CHC Trial – Common sense explanations of the 200,000 CDs scenario (MrsLightnFriends: 3 May 2015)

I have attended the out-reach crossover concerts, the announcement of Sun’s success and the crossover videos. I was also made to believe God was in the midst of this crossover project and the album in US would sell more than 200,000 CDs.

When I say crossover videos, I need to qualify I am not referring to the Geshia or the Victoria’s secret bra video. I am referring to the crossover alter call videos.

I need to remind some of my friends, this is a criminal trial not a civil case, the mental element of the offense must take into consideration. Whether the 6 accused have any criminal behavior it’s not for a layman to judge. Do we need a person who is expert in criminal psychology to understand the case? Certainly not. I am merely using my common sense.

The prosecution’s position is Xtron at that time was under the control of the accused persons Kong Hee and/or Tan Ye Peng. The 5 accused based on the conservative estimate know that the $13 million Xtron bond would not be able to repay the bonds on maturity and the 3 accused [Involves in the E-1 200,000 CDs scenario planning] were already making plans to extend the bonds.

The prosecutor asserted that the directors of Xtron were not told about the projections in E-1 is because the co-accused expected the Xtron directors to rubber stamp the Bond Subscription Agreement without making their own independent assessment of how financially liable it was from Xtron’s perspective.

The prosecution also painted the picture that Tan Ye Peng came up with half truths and lies by omission to conceal certain information to be given to Foong Daw Ching. What was discussed in E-1 was not told to the Board and the EMs.

DPP put statement to Kong Hee in relation to the 200,000 CDs email 

DPP: I put it to you that you knew before the $13million Xtron bonds were entered into, there was no reasonable prospect of success, given the projection reflected in E-1.

DPP: I put it to you that nevertheless you, together with Eng Han, Serina, John Lam and Ye Peng, went ahead with this transaction.

John Lam’s defence position
Both emails E-1 and E-197 John Lam wasn’t a party to these discussion. John’s counsel said “John Lam just a volunteer who comes in and out”. He painted the picture that John seem to pop-in and pop-out here and there.

Kong Hee’s defence position
Kong’s counsel painted the picture that Pastor Kong was a busy person, fly-in and fly-out of Singapore. When assessing the budget, he was being very considerate, being very conservative in ensuring that there would be

1) No overspending
2) An degree of probability of recoverability and
3) An expectation that over a certain period of time, the investments could be recouped.

As in relation to the email E-1 Kong said he was not copied in this email. The team never told him about the conservative estimate that they had done.

Kong: Your Honour, I cannot speak for Serina because I’m not cc’ed in this email, but this is probably Serina’s worst-case projection.

DPP: Your evidence is that your team was doing this ultraconservative estimate in E-1 that showed the bonds would not be able to be repaid but they never told you about this particular conservative estimate that they had done. Is that correct?

Kong: Not that I could recall, your Honour.

Chew Eng Han’s defence position
When you read Mr Chew Eng Han’s oral evidence, he is giving evidence of what he thought at that point in time.
 

Chew’s defence position is very simple just speaks the truth and what was in his mind at that point in time.

Chew’s EIC:  Your Honour, I believe in supporting Sun. I believe in having members cough up their own money to buy CDs. I will do it personally. But I do not believe in falsifying success, because if success is falsified, the faith of the members are being robbed, number one. Number two, this was supposed to be an investment. There are people involved in this whole album investment and they bet their lives on that. They put their lives on the chopping board, thinking that Sun is a success. And if they think that Sun is a real success, then, of course, the album is an investment. But if they had known that Sun’s success was not real, then would they have gone in the same way and supported the album investment the same way? Probably not.

Tan Ye Peng’s defence position
In relation to the 200,000 projection in E-1, from Ye Peng perspective, it was not a prediction as to how many albums were going to be sold, he was expecting the album to sell around 1.5million copies. 200,000 copies was a scenario planning. John Lam who DPP alleged is a co-accused was not involved in the scenario planning in E-1.

TYP: Your Honour, as I’ve said in my evidence, that this is the expected sales and that’s why I say that we are optimistic that this album is going to do well, and this budget is something that Serina has been keeping track because of the amounts of monies that are sent to the US, and we’ve always been expecting 1.5 million copies. But internally, we do another worst-case scenario planning, and that’s been the way and the pattern in which we do things in City Harvest Church, your Honour.

E-1 dated 7 July 2007
This email involves Serina Wee, Chew Eng Han and Tan Ye Peng. According to the prosecutor this is a critical email. At that time, none of them have any official position in Xtron. Serina and Tan Ye Peng were working in City Harvest.This email took place before the BSA (Bonds and Subscription Agreement) was signed.

From Serina Wee
Date 3 July 2007
To Eng Han

Hi Eng Han,

Can I check with you about the bonds Xtron will issue?

We will issue $13m in bonds with interest of 7%. Is this going to be a 2 year bond? And do we only need to pay the interests of 7% x 2 years at the end of 2 years?

I am checking the Xtron cashflow which we worked on the other day in Pst Tan’s room. I can’t seem to recall why was the interest on the $13m removed? ……

Eng Han replied to Serina on the same day
We will issue $8m first and then $5m next year. May be we do 1.5 years first and reissue on maturity if needed. The interest coupon is paid annually.

Serina writing back to Eng Han on the same day
We are quite sure we will not be able to collect much sales on the English Album by end 2008 so we will definitely have to issue another bond come end 2008 when this bond matures.

Eng Han replied to Serina on the same day
Then let’s do a 2 year bond?

Serina replied to Eng Han on the same day
Just to clarify that once the building project starts, UEPL will lend the $13m to Xtron instead so that Xtron has money to pay back CHC the principal. And Xtron will take 10 years to pay back UEPL the $13m.

Eng Han replied to Serina on the same day
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 replied to Eng Han on the same day
We based our projection on 200,000 copies of English Album sold which will only yield us $2.17m, hardly enough to pay off the $13m.

Xtron directors’ oral evidences
Xtron director, Mr Choong Kar Weng understanding is the bond would be repaid in two years from the sales of the album.
 

Xtron director, Mr Wahju’s evidence is the 200,000 ultraconservative projection, was never discussed with him.

During cross-examination by Kong’s counsel, Wahju agreed with Kong’s counsel that it was Justin Herz who gave him the figure of 1.5 million album sales but when re-examined by the DPP he said it could be Pastor Kong who told him the 1.5 million copies sales figure.

Wahju: “The email didn’t come to me, but I mean, if they were proposed to me that the sales only 200,000, I wouldn’t be putting $13million to sell 200,000 albums. I would throw it away. [Wahju’s oral evidence on 11.9.2013]

Recount of Serina’s EIC on 17 April 2015
SC: Why were you still working on the Xtron cashflow, as you mentioned in this email?

Serina: Your Honour, this is because prior to the meeting in Pastor Tan’s room, Pastor Tan called me to ask me to work on the worst-case conservative projection of 200,000 to plug it into the Xtron cashflow and work on the cashflow based on that, and what I understood was that it was a instruction from Pastor Kong for us to work on it.

SC: Did Pastor Tan use the words “worst-case” or “conservative”, or is that what you understood? Can you tell us your perspective of that?

Serina: Your Honour, it’s what I understood, that it was a conservative, worst-case kind of projection.

SC: Why were you doing this when you already had a cashflow worked out based on 1.5 million units?

Serina: Your Honour, the purpose of this exercise was for a scenario planning, for contingency plans to be set up.

Serina said it would be Eng Han and herself working on the Xtron cashflow and she couldn’t recall if Pastor Tan was around.

Recount of Serina’s Wee cross-examined by Chew Eng Han on 29 April 2015
In relation to the 200,000 CDs exhibit E-1.

Chew: Serina, you know, this is a very contentious email, unfortunately you are the author of it. But between you and me, we are going to clear this up. If you look at the last email on the bottom, here you send me an email on 3 July 2007 at 1.13pm…. Your evidence is that you and I met in Pastor Tan’s room to discuss the Xtron cashflow. Right?

Serina: Yes.

Chew: What was the purpose of us meeting? What about Xtron cashflow that we were looking at?

Serina: Your Honour, the purpose is to work on the 200,000 projections, the worst-case projections, that Pastor Kong wanted.

Chew: You gave evidence that in that same meeting we talk about 1.5 million copies as well. Correct?

Serina: Your Honour, I don’t think I said in the same meeting we talk about 1.5 million copies, but because Eng Han was involved in helping Xtron to source for bank loan, as early as January 2007, there were already projections on 1.5 million.
…….

Eng Han read the text in E-1 what he replied to Serina. 
Chew: Don’t you agree that from this email my impression was that it was possible for sales to come in within one a half years?

Serina: Yes, I agree that is Eng Han’s impression.

Chew: That’s why I said “we will re-issue on maturity if needed”, right? It was a condition.

Serina: Yes, that can be understood from what Eng Han is saying.

Chew: In fact, if you stay on this just put this email aside, but don’t close it, and open X-30. X-30 is a minutes of a board meeting of Xtron Productions on 7 October 2006.

Item 1
The Board reviewed the budget for Sun Ho’s debut English album to be launched in the USA in April 2007 (Appendix 1). As the proceeds from the album will only be received at the end of 2007, the directors will need to source for a loan of $10.4 million in order to fund the project.

Chew: Just take note of the date, okay? In this minute it’s 7 October 2006. You and Xtron directors were expecting the English album to be launched in April 2007. All right?

Serina: Yes

Chew: So from the time of these minutes, which is October 2006, to the time of the launch of the album, April 2007, it’s a period of six months. Correct?

Serina: Yes, but, your Honour, I would like to state that these minutes, the reviewing of the English albums stated here, it was actually on 5 May, where the whole 1.5 projections, the 5 May 2007 meeting with the directors, where the English album projections of 1.5 was shown to them. In this 7 October meeting, there was some form of album budget shown to them, but it is not this one that is finally minuted down on 7 October.

Chew: Serina, I’m not going on about the point of the budget or the album copies. I’m looking at the timeframe for the album to be launched and for the sales to come in. Okay?

Serina: Yes.

Chew: So, basically, at the time of writing these minutes, October 2006, and you say that the album will be launched in April 2007, that’s a space of six months. Right?

Serina: Yes, during that time what the Xtron directors know is that the launch was going to be in 2007.

Chew: Yes, during the time what the Xtron directors know is that the launch was going to be in 2007.

Serina: Yes, during that time what the Xtron directors know is that the launch was going to be in 2007.

Chew: So it doesn’t take that long, actually, to produce the album and then to launch it, according to this minute?

Serina: Yes, because Sun had been in the US for quite a while.

Chew: And you had past experience of the Mandarin albums. It didn’t take that long to record an album. Right?

Serina: Yes, it’s not very long.

Chew: The same paragraph says, at the second line: “As the proceeds from the album will only be received at the end of 2007” So if the launch in April 2007, you expect the proceeds to come in by end of 2007, so, from April to December 2007, there’s a space of eight months. Correct?

Serina: Yes.

Chew: In other words, if we add the six months to produce an album to the eight months from the time of launch to the time of receipt of sales, it’s only a space of 14months. Correct?

Serina: Yes.

Chew: In other words, it is possible from start to finish to start producing an album, launch it, get the proceeds in, and repay the bonds within 14 months?

Serina: Yes, it is possible.

Chew: So for me to assume 1.5 years by in E-1, it’s not unreasonable?

Serina: Yes it’s not unreasonable.

Chew: Because the time cycle has been achieved before for many of the Mandarin albums. Right?

Serina: Correct.

Chew: And you’ve agreed that at the time of the issue of the Xtron bonds, none of us were expecting it to take so long to launch and for the sales to come in. Do you agree?

Serina: Yes, I agree.

Chew: The second paragraph says that the directors discussed on the risks involved in taking the loan but decided that the English album is very likely to succeed in the USA as indicated by the tremendous response that Sun received from the release of her various Singles in the USA in past months.

So you were expecting the launch of the album to be successful because of Sun’s past track record. Right?

Serina: Yes, your Honour, I was expecting Sun’s album to be successful.

Chew: So if everything had gone on as planned, the album is launched in time, sales comes in within eight months, a timeframe of 1.5 to 2 years for the Xtron bonds is more than enough. Do you agree?

Serina: Yes, your Honour.

Chew: Just go back to E-1. We continue on the email …. you writing back to me. In the second paragraph, you say, ” We are quite sure we will not be able to collect much sales on the English Album by end 2008 so we will definitely have to issue another bond come end 2008 when this bond matures.”

Serina, my impression when I read this was that you were telling me that sales weren’t coming so fast, because you said “we will not be able to collect much sales… by end 2008”. Is it reasonable for me to read it that way? That you were talking about sales timing, that sales would not come in that fast, by end 2008?

Serina: Your Honour, I agreed that Eng Han can possibly get that impression from this, but what I was referring to is really based on the 200,000 worst case projections we won’t be able to get the sales by end 2008.

Chew: But do you agree that the way you worded it can be misconstrued?

Serina: I do agree that reading it now it can give Eng Han that impression.

Chew: That’s why, if you turn to page 2, my reply to you was: “Then let’s do a 2 years bond?” Can you see that?

Serina: yes.

Chew: Because my impression was that you were telling me that one and a half years is not enough, that the time is too far. That’s why I suggested to you two years instead. Is that reasonable?

 ——  DPP stood up and objected.——

DPP: Your Honour, I’m not really sure whether the witness can answer this question about what Mr Chew’s impression was when he made a particular suggestion.

Chew: No, your Honour, I’m actually asking about what she thinks right now, not at that point in time. I think there was a miscommunication between herself and me, and that’s why I said we need to clear this up right now. Because it is clear from the emails, your Honour, that we are going on different frequencies, Serina and myself.

Chew: So Serina, I am not asking you about your impression back then but now, as we read these emails. When I say “let’s do a 2 year bond”, isn’t it reasonable that the reason why I’m extending from 1.5 to 2 years is because I misinterpreted your email to me when you said that sales won’t come in by end 2008. In other words, I thought that you were telling me that sales would come in after end 0f 2008, perhaps in the middle of 2009.

Serina: Your Honour, I can understand that Eng Han may have read it in the way that he understood, but I think in my understanding we worked on the cashflow, the Excel Spreadsheet during that meeting, so I don’t know how much of that registered with him.

Chew: Yes, I’ll get to that, about how much actually registered with me. Because you gave evidence, actually in your EIC that you were frustrated with me, right?

Serina: Yes

Chew: Because I didn’t seem to get what you were trying to tell me.

Serina: Correct.

Chew: Now on page 2, at the top, again you are reiterating to me, you say: “Xtron will take 10 years to pay back UEPL the $13m.” Can you see ..?

Serina: Yes

Chew: My reply to you “Do we really need 10 years for Xtron to pay back can’t the sales of album cover back the majority of the loan?” So it seems like we’re still at a different frequency, right? Because here I’m suggesting to you that, even if all $13million doesn’t come in by 2 years time, perhaps 80 or 90 percent of it will come in. That’s why I say “can’t the sales of album cover back the majority of the loan”?

Serina: Yes

Chew: Right? That’s why you were being frustrated with me, because you were asking me to plan the bond and structure it in such a way to cater for the worst-case scenario. Right?

Serina: Yes, I was asking Eng Han has he considered that.

Chew: Could it be possible that the reason why I’m not getting you in this email and this was supposedly a few days after we met in Pastor Tan’s room could it be the reason that in that room in Pastor Tan’s room, it didn’t imprint on my mind, this 200,000 copies scenario?

Serina: Your Honour, from reading of E-1, I get the impression that it didn’t imprint on Eng Han’s mind.

Chew: Yes. That’s correct. You needed to remind me. The prosecutor’s case is that all of us were expecting 200,000 copies as the eventual sales. If that was the case, you wouldn’t need to remind me. Right?

Serina: Your Honour, I agree that Eng Han probably didn’t get the 200,000 very clearly in the meeting, but even for myself the 200,000 is based on a worst-case scenario planning. Because Pastor Kong wanted us to work on it, so I thought Eng Han has to register that this is a scenario that we work on.

Chew: So you did this scenario because Pastor Kong wanted you to do it?

Serina: Yes

Chew: At the top of the email, when you say: “We based our projection on 200,000 copies of English Album…. which will only yield us $2.17m…”

Am I right to say that when you said “We based our projection on 200,000 copies”, you are actually saying that you are projecting ten years because you’re assuming 200,000 copies in a worst-case scenario?

Serina: Yes, correct.

Eng Han pointed another email that is related to E-1. He is not copied in these emails but his name was mentioned.

Serina wrote to Tan Ye Peng, “Eng Han & I are trying to think of a solution. Originally Xtron was supposed to earn some management fees for the new building project but since it is postponed, we have to think of another solution!.

Chew: In any case, this solution that you and I were talking about has to do with a property.

Serina: Yes, correct.

Chew: And if there is no property, there’s no solution?

Serina: Yes, I was saying that the original solution is because of the property.

Chew: Do you remember whether I came up with any solution after that other than the property?

Serina: Your Honour, not that I can immediately recall.
……
Chew: Serina, we were continuing on E-1, but now we take up E-197, which is related to it.

Serina: Yes

Chew: … you talk about how Xtron will take 10 years to pay back the $13 million bonds right?

Serina: Yes

Chew: I have a reply to you which is different from E-1. I said: “If your objective is to lengthen the repayment period for Xtron, we can always re-issue bonds for Xtron.” So here again, my impression of what you were telling me was that, we were talking about sales timing, basically, and I said if what you want to achieve is lengthen the repayment period, then all we need to do is re-issue new bonds when the original bond mature. Implied in this email to you, would you agree that I was still expecting the bonds to be repaid, and that's why I said we just lengthen the repayment period?

Serina: Yes, your Honour.

Chew: You know there’s a lot of controversy about how the bonds are being extended or subsumed into the ABSA. At this point in time, on 3 July 2007, when I said, “We can always re-issue bonds for Xtron”, you were relying on my professional view. Right?

Serina: Yes, your Honour, because I’m not familiar with the bonds.

…….Eng Han continues with his cross-examination…..