CHC trial: Suspicious financial transactions reported in 2005 (Today: 29 Jan 2014)

SINGAPORE — Suspicious financial transactions linked to City Harvest Church were first reported to the authorities in 2005, about five years before news broke that the church was being investigated by white-collar crime busters.

The latest revelation in the long-running trial emerged in court yesterday as defence lawyers grilled the Commercial Affairs Department (CAD) officer who led investigations culminating in criminal charges against six church leaders.

The reports were filed by financial institutions to the CAD’s Suspicious Transaction Reporting Office — the Republic’s financial intelligence unit aimed at detecting money laundering, terrorism financing and other criminal offences.

How the transactions involved the church, however, was not revealed as lead prosecutor Mavis Chionh strenuously argued that they were “privileged, confidential and inadmissible” under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act. The identities of the financial institutions were also not revealed.

CAD officer Kevin Han Tong Kim, who took the stand as a prosecution witness, was asked by Senior Counsel Michael Khoo, who represents the church’s former investment manager Chew Eng Han, if the first police report on a possible crime for this case was made on May 3, 2010 — three days after he was appointed lead investigator.

Mr Han replied that the earliest of a number of first information reports was lodged in 2005. Mr Khoo then asked if the 2005 report had anything to do with the charges of criminal breach of trust and falsification of accounts brought in June and July 2012 against the accused.

The defence sought to gain access to the report filed before 2010, which Ms Chionh objected to, citing laws protecting the identity of informers. The defence was on a “fishing expedition”, she added. Both sides will argue today before Chief District Judge See Kee Oon on whether the document can be admitted in court.

Earlier yesterday, defence lawyer Edwin Tong — who represents church co-founder Kong Hee — sought to show that the CAD’s seizure of documents in its investigation was not thorough.

The prosecution had made reference to a church member retracting a 2003 allegation of church funds being misused for the music career of Kong’s wife, Ms Ho Yeow Sun, in its opening statement, but CAD officers did not seize auditing firm Baker Tilly’s audit work papers for the church for its 2003 and 2004 financial years.

It appeared that investigation officers had “applied their minds to not seizing” some documents, Mr Tong remarked, triggering one of many verbal jousts with the prosecution yesterday.

Ms Chionh called the statement “gratuitous and baseless”. She later asked if Mr Tong was accusing the investigation of bias and said the defence could apply for relevant documents to be produced. He replied that he did not intend to make any application. The trial continues.

Mystery report suggests authorities alerted in 2005 (ST: 29 Jan 2014)

A MYSTERY report mentioned for the first time in court yesterday suggests that City Harvest Church had come under the authorities' radar as early as 2005.

That is several years before founder Kong Hee and five other members of the mega-church allegedly funnelled millions in church funds through bogus deals - the subject of the current trial - to either finance the pop music career of his wife Ho Yeow Sun or to cover this up.

Prosecution witness Kevin Han, who has led the Commercial Affairs Department's (CAD) investigation into these transactions since April 2010, said a first information report related to the criminal charges was filed in 2005.

He had explained earlier that such reports are "the first instance when the police receive information about a possible crime".

When defence lawyer Michael Khoo tried to clarify whether the 2005 report had "anything to do with the charges the accused are facing today", which are related to transactions that took place between 2007 and 2009, Deputy Public Prosecutor Mavis Chionh interrupted. She said that under the Evidence Act, investigating officers could not be asked about their sources of information.

As Ms Chionh offered to show the report to the judge to explain why it could not be disclosed publicly in court, Mr Khoo said: "I'm astounded that the prosecution is offering to show your Honour reports which the defence will not be seeing."

But Ms Chionh insisted that there was "no big sinister secret".

Instead, the report detailed suspicious transactions highlighted by financial institutions, she explained. She also reiterated how the law protects informers by not disclosing during trial their identity or the information they gave.

Senior District Judge See Kee Oon said he would hear from both sides on the matter today.

Earlier yesterday, defence lawyer Edwin Tong suggested that CAD's Mr Han and his team had not been thorough when seizing documents relevant to the trial, which began last May.

They had not, for example, taken auditing firm Baker Tilly's work papers related to its special audit of City Harvest in 2003, after a church member raised allegations about the misuse of church funds. They also had not seized any of the accounting firm's electronic storage devices such as hard discs.

Mr Tong alleged this was done on purpose.

Objecting to this as "gratuitous and baseless", Ms Chionh asked whether he intended to make the "serious allegation" that the CAD investigation was biased to an extent that how it did its work was affected.

Mr Tong said there was "no present intention" to do so.

Ms Chionh repeatedly pointed out that if there was useful evidence that had not been seized, Mr Tong could apply to the court to have it produced. "But if he is not making the application... then I take it that he is unable to show why the item of evidence is necessary or desirable for the purposes of this trial."

CHC trial: Reports of possible breach of law made in 2005, says lead investigator (CNA: 28 Jan 2014)

SINGAPORE: From as early as 2005, financial institutions have reported to the authorities their suspicions of a possible breach of law by the six leaders of City Harvest Church.

This was two years after former church member Roland Poon issued a public apology after he questioned whether the church used its members' donations for singer Sun Ho's music career.

The court was told about the suspicions during the cross-examination of a new prosecution witness, Mr Kevin Han, who is the lead Commercial Affairs Department investigator of this case.

Lawyer Michael Khoo had asked Mr Han when the first information report, which is when police first receive information about a possible crime, was filed.

Mr Han said there were a few, and the earliest was filed in 2005.

Mr Khoo followed up by asking if the report had anything to do with the charges the six accused are currently facing.

However, this was was met with strong objections from prosecutor Mavis Chionh, who repeatedly asked about the relevance of the questions.

She said: "Your Honour, I think that the fact that I am objecting means that Counsel, my learned friend, is unfortunately and regrettably going off on a fishing expedition."

Ms Chionh explained that the law makes it clear that "no part of the information provided to the investigation officer is admissible" in the court as it is confidential and privileged.

But Mr Khoo argued that his question was relevant to what Mr Han had testified.

District Judge See Kee Oon will hear submissions on this from both parties on Wednesday.

Earlier in the day, the prosecution and the defence also traded barbs over the line of questioning that was put to Mr Han on the seizure of documents.

Church founder Kong Hee and five deputies are facing charges of misusing millions of the church's building fund by channeling the money into singer, Ms Ho's career via "sham bond transactions".

Lead CAD officer in probe to take stand tomorrow (ST: 27 Jan 2014)

Hearing adjourned last week for parties to discuss evidence tendered

THE lead Commercial Affairs Department (CAD) officer in the probe against six City Harvest Church figures for alleged fraud is expected to take the stand tomorrow.

The hearing was stood down last Friday after barely two hours as parties sought an adjournment to iron out administrative matters.

Under discussion were exhibits - understood to be mostly e-mail involving the accused - to be tendered as evidence in court through the CAD officer.

Pastor Kong Hee and five others are contesting charges of criminal breach of trust and falsifying accounts by misappropriating $24 million in bogus bond investments and another $26.6 million to throw auditors off their scent.

In the third tranche of the trial, which started two weeks ago, Baker Tilly assurance partner Tiang Yii and managing partner Sim Guan Seng have testified as prosecution witnesses.

Ms Tiang led the church's audit as engagement partner from January 2006 to June 2007, and did the same for church-linked music production firm Xtron in 2006 and 2007.

Mr Sim then took over, presiding over the church's audit in financial years 2008 and 2009, and Xtron in 2008.

He had repeatedly raised the red flag about church money going to Xtron, saying that it was "not exactly the most financially healthy company".

The audit manager for the two Baker Tilly partners' respective audit years, Ms Foong Ai Fang, is expected to testify as a prosecution witness following the CAD officer.

The defence has argued that Baker Tilly, as a firm, would have been well aware of the transactions entered into by the church during the material period.

Some information in documents and e-mail shown by the prosecution to Mr Sim - who said he was seeing them for the first time - had long existed in Baker Tilly's archives.

The City Harvest leaders were communicating with the firm's then-managing partner Foong Daw Ching, a long-time churchgoer endearingly known to them as "Bro Foong". They would have expected him to pass on the information, defence counsel argued.

E-mail presented in court have shown at least one "off-the-record" meeting with Bro Foong.

Mr Sim said an auditor's key role was not to detect fraud, and he had deemed the accounts intact when he signed them off.

Defence lawyers have also argued that church leaders only entered into the transactions on the advice given by Mr Sim to "keep it simple", saying that this impression precipitated the early redemption of bonds so they would no longer appear on the books.

Mr Sim said: "I did not tell the client that I wanted the bonds off the books."

Asked to confirm if several entries in the church books, recorded as "investments", were accurate and not misleading or false, Mr Sim said "yes".

But he added a caveat during re-examination that the answers were based on what he knew when he signed off the audits.

He said an auditor's role was not to detect fraud, and if privy to documents and e-mail that may suggest that the transactions were "actually not real investments", he would not have agreed to the classification.

"The way it is recorded is actually the client's responsibility," he said. "If it's supposed to be a transaction done to hide something, obviously they will not record it properly."

On the point that the money was eventually repaid with interest, the prosecution asked: "If the return on investment is, in fact, paid with the investors' own money, would that be considered a genuine return on investment?"

Mr Sim replied: "No."

Defence counsel seek to show that CHC members not hiding anything (BT: 24 Jan 2014)

[SINGAPORE] Defence counsel continued their cross-examination of City Harvest Church's (CHC) one-time external auditor Sim Guan Seng yesterday.

Senior Counsel Kenneth Tan, who represents CHC board member John Lam, established during his cross-examination that Mr Sim had met his client on only a few occasions during his audit of the church and Xtron Productions (a music production house that helped manage CHC's evangelisation-through-pop-music Crossover Project).

Mr Sim testified that on the three occasions he met Lam, he had the sense that Lam was "forthcoming" and "tried to assist (Mr Sim) the best he could". Among other things, he said Lam had discussed with him the bond issues made by Xtron to CHC, and had brought up the fact that the people running Xtron and those in CHC "have a common interest".

"John Lam was making a disclosure in a forthright way, that there was clearly a link (between Xtron and CHC) because they are church members?" Mr Tan put to Mr Sim.

But, Mr Sim said: "If you are saying that John Lam tried to tell me that the two entities are related, then why was it signed off in the financial accounts as them being unrelated parties? Why was there no disclosure? They (the board) signed the accounts, they approved the accounts.

"You're right in saying that John Lam said they wanted to maintain an arms-length (relationship between the two entities). For governance purposes, the board should maintain an arms-length view of all transactions . . . But I don't see how you can jump back to how he disclosed anything to me," Mr Sim added.

Mr Tan then asked: "However, in your view, after considering all the responses, which you obtained (from a meeting with relevant CHC members), you were comfortable with signing off the FY2008 accounts as it was signed off eventually? Which did not include Xtron as a related party of CHC?"
"Yes," Mr Sim said.

The line of questioning came after several e-mails were tendered as evidence by the prosecution earlier this week.

One was an e-mail from former CHC finance manager Serina Wee to deputy senior pastor Tan Ye Peng in June 2009, expressing her concern that Mr Sim might "say that CHC is running Xtron".
Another was an e-mail from former CHC board member Chew Eng Han to Wee and Tan in July 2008, which said that "we don't want them (the auditors) to think we control Xtron".

Mr Sim had said then that the e-mails seemed to suggest the CHC members were eager to hide any link between Xtron and CHC from him, and that the e-mails would make him question the bond issues made by Xtron to CHC - "is there something more to (the bond issues) than what is represented to us?"

Senior Counsel Andre Maniam, who represents Wee, then sought to show that CHC members had not attempted to hide such issues, as they had raised them with Baker Tilly TFW's then-managing partner and CHC's first audit engagement partner, Foong Daw Ching.

Mr Maniam showed Mr Sim, who is the current managing partner of Baker Tilly TFW, CHC correspondence and documentation - such as minutes of meetings - which seemed to show that any concerns the CHC members had about the Xtron bonds and the possible link between Xtron and CHC had been raised and discussed with Mr Foong on several occasions.

These were documents which Mr Sim said he had not seen during his audit of CHC and Xtron, nor before this trial.

The hearing continues.

City Harvest trial: Hearing adjourned to Tuesday, CAD investigator expected to testify (ST: 24 Jan 2014)

The trial against six City Harvest Church figures for various counts of criminal breach of trust and falsifying accounts was barely a two-hour affair on Friday.

This, after parties sought an adjournment to iron out an agreed list of exhibits to be tendered as evidence through the next prosecution witness. The Straits Times understands that the exhibits under discussion are largely e-mail communications involving the accused.

The lead Commercial Affairs Department investigation officer for this case is expected to take the stand when the trial resumes next Tuesday.

In Friday's hearing, Deputy Public Prosecutor Christopher Ong re-examined Baker Tilly managing partner Sim Guan Seng on key issues raised by the defence during cross-examination. Mr Sim had presided over the church's audit in financial years 2008 and 2009, and for music production firm Xtron in 2008.

He reinforced his position that as an auditor, his key role was not to detect fraud, and that he had determined that the accounts were intact when he signed off on them.

Defence counsel N. Sreenivasan and Michael Khoo - acting for deputy senior pastor Tan Ye Peng and director of church investment manager AMAC Capital Partners Chew Eng Han respectively - had asked Mr Sim to confirm if several entries in the church books, recorded as "investments", were accurate and not misleading or false.

Although Mr Sim agreed at the time, he added a caveat on Friday that he based his answers on what he knew at the time he signed off on his audit.

If he had been privy to other information, such as documents and e-mails cited by Mr Ong in suggesting that church transactions were "actually not real investments", he would not have agreed to the classification as an "investment" on the books.

He said: "The way it is recorded is actually the client's responsibility...If it's supposed to be a transaction done to hide something, obviously they will not record it properly."

Earlier, Mr Khoo had raised the point that the monies taken from the church were eventually repaid - with interest. In relation to this point, Mr Ong asked: "If the return on investment is, in fact, paid with the investors' own money, would that be considered a genuine return on investment?"

Mr Sim replied: "No."

CHC trial: Auditor says wouldn’t have signed off on church’s accounts (CNA, 24 Jan 2014)

SINGAPORE: The lead auditor testifying in the trial of the six leaders of the City Harvest Church said he would not have signed off on the church's accounts if he had been aware of the discussions among the accused and would have raised more questions.

On Friday, the prosecution sought to rebut the defence's argument by asking Mr Sim Guan Seng of Baker Tilly about the signing off on the documents.

This comes after the defence sought to show that the prosecution's case was built on a “piecemeal” approach, where it showed selective information to the witness.

Mr Sim also said on Friday that the amendment of the Xtron bonds would raise a lot of questions.

It is the prosecution's case that church founder Kong Hee and five deputies misused millions of Building Fund monies to boost singer Sun Ho's career.

The accused are accused of doing so via "sham bond investments" in companies like Xtron.

Xtron was the management firm of Ms Ho, who is the wife of Kong.

The trial will resume on Tuesday as both the defence and prosecution sort out some logistics.