Sharon Tan explains that Chew Eng Han’s proposed process of using advance rental to redeem bonds and acquire property was approved by the CHC board.
Following from yesterday’s court session, this morning senior counsel Kannan Ramesh delved into details of how the approved advance rental would be deployed through which entities.
These details were explained by Chew Eng Han to Sharon Tan after a City Harvest Church board meeting dated Sep 12, 2009. Tan had taken six pages of notes by hand, and Chew had mapped out the diagrammatic plan on a seventh page.
Ramesh took his client through her own handwritten notes.
Points in Tan’s handwritten notes included Tan Ye Peng explaining to the board how Baker Tilly’s engagement partner Sim Guan Seng was of the view that there was a need to clear the Xtron bonds and Firna bonds off the CHC accounts to avoid consolidation. The best solution was to redeem the unquoted bonds. Sharon Tan shared that the board members were open to the solution, and like her, they were puzzled as to why Sim’s sentiments regarding the bonds was in contrast to Foong Daw Ching’s. The court heard yesterday that the previous audit team had “blessed the bonds”.
According to Sharon Tan’s notes, Tan Ye Peng had spelled out at the board meeting how the redemption of the bonds was to be carried out, that CHC would pay advance rental to Xtron for 10 to 15 years, and that Xtron was to secure a property for the church. Xtron would secure a three-year lease for CHC at Singapore Expo while it sourced for a property. If Xtron failed to do this, the remaining seven years of the advance rental would be returned back to the church.
Using the advance rental, Xtron would repay CHC $21.5m for the bonds, and invest $11m into Firna, which Firna would use to repay CHC for the Firna bonds. According to Sharon Tan’s notes, Tan Ye Peng had told the board that lawyers from Rajah and Tann, as well as Foong Daw Ching were “ok” with this redemption plan, which was essentially a reclassification of debts, with Xtron still owing legal liability to CHC. This would essentially resolve Sim’s concern regarding the bonds.
The advance rental was to be executed the week following by Chew together with Christina Ng, a lawyer from Rajah and Tann. Sharon Tan told the court that the board members were in total agreement after a 40-minute presentation by Tan Ye Peng, to give Xtron the mandate to secure a property for the church.
The court also heard this morning that Sharon Tan had witnessed a change in the attitude and stance of audit engagement manager Sim after five months. At an “intense” meeting held between the auditors and the church management team on Apr 9, 2009, Sharon Tan had perceived Sim as being bossy and domineering in his opinion on how the church should be operated. However, after a meeting on Sep 22, 2009, Sharon Tan noted that Sim was more open and accommodating as to how a non-traditional church like CHC would operate.
Seeing that Tan Ye Peng had told the board members that Foong was in agreement with the bond redemption plan, Tan deduced that Foong had spoken to Sim regarding this matter, hence Sim’s change in attitude.
Sharon Tan was also asked about an entry in her notes during the Sep 12, 2009 board meeting to minute that there was no need for a building committee meeting or an investment committee meeting as the committee members—who were also CHC board members—were in the board meeting in which pertinent issues regarding the building project and the church’s investments had been discussed.
At the same board meeting, it was told to the board members that the advance rental was calculated to be $65m based on $6m rental per annum for a 15-year period. Chew later had a meeting with Sharon Tan and Wee, and informed them that the actual advance rental would be based on $7m rental per annum for a eight-year period instead. Sharon Tan recalled that Chew had explained that a $7m rental fee was reasonable for a convention hall in the city area. According to her, Chew had also said that the lease for city properties are secured for a long period, justifying the eight-year period for the advance rental.
Before the lunch break this afternoon, the court saw that part of the plan to redeem the Xtron and Firna bonds was a suggestion to get Pacific Radiance, the firm that John Lam worked for, to invest into AMAC so that the fund manager could invest into Ultimate Assets and Ultimate Assets could in turn transfer the money to Firna for it to redeem the bonds issued to CHC. Sharon Tan had agreed with her defense lawyer that this was like a loan to AMAC with a 10 percent interest.
However, Lam was not able to confirm the plan with Pacific Radiance quick enough, and Chew thus proposed an alternative solution—for CHC to make a $11.4mil investment into a Special Opportunity Fund managed by AMAC.
With this money, AMAC could give a loan to UA which would in turn loan the money to Firna to repay the $11m bonds it issued to CHC.
This afternoon, the court heard that this new SOF investment plan was brought up in a board meeting on Oct 31, 2009; no issues were raised by the board.
In preparation for this meeting, Sharon Tan had typed out the minutes of a previous board meeting held on Sep 12, 2009, in which she noted that CHC had fully recouped all its SOF investments.
However, this was based on an earlier version of the SOF investment schedule between CHC and AMAC, which did not include two tranches in investments made by the Church. At that time, the redemption of these two tranches had been delayed.
She clarified to the court that when she had stated all SOF investments had been recouped, it did not take into account the pending redemptions of the two outstanding tranches of investment. The board members were aware of this delay however, she testified.
Ramesh then proceeded to take the court through his client’s evidence in statements to the CAD.
Tan affirmed that she stood by what she had told the authorities, from the legitimacy of the bond redemption plan to the accuracy of details surrounding it.
Court resumes tomorrow at 9.30am.
中文报道 – 城市丰收审讯：董事核准赎回债券的计划