11 May 2015 – Serina cross-examined by DPP (MrsLightnFriends: 13 May 2015)

Prosecution’s case is when it came to Xtron’s liability to pay interest to the church. It was Kong Hee, Ye Peng, Serina, John Lam and Eng Han willingly to manipulate the earnings of Xtron from the church to ensure that the interest liability could be met. (This was put to Eng Han on 6 Feb 2015)

Serina’s position is there is nothing wrong with her, Eng Han, Ye Peng and Kong Hee working on plans to enable Xtron to be able to meet its interest and principal obligations.

DPP: I put it to you that from the time you and your sham bond co-accused persons first started planning the bonds, it was always your intention that you were ones who would take responsibility for finding ways for Xtron to meet the obligations that had been created by the sham bonds.

“Your Honour, I partially agree that we are involved in finding ways and giving proposals because of our understanding that Xtron has real obligations to meet under the real bonds.  But the responsibility mainly is under Xtron, and we were assisting the Xtron directors in doing that.”, said Serina Wee.

The emails exchanges were mostly between Kong Hee, Ye Peng and Serina. John Lam and Eng Han were not in some of the planning emails.

Recount of Serina’s evidence (Cross-examined by DPP on May 8)

DPP: Can you tell us who in Xtron handled this responsibility?
Serina: Your Honour, the responsibility is Xtron’s, and the directors, they leave it to me to plan the cashflow together with Pastor Kong and Tan.
DPP: In reality, the persons who took on the responsibility of ensuring that Xtron met its obligations was you, Pastor Kong and Pastor Tan. Correct?
Serina: Your Honour, not exactly. We are involved to plan the cashflow, but we are accountable to the directors. The directors are the ones that are really responsible as the directors of Xtron.
DPP: Well, the three of you, together with Eng Han’s help, when it was required, were the only ones planning how Xtron was going to meet its obligations. Correct?
Serina: Your Honour, we were planning in details, but the directors also reviewed the cashflow as a result of our plans.

Recount of Serina’s evidence (Cross-examined by DPP on May 11)

I need to remind my friends, we can only draw reasonable inference from the emails. In the course of this proceeding, I know that words can be different meaning to different people. The worst-case scenario is Humpty Dumpty chooses the word it wants to mean. For me I choose to seek wisdom and knowledge and I wish to understand the case and I am still trying to understand the case.

Let’s see some of the email exchanges.

Email E-570 dated 31 January 2008.

This is an email from Tan Ye Peng to Serina.
Timeline: Six months after the first Xtron bonds had been entered.
Subject: Confidential: Q&A This are the issues:
1….
2. If we sell 300K CD only, how are we going to get out of the situation for US project.
4. How are we going to pay the 7-8% interest on XPL bonds?
[Serina replied: It’s 7% interest]
5. What is the current amount of profit per year (Revenue – Expenses) for XPL? Is this profit enough to pay the 7-8% interest to AMAC for the bonds?
[Serina replied: Enough, see cashflow]6. Who are the staffs we can cut from XPL without affecting the retainer?
[Serina replied: It’s the 3, Adrian, Jaslynn & Alicia as per what I told Pastor Aries.]
7. If I cut Adrain Chan, Alicia Leo, and Jaslynn Khoo out of XPL, how much expenses per year can I save for XPL?
8. Can we have the retainer between XPL and CHC (in terms of what XPL is doing for CHC) so I can see that the services the XPL will do for CHC is unaffected.

In this email Tan Ye Peng mentioned about “How are we going to pay the 7-8% interests on XPL bonds?”

Serina Wee said the “We” is Xtron. Then DPP asked, “As I said in the first question this morning, the ones working out the plans to repay this interest would be you, Ye Peng, Eng Han and Kong Hee. Correct?”

Serina: Yes, your Honour.
…..
DPP: But as we have seen with some other proposals regarding Xtron’s cashflow, the effect of this is really, in this case, to transfer those expenses back to the church. Correct?

Serina: Yes, your Honour.
…..
DPP: When this suggestion is made to cut three staff from XPL and transfer them back to the church, the intention was that this would result in a net increase in profit for Xtron. Correct?

Serina: Yes, that’s what was the proposal.
…
DPP: Again, what we see here is a situation where the church was going to be paying more so that Xtron could make more profit, and this profit would then go towards helping to meet the interest payments. Correct?

Serina: Your Honour, in terms of cash, yes, the church pays more than it originally did at this point. But when the church employed these three staff back, they must see the benefit of having his three staff, and they make the decision to employ them.
…..
DPP: So Pastor Tan, who has no formal role in Xtron’s management, first puts on the Xtron hat to decide or to identify how to improve Xtron’s cashflow situation, then he takes that off and puts on the CHC hat and decides how it can make sense for CHC to take back these three people. Is that what you’re saying?

Serina: Your Honour, I’m not Pastor Tan, so I cannot speak for how he thinks in a particular proposal. But what I’m saying is that Pastor Tan will know the needs of the church, and he will consider for example, it is a staff that is in Xtron, totally unnecessary to be employed by the church. And there is no way that he will propose for this staff to be employed under the church.

DPP: I put it to you that whether it’s you, Ye Peng, Eng Han or Kong Hee, when it comes to these plans you made regarding the financing of the Crossover Project, there was no real separate Xtron or CHC hats. The four of you would look at it wearing the Crossover hat, and your only concern was with finding ways to keep the cashflow of the Crossover Project going.

Serina: Your Honour, I disagree. The motivation of these plans, yes, it comes from the needs of the Crossover. But from whatever proposal we put forth, it has to be considered by the church and it has to have benefits to the church, and that will be considered by the church board and the church side.

DPP: I put it to you that in these sorts of planning, once you have identified a way to improve Xtron’s cashflow, you would come up with a justification that you would then use to ensure that that step was taken.

Serina: Your Honour, I disagree that these are justifications. Because they are real transactions, and when they are entered into these are just proposals, but when they are entered into, there is real consideration on the benefits of the transaction.


Email E-199 dated 19 August 2007
This email is written before E-570 and is just after the first Xtron BSA has been signed.

Tan Ye Peng wrote to Eng Han and copied to Serina and Eng Han.
Eng Han replied to Ye Peng with a propose solution if the album sales didn’t come in.

Subject: Some questions

Hi Eng Han,
I like to understand something regarding the bonds.
If say XPL issued S$10m bonds for 7% per annum. Then it means 700k dividends is it?
And what if we sink in S$10m into all the projects and we cannot recoup back S$10m.. how are we going to return the S$10m back to the investor?
In a sense XPL has to be super profitable right?
Meaning it has to make at least $700k profits per year from now on is it?

Eng Han replied
Correct, 700k interests payable per year. The main thing we need to take care of is the interest rather than the principal because we can ways reissue new bonds if the principal can’t be repaid. For the interest of 700k per year, we should be able to scrap something from individuals to help in the worst case if album sales don’t come in?

DPP: Now we’re moving to this other method, which is re-issuing bonds and extending their maturity period. If that is done, it does not actually resolve the $13m debt once and for all; it just extends it. Correct?

Serina: Yes, your Honour

DPP: That’s similar to the Riverwalk plan as well as the UEPL plan in E-1, which involved the building project or Riverwalk. Because in that situation, the debt is also extended for ten years, it’s just that it takes a different form in those plans, as in the debt gets transformed into some other debt that still needs to be repaid. Correct?

Serina: Yes.

DPP: When you were discussing the UEPL plan, and then a year later in 2008 the Riverwalk plan, in your mind, the $13million debt was really still the debts that had been incurred by the album project that eventually had to be repaid. It’s just that it would be repaid in the form of the mortgage loan or in the form of a loan from UEPL. Correct?

Serina: Yes, your Honour, and that was because the album was delayed at that point.

Let’s see the next email. 

E-11 dated 5 July 2008
This is an email from Serina to Tan Ye Peng.
 

Subject: USA Album Projection

We have managed to raise US$8m by the following method and are short of almost $6million.
(i) USD $3m left to give Justin
(ii) Increase Bonds from S$17m to S$24m
(Eng Han has extra S$3m to set aside without affecting building project, S$1.7m from current A&B surplus, S$2.1m projected from 2008/2009 A&B surplus)
(iii) Wahju Hanafi’s BF $1m
(iv) Less: set aside for additional bonds interest (S$1m)

Areas of concerns regarding Bonds:
The bond contract for S$13m bonds technically ends on 16 August 2009 and the remaining S$11m due 2 years from date of issue (August 2010 as we need to draw down the additional bonds from August 2008). Eng Han says that technically once the bonds expire we can re-issue new bonds so that the expiry date can be pushed back as he has set aside this money from the BF that he doesn’t need for the building project. It is more of answering to the members why do we have so much money sitting in bonds by the time the building project is completed.

Also we have to consider if Xtron cannot eventually redeem the bonds, Foong Daw Ching says that we may have to write down the value of the bonds, which will be reflected in CHC’s accounts and it will be hard to explain to the members the loss in investment.

DPP: How you have raised the $8m includes a plan to increase the Xtron bonds from $17m to $24m. This was the second Xtron BSA that was eventually not used. Correct?

Serina: Yes, your Honour.

DPP: This meant that from the money you had raise the additional $7m you were planning on the second Xtron BSA, 1 million would be set aside just for paying interest on the bonds.

Serina: Yes

DPP: Would I be correct to say that your position is there’s nothing wrong with Xtron using proceeds from further drawdowns to pay for interest on existing bonds, as well as those further bonds that had been drawn down.

Serina: Yes, your Honour, because Xtron takes on the additional bond liabilities.

DPP: But isn’t there a conflict of interest if the people coming up with the plan for Xtron to use the bond proceeds to pay off the interest are the same people who are also working out the plan to get the church to increase the bonds being drawn down, and that would be you, Ye Peng and Eng Han?

Serina: Your Honour, this is not a case of increasing the bond drawdown beyond the BSA that was already entered into. The $24m here is the $13m original BSA, plus the second BSA of $11m. So when two parties entered into it, that is already with the knowledge that there’ll be a drawdown up to the amount. So in the midst of managing the cashflows, the timing of the drawdown of some of these bonds might be required to pay off some of the bond interest on the interim basis. But it doesn’t require additional bonds to be drawn down.

…..

In this email prosecution’s position is the same persons (Tan Ye Peng, Serina Wee and Eng Han) who had come up with the plan, developed the plan and ultimately proposed the plan to the board were the ones figuring out how to meet the interest obligations that resulted from it.

Let’s see the next email.  Sun Ho is in the loop.

E-480 – 16 July 2008 time 11:15am
This is an email from Serina to Kong Hee, Ye Peng and Sun Ho
 

Subject: For ourselves to know: UPDATED
This email relates to Serina’s projections for Xtron’s profit and cashflow according to how many albums were launched.

Hi Dr Kong, Sun & TYP,
I projected the following for Xtron cashflow:
……
If consider only 1 album (launch in 2009)
1. By end 2010, Xtron will have a profit of $3.6m for album 1 and a cash flow surplus of $0.2m (S$0.3m) after redeeming the bonds & loans.
2. Xtron wil be able to repay the $16m (S$22m) bonds by end 2010
3. Dr Kong has already made provision to set aside $2m CHC GF to give to Xtron via some projects so this will help us to repay some of the bonds if we do not hit Justin’s projected sales.

If consider 2 albums (album 2 launch in 2011)
1. By end 2012, Xtron will have a profit of $20m for album 2 alone(excluding album 1 profits) and a cash flow surplus of $21.3M (S$29.4) after redeeming the bonds & loans.
….

DPP: At this point in time, July 2008, we’re still talking about the first Xtron BSA. Correct?

Serina: Your Honour, there are two BSAs here. It’s the first $13m, plus the $11m, the second BSA that was entered into in April 2008.

DPP: So at least for the bonds under the first Xtron BSA, those would be coming due in 2009. Correct?

Serina: Yes, your Honour.
…
DPP: So at this point in 2008, you already know that you are not going to be able to redeem the bonds upon maturity. Correct?

Serina: At this point, I know that, yes, it’s possible that Xtron cannot redeem the first $13m bonds based on the proceeds collected after the album launch in April 2009, up to the point of maturity.
…
DPP: Look at point 3 of the one album scenario. It says: “Dr Kong has already made provision to set aside $2m CHC GF to give to Xtron via some projects so this will help us to repay some of the bonds if we do not hit Justin’s projected sales.” How did you know about this?

Serina: Your Honour, this is what Pastor Kong told me to put in, and this is in relation mainly to the Asia Conference that the church is having. I believe 2008 is the first year. It’s a very large conference, and Xtron does a lot, a lot of services for the church. So that’s why there’s a charge for it.

DPP: So this was a method that had already been identified by which Xtron’s income might be again increased to help it meets its bond obligations. Correct?

Serina: Yes, your Honour, and this is only if we do not hit Justin’s projected sales.
….
DPP: Did you come up with that list and inform Pastor Kong, “These are some upcoming events that Xtron might take on for the church. How much do you think we should pay these events?”

Serina: Your Honour, in that meeting, I was representing Xtron, and then the church represented by I think Pastor Kong, Pastor Tan and Pastor Aries and Meng How were there. So there was a discussion on what are the events, and some of the events are something that had been happening every year. So we already know that going forward on a yearly basis, these events would take place. So that was how the discussion took place.

…

DPP: This email, E-480, why is it titled “For ourselves to know”. Who are the “ourselves” who were supposed to know?

Serina: Your Honour, I think the “ourselves” is the people listed in this email, which is Pastor Kong, Pastor Tan, Sun and myself. And the reason for this email and why Sun is included is because at that time, I think Pastor Kong and Sun are in negotiations with the Americans. So Sun needed to know some what is the percentage and some of the figures, so she has a better idea. And this was the only time Sun was copied in such emails.

E-16 dated 16 July 2008 time 12:30pm
This email is sent one hour after E-480 “For ourselves to know” email.

Serina sent to Eng Han and Tan Ye Peng
Subject: Bonds

Hi Eng Han,
1. Bonds drawdown
For your projection purposes, tentatively the drawdown of the remaining $9m bonds….will be in the follow schedule. Please confirm if the timing is ok.
2. Reason to transfer US$2M per year from to XPL
We still need to think of a reason for XPL to legitimately earn this US$2m surplus every year. Any ideas?

DPP: This is sent to Eng Han and Tan Ye Peng and point 2 of this email says:
“We still need to think of a reason for XPL to legitimately earn this US$2m surplus every year. Any ideas?’
This is referring to the same $2m referred to in E-480. Correct?

Serina: Yes, your Honour.

DPP: From what you’ve written to Eng Han here, firstly Eng Han also knew about this provision of $2m that had been made?

Serina: Yes, your Honour. From this email, he’s aware.

Mr Chew stood up

Chew: Your Honour, I don’t recall the prosecution putting this email to me and asking me that question. I don’t think Serina is in a position to answer this.

DPP: Your Honour, I’m asking the witness based on the words that she has written in this email. The email is directed to him, and she makes reference to the $2million surplus without any explanation whatsoever. So I’m asking the witness to confirm whether she knew if Eng Han knew, based on the inference that she seems to assume he knows about it in this email.

Chew: Your Honour, at the top of the email, all I said was “ok” to the plan about the bonds. I think I’ve been patiently waiting while the prosecution has been doing this several times, your Honour, when questions that needed to be put to me when I was on the stand have not been put, and emails have conveniently been taken up, and my name has been pulled in several times. And just because I keep silent, your Honour, doesn’t mean I agree to it. Right at the top of the email, all I said was “ok”.

Judge: I accept your position, Mr Chew. If it’s correct that it’s not been put to you, that is something we will have to take note of. But I don’t see any reason why the prosecution should not be allowed to ask Ms Wee this question.

Chew: Thank you, your Honour. As long as it is noted here.

DPP: Ms Wee, from your recollection, did Eng Han know about this plan to set aside $2m at this point in time?

Serina: Your Honour, Eng Han wasn’t involved in the exercise to determine the events that I mentioned about earlier. So I think his involvement is mainly in the bond drawdowns.

DPP: When you wrote this email and it’s addressed to him, although Ye Peng is copied in were you asking him for his inputs on how Xtron could legitimately earn this $2m surplus ?

Serina: Your Honour, I was just putting in the email sometimes Eng Han may have ideas, but from what I recall in this particular exercise Eng Han wasn’t involved.

….
The cross-examination continues