4 May 2015 – Serina cross-examined by DPP – (Topic – Control) (MrsLightnFriends: 5 May 2015)

The Deputy Public Prosecutor (DPP) Christopher Ong started his first day slow grill on Serina Wee.

The prosecution’s case is the accused know that CHC has control over Xtron but have intentionally wanting to avoid the consolidation of Xtron accounts in CHC’s accounts. The accused mislead the auditor and they [Foong, Aifang, Tiang Yi and Sim] do not know Kong Hee and Ye Peng were actually the ones controlling Xtron in respect of Sun Ho’s music career.

To join some of the dots, we need to start from E-331 followed by the 1 August 2008 meeting and E-325.

E-331

Timeline 31 Jul 2008

Subject: Notes for EOGM on 10 Aug 2008
 

This email started from Serina writing to Eng Han and Tan Ye Peng.

Eng Han replying to Tan Ye Peng and Serina 1st email.
I have edited the document. I put in some explanation about why 4% yield, and why rental at $5psf, comparing with market rates. …..if anyone asks about the profit made, then we address it and say that Xtron is under CHC control and therefore any profits will be well managed by us for future works.

Tan Ye Peng replied
Are we allowed to say XPL is under CHC control?

Eng Han replied
Not in such bold terms, but we should let our members have assurance that Xtron gains will be channeled into projects which are in line with CHC vision? The only problem of using the word controls is that if it gets to the auditors, then they may get ultra conservative and say we own Xtron and therefore we need to consolidate. So we need to find a balance between what we tell our AGM (they want full control) and what we tell auditors (we don’t want them to think we control Xtron).
So a compromise statement to AGM could be through the placing of Siow Ngea on the board of Xtron, CHC has assurance that Xtron’s activities and running will very much be in line with the vision of what CHC wants to accomplish in the marketplace?

1 August 2008 Meeting
Present
1.Auditor – Foong Daw Ching
2.Auditor – Foong’s sister Foong Aifang who was the audit manager.
3. John Lam, Eng Han, Ye Peng and Serina Wee.

E-325 – dated 1 August 2008 5pm
From: Serina Wee
To: Kong Hee and
Copied: Tan Ye Peng and Eng Han

Hi Pastor,
We just met with Bro Foong and his replies were favourable regarding our new plans. He advised us the following:

1. Not to mention that Siow Ngea (or any of the XPL directors; namely Kar Weng) will not take any profits from Xtron as this doesn’t make commercial sense. Everything that XPL or its directors do has to be seen to be justifiable commercially. Whether he chooses to take a profit or not will be based on verbal agreement with us.

2. The way that Eng Han has come up with to prevent any of the XPL shareholders from acting against our interests is that the $18m bonds that AMAC will buy from XPL are convertible bonds (CHC can exercise the right to convert these bonds to equity and take control of XPL)

3. Not to paint the picture that CHC has full control but only some control over XPL. If full control will invite consolidation.

4. We can talk about XPL to the members in EOGM but don’t minute down everything. Just minute down necessary portions so as not to show too close a relationship or control over XPL.

5. Main thing is to proof to the members that all the transactions that CHC will undertake is justifiable commercially.

After discussion with Bro Foong, I need to change part of the EOGM notes. See attached.

Bro Foong mentioned that he just had a talk with the commissioner of charities (COC) recently and explained to him that churches are doing things very differently now as compared to the past.
 

Churches nowadays have different ways of fulfilling the Great Commission and if the COC insists on churches disclosing everything, it will be very hard for the churches to achieve their objectives. There is no conclusion to their discussion but Bro Foong feels that the COC now better understands how churches function. As Bro Foong sits on the COC’s advisory committee, he will be able to advise us on any new developments to be implemented by the COC.

Recount of Serina cross-examined by DPP on 4 May 2015

In relation to E-325, DPP suggested that those five points in the email actually reflect the conclusions that were drawn from the meeting discussion with Mr Foong.

DPP: Ms Wee, I suggest to you that when you wrote point 3 the way that you did, “not to paint the picture that CHC has full control but only some control over XPL, if full control will invite consolidation”, what you were actually doing was reflecting your own conclusion about what the members should be told at the EOGM.

Serina: Your Honour, I disagree.  This is what Mr Foong told us.

DPP: I put it to you that this was your conclusion after you had tested out Eng Han’s proposal of the compromise statement on Mr Foong.

Serina: I disagree, your Honour.

DPP: Meaning that what you, in fact, told Mr Foong during the meeting on 1 August was the compromise statement that Eng Han had proposed in E-331.

Serina: Your Honour, what we told Mr Foong is not just the compromise statement but the context of what the meeting is about, and our query to him is very specific.  It’s about whether placing Siow Ngea in Xtron will amount to control.

…..

DPP: Ms Wee, do you agree that if, in fact, the church did have full control of Xtron at that time, in August 2008, the advise that Mr Foong supposedly gave you would be basically advice to commit a fraud or to lie to members?

Serina: Your Honour, if, in fact, there is full control then it will be a lie to tell them that there’s no full control.

DPP: As far as whether Xtron was controlled by the church or not, Mr Foong really has to go by what you told him.  Correct?

Serina: Yes, your Honour.

DPP: The ones who would know what was really the situation in Xtron, who really made the decisions in Xtron, that would be you and your co-accused persons, not Mr Foong.  Correct?

Serina: Yes, Mr Foong would not know the operations.

DPP: So this was not a case, as far as your evidence is concerned, where Mr Foong knew that the church actually had full control of xtron but was telling you to do something differently.  If he had given you that advice, you wouldn’t have followed it. Correct?

Serina: Yes, your Honour. But Mr Foong knew that there was a close relationship.

DPP: Ms Wee, I put it to you that Mr Foong never gave you the advice that you had reflected in point 3 of the E-325.

Serina: Your Honour, I disagree.  I wrote this email at 5pm.  It’s just after the meeting with Mr Foong.  And this is a record of what Mr Foong advised us.

DPP: Well, Ms Wee, at 5pm, just after the meeting, you also wrote point 2, which you have considered was not something that Mr Foong advised you on, correct? Point 2 is the one describing Eng Han’s plan for the Amended Bond Subscription Agreement.

Serina: Yes, your Honour, but I also said that this point was mentioned in the meeting with Mr Foong, so that’s why I worded it this way.

DPP: So we have to accept that for point 2 it was a mistake on your phrasing, but point 3, very definitely, that is something that Mr Foong gave as advice?

Serina: Yes, your Honour.

DPP: Even though he was, according to you, clear that the church had no control over Xtron, and so should have had no reason to tell you not to paint a picture of full control?

Serina: Your Honour, I think what I recorded is that “some control”, so Mr Foong had an idea that the church had some control, and he told us not to paint the picture of full control.

DPP: You all went to go and see Mr Foong on 1 August regarding this issue of control and consolidation because it was something that you were concerned about.  Correct?

Serina: Your Honour, it was a question that we did not know whether the placing of director in Xtron would mean control.

DPP: And the reason you were concerned about confirming whether it meant control is because of the possible implication of consolidation.  Correct?

Serina: Yes, your Honour.  This because it will affect the property bid.

DPP: Sorry, can you explain what you mean by that?

Serina: Your Honour, this because Xtron is going to be a vehicle for the eventual property that the church will purchase, so if there’s consolidation then it will mean that Xtron, it will be known to the third parties that the church is involved in such a bid.  And also, consolidation will mean that the Crossover at this point, Sun is no longer going to be under Xtron, so it wouldn’t affect the Crossover in that sense.

DPP put statement to Tan Ye Peng
 

DPP: In relation to Mr Foong and E-331, I put it to you that it is clear from your own evidence that you knew that it was the engagement partner who had the final say on audit issue, including related party issues, and if, on your own admission, you chose to go and speak to Mr Foong instead of to the engagement partner about related party issues, then this only shows that you were anxious to avoid the statutory auditors finding out about the related party issues between the church and Xtron. Do you agree?

TYP: Your Honour, I disagree.

….

DPP: The compromise statement Mr Chew proposes, which you agree to, is supposed to be then part of what Kong Hee tells the board and the EOGM at the board meeting and the EOGM in August.  Correct? In other words, it is this compromise statement that will be told to the board and the EMs insofar as the relationship between the church and Xtron is concerned.  Yes?

TYP: Yes, your Honour.

DPP: Therefore, the board and the EMs will not be told anything about the church controlling Xtron. Correct?

TYP: No, your Honour, but the church EMs were told….

DPP put statement to Chew
DPP put it to Chew that his intention to meet Mr Foong on 1 August 2008 was to test the compromise statement.

I put it to you that the whole purpose of this meeting with Brother Foong on 1 August was to test your compromise statement on Mr Foong, to confirm that it would not trigger consolidation if you subsequently told it to CHC’s real auditors, that is, the engagement partner.

Chew: I disagree, your Honour, and, in fact, I think Mr Foong didn’t say that as well in his testimony.

CHC’s EOGM on 10 Aug 08 – What did Kong say?
Kong Hee after explained to the EMs, he tested them
 

Kong said, “Can we say that Xtron is owned by the church?”
 

Implicit in that question is, “You know actually Xtron is the vehicle of the church, but are you going to tell everybody?” and the answer was “no”.
 

Looking at Kong’s EOGM transcript, there was no intention to hide it from the members that there would be some control by the church over Xtron.

I ponder on the word “control”

I find the word “control” has grey boundaries. Foong doesn’t seem to know where the exact boundaries of control is. [On 17.9.2013 Foong said he was not familiar with the details of FRS if he has to go for exam he would fail his exam.]

Recap of individuals giving oral evidence of what was their state of knowledge at that point in time. 

1. John Lam said, “Xtron share the common objective of City Harvest Church. The church may not be able to own the commercial property in the future, but we [the church] can use Xtron to be the vehicle to own and manage this future commercial property, and then there will be some arrangement between Xtron and CHC in relation to this property that both party wants to obtain….. but Xtron is still run independent from the church.  They have their own directors.  They have their own team.  The directors of Xtron may be City Harvest members but, nevertheless, they still need to make their own decisions regarding Xtron.”

2. Kong Hee said that Xtron was separate and independent to City Harvest Church and the directors of Xtron were successful businessmen who are able to exercise their own independent thinking.

3. Sharon said, “… the impression given to me for the relationship between Xtron and church supposed to remain independent and all transactions to be remained at arm’s length.  And Xtron to be positioned as a vehicle to hold the future building for the church to use.”

4. In relation to consolidation of accounts, Sharon said, “I started to have concerns because I understand why the church, or the leadership and the board themselves doesn’t want Xtron and CHC to be consolidated.”

5. Chew said, “I have no qualms about saying that Xtron is the church vehicle. I don’t know why some of the accused have detached CHC’s control of Xtron”. His definition of control in relation to the court evidence E-325 is the ability of CHC leadership or management board to swing the profits of Xtron to CHC.

6. Chew said, “…the meeting with Foong on 1 Aug 2008, Foong was teaching them to walk within the paths, a certain path where there was a range in which they could walk within that range and still say that there was no full control”

7. Tan Ye Peng has persistently taken the position that as long as there were no common directors, Xtron was independent from CHC. His knowledge was based on what Mr Foong’s advice to him back in 2004.

8. Serina Wee said, “Foong had included Xtron in the CHC group but he had never said Xtron and CHC were related parties for RPT disclosures.”

9. Serina testified that she presented major expenditure from Xtron in board resolutions for Wahju and Kar Weng [Xtron directors] to approve.  She said, “Your Honour, I did not think it was a problem, because the directors had left the day-to-day running of the Crossover to Pastor Kong and Tan.”

The cross-examination continues….