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.