’t strike me as something very important or that is going to shock them … There was trust in Kong Hee and the Crossover team”.

There was also no definite plan as to when proceeds would come in, he added.

Dismissing Chew’s reasons as “absurd and disingenuous”, DPP Ong countered that Chew and his co-accused had intentionally kept the board in the dark so that the sham would not be exposed.

The trial continues on March 16.

Fund manager 'hid fact that bonds won't be repaid on time' (ST: 7 Feb 2015)

CHC board did not need to be told because it trusted founding pastor Kong Hee and team in charge of Crossover Project: Chew
 
WHY did you hide from City Harvest Church board members the fact that the bonds you helped the church invest in were not going to be repaid in time?

This was the pointed question that the prosecution fired at the church's former fund manager, Chew Eng Han, yesterday. The reason for the silence, accused Deputy Public Prosecutor Christopher Ong, was that the bonds were nothing more than a sham.

But Chew retorted that there was never any intention to hide anything about what he has maintained are "genuine" investments.

The board did not need to be told, Chew claimed, because it trusted founding pastor Kong Hee and the team in charge of the church's Crossover Project, which aimed to evangelise through the music of Kong's wife.

The matter did not strike Chew as being particularly important and, in any case, there was no point in sharing until the team came up with a way to solve the repayment problem.

DPP Ong described those reasons as "absurd" and "disingenuous".

Chew, 54, is one of six people on trial for misusing $50 million in church funds to boost the music career of Ms Ho Yeow Sun, and covering up the misuse.

The prosecution alleges that money from the megachurch's building fund was illegally channelled into production firm Xtron, which managed Ms Ho. This was done through the church's investment in Xtron bonds.

Much of yesterday's hearing centred on Chew's role in this alleged scam. He also allegedly had a hand in sham bond investments in glass maker Firna and finding ways to throw auditors off.

The initial $13 million Xtron bond agreement, which was signed in August 2007, was due to be repaid two years later. But in 2008, the repayment was pushed back to 2017.

DPP Ong said yesterday: "What you (and fellow defendants) Kong, Tan Ye Peng, Serina Wee and John Lam did was to intentionally hide the fact that the $13 million misappropriated from the building fund to fund Sun Ho's music career was in danger of not being returned."

Chew disagreed, again.

In an intense 30-minute spell of cross-examination, DPP Ong also charged that it had always been their intention to push back the due date for the first Xtron bond repayment for as long as it was necessary for Ms Ho's music career to start returning profits.

Mr Ong said: "You never treated the legal obligation as genuinely... binding; you merely entered into the bond as a sham to cover taking the building fund money to fund Sun Ho's music career."

But Chew pointed out that regardless of how Xtron was funded, there was a legal agreement and transactions were all recorded in the church's accounts.

The trial resumes on March 16.

Ex-fund manager 'lied to court over sham bonds': City Harvest trial (ST: 6 Feb 2015)

CITY Harvest Church's former fund manager helped it to invest in alleged sham bonds despite knowing full well that they could not be paid off in time, a court heard yesterday.

The prosecution charged that Chew Eng Han also tried to cover this up and lied to the court.

The 54-year-old is one of six people accused of misusing $50 million in church funds to boost the music career of Ms Ho Yeow Sun, the wife of founding pastor Kong Hee, 50, and covering up the misuse.

His alleged involvement included channelling money from the church's building fund into sham bond investments in Ms Ho's then management company Xtron, and glass manufacturer Firna.

Before accusing Chew of lying, Deputy Public Prosecutor Christopher Ong yesterday referred to an e-mail sent to him in July 2007, regarding a projection of how Ms Ho's planned album would sell in the United States, and how money from its sales would help to repay the initial Xtron bonds.

Fellow accused Serina Wee, 38, wrote in the e-mail that Xtron would take 10 years to pay off the $13 million in bonds. This projection was based on the album selling only 200,000 copies.

Chew claimed in court yesterday that he always thought the amount could be paid within two years, based on what Kong had told him. He said he had probably thought Wee was being "ultra conservative".

He insisted that he would have asked Kong to rethink the bond plan and fund Xtron directly through a missions fund if there was a 30 per cent to 40 per cent chance of Wee's projection occurring.

Earlier, he said it would have been "suicidal" to proceed with the bonds based on Wee's projection.
DPP Ong said: "I put it to you that when Serina gave you this projection of 200,000 albums (sold), you accepted it and took it seriously because you knew that Serina, (fellow defendant) Tan Ye Peng and Kong Hee were the ones who were able to provide accurate information about the budget."

He added: "I put it to you that you are lying when you say you didn't take Serina seriously because you are trying to cover up the fact that you entered into the bonds knowing that they would not be repayable upon maturity."

Chew disagreed both times. He has maintained that it was more important to consider whether the bonds would yield profits.

Earlier yesterday, he admitted he had come up with the idea of using bonds to put money into Xtron. "In terms of packaging it as a bond, yes, it was my idea, your honour."

He agreed with the prosecution that if Kong had not given the go-ahead for the bond plan, nothing would have been done.

Chew also agreed that other options of getting funds from outside the church had been exhausted, and that the bond plan was the only way to get the funds needed to continue financing Ms Ho's career.

But asked whether it would essentially have spelt the end of the Crossover Project if the bond plan had not gone ahead, Chew said: "I don't know, maybe they would have gone to borrow money from some rich individuals."

5 Feb 2015 – Chew cross-examined by DPP – Part 1 (MrsLightnFriends: 6 Feb 2015)

On 5 Feb 2015(morning) and 4 Feb 2015(afternoon), many questions were asked, just to find out whether bank loan was mentioned to the board. During Sharon’s cross-examination she did testify that bank loan must have been mentioned to the board but she did not have a recollection of it. The DPP argued that neither her hand written notes nor her minutes of board meeting mention the loan. Chew confirmed with the DPP that he could not remember whether bank loan was mentioned during the meeting. DPP went on to referred to another exhibit, the investment committee meeting minutes dated 29 Jul 08.

1. DPP said that the investment committee is supposed to have considered the recoverability of the Xtron bonds.

2. The minutes did not mention of any loan. But there is recoverability analysis attached to the minutes. But the analysis report shows Xtron bond could be able to recover over a period of ten years.

DPP said that the documentary evidence of the investment committee meeting minutes, CHC board minutes, as well as Sharon Tan’s handwritten notes, did not mention the loan.  [Chew said, "Yes"]

Then the DPP pointed back to the meeting that Chew had with Mr Foong in 2007 regarding the Xtron bonds and the alternative plan to loan money through UEPL to Xtron.

DPP: You mentioned that your focus in this discussion was really on what the disclosure implications of either option would be. Correct?

Chew: No, your Honour. The focus was on the Xtron bonds itself. The secondary topic was on disclosure. On the Xtron bonds, as in the plan for Xtron to issue bonds to the church, your Honour.

[On 4 February in the afternoon, there were many questions related to this meeting with Foong were asked. Perhaps too many questions, I don’t remember Chew said that his focus in the meeting with Foong was really on disclosure issues. 

DPP: But, from your account of the discussion, it would seem that the determinative issue that you were consulting him on was disclosure. Correct? Which of these two options would lead to, or might lead to having to have disclosure of the transaction from CHC’s point of view.

Chew: No, your Honour, disclosure was only one of the issues. The other issue, which what Kong Hee wanted me to check with Foong, was whether it’s okay for the church to purchase Xtron bonds. I think that was of primary importance. And secondary is, of course, once you purchase the bonds, Kong Hee doesn’t want the bonds to be known to the whole world, so I have to check on the disclosure as well. ]

DPP referred back to email exhibit (E-1 dated 3 Jul 2007), that Chew was being cross-examined yesterday. I shall call this 200,000 CDs exhibit.

In this email Serina wrote to Eng Han discussing about the period of the bond. This is a 5 pages long email.

Serina Wrote:Initial proposal of the bond period was one and a half year, then 2 years then final discussion is 10 years.On page two of the email, Serina said “And Xtron will take 10 years to pay back UEPL the $13m.
Eng Han asked: Do we really need 10 years for Xtron to pay back .. can’t the sales of album cover back the majority of the loan?
Serina Wee replied: We based our projection on 200,00 copies of English Album sole which will only yield us $2.17m, hardly enough to pay off the $13m.

[Just to recap what was cross-examined on 4 Feb 2015.

DPP asked whether two-year bond would actually take ten years to pay back was shared with the auditors. Chew was not sure because he didn’t deal with the auditors on this.

DPP: So wouldn’t you agree that information that a 2 years bond can only be repaid in ten years’ time would have been relevant information to valuing the bond? 

Chew: My personal view, your Honour, is that what’s more relevant is whether Xtron is able to pay back the money eventually. Whether it’s able to pay back in 2 or 3 or 5 or 7 or 10 years is not the main point for the auditor. …..Charles Schwab for instance, had bonds that was going to be due soon and he re-issued new papers that extended the maturity. In other words, what’s relevant for valuing the bonds, really is whether the issuer has the ability to repay. Not so much the timing, but ultimately does it have the sources of income to pay it. That’s my view.

….. 

DPP: From an investment perspective, one would not go into an investment, into a bond, thinking, “I know this bond I’m buying, the firm will actually not be able to redeem it when it becomes due, but somehow I know that they will just issue a new bond and drag it out”. That wouldn’t be the normal way to approach an investment. Correct?

Chew: You’re saying that someone wouldn’t go into a bond knowing that it wouldn’t be repaid on time? 

DPP: Yes

Chew: Not true, you Honour. There are about $18 trillion of US Treasuries out there right now held by investors and most of these investors know that when the bonds come due, they will not be repaid, but they will be rolled over.]

With regards to this email, Chew in his EIC said, “he didn’t take it seriously”.

DPP: If you had taken it seriously when you received it on 3 July 2007, it’s probably safe to say that you would have brought it up with Mr Foong subsequently. Correct?

Chew: Your Honour, if I thought that this 200,000 CDs was more than a 50per cent chance, I think this whole bond wouldn’t have taken off in the first place. I wouldn’t even dare to go back to Mr Foong and ask him, “Is it okay to issue a bond?”, knowing that money’s not going to be recouped. This whole thing wouldn’t have taken off, at least not with me.

DPP: Okay, because you have said in evidence earlier that because it was 200,000 copies, then, for sure, this bond is a sham. Correct? That’s what you’re saying that you would not have gone into this bond, if you had taken that seriously.

Chew: Yes, and when I said “seriously”, I’m talking about probability, your Honour. Investment is really about odds as well. It’s not gambling. When every investment, we have to weigh and assess the probability of making money at different levels of revenue. And so it’s really a judgment. And when I say, “I don’t take it seriously”, I mean 200,000 copies is like, probably maybe a 5 per cent chance, your Honour.

DPP referred to 1 email exhibit written by Serina to Foong. (Chew not in the loop.) DPP uses this email to get Chew to confirm the following points

1. Foong wasn’t told in 2007 that there would be a need to re-issue new bonds upon expiration of the first Xtron BSA in 2009. Chew said, “Yes”.

2. There was no mention to Foong about Xtron being an insolvent company. (Chew said, “I don’t understand why Serina would call it “insolvent” because I understand “insolvent” to be a state of a business or company where it has no more source of funds to continue. If it does continue to having funding, whether from CHC or otherwise, it is not insolent”.)

DPP referred to another email exhibit written by Tan Ye Peng to Foong. (E-269)
<…questions related to this email exhibit…>

DPP Put Statement

DPP: I put it to you that, in fact, at this meeting (the 2007 meeting with Foong), you merely asked Mr Foong generally about the consequences of CHC investing its Building Fund into the bonds of a private limited company.

Chew: Without mentioning Xtron or the purpose of the bonds?

DPP: You may have mentioned Xtron, but you didn’t go into details of the bonds.

Chew: In other words, your proposition is that the main agenda was to find out the consequences, the accounting consequences?

DPP: Yes

Chew: No, I disagree.

DPP: I put it to you that at the meeting you and the other participants from CHC deliberately hid critical information (refers to Kong Hee and Tan Ye Peng had control over Xtron in relation to Sun Ho’s music career) from Foong about the proposed Xtron bonds.

Chew: I disagree, your Honour, because, at that point in time, I didn’t know the extent of control of Kong Hee and Tan Ye Peng.

DPP: I put it to you that you deliberately concealed this information about control to avoid the auditors’ requiring disclosure in CHC’s financial statements.

Chew: I disagree.

DPP: I put it to you that you also concealed the fact that the Xtron bonds would not be repayable upon maturity.

Chew: In 2007

DPP: Yes

Chew: I disagree. Your Honour, if there was intention to conceal the inability of Xtron bonds to be repaid, then why would Serina or Sharon then tell the auditors in 2008 that it may not be repaid on time?

DPP: I put it to you that you hid all this critical information because, ultimately, you wanted to conceal the fact that the Xtron bonds were actually a sham.

Chew: I disagree.

DPP: I put it to you that Mr Foong was in no position to give you good advice about these bonds because you had hid this critical information from him.

Chew: I disagree.

DPP: I put it to you that Foong was not asked whether the bonds were acceptable either legally or from a governance perspective because this was only asked in E-269.

Chew: I disagree.

DPP: I put it to you that, in any case, when you met Mr Foong in 2007, you know that he was not the right person to seek advice on the legality of the bonds.

Chew: I knew I had to seek advice on legality from the lawyers, your Honour. But Mr Foong’s input was in relation to acceptable practice for charities. It was important from that angle.

DPP: I put it to you that the whole purpose of this meeting with Brother Foong on 1 August was to test your compromise statement of Mr Foong to confirm that it would not trigger consolidation.”

DPP: What I’m putting to you now is that in the same way, when you went to see Mr Foong on 25 June 2007, what you were actually doing was, without his knowledge, using him to test out your plans to see how you could go about avoiding disclosure of the use of CHC’s Building Fund to finance Sun Ho’s music career.

DPP: I put it to you that it was after this meeting with Foong in 2007 that you and the others involved in planning the first Xtron Bonds, Ye Peng, Serina, Kong Hee and John Lam, concluded that the Xtron bonds was the best way to avoid such disclosure.

Chew disagreed and for the last put statement Chew gave explanation that bond was the only option they approached Foong in 2007.

City Harvest trial: Chew ‘knew investments were a sham’ (Today: 6 Feb 2015)

SINGAPORE — Despite red flags being raised internally over the church’s inability to repay money taken out of its coffers to buy bonds, City Harvest Church’s former fund manager Chew Eng Han ignored the warning because he knew the investments were a sham anyway, prosecutors argued today (Feb 5).

They were referring to the S$13 million that was taken out of the mega-church’s building fund to invest in bonds issued by Xtron Productions, the company that used to manage pop singer Ho Yeow Sun, the wife of church founder Kong Hee.

Chew had no qualms about doing so because he knew the bonds were just part of a series of sham investments used to fund Ms Ho’s pop music career, prosecutors told the court.

Chew and Kong are among six church leaders on trial for misusing millions of dollars in church funds to fund Ms Ho’s foray into the United States. The church had sought to use Ms Ho’s pop music to evangelise through what it called the Crossover project.

The prosecution believes S$24 million in church building funds were used to buy sham bonds in two companies, including Xtron Productions’. Another S$26.6 million was then allegedly circulated through complex transactions to cover up the first sum.

Today, the prosecution pointed to an email from July 2007, where co-accused and the church’s former accountant Serina Wee projected that selling 200,000 copies of Ms Ho’s album would rake in only S$2.17 million, which was “hardly enough to pay off” the principal.

In the email, Wee had also raised concerns that it would take ten years to pay off the bond — eight years more than the defined term.

Chew, however, contended that the Xtron bonds were genuine legal obligations that were expected to be repaid by Ms Ho’s album sales, which he was confident then would be profitable.

His sentiments were based on his “sense of (Kong Hee’s) confidence in Ms Ho’s album”, he told the court, adding that he felt there was only a 5 per cent chance that Wee’s projection would be true.

When Deputy Public Prosecutor Christopher Ong questioned how Chew could disregard such specific projections in favour of “non-specific conversations” he and Kong had, Chew argued that Kong was the one with the best gauge of sales as he was based in the US then.

“I took my cue more from Kong Hee, actually, and I also knew Serina Wee to be conservative and also actually quite prone to mistakes... what she’s saying here didn’t gel with what Kong Hee was telling me, actually,” he said.

Chew added that if there were a higher probability, say 30 to 40 per cent, that the projections were correct, he would have advised Kong to think twice.

“It (would be) suicidal for all of us to want to go and do this ... from the start knowing that only S$2.17 million was going to come back after spending S$13 million,” he said.

The trial continues.

Chew was dishonest in testimony, to downplay involvement: Prosecutor (Today: 5 Feb 2015)

SINGAPORE — City Harvest Church’s former investment manager Chew Eng Han was “dishonest and disingenuous” in his testimony, in a bid to downplay his involvement in hiding the close ties between the church and Xtron Productions, the prosecution charged yesterday.

Chew and five other church leaders, including founder Kong Hee, are on trial for misusing millions of dollars in church funds to advance the pop music career of Kong’s wife, Ms Ho Yeow Sun.

The prosecution believes S$24 million in church building funds were used to buy sham bonds in two companies, including Xtron Productions, which used to manage Ms Ho. Another S$26.6 million was then allegedly circulated through complex transactions to cover up the first sum.

Citing an email Chew sent in December 2006, Deputy Public Prosecutor Christopher Ong argued that Chew was instrumental in disguising the sham transactions as legitimate so as to fend off auditors.

In the email, Chew had proposed, among other things, for Xtron to have a separate physical office and a full-time chief executive, so “all these transactions (will) look real and legitimate”.

But Chew told the court that he was only being mindful of “baseless accusations” that might have arisen over how the church’s money was being used to benefit Kong and Ms Ho, especially after church member Roland Poon fired such allegations in 2003.

“Your Honour, I’m a man of substance. I don’t believe in appearance. But I do believe as well that if you project the wrong appearance, it just invites false accusations. Simple as that,” he said.

Chew maintained that his ultimate interest was in preserving the Crossover Project, which sought to evangelise through Ms Ho’s music.

When DPP Ong pointed out another email in which Chew had suggested condensing the list of investments shared with the church’s investment committee, Chew said he had preferred to keep details about the Xtron bonds from a particular committee member in order not to “invite unnecessary trouble or another Roland Poon crisis”.

'Sham bonds continue earlier misuse of funds': City Harvest trial (ST: 5 Feb 2015)

Prosecution: Ex-fund manager used rent payment for singer's career

EVEN before alleged sham bonds were part of the picture, City Harvest Church's former fund manager had helped to fuel Ms Ho Yeow Sun's music career by making money that was earmarked for the church's building fund look like it was going elsewhere.

Chew Eng Han, who rejected this suggestion by the prosecution yesterday, is one of six people accused of misusing $50 million of church funds to boost the music career of Ms Ho, who is the wife of founding pastor Kong Hee, and covering up the misuse.

The alleged wrongdoing involving the sham bonds was a continuation of the earlier practice, the prosecution argued.

It cited, as an example, a 2006 e-mail to Kong and deputy senior pastor Tan Ye Peng regarding the payment of "advance rental" to production firm Xtron to hire premises at Singapore Expo.

Chew had effectively proposed that this payment should be made twice, and that the rent would only be settled with the second payment. Xtron, which was Ms Ho's manager, would use the first payment for her career.

In the same e-mail, Chew wrote of the need for this and other transactions to "look (like) real and legitimate and arm's-length commercial transactions".

"It's the appearance, not the substance, that you are concerned about, isn't it?" Deputy Public Prosecutor Christopher Ong said.

Chew retorted: "Your honour, I'm a man of substance. I don't believe in appearance. But I do believe as well that if you project the wrong appearance, it just invites false accusations."

DPP Ong then accused Chew of being "disingenuous" and lying by ignoring the "obvious meaning" of what he had written. "The proposal that you make in this e-mail is all about ensuring that the form disguises the real substance of the plan."

The real substance of Chew's proposal, the prosecutor continued, was to channel building fund money to Ms Ho's music career, disguised as advance rental. But Chew disagreed.

Since he began testifying last Monday, Chew has insisted that what he did for the church as its fund manager was above board and according to "common" market practices.

At one point yesterday, he sounded a note of frustration: "I'm being held to move along the lines, very narrow line, of what the prosecution believes are proper and not proper investments. I think perhaps the prosecution needs to - no, I will just - I will refrain from saying that, your honour."

Chew is the fourth defendant in the long-running case to testify. The trial continues.

4 Feb 2015 – Chew cross-examined by DPP – Part 1 (MrsLightnFriends: 5 Jan 2015)

After some questionings, DPP Ong did not get the desired response from Mr. Chew, he put to him that he is being disingenuous and lying.

Below is the recount of cross-examination by DPP Ong on 4 February 2015.

4 Feb 2015 – Chew cross-examined by DPP – Part 1

DPP referred to an email exhibit (E-196) dated 15 June 07, written by Ye Peng to Serina and Chew.

In this email Ye Peng was suggesting a plan to lend CHC’s Building Fund to Xtron and then, later, to allocate part of the next Arise & Build to the General fund, and then that allocation would then be used to replace the money in the Building Fund.

DPP recounted what was said yesterday. Not from this email, there was another plan to use the Building Fund indirectly by placing as a fixed deposit with Citic Ka Wah Bank to build the relationship with the bank in the pursuit of getting a loan from Citic Ka Wah Bank to fund the Crossover Project.

After Eng Han agreed with DPP Ong, he referred Chew to an email exhibit (E-189) dated 4 Dec 2006. The bottom of this email was Chew writing to Kong Hee and Ye Peng. (This is a 4 pages email)

Dear Pastor,

Here’s a follow up to the proposed plan in the sms.

CHC will prepay Xtron rental of expo for 2007 and 2008, in return for a discount on the rates. So instead of the $3.1m per year, perhaps it pays the amount which Xtron pays Unusual? Xtron can use the money for the Crossover first, but as the next 2 years progress, it will need the money back to pay Unusual.

This is where the new building comes in. Once we secure the land, Xtron takes a down payment from CHC in exchange for securing a 10-year usage of the concert hall….<<skipped some lines of the proposal>> UEPL will let out directly to SUTL (Arther and JJ’s company). I am thinking of $1m for the go-kart plus $1m for F1 each year. Once we secure the land, we take a $3-4m deposit from them. The money can then be used to help pay for the land.

For all these to look real and legitimate and arms-length commercial transactions, I feel we need to really physically separate UEPL and Xtron from CHC’s office. Otherwise, if one day we get audited, these companies are probably going to get scrutinized for independence, because of the many transactions CHC has with them.

I propose the following changes:

1. Move Xtron staff out from CHC office and have a separate real office of its own.
2. Have a separate accountant – any audit which shows the CHC and Xtron accountant are the same is going to cast doubts on whether transactions between CHC and Xtron are really commercial, or are we are just trying to move funds between these 2 entities.
3. Xtron must have a full-time CEO/COO who is not Pastor Tan or any of our board members. Can Wen Ling come out of the CHC staff and run Xtron? The board should also not overlap with CHC/CHCSA’s board or committees.

DPP wanted Chew to confirm the following point:

The proposed plan was that Building Fund money would be paid out to Xtron as advance rental for the Expo but that advance rental paid would instead be used by Xtron to fund Sun Ho’s music career first, then later on more advance rental will be paid when a building was secured, and that further advance rental would actually be used to cover the 2 years of rent which was originally supposed to have been covered by the first lot of advance rental.

Chew: That’s correct, your Honour. But depending on when the building comes in and when the albums launch and the album sales comes in, by the time the album is launched, if the album is launched quickly and the sales comes in, then the next batch of advance rental that comes in doesn’t need to cover the first deposit, rental deposit.
……

DPP: Really, this is very similar in concept to the plan in E-196 (the email written by Ye Peng) to loan money from the Building Fund and then put it back later, except that, instead of a loan, here the money goes first under the label of “Advance Rental”.

Chew: Yes

DPP read the email and said that Chew in this email was really expressing a concern that people might say these were not real commercial transactions, these were just shams to move funds between the two entities. Chew disagreed.

DPP: Then can you explain what you meant by whether these transactions between CHC and Xtron are really commercial or are we just trying to move funds between these two entities?

Chew: Yes, I will explain. Sham never came to my mind until we got investigated and got charged. What I’m trying to pre-empt is the possibility which exists in the commercial world itself, in my own experience, whereby auditors will always question whether the pricing is based on arm’s length. And, really, the best way to verify and assert that these transactions are at arm’s length is to have separate accountant, separate CEOs, separate office. But the very fact that it was separate accountants means the two accountants will be negotiating prices. But that does not mean that if these steps are not done that it’s not possible to have arm’s length. It is still possible, provided the person is handling both sides, is able to separate his mind and make a distinction between the two entities.

This happens in the commercial world as well, where the same two or three directors are sitting on both sides of two entities, and one is a associate of the other. I’m really trying to pre-empt… I’m not saying that the auditors will find out that these are sham transactions. Doubts are normal when there are no separate accountants and it’s the same people managing both sides. But it doesn’t mean it’s going to be a sham, your Honour.

DPP: …… If you say “really commercial”, then alternative view, you are …. you are afraid that the auditors might have must be that not really commercial.

Chew: My concern is that the auditor, or anyone else, may think that these transactions are not arrived base on true commercial relationships, and, therefore, that the pricing could not be at arm’s length.

DPP: If that is the conclusion or the suspicion that the auditors arrive at, then the conclusion that they would arrive at is that these could then be false or shams — whatever word you want to use — but not real. Correct?

Chew: No, your Honour. If it’s not commercially arrived at, it does not mean that it’s not real. It’s just that the price at which these transactions are made may not reflect what would have happened if it was done between two commercially separate entities that have no relationships. That’s all I’m saying.

<… questions and answers…>

DPP: So why were you concerned, as you expressed in the email, that the auditor would view it as just “just trying to move funds between these 2 entities”?

Chew: Your Honour, because, first of all, there has to do with the Crossover. I’m already mindful, your Honour, because of Roland Poon crisis, the saga, that there was going to be baseless accusations, that this is done perhaps to benefit Sun and Kong Hee, which was the exact accusation of Roland Poon. And here we are trying to avoid doing things in a manner that just openly invites baseless accusations and put us in a position that makes it difficult for us to justify, your Honour. That’s the answer.

DPP: You see, now you are saying that it might put you in a position that makes it difficult to justify. A few moments ago, you were saying that it’s no problem, it’s just that somebody would have to spend a bit more time explaining. So which is it? Is it not a big deal or is it a concern that another Roland Poon incident will happen?

Chew: It is not a big deal, as in, your Honour, in my mind and conscience that there’s nothing wrong with doing this. It’s a big deal if someone does pounce on it and we end up spending weeks or months, like what we’re doing right now, trying to explain these transactions. If everything had been done as I had suggested, your Honour, perhaps we wouldn’t spend so many weeks explaining about Xtron and arm’s length.

DPP said that what Chew wrote in the email “For all these to look real and legitimate and arms-length commercial transactions” it’s the appearance, not the substance, that Chew were concerned about.

Chew: Your Honour, I’m a man of substance. I don’t believe in appearance. But I do believe as well that if you project the wrong appearance, it just invites false accusations. Simple as that.

<… questions and answers…>

DPP: So, really, what you would have been envisioning is somebody very much like what you’ve described the directors to be: people who trusted in the decisions of Tan Ye Peng and Kong Hee and so would basically be prepared to go along with their decisions without really having full information of what was going on. Correct?

Chew: No, your Honour. What I’m suggesting here is that they would ask for more information. And if giving the limited experience, of course, in the entertainment industry, they may need to brush up on it, and then ask intelligent questions, like how many songs do you have in the album, who owns the copyrights, these questions could have been put up by the CEO. Not that they’re going to run it on their own, but, of course, they know they can’t do it. But they need to fulfill their minimum duties. That was my perception of how Xtron should be run, your Honour.

DPP: Mr Chew, I put it to you that you are being disingenuous and lying because you are ignoring the obvious meaning of the words in your email.

Chew: Your Honour, which words?

DPP: The fact that you, yourself wrote in your email that these transactions need to look real and legitimate and arm’s length, as opposed to being real and legitimate and arm’s length.

Chew: Your Honour, I disagree.

DPP: You had also sought to ignore the obvious meaning of your words in paragraph 2 when your concern was clearly whether the auditors would view the transactions as shams or noncommercial deals to move funds between two entities.

Chew: I disagree.

DPP: I put it to you that contrary to your evidence that you are a man of substance, the proposal that you make in this email is all about ensuring that the form disguises the real substance of the plan.

Chew: I disagree.

DPP: I put it to you that the real substance of the plan that you’ve proposed here is that Building Fund money would be channeled to Sun Ho’s music career, disguised as advance rental.

Chew: You finished?

DPP: Yes.

Chew: I disagree, your Honour. At then end of all the puts, I would like to say something, your Honour.

DPP: And I put it to you that plan would then call for more money to be transferred to Xtron to cover for the earlier advance rental disguised as further advance rental for a subsequent period.

Chew: So you are saying that the advance rental are shams as well?

DPP: That if this had been carried out, yes, that was your plan.

Chew: The advance rental is nothing more than a disguise?

DPP said, “Yes” and Chew replied, “Disagree”.

DPP further said that this plan that Chew had proposed would essentially had meant that CHC would be paying twice for the same period of rental. Given the reason that the first rental payment would be expended on Sun Ho’s music and the second rental payment would have to be made to cover for the rental that was supposed to have already been paid for in the first rental payment.

Chew: Your Honour, when …

DPP: Can you answer my question first?

Chew: I need to clarify on the question first. What do you mean by “pay twice”? You mean expend and never going to come back, or is it expenses?

DPP: Mr. Chew, under your plan, the advance rental was supposed to be paid for 2007 and 2008. That money was going to be spent on Sun Ho’s music career, and so you would have to put in some money to actually pay for the 2007/2008 rental. Correct?

Chew: That’s provided by then album sales hasn’t come in.

DPP: Mr Chew, you would have to get money to pay the rental unless you could inject fresh sums in the album sales. Before I go on can you answer my question? The plan you proposed was to pay the rental again. Correct.

Chew: Yes

The same email Kong Hee and Tan Ye Peng was okay with Eng Han proposed plan.

DPP further said, “Quite apart from having been disingenuous and dishonest in your answers this morning, you are also misleading and very selective when you referred to this email during your evidence on 29 January 2015. Because then, you said that the concept of a long-term lease between Xtron and CHC already existed in the year 2006, and you sought to rely on this email (E-189) to suggest that the ARLA, which is the subject matter of the charges, was just another advance rental agreement like the one in this email. Correct?”

Chew: No I disagree.

DPP Ong based on this email (E-189) to pin down on Eng Han. He concluded that Eng Han gave his evidence on 29 Jan 2015 that this was an example of an earlier genuine advance rental agreement or proposal but has omitted to go through the other parts of this email that shows the advance rental proposed was just part of a plan to channel money to Sun Ho’s music career.

DPP: … you didn’t refer the court to those sections because you didn’t want the court to realize that this advance rental plan in E-189 was just another scheme to finance Sun Ho’s music career.

Chew: Your Honour, I’m under no illusion that just because I don’t bring up the part of the email then the prosecution wouldn’t bring it up. The answer is no.

DPP: Yet this morning, when I have drawn your attention to those sections, you have tried to continue to dissemble and give explanations contrary to your clear words in the email itself. Correct?

Chew clarified the meaning of the word “dissemble” and he said, “No.”

……

Chew: Your Honour, this email was based on an actual property project I was working on. It was called Project Shamgar. It was the site, the land on which the F1 site, the pit building site, the pit building stand now. This was a project I was working together with Arthur Tay from SUTL. I’ve shown emails your Honour, where Arthur was going to meet the minister as well as Iswaran. Arther was flying to meet Iswaran about F1. Xtron was going to be the master lessee, not just to rent to City Harvest but to rent out to concert operators. UEPL, the owner of the project, was going to rent it out to the F1 people, which was Ong Beng Seng. I did actual projections. I was wondering whether I should put in those projections as evidence but since now I’m being accused that these whole thing is a sham, in my re-examination, I can produce those projections, your Honour, to show that this was a real project. What I was proposing was not a commercially justifiable thing for Xtron to do, it was commercially motivated.

DPP: …..but even if Project Shamgar was a genuine plan to secure a building, you have taken that plan and you’ve folded into it your proposal in E-189 to use the building to put back the advance rental that you were planning to use for Sun Ho’s music career.
…….
DPP: Mr Chew, you’re not answering my question. My point is that your proposal in E-189 basically uses this building project even if it’s legitimate as an excuse to put funds into Xtron so that the advance rental that has been used to fund Sun Ho’s music career can be put back. Correct?

Chew: Can be put back??

DPP: Yes

Chew: What do you mean by “advance rental that has been used to fund Sun Ho’s music career can be put back”? Into where?

DPP: Mr Chew in E-189, as we’ve gone through, you propose paying advance rental to Xtron using that first tranche of advance rental to finance Sun Ho’s music career, and then paying a second tranche of advance rental to replace the first tranche of advance rental. Correct?

Chew: Yes

DPP: And the second tranche of advance rental was going to be portrayed as advance rental for the new building project it could be Shamgar but was actually going to be used to cover the rental that was supposed to have been paid for by the first tranche. Correct?

Chew: Your Honour, as I said, it depends on when album sales comes in, and when this second advance rental is done. Because it wouldn’t be done until the property project takes off. So I can’t answer.

DPP referred Eng Han to another email E-455.

Eng Han explained that the concept of using advance rental to fund the Crossover was not hidden from the auditors. There is nothing sinister about this. He said it is just an interim funds not being used to fund the album trailer. At that point in time, as what he said, he always thought the album was within one and a half to two years. It’s just a bridging finance.

E-455 dated 7 Dec 2006. Chew wrote to Kong Hee and Tan Ye Peng about the Shamgar Project with financial projections.

Chew wrote:
… project proposal …

The bottom of this email
Because of all the major commercial transactions between UEPL, Xtron and CHC, this is why we need total independence of all 3 entities, so that any scrutiny will reveal that everything is done at arms-length, and not favoring any particular party or used as a means of channeling money out of CHC.

DPP: And further advance rental to be paid to Xtron was going to be portrayed as advance rental in relation to this building(Shamgar Project).

Chew: Not portrayed, your Honour. It’s actual advance rental.

DPP read the bottom of the email and said, “again there is your concern that the transactions must be arm’s length”. Chew agreed.
……
Eng Han confirmed with DPP that if the transaction favours one particular party then it would not be arm’s length.
……

DPP another put statement
DPP: I put it to you that, from your description of the relationship between CHC and the Xtron directors, it would have been the same for Kar Weng, for Siow Ngea for Wahju, that the interest that they would put foremost was not Xtron but City Harvest. Correct?

Chew: Yes, City Harvest interest was more important.

 <… more questions and answers…>

Eng Han said … the whole objective is to ensure that the church doesn’t get short changed. But before we can ensure that, we need to know what’s the arm’s length rate, your Honour, and then we add something better for the church. That’s what’s happening in all these conversations.

Chew pointed out that the projections were sent as attachment to Kong Hee and Tan Ye Peng in this email (E-455). This is not a sham as he told them the whole business model about this Shamgar Project.

DPP referred to another email dated 22 Feb 07 sent out by Suraj. (E-459)

In this email he said that the board was told that the advance rental was to pay for July 2007 to February 2009. There is no mention of the actual usage of the advance rental was to be used to finance Sun Ho’s music career.

The author of the email was Suraj. DPP questioned Chew why Suraj didn’t write on this email and tell the board what was really going to happen with the advance rental that was being paid.

Chew: I can’t answer the question, your Honour. I’m not the writer of this email.

DPP said Chew at that time was a board member was copied in this email. DPP asked, did you reply to this email to say, “Hey, by the way, board member, actually, this is all part of the plan to channel Building Fund as advance rental, but, actually, to finance Sun Ho’s music career”?

Chew replied No.

DPP: Why not?

Chew: I didn’t think of it, your Honour. However, at this point in time, the board already knows Xtron is managing Sun. If the monies go to Xtron in these sort of amounts, the board would know.

<… more questions and answers…>

DPP referred to another email dated 7 Aug 07 (E-157). Serina wrote to Chew, Ye Peng and John Lam about the use of proceeds in the bond subscription agreement.

Serina wrote:
Reason why I need to add in traveling and salary costs is because we had used the advance from Expo rental to pay off a part of the English Album expenses already and some part of this $13m is to go to pay off Unusual for the rental.

DPP interpreted Serina’s email as she is actually proposing a way to justify the sum of money that is actually required to pay off the rental expenses that should have been covered by the advance rental.

Chew explained: She’s asking about the treatment basically, your Honour, about how to treat these transactions, whereby advance rental for Expo has been used to pay for album expenses. And now the bond proceeds are coming in, and these bond proceeds were originally to be used to pay for those expenses, the album expenses. So she’s not asking how they’re justified but how to treat this series of transactions.

DPP: But the bottom line, Mr Chew, is that the use of proceeds that the lawyer are going to be asked to draft doesn’t reflect that the money is actually going to be used to pay off past rental expenses. Correct?

Chew: Your Honour, this is exactly what I’m saying, that advance rental was a bridging finance to pay for the album expense, pending a more permanent source of funds, which could be either the revenue from the album sales, or, in this case, it’s the bonds. When the bond proceeds now comes in and the bond BSA specifies that it’s to be used for album-related expenses, but some expenses have already been paid by advance-rental, which was the bridge. Theoretically, accounting-wise, in substance, what’s happening is that the bond proceeds now are going to pay the “bridger” which is the advance rental that has paid for the album expenses. Your Honour, the same thing happened for Pacific Radiance commercial paper. John Lam told us Pacific Radiance is going to seek a bank loan, that’s a long-term plan. In the interim, before he gets a bank loan, can the church lend Pacific Radiance, which is what the church did. It was a bridging. And those bridging finance went into the building of the ships which his company was building. And when the bank loan subsequently comes in a few months later, I’m sure he would have got permission from the bank to take some of that bank loan proceeds to pay the commercial paper which was the bridging, your Honour. And this is exactly the same situation. The advance rental was a bridge. The permanent source is now the bonds, where the bond comes in it has to pay off the bridge, which is the Expo rental, which was used to pay for the album expenses. There’s really nothing sinister about this, your Honour.

DPP said the board was not told about the advance rental was actually a bridge.

Chew: I do not remember, your Honour, whether verbally they were told or not, so I can’t comment on that…

 …I could or Pastor Tan could have verbally told the board.

DPP said that when Suraj sent out the email (E-459) to the boards, Chew has the opportunity to tell the board via the email but he didn’t. Chew replied, “That’s right, I didn’t tell them.”

The DPP further said that the email(E-157) wasn’t explaining that there was the advance rental was a bridge and then because of that, the money has been put back.

Chew explained that he assumed that what Serina was saying the Expo rental went to pay probably salary, which is part of album expense.

…..

DPP: So, again, you are trying to dissemble and evade not only the words of the email but what you’ve just agreed to a few moments ago.

Chew: I don’t know if the prosecution understands what I was explaining earlier on, your Honour. I’m assuming that the Expo rental to pay some album-related expenses, so when Serina says she has put in the salary costs as an item, in my mind, I’m thinking that she’s saying that Expo rental was used to pay salaries for album-related, is the team itself that’s doing the album, which are part of the indirect expense. I don’t understand what the prosecution is trying to say. So, in other words, in substance, the classification of this transaction, where the bond proceeds now goes to pay back for Expo rental, is that we’re tracing it back to the original destination of those funds, the Expo rental went to pay off salary or album-related expenses. That’s what I’m saying.

…….

DPP: Mr Chew, the evidence is on the screen in front of you, because when you need to put the money back you give a different reason to beef up, to justify the amount of money needed to put it back.

Chew: When I needed to put the money back into where, sorry? and then I give a different reason?

DPP: When you needed to put back the advance rental that had been expended on music album expenses, you do it by disguising it in this use of proceeds clause. You don’t say, “We’re going to use part of this $13m to pay back advance rental that has been used first”.

Chew: Your Honour, if I explain this to Christina Ng, she would say you don’t need to include advance rental as part of the use of proceeds. She would have understood in substance the money went to pay for album-related expenses, which was bridged by the advance rental. Nobody does this in a commercial market, your Honour.

DPP: I’m sorry, Mr Chew. What do you mean by ”Nobody does this in the commercial market”?

Chew: Your Honour, what the prosecutor is suggesting is really out of market practice. I’m being held to move along the lines, very narrow line, of what the prosecution believes are proper and not proper investments. I think perhaps the prosecution needs to … …

SC Maniam stood up to clarify with the prosecution on his position related to the agreed statement of facts.

DPP explained that the substance of the questions that they have been asking is how the application of those funds to the Crossover Project was accounted for and how what was being told to.

Chew said what actually happened does accord with the agreed statement of facts…. and he gave the reasons.

DPP put statements

DPP: I put it to you that in these emails, like E-189, E-455, E-456 and previously E-196, really, what you are always concerned about is marinating the form of commercial transactions when the substance is, as you have agreed in relation to E-189, prepackaged plans.

Chew replied:

Your Honour, I’m concerned with both substance and form. Not because form is important to me but because form is important to many people, and we are to avoid all appearance of evil, your Honour. And that comes through the form.

DPP: I put it to you that, in fact, since before the first Xtron bonds, you had already been involved, together with Kong Hee, Ye Peng, Serina and John Lam, in hiding your plans to make use of the Building Fund to finance Sun Ho’s music career.

Chew: I disagreed

DPP: In fact, when you went on to the Xtron and Firna bonds, it was a continuation of this practice of cloaking the financing of Sun Ho’s music career in the guise of other kinds of transactions.

Chew: And the cloaking and the hiding is from whom?

DPP: From the auditors, from lawyers, from the executive members, from the board and, basically, from everybody outside the five of you who knew about these plans.

Chew: I disagree.

City Harvest ex-investment manager's testimony 'dishonest': Prosecution (CNA: 4 Feb 2015)

SINGAPORE: City Harvest Church's former investment manager Chew Eng Han was "dishonest and disingenuous" in his testimony, the prosecution on Wednesday (Feb 4) claimed.

The prosecution also accused Chew of hiding the close ties between the church and Xtron Productions, and downplaying his involvement.

Chew told the court that church leaders preferred to remain discreet about the control the church had over Xtron so as not to jeopardise the Crossover Project, which sought to evangelise through the pop music of Sun Ho, the wife of church founder Kong Hee.

Chew is among six leaders accused of misusing church funds to advance the pop music career of Ms Ho. They are accused of making sham bond investments in two companies, including Xtron, and then covering them up.

The prosecution argued that Chew was instrumental in disguising the sham transactions as legitimate so as to fend off auditors.

In an email dated December 2006, Chew had proposed that Xtron have a separate, physical office and a full-time chief executive for transactions "to look real and legitimate". However, Chew told the court that he was being mindful of "baseless accusations" that might arise over how the church's money was being used to benefit Kong and Ms Ho.

"Your Honour, I'm a man of substance. I don't believe in appearance. But I do believe as well that if you project the wrong appearance, it just invites false accusations. Simple as that," he said.

City Harvest’s former investment manager dishonest in testimony, says prosecutor (Today: 4 Feb 2015)

SINGAPORE — City Harvest Church’s former investment manager Chew Eng Han had lied to the court and omitted crucial portions of evidence in his testimony, said the prosecution this morning (Feb 4).

Chew is among six church leaders, including church founder Kong Hee, accused of misusing S$24 million in church building funds to buy sham bonds in two companies to boost Kong’s wife Ho Yeow Sun’s pop music career. One of these companies was Xtron Productions, which manages Ms Ho.

Another S$26.6 million of church funds was then allegedly circulated through complex transactions to cover up the first sum.

Citing Chew’s own words in email sent in December 2006, the prosecution charged that Chew made suggestions to disguise the sham transactions as legitimate so as to fend off auditors.

Chew had also been “misleading and very selective” in presenting emails during his evidence-in-chief last week, said Deputy Public Prosecutor Christopher Ong.

Chew disagreed. He countered that he was concerned about “baseless accusations” that may arise as to how the church’s money was used to benefit Kong and Ms Ho.

“Your Honour, I’m a man of substance. I don’t believe in appearance. But I do believe as well that if you project the wrong appearance, it just invites false accusations. Simple as that,” he said.

DPP Ong further contended that Chew was involved in a “pre-packaged plan” to channel the church’s funds into Ms Ho’s career under the guise of an advance rental paid to Xtron for worship premises at the Expo.

Asserting that the funds were genuinely intended as advance rental, Chew said they were used as a temporary “bridge” to fund Ms Ho’s album expenses until more permanent sources of funds came in the forms of album sales or bond proceeds.

“There is really nothing sinister about this, Your Honour.”

CHC wanted Xtron link to be discreet: Chew (Today: 4 Feb 2015)

SINGAPORE — The extent of City Harvest Church’s (CHC) control over Xtron Productions was never made explicit to the auditors, the church’s former investment manager, Chew Eng Han, testified yesterday.

Chew told the court that church leaders preferred to remain discreet about the control CHC had over Xtron so as not to jeopardise the Crossover Project, which sought to evangelise through the pop music of Ms Ho Yeow Sun, the wife of church founder Kong Hee.

The prosecution, however, argued that Chew and his conspirators hid the connection between CHC and Xtron “to prevent the bonds from being uncovered as shams”, to which Chew disagreed.

Chew and Kong are among six church leaders accused of misusing S$24 million in church building funds to buy sham bonds in two companies, including Xtron, to boost Ms Ho’s pop music career. Another S$26.6 million of church funds were then allegedly circulated through complex transactions to cover up the first sum.

Citing documents that CHC had submitted for audits for the financial years 2007 to 2009, the prosecution yesterday contended the church had falsely declared that CHC and Xtron were unrelated.

On the contrary, Deputy Public Prosecutor Christopher Ong charged that Xtron’s directors were appointed by Kong and his deputy Tan Ye Peng, another co-accused, so that the company’s objectives would be in line with what CHC wanted to accomplish.

Chew agreed, adding that Kong and Tan had the ability to “swing profits away from Xtron (to CHC)”.

The prosecution further argued that church members were kept in the dark about the true motive behind the purchase of Xtron bonds to raise funds meant to advance Ms Ho’s career.

Chew said the church leaders refrained from conveying CHC’s “overt” control over Xtron for fear that its members would “misconstrue and exaggerate” it.

He added that he had “assumed and expected” the auditors knew about the relationship between CHC and Xtron.

Refuting DPP Ong’s charge that he had played an active role in facilitating the disguise, Chew said he “did not share (Kong and Tan’s) desire” to remain discreet, but had been tasked to do so to ensure the Crossover Project could be executed.

'Church-Xtron link concealed to hide fund use' (ST: 4 Feb 2015)

DPP: Aim was not to protect evangelical mission but hide use of fund for Ho's career

THE close ties between City Harvest Church (CHC) and production firm Xtron were concealed to hide the use of church money in funding Ms Ho Yeow Sun's music career - not, as claimed by founding pastor Kong Hee, because the ties would jeopardise her "undercover" mission to evangelise in China.

This was one of the prosecution's arguments yesterday as it continued to shine the spotlight on the megachurch's former fund manager Chew Eng Han. He is one of six accused of misusing $50 million of church funds to boost Ms Ho's music career, and covering up the misuse.

The 54-year-old Chew testified that "concerns" over the church's China missions was one of the "real reasons" Kong gave him for wanting to conceal the close relationship between CHC and Xtron. Kong did not want the Chinese to dismiss Ms Ho, his wife, as "nothing more than a gospel singer".

"I knew that Kong didn't want it to be known that the church had purchased bonds in Xtron. From that angle, yes, that was what actually happened," Chew conceded when challenged.

Yesterday, Deputy Public Prosecutor Christopher Ong rejected the suggestion that there was a need to be discreet about Ms Ho's gospel links to prevent the Chinese from discovering that the church's Crossover Project had a "hidden agenda" to evangelise.

This was because her background was public knowledge.

To make his point, DPP Ong referred to several documents, such as the transcript of an extraordinary general meeting of the church in 2002. It records how Kong told of his hope to "publicly" deliver Christian messages in mainland China.

At an annual general meeting the next year, Kong also highlighted a Taiwanese newspaper headline that Ms Ho "shares her faith" during a concert.

When pressed by DPP Ong that he and other accused had wanted the secrecy to prevent the bonds being exposed as shams, Chew disagreed.

"I never thought the bonds were shams, right from the beginning," he insisted.

Chew has insisted that Kong and deputy senior pastor Tan Ye Peng were the ones who called the shots for Xtron.

But the prosecution yesterday pointed out a 2008 e-mail to Tan and fellow accused Serina Wee, in which Chew wrote about the need to "find a balance" between what to tell church members, who wanted to hear that the church fully controlled Xtron, and auditors, who were not supposed to think that.

Chew, while admitting that he was involved in coming up with a "compromise statement" to an annual general meeting on the control issue, retorted that it was not he who wanted to keep things hush-hush.

He said: "No, your Honour, I don't believe in distancing myself. I'm involved in this. All I'm saying is that it's not my desire to achieve this object... in a discreet manner."

He claimed yesterday that he had merely followed Kong and Tan's preference for secrecy, believing then that their intentions were "pure".

DPP Ong later said: "Once again, you are trying to distance yourself from your involvement in trying to conceal the nature of the bonds, by saying it was actually Ye Peng's preference."

Chew, who is representing himself, disagreed.

3 Feb 2015 – Chew cross-examined by DPP – Part 1 (MrsLightnFriends: 4 Feb 2015)

On 2 Feb 2015, in the afternoon session Chew was cross-examined by DPP Christopher Ong about the role that the Xtron directors played in Xtron and the independence of Xtron.

Today, in the morning DPP continues to cross-examine Mr Chew on Xtron. (On 26 January 2015, Mr Chew in his EIC gave his evidence in the afternoon on the topic related to the relationship between Xtron and City Harvest Church)

Below is the recount of cross-examination by DPP Ong on 3 February 2015.

DPP Position – Who is making the management decisions for Xtron?

On 3 Feb 2015, DPP asked Chew about Suraj’s involvement in Xtron.

Chew explained the involvement of Suraj in Xtron and said, “As far as Suraj being the ghost director, I was not aware until I saw the evidence, your Honour”. (Suraj holding the appointment of “ghost director” was seen in a hard copy Xtron minutes evidence during the court proceeding.)

DPP opened an email exhibit of Serina writing to Eng Han and Tan Ye Peng and this email was forwarded to Kong Hee.
 

Eng Han agreed with DPP that at the point, 30 March 2010, from reading the email he would have known Suraj was managing Xtron.

Was it Tan Ye Peng?
 

DPP: And when did you become aware of the role that Ye Peng played in managing Xtron?

Chew: Your Honour, I was aware in bits and pieces, because I was aware that the people in Xtron were addressing him as “陈老板”(Boss Tan). I wasn’t aware of the extent to which he was managing Xtron, but it would be logical to think that, as far as the Crossover was concerned, that Tan Ye Peng would be managing it. As far as the other operations are concerned, I wasn’t too sure how deeply involved he was. But I knew he had a hand in it.

Was it Chew Eng Han?
 

Eng Han said that when he was the director of Xtron, he hardly participated in managing Xtron. After he ceased to be the director, he didn’t have any hand in managing Xtron. He said, “I didn’t manage, but I proposed decisions to be made in regards to acquiring Riverwalk, and that’s the only extend that was involved in Xtron’s management.”

How about Xtron Directors Kar Weng and Siow Ngea?
 

DPP: So in relation to the property, if you were not the one managing Xtron, who managed Xtron in relation to the property?

Chew: With regards to Riverwalk, actually Kar Weng had quite a strong hand in it because I remember I was proposing for several years of advance rental to be given to Xtron from the church to enable Xtron to purchase Riverwalk, and Kar Weng quite firmly said that he wasn’t for the idea. And so we abided by his decision.

 <…. Some questions related to Kar Weng…>

And the last question, he asked Eng Han, consisted of two questions in one question. SC Sreeni, who is representing Ye Peng, stood up and requested DPP to break up the question into two parts.

1^st Part – Is it correct that Kar Weng exercising his powers as Xtron director to override decision?
 

2^nd Part – Suggested Tan Ye Peng accepted Kar Weng inputs and then the decision was made.

In the context of Riverwalk property Chew replied: ….I was quite frustrated because I approached him in his companies as Xtron director. He was telling me it’s not in the church’s interest, but the church interest was represented by Tan Ye Peng, and Tan Ye Peng was okay with the idea. So, in the end, I think it was a case of Ye Peng representing the church, respecting Kar Weng’s view and decision as Xtron director, even though Kar Weng made that decision based on not wanting to take advantage of CHC. It’s a strange situation, your Honour. Like I said, Xtron is just out of this world. But he did exercise his power as Xtron director. I didn’t go to him as in any other capacity.
<… further questions related to Kar Weng’s evidence..>

The DPP went on to refer to an email exhibit, to prove that Eng Han and Ye Peng were involved in the management of Xtron.

In this email, Suraj who is a church staff of CHC using the email of Xtron wrote to MCST and also forwarded the same email to Eng Han and Tan Ye Peng.

This email is about the delays from renting the Riverwalk property to Singapore Turf Club.

Suraj wrote:
Dear PS and CEH,Delays again!!! Sigh!
Kindly read email exchanges below before continuing with this email.
…..
May I suggest getting Siow Ngea involved?
……
I feel we need to give Singapore Turf Club(STC) some assurance that the Directors from Xtron are involved in this matter and not just representatives.
I can get Xtron guys to create emails for both Siow Ngea and Kar Weng up immediately!

The DPP asked questions based on this email.

DPP: You’ve told us that Siow Ngea had no decision-making role in Xtron in practice. This was actually the same for Kar Weng. Correct?

Chew: I think less so for Siow Ngea, your Honour. Kar Weng did exercise some of his decision-making powers.

DPP further questionings just to make a point that Suraj was asking the permission from Chew and Ye Peng whether they could agree to the suggestion of getting Xtron’s directors involved in his own company affairs.

DPP: So would I be correct to say that without you and Ye Peng giving the go-ahead, Siow Ngea would not have become involved in these dealings with Singapore Turf Club(STC) at all, and with the MCST?

Chew: Your Honour, I don’t think it’s a matter of us giving the go-ahead. Siow Ngea was the director. I never thought of this idea that it’s important for Siow Ngea to go and approach or meet STC as a director of Xtron. So Suraj thought it was good, and we just said, “Yah, if we agree with him, then let’s do it”.

DPP: Really, looking at this situation, you were involved in the management of Xtron together with Tan Ye Peng quite apart from any matters to do with Sun Ho’s music career. Correct?

Chew: Your Honour, I was involved because I was the one talking to the potential tenant, STC. I was also the one liaising with the sellers of Riverwalk. I was the one liaising with the lawyers, and all this was done on behalf of the church and Xtron. If you call this management, then, yes, I was involved. But to me, it’s a role as a fund manager and investment adviser. I was just offering my services.

 <…. more questions…>

DPP: But in this case, I mean as far as Turf Club was concerned, it was going to be renting the premises from Xtron. That’s why it became necessary to get Siow Ngea involved to be the face of Xtron to Turf Club. So, really, this has nothing to do with the investment that you had gotten the church into, to buy the Xtron bonds to enable the Riverwalk purchase. Correct?

Chew: Your Honour, besides having a responsibility for the bonds, the BSA or the ABSA, I’ve also been tasked to look after the property matters for the church, which is an investment for the church as well, be it the Rivwerwalk or Suntec or Capitol. And that’s why I was involved in Riverwalk, because it’s part of my responsibility. Property is an investment as well. And to look for a tenant for Riverwalk, the property which is being purchased, is also an investment decision. And that’s why I was involved.

After DPP confirmed with Chew that the Riverwalk property was an Xtron’s investment. He further questioned Chew when he was appointed as Xtron’s investment manager.

Chew: I was never appointed, your Honour, but Xtron was appointed to be the vehicle for the church, and that’s why I have a responsibility to make sure Xtron buys the right property and gets a good yield to the rental.

Was it Kong Hee and Tan Ye Peng?
 

The DPP referred to another email exhibit and addressed Mr Chew as “Witness”.

This email is about Justin Herz proposed to Kong Hee about some joint venture to fund the US Sun Ho project. Then this email was forwarded to Tan Ye Peng and cc to Chew Eng Han. The DPP said, “Kong Hee then discusses this proposal with you and Tan Ye Peng”

Kong Hee wrote :

Dear Eng Han,

What do you think of the below?

And Eng Han replied with some proposal to let Xtron out of the joint venture agreement.

And Kong Hee replied Ok and instructed Tan Ye Peng to carry out the task.

DDP: This decision would clearly have an impact on Xtron. Correct?

Chew: Yes

DPP: So in this situation, you, Kong Hee and Ye Peng were essentially acting as the management of Xtron to make this decision. Correct?

Chew: No, your Honour. I was just offering my advice as the adviser.

DPP: Now, you said that you were merely offering your advice as the adviser. Is this again, in your capacity as the investment adviser to the church?

Chew: Yes, your Honour.

DPP questioned how is this investment advice(referring to this email) connected to the investments of the church.

Chew repeated his evidence that Xtron is the special purpose vehicle of the church.

DPP raised a long question. Chew said, “I don’t understand your question.”

SC Sreeni stood up and suggested DPP to split up the question.

To summarize, the question is, “Although it’s Xtron that the decision is being made and ultimately the main factor is the church’s interest and it’s being evaluated from the perspective of what is best for the church rather than what is best for Xtron”.

Chew replied was yes and he gave his reason. He said, “because this is akin to a situation where in the commercial world, a holding company is…., 70 or 80% stake in a subsidiary, and the holding company would want to make sure whatever the subsidiary does is in the interests of the holding company”.

Was it John Lam and Eng Han?
 

The DPP went on to refer to another email exhibit dated in 2008. Serina was writing to auditors talking about finalizing Xtron account and getting an independent valuer for the Xtron bond, and the same email was forwarded to John Lam for guidance.

And John Lam replied:
“For Xtron, depends on Kong Hee. I suppose we’ll do it too. 

A better idea- talk to EH. Cancel the convertible bond. We do side letter instead so no more CB.”

DPP asked Chew why was Serina asking John Lam …. matter concerning Xtron’s audit. Before Mr Chew could answer. SC Maniam objected with two reasons. First reason is Mr Chew not copied in the email and second reason is the question is related to Serina’s state of mind not Mr Chew.

The DPP position is, for a decision in relation to Xtron’s audit, it should be Xtron’s management that makes the decision to respond to the auditor. But in this email John Lam does more.

DPP questioned Chew what this side letter that John Lam wrote was about?
 

Chew: I think John was thinking of cancelling the convertibility feature in the ABSA. I guess it’s because with the convertible portion, maybe there was a need for consolidation. I’m note sure. Or maybe it was difficult to value with a convertible feature.

The same email, Serina replied to John Lam copied to Eng Han.

Serina wrote:Told Eng Han already but time is tight for Firna bonds. So no choice later on then cancel the convertible part.

Eng Han can you note?

DPP: ….So you were made aware of this suggestion to remove the convertibility feature. Correct?

Chew: Yes

DPP: Really, when it came to deciding how to decide with this issue arising from the Xtron audit and the valuation of the bonds, eventually the people consulted were John Lam and yourself. Correct?

Chew: Your Honour, actually, in this email I was told to take note of it, about the possibility of cancelling the convertible, because I was involved in the drafting of the documents.

Back to how about Kong Hee?
 

The DPP referred to another email exhibit and went back to the questionings on the subject related to Riverwalk.
 

This email is concerning the decision on purchasing Riverwalk.
 

Eng Han wrote to Kong Hee and copied to Tan Ye Peng.

Chew agreed with DPP that in this email he was seeking Kong Hee’s decision to purchase the property. And Chew added that the final decision-maker would be the board.

In this email after Kong Hee said, “Ok”, Eng Han replied, “I will start negotiating”.

DPP: It wasn’t a case of, “Well, let’s put it to the board, and then I’ll start negotiating when the board says okay”.

Chew: Yes, your Honour.

The DPP referred to a blackberry message exhibit. This blackberry message is concerning the decision on selling Riverwalk. Eng Han informed Kong Hee about the price of Riverwalk and seeking Kong Hee’s decision to sell the property.

Chew: Your Honour, basically, it’s a church decision again, mainly a church decision.

DPP: Although on paper it would be Xtron doing the selling, correct?

Chew: Yes, because Xtron was, again, the vehicle to purchase the property.

DPP: When Kong Hee gave his evidence in relation to the purchase and eventually sale of Riverwalk, he told the court that he wasn’t in the position to decide whether to buy Riverwalk, whether to sell Riverwalk. Is that correct?

Chew: Your Honour, he is in a position to strongly influence because the reality is this, your Honour, that, in the board, it’s really Kong Hee and Tan Ye Peng that are the most influential. There hardly any situation where Kong Hee or Tan Ye Peng suggests certain matters to the board and it’s been rejected. So I don’t really know how to answer that question because there is always a probability that Kong Hee says something and the board says “No”, but it’s a small chance.

Chew agreed with DPP that in relation to the sale of Riverwalk it is not an Xtron management decision to sell Riverwalk.

DPP put statement to Chew
 

DPP: Mr Chew, I put it to you that, from what we have seen in these emails and BB messages, Kong Hee, Ye Peng, John Lam and yourself all took part in making management decisions for Xtron.

Chew: Your Honour, I have a different interpretation, probably, of the word “management decision”.

DPP: Mr Chew, this is a put, so you can agree or disagree.

Chew: I disagree, your Honour, because for myself, and I think even for John Lam, we were not making management decisions. We were giving advice. For John Lam, in regards to audit issues; for myself, in regards to property issue. We were offering information and advice for a decision to be made. And the decision whether it was made by Kong Hee, Tan Ye Peng or the Xtron board is another matter. So I do not agree when it comes to myself, or even John Lam.

DPP Christopher Ong moved on to a different topic related to auditors.