John Lam explained to the court this morning how personal guarantees work, and why it was necessary to extend the maturity date of the Xtron bonds rather than rely on the personal guarantee.
This morning, DPP Mavis Chionh continued her cross-examination of John Lam, clarifying a number of issues that were brought up yesterday.
Based on an email by John Lam to Tan Ye Peng on Jun 27, 2008, in assessing the Xtron bonds, Lam had suggested to Tan to show that Xtron had the option of extending the maturity date of the bonds. The DPP put forth that Lam was aware that Xtron had been making losses and that there was a possibility that Xtron could not pay the bond on maturity.
She questioned Lam as to why did he not consider the personal guarantee from Wahju Hanafi to underwrite the losses of Xtron, insinuating that there was no existence of such a personal guarantee by Hanafi at that point in time.
Lam disagreed with her, citing an example of how the company he worked for as a chief financial officer had cashflow issues in 2008 and 2009. In his discussions with the company’s owner, they considered several factors and various scenarios to raise funds, and although there was a personal guarantee provided by the company’s owner, it was considered a last resort and usually not utilized. Hence, suggesting the option to extend the maturity date of the Xtron bonds was a more logical solution as opposed to using the personal guarantee from Hanafi.
DPP Chionh questioned the existence of another document–an appendix to an investment committee meeting minutes. She took Lam through the minutes of a CHC investment committee meeting held on Aug 5 where the committee reviewed an appended report submitted by Xtron showing its ability to make good on the bonds.
The DPP told Lam to right-click the document’s properties and details. Chionh alleged that the appendix had been created on Aug 8, 2008 by Serina Wee, and therefore could not have been reviewed by the investment committee on Aug 5, 2008.
The prosecution concluded that this was a deliberate act by the accused to falsify paperwork to convince auditors that CHC’s management board had assessed the recoverability of the bonds.
Court resumed at 2.30pm.
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