As long as everything was within legal boundaries, and as long as he wasn’t legally obligated to reveal details and relationships, Kong Hee preferred to keep disclosure to a minimum, at times to protect the mission of the Crossover.
This morning in court, deputy public prosecutor Christopher Ong took issue with Sun Ho’s switch of artist management companies from Xtron to Ultimate Assets, a company owned by Wahju Hanafi.
Using email evidence, Ong showed that the accused appeared to have been concerned with the need for disclosure and eventually decided to switch Ho from Xtron’s management to Ultimate Assets’ management. With the Firna bonds proceeds, Hanafi could independently finance Ho’s music album.
Ong then submitted that the reason for the switch was to avoid disclosure of third-party relations between Xtron and CHC, because a disclosure would lead to the discovery of “sham” investments.
It was seen in court that, the circumstances leading to this switch in management were thus. In light of the Renci saga (2007-2009), CHC staff member Suraj had written to Kong highlighting his concern over two issues: the retainer that CHC paid to Xtron for its services engaged during weekends, and the potential conflict of interest when it came to Ho being the artist of Xtron and the wife of Kong.
In response Kong had instructed Tan Ye Peng and Serina Wee to check with the church’s auditor Foong Daw Ching to see if there were any areas found wanting between CHC and Xtron.
Foong’s advice to the team was that after the Renci case, the net had been “cast wider” and the relationship between Xtron and CHC had to be disclosed in both sets of accounts, as Ho as considered a key player in Xtron and she was the wife of Kong.
Kong maintained that it is true that he and the team had preferred not to disclose the close relationship between Xtron and CHC, as doing so could have led to the perception that Ho’s success was church-driven and hence not legitimate. This would have jeopardized the Crossover mission. Kong qualified to the court that everything had been done within legal boundaries, adding that Foong had been alive to the sensitivity of the issue and did not consider the bonds structure a sham.
Church Management Board Not Told Of The Purpose Of Bonds, Hence Sham?
Ong noted that the court had not seen any documentation in the form of emails or minutes of meeting to show that the church’s management board was ever told of the purpose of the Xtron or Firna bonds—which is, to fund the Crossover project.
Kong agreed with this, but added that it could have been discussed with the board, but might not have been documented because the mandate to invest had been given to the fund manager, Chew Eng Han. Kong also told the court that whatever needed to be told to the board, would have been told. He further added that there was no harm in telling the board because they supported the Crossover.
Ong submitted that the use of funds from the bond proceeds were deliberately kept from the board as part of the overall plan of the accused to avoid discovery of the alleged sham transaction to channel funds to the Crossover.
Kong disagreed that the transactions were sham because there was every intention for Xtron to fulfill its legal obligation to repay the bonds. He asserted that the bond subscriptions were legitimate investments.
The Purchase Of Riverwalk
In another email brought up by the DPP, Chew discussed with Tan regarding the church purchasing the Riverwalk property through Xtron. Benefits of this purchase listed by Chew included the fact that the church could own a building and Xtron could earn rental from CHC. An additional benefit would be that it was a way to transfer the church’s general fund surplus to Xtron.
Kong explained that Xtron needed to be capitalized and it was to CHC’s benefit that Xtron stayed commercially viable as Xtron was a vehicle to further the church’s objectives. He maintained that the reasons for CHC to transfer funds must be commercially viable and within legal boundaries—meaning that Xtron was positioned to search for a property for CHC and could earn legitimate income from the church.
When asked if the church’s executive members were told of this, Kong replied that if there was a legal obligation to, they would have been told. Pointing to two emails showing auditor Foong Daw Ching’s advice to Wee and Chew respectively, Kong told the court that the team had relied on Foong’s advice not to share unnecessarily to church members regarding what Xtron was doing, so as not to give the impression that the church had full control.
Foong had also advised Chew that what his fund management company AMAC did would be AMAC’s prerogative. In that context, said Kong, they wanted to maintain separation between the parties.
Executive Members Not Told About Bank Loan To Purchase Riverwalk
Eventually in 2008, when the amended bond subscription of $18.2m went through and Xtron bought the Riverwalk property, Ong noted that the executive members were told about the Amended Bond Subscription Agreement (ABSA) but were not told that a mortgage loan of $18 million had been taken.
Ong brought up an email in which Wee, in preparing a draft statement for what Kong would say at an extraordinary general meeting and board meeting, said that it was hard to justify to the members the need for CHC to pay half a million a year in rental. From the email, Ong said that it was quite clear that the bank loan was kept secret from the members.
Ong submitted that the accused intentionally deceived the board and executive members into thinking that the entire $18m of the ABSA was for the purchase of Riverwalk, in order to roll over the $13m that had already been spent on the music album.
Kong disagreed saying that if he had known that a lack of disclosure would cause a ruckus that would lead to a court trial, he would have told the members and the board. But the fact was that he was not aware of any legal obligations, even to this day, to disclose this information. He added that in an email, it clearly showed that the ABSA had gone through the minds, eyes and heads of the lawyers and auditors, and they did not consider it a sham.
Court resumed at 2.30pm.
中文报道 – 城市丰收审讯：康希没有完全披露详情为保护跨界