All the action taken in 2010 to clear all the Xtron and Firna bond transactions were to protect church members and to prevent distraction from the church’s move into its new premises at Suntec Singapore, said Kong Hee this morning.
As the City Harvest trial resumed this morning after a week-long break, the prosecution raised the topic of the repayment of the Advanced Rental Licensed Agreement in early 2010, and subsequent repayment of Xtron and Firna bonds using the funds from the ARLA.
Deputy public prosecutor Christopher Ong noted that the money that CHC paid to Xtron for the ARLA was used to redeem the Xtron and Firna bonds.
The court heard that there was a need to speed up the redemption of the bonds during that period, which followed CHC’s announcement that it had procured Suntec Singapore for its new worship premises. There had been a slew of criticism and rumours on the Internet regarding the Suntec deal and Xtron’s involvement with the Crossover. Kong did not want the church members to be distracted by rumors that Xtron was siphoning money out of the church for Kong’s personal use.
When the ARLA was eventually rescinded as a result of the Suntec deal—there was no longer a need for Xtron to use the ARLA to secure a new location for the church—Wahju Hanafi had to make good his personal guarantee and repay the bonds and the ARLA.
Kong told the court that he didn’t want the team to be fighting fire on two ends, and he wanted to focus moving the church into Suntec. Hence, there was a need for the bonds to be repaid to CHC.
The court also heard that Kong, Tan and Chew had helped Hanfi source for loans to fulfill his obligations as per his personal guarantee. Kong told the court that he had taken a cross-guarantee to help Hanafi, and that he would have helped Hanafi even if there was no cross-guarantee because the Crossover was “our mission”.
Earlier this morning, DPP Ong questioned the church’s senior pastor as to how Firna Glassware was going to pay CHC $24.5m for the bonds the church had bought.
Kong replied that proceeds from Sun Ho’s English debut album would have enabled Firna to repay the bonds with interest within three years.
Ong produced an email from Serina Wee to Tan Ye Peng dated mid 2009, revealing that Firna would need to pay additional $1.9 million in interest as there was a delay in recouping income from the album proceeds. Chew Eng Han had proposed that $2.5 million be drawn down from CHC to pay for the interest. If bond proceeds were used to pay interest, then essentially, church money was being recycled back, suggested the DPP. Kong pointed out that it was not considered wrong to borrow money to pay back a loan, and that ultimately there would be legal obligations that came with it. Furthermore, the suggestion to do this had come from a financial expert that the church trusted.
The DPP pointed out that Chew had also proposed that the church pay advance rental to Xtron, so that Xtron could help Firna pay back the church. Kong responded that transactions had to be commercially viable in that Xtron owed CHC a rental obligation while Firna owed Xtron.
Ong put to Kong that Chew had proposed solutions to the cash-flow issues between CHC, Xtron and Firna because the accused controlled all the decisions with regards to the bond transactions and the financing of the Crossover album. The DPP also submitted that Hanafi had never intended to independently support the Crossover project using the Firna bonds proceeds, but that Firna was only a vehicle for the money to be channeled through.
Kong disagreed, maintaining that the team was involved in managing the cash-flow issues because they were all trying to help Hanafi. Ultimately, decisions were subject to Hanafi’s approval. Kong pointed out that Hanafi was not just a vehicle because he had signed a personal guarantee to underwrite the Crossover. When all was said and done, Hanafi had fulfilled his word in 2010 before the investigations began. The bonds were drafted by law firm Rajah & Tann with auditors in the know—no red flag had been raised. Kong told the court that as a pastor, he had provided the vision and relied on financial experts, lawyers and auditors.
The DPP asked Kong if it was his position that, as long as a lawyer had drafted a contract, it was legal?
Kong replied yes, if the lawyer was honest.
Was the client honest, Ong asked in return.
The pastor replied that while the client was certainly not perfect, he believed the client had no dishonest intentions.
Court resumed at 2.30pm.
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