City Harvest Church’s former fund manager, Chew Eng Han began his testimony by rationalising the bond investments he created, which he says are not sham.
Today was the first of Chew Eng Han’s planned five days evidence-in-chief. He is the fourth defense witness in the City Harvest trial and is the only one representing himself.
Once the fund manager of City Harvest Church, Chew was responsible for structuring both the Xtron and Firna bonds. The prosecution has alleged are sham bonds created for the purpose of using church funds for the Crossover Project, and not legitimate investments.
Chew, however, sought to establish this morning that the bonds could not be sham as he had done his due diligence and claimed that the structuring he had performed was “commonplace” in commercial and financial markets. He even suggested to the prosecution that its job should not be to focus on the structuring of the bonds but on how the proceeds of the bonds were used.
Seeking to establish his state of mind, Chew brought the court through events that happened right after the raid of CHC’s office in May 2010 all the way to the period of time when the six defendants were charged. Using SMS conversations, he explained to the court how he began to disagree with his co-defendants and eventually decided to not team up with them to prepare his defense. He told the court he felt Kong Hee and Tan Ye Peng were not behaving like the leaders he believed them to be. He read their deference to legal advice as a lack of conviction. He told the court he did not need a lawyer during the investigations to tell “the truth”.
In his defense of the bonds he structured, Chew explained his understanding of why it was sound to him that Xtron was a vehicle for the church to undertake the Crossover Project, and that its directors acted in trust. Thus, it was logical and even prudent for Kong and Tan to have control over the company. So far in the trial, defendants John Lam, Kong and Sharon Tan, as well as witnesses Choong Kar Weng and Wahju Hanafi have maintained that the CHC leaders only had some control over Xtron and that the Xtron directors had the final say over Xtron matters.
When funds were needed for the Crossover, Chew claimed Tan Ye Peng had asked if Xtron could borrow from the church’s building fund. Chew told the court he sought the opinion of both the church’s lawyer and auditor before proceeding to structure the bonds. He emphasized repeatedly that he had always expected the English album would bring in profits to repay the bonds.
After the lunch break, Chew continued his defense by divulging to the court the rationale for the purchase of the Riverwalk property which was instigated by him. The prosecution has also alleged this investment was sham.
According to Chew, it made commercial sense for Xtron to purchase Riverwalk because by doing so, CHC would not have to pay rental expenses to a third party. The terms of the Riverwalk purchase were “more than fair” to CHC because should the Riverwalk property dip in market valuation, CHC would have the option to purchase it at the original price.
Ultimately, the Riverwalk property was purchased not to camouflage the initial $13m bond CHC had bought from Xtron, but was a temporary measure to resolve Xtron’s cash flow issue stemming from the delay of the album launch from 2007 to 2010, Chew said in court.
Chew claimed full credit for the idea and execution of the Firna bonds, which the prosecution also believes were sham. Firstly, he trusted Wahju Hanafi, Firna’s director; it only makes sense for one to invest in a company managed by a trustworthy person. In addition, Chew understood Hanafi to be a man with means; he was also in good standing with Kong Hee.
Chew also took the court through documents proving Hanafi’s financial strength as well as the legality and soundness of Firna’s business.
Chew testified that he had himself flown to Jakarta to look at Firna’s glassware factory before being fully satisfied about the financial strength of Firna.
As such, he saw nothing wrong with investing in the bonds it issued.
In his defense, Chew sought to paint himself as merely the party that made funding happen. He insisted that he was not the one who decided how the funds would be used. As far as his actions were concerned, he pointed out that what he had done was in accordance with common market practice.
The court also heard that Chew had put his full confidence in the earning potential of the Crossover Project based on the sales projections derived by Kong Hee in collaboration with US music producer Justin Herz.
He had no reason to get himself involved with sham investments, as he stood to gain nothing. In fact, to do so would have been “suicide,” Chew testified.
Court resumes tomorrow at 9.30am.
中文报道 – 城市丰收审讯：前基金经理出庭答辩