The prosecution sought to establish that the Baker Tilly auditors were not informed about how the funds involved in the ARLA and SOF transactions were routed around to complete the redemption of the Xtron and Firna bonds.
Over this past week in court, City Harvest finance manager Sharon Tan had given evidence that it was at a board meeting on Jul 18, 2009 that a bond redemption plan was first shared with board members. At this meeting, approval had been given for an approximate figure of $65m advanced rental to be paid to Xtron under the ARLA. It was only later that the board confirmed a quantum of $56m in advance rental ($7m over eight years). The court heard today that Sharon Tan inserted those figures into the minutes of a subsequent Sep 12 board meeting.
Yesterday afternoon in court, the prosecution alleged that Sharon Tan had given auditors the “deceiving impression” that the CHC board had approved and finalized the sum of advanced rental to be paid by the church to Xtron during the Sep 12 board meeting. In addition, the auditors had the false understanding that the board had approved of a $11.4m Special Opportunity Fund investment at the same meeting.
Sharon Tan told the court that while she had retrospectively inserted the advanced rental amount, it had not been done with any intention to deceive the auditors. She explained that on Sep 12, the advanced rental amount had not yet been confirmed. Furthermore, the board members had already approved a higher amount of $65m previously; they had also expressed that as long as the advanced rental payments did not result in consolidation, they had no issue with altering the amount of advanced rental payments.
Asked if the board members knew how “every step” of the entire redemption plan would take place, Tan replied yes.
The court heard that while the church’s auditors knew about the church’s $11.4m SOF investment, they would not have known the details that the monies were routed to Ultimate Assets and subsequently to Firna. They would also not have known that Firna used these funds to redeem its bonds from CHC.
Likewise, the auditors were aware that CHC had paid $12m of advanced rental to Xtron, and that a part of it was invested into the Xtron-Firna bonds. But they would not have known that Firna had used the money to repay Ultimate Assets, which then repaid AMAC, culminating in the redemption of CHC’s SOF investment.
The prosecution sought to show that the Xtron-Firna bonds were proposed purely to effect the redemption of CHC’s Firna bonds and not for investment purposes.
Discussions among Tan and the other accused parties seemed to suggest an understanding that the church’s auditors did not have to be informed about every single transaction in the entire bond redemption exercise because all investments would have been redeemed by the church by the time audit work was to be carried out at the end of the financial year.
The DPP put forth to Sharon Tan that the CHC board members had not been briefed at the Sep 12 board meeting about the entire redemption exercise involving the plan for Xtron to use part of the advanced rental payments to buy over CHC’s Firna bonds.
Even if the board members were told about the ARLA and SOF transactions, they were not told about the entire series of transactions, and could not have approved of the round-tripping, said the DPP.
She added, the entire bond redemption plan was conceived and entered into to defraud auditors that the Xtron and Firna bonds had been redeemed when it was actually redeemed through the round-tripping of CHC’s own money, and that was why false accounting entries had to be made in CHC’s books.
Tan disagreed with all the allegations.
Court resumes next Monday 9:30am.