Defense provides proper context of the prosecution’s evidence in its cross-examination of Baker Tilly auditor Sim Guan Seng.
Why couldn’t CHC buy a commercial property in its own name? Even if it wanted to buy it through another company, why couldn’t it do so through a subsidiary instead of using a third party owned by a church member?
“Unusual” and “didn’t make sense” was how Sim Guan Seng described his concerns about CHC’s seemingly convoluted Advanced Rental License Agreement with Xtron earlier this week when questioned by deputy public prosecutor Christopher Ong. In fact, he “didn’t quite buy” CHC’s explanation that it could not purchase a commercial property.
In cross-examination this afternoon, however, defense lawyer Michael Khoo for Chew Eng Han showed the court evidence which supported CHC’s rationale for the “unusual” agreement—written responses from three out of four major banks in Singapore had, in fact, expressed reluctance to lend money to CHC, which was looking to secure new premises for the needs of its growing congregation.
Khoo explained to the court that the unspoken concern was presumably that should a church default, it would be in “bad taste” for the bank to sue the church.
Defense counsel for Serina Wee, Andre Maniam, also sought to clarify Sim’s evidence-in-chief by providing the court a fuller context to seemingly clandestine exchanges among the accused that would have “raised many concerns” and triggered “a lot of doubts as to what was represented to us during our audit” had he known about them, and caused him to wonder if there was “something else they are hiding from us?”
In particular, there was the “off-the-record” meeting between Foong Daw Ching and Serina Wee, as well as multiple emails in which CHC people had sought Foong’s advice on audit matters.
After taking the court through chronological email evidence detailing the relationship between CHC and Foong wherein the church had approached Foong on various matters even though he had not been its engagement partner, Maniam asked Sim if he felt there was anything wrong with people from CHC and Xtron approaching Foong with their concerns about how their audit engagement partner was proposing to conduct the audit.
Sim agreed that there was nothing wrong. In fact, the witness stated that he trusted Foong to give the appropriate response if clients would approach him, given his many years of audit experience.
Maniam also challenged Sim’s early evidence based on an Xtron cashflow spreadsheet that suggested losses from Sun Ho’s projected album sales. Sim had told the court that it would have raised a “serious issue” about whether Xtron was really able to fulfill its obligations. The senior counsel acting for Serina Wee pointed out that the spreadsheet did not factor in Xtron’s other sources of income (such as rental, lighting and sound services, sponsorships), although Sim had revealed in his evidence that he knew about these sources. He also knew that Xtron had support from its shareholders, directors and sponsors.
Sim also agreed with Maniam that not all the money received by Xtron under the advance rental license agreement had to be “put in a corner” and used only to provide for premises for CHC. The court heard that Sim was fully aware that $22m of this sum had been used to offset the redemption of the Xtron bonds.
The court had also previously heard that according to a draft Baker Tilly management letter dated 28 July 2010 signed off by Sim, there was no evidence that CHC had an investment policy.
However, a copy of a letter obtained from Baker Tilly’s own records showed that CHC’s investment policy had in fact been provided to Mdm Foong and Baker Tilly as early as August 2007. This was before Sim took over as engagement partner for CHC and Xtron.
The same draft management letter also stated that there was no documented evidence over the selection of fund managers for investments. Sim then agreed with Maniam’s point by conceding he had seen the fund management agreement with AMAC. He then pointed out that CHC’s management could have clarified these points since it was only a draft.
Court will resume with re-examination of Sim Guan Seng at 9:30am tomorrow.
中文报道 – CHC审讯：辩方澄清关于“没道理”之“不寻常”交易的疑虑