While it was true that Xtron’s increased retainer fees and the transfer of its expenses to the church was meant to cover its deficit, the transactions had to be legitimate and reasonable, says Kong Hee.
This afternoon, deputy public prosecutor Christopher Ong put it to City Harvest Church’s senior pastor Kong Hee that he had lied when he said he was not involved in financing the Crossover Project because he wanted to distance himself from the fact that he approved the bonds.
The DPP further alleged that the reason Kong did so was because he knew the bonds to be sham, and that the sole motivation for the investments was to channel the church’s monies into the Crossover Project.
In response, Kong maintained his stand over the past few days, replying that he does not deny approving the bonds—subject to approval from the lawyers, auditors and the church’s management board.
“Your Honour, how could they be shams when there was every intention to fulfill its obligation, and your Honor would have seen in those emails … that the structure of it from the church’s building fund to AMAC, to Firna, to the music production, was shown to Brother Foong, was shown to Jimmy, and they didn’t say that it was a sham. And that exact same structure was actually a repeat of the previous years investment. The Xtron BSA, church Building Fund to AMAC, to the Xtron, and to the music production. They didn’t say it was a sham. So why would it be a sham? I don’t understand, your Honour,” Kong added. Jimmy referred to Jimmy Yim, the church’s former lawyer.
Earlier, Ong sought to establish his point via email evidence which suggested that money had been channeled out of the church toward Xtron via inflated retainer fees and expenses originally incurred by Xtron, in a bid to alleviate Xtron’s cash flow problems.
“Mr Kong, I put it to you that the reason why you were kept updated on Xtron’s cashflow by Serina is because you and your team were really the ones controlling Xtron’s finances to make sure that the Crossover Project could be funded,” said the prosecutor, referring to accountant Serina Wee.
Kong disagreed, but stated that he did not deny that they had some control, and a measure of influence.
DPP Ong further asked, “ … would you agree that the motivation for entering into increased retainer and the Xtron bonds was the same, to find ways to increase Xtron’s cashflow to finance the Crossover Project?”
Kong explained that while it was true that the increased retainer fees and transfer of expenses, both of which resulted in financial outlay on the church’s part, were proposed to solve Xtron’s deficit problems, it would not be “an arbitrary transfer of funds for no legitimate services or at a cost to the church that is totally unreasonable.”
Undeterred, Ong asked, “In fact, there is no real assessment of commercial motive here on either side, because Xtron is just benefiting from certain accounting adjustments that are being made that would allow it to deal with its deficit. CHC actually ends up bearing more cost as a result of these arrangements, correct?”
Kong pointed out that the church bearing some of the expenses for the building of schools was “really within the missions of the church.”
“So it’s a legitimate expense. Now, I do not deny, perhaps in terms of dollars and cents, the church would have less, but the church benefited in other areas. When Xtron is capitalised, Xtron could help the church to fulfill its mission … like, in this case, the Crossover Project,” he said.
Ong pressed on, “Mr Kong, whatever financial arrangements needed to be made to capitalise Xtron will be done, never mind that the church would end up bearing the increased expenses. That was the motivation for these transactions that we’ve looked at in these emails, correct?”
“Your Honour, the church would want Xtron to succeed because Xtron is helping the church,” explained Kong adding that the expenses had … “to be for legitimate reasons, like, in this case, building of schools is within the missions of the church. If we increase the retainer, it must be for actual services. So it got to be for things that are legitimate, real jobs that were done, and the price has got to be reasonable.”
“NO CHURCH FUNDS USED” EXPLAINED
In the course of the proceedings this afternoon, DPP Ong referred to the transcript of the Annual General Meeting on Apr 27, 2003, and questioned Kong if it was accurate to say that no church funds were used for the production and promotion of Sun Ho’s album.
Kong was addressing the executive members in the meeting and he said “no church funds went into the secular singing career or boost or albums or ticket sales” and that “1.27 million (was) being set aside for Attributes Pte Ltd for the book store for the promotion of Pastor Sun’s album”. He went on to show a video of auditor Foong Daw Ching giving a statement to confirm that no church funds were used. Kong later added that “Attributes spent money donated by Wahju (Hanafi)” and that “Not a single dollar or cent is from your tithes, your offerings or Building Funding from the church account”.
Ong asked if it was accurate to say that not a single dollar was used of the church funds when in fact Hanafi’s donations were a refund from the church.
Kong replied that “it is accurate to the extent that after the Roland Poon weekend the board took a view that no church funds were used, and that was confirmed by the special audit done by Brother Foong. And Brother Foong said no church funds were ever used. So in my mind perhaps I was too simplistic. I just adopted what he said and said that no church funds were used.” He also told the court that the executive members had also attended the AGM in the previous year when he told them that money was used to produce Ho’s album.
Ong pressed the issue and asked why did he not find it necessary to tell the members that while church funds were originally used, they have done some reclassification, so technically, no church funds have been used?
Kong replied, “perhaps with the benefit of hindsight, I should have been more proactive in this, and be clearer. Perhaps I was too simplistic in this. So to answer the question, at that point in time, I didn’t feel the need, but with all that has happened in the last four years, perhaps I should have checked with other people if what Brother Foong have said was accurate.”
Kong also explained that in 2002, Wahju Hanafi had pledged to Kong that he would underwrite the Crossover Project after witnessing the large number of people responded to the altar call after one of Ho’s outreach concerts. When the Roland Poon incident happened in 2003, some of the board members approached Hanafi and asked if he would make good his pledge and pay for the album cost.
The DPP then referred Kong to co-defendant John Lam’s statements on Aug 4, 2014 where he had said Hanafi’s intention had always been to give to the Crossover Project and it was a mistake that the monies went into the Building Fund (Article). Ong asked how was the refund an accounting mistake when it was the board who approached Hanafi for the refund. Kong explained that he was answering based on his own recollection but he was not involved in the reclassification of refunds, thus Lam could be right. He further explained that he remembered there was a non-official board meeting where one of the board members told him that Hanafi would pay for the album cost.
Court resumes at 9:30am tomorrow.