Chew Eng Han claimed he considered his role regarding Xtron bonds as “investment advisory”, not “investment manager”. He was also accused by the prosecution of “abusing the full discretion AMAC had” over CHC’s investments.
Chew Eng Han did not charge City Harvest Church AMAC’s fee of 0.1 percent on investments for his work on the Xtron and Firna bonds.
He told the court this morning that this was because in his mind, the Xtron and Firna bonds were his “ministry”, and therefore separate from his other investments for the church.
He also told the court that he did not tell anyone this, not even CHC.
The prosecution picked up on this point to ask Chew if the bond came under the investment mandate given to AMAC by the church since Chew had said it was not a “normal” investment.
At this point Chew introduced a new definition of his role. He told the court he decided to divide his actions into two: investment advisory and investment management. For Xtron, he told the court, he was advising only.
Was the Board or Investment Committee told that when he was making decisions about Xtron bonds, he was only advising, not making a decision as AMAC? And did he mean he was not responsible for the outcome of the Xtron and Firna bonds? the prosecution asked.
Chew denied this, adding that he still conducted due diligence to satisfy himself of the soundness of the investments.
The prosecutor pressed further: when Chew structured the first bond subscription agreement, did the lawyers understand this was an investment made by AMAC? asked the prosecutor.
Chew insisted it was the church that invested. But the prosecutor pointed out that the transaction was conducted between Xtron and AMAC and CHC was not mentioned anywhere in the agreement. Chew conceded he had not specifically told the lawyer or anyone that he was merely advising for the church.
Today, Chew again maintained that the bonds were the only way to get funding from the church to the Crossover Project. Bank loans had proven not possible. When the DPP suggested that without AMAC the bonds would not have happened and that would have been the end of the Crossover Project, Chew agreed that would have been the end of his role in the Crossover.
The prosecution then examined the minutes of an extraordinary general meeting in July 2007 during which the executive members of the church voted on investments and the appointment of AMAC as the church’s fund manager.
The court saw that Chew had taken the stage at the EGM to explain the nature of bonds vs equities, that bonds did not fluctuate in value as much as equities and so made for a safer investment. He emphasized minimizing risks. The court saw that there was no mention of Xtron or the funding of the Crossover Project.
The prosecutor noted that it was said to the EMs that other fund managers had been considered but AMAC was chosen because it could provide “better confidentiality and flexibility”.
Explaining this, Chew guessed that the church leaders would understand the sensitivity of funding Xtron, and so the logical conclusion would have been to choose AMAC.
As for flexibility, he told the court that another fund manager would not understand the way the church may want to sell off stocks and bonds at any time to get funds – the church would likely have been tied to a certain period before it could sell. This was something AMAC could do.
Was AMAC appointed to help facilitate Xtron bonds? the prosecution asked.
No, Chew replied, adding that even if AMAC had not been appointed by the church he would still have helped with the bonds.
The prosecution put to Chew that together with his “bond transaction co-accused” he ensured decisions made at the EGM enabled him to carry out the bond plan he developed.
Chew disagreed, stating that he was in no position to ensure AMAC was appointed. He also pointed out that the investment policy was to prevent AMAC from going into high-risk investments such as coal, at that time. The policy was not structured for the Xtron or Firna bonds, he said.
The issue of the lack of board approval for the first Xtron bond agreement came up again.
The court saw that there was no record of the CHC board approving AMAC’s buying of Xtron bond. Paperwork revealed merely that the Investment Committee had appointed AMAC as fund manager of the church.
Chew said that board approval must have been given since the monies had been put into the account. The prosecution pointed out that Chew had been granted the right to operate the account as fund manager, and the investment had actually been made by AMAC and not the church directly.
Chew then told the court that since he had spoken to Kong Hee and Tan Ye Peng, “to me this was the board”.
Earlier this morning, the prosecution put it to Chew that he had hidden “critical” information from auditor Foong Daw Ching about Xtron — that Kong and Tan Ye Peng had control over Xtron, which Chew has claimed in his earlier testimony. The prosecutor added that Foong, therefore, was in “no position to give advice”.
Chew denied this, saying at that point he did not know about the control.
He then asked the prosecutor: “If there was indeed control, does that make the bond a sham?”
Senior counsel Andre Maniam supported Chew’s question, asking for clarification as to whether “control” was part and parcel of “sham”.
The judge stated that he understood the prosecution’s case to be so, at which Chew added that in financial markets, “existence of control doesn’t mean sham.”
In the afternoon, Chew told the court that it could have been at an informal meeting that the church’s board members were told that CHC was buying bonds from Xtron for the purpose of missions.
Chew maintained that he believed the board members had approved the bond investments. The prosecution said this was a lie.
After several objections from the defense questioning the relevance of board approval to the charges, the prosecution admitted that the topic of board approval is irrelevant, as it believes the investments are sham in the first place. But the prosecutor sought to challenge Chew on this point because it formed a part of his defense.
When the prosecution charged that Chew abused the full discretion AMAC had over CHC’s investments in order to hide the bonds from the board members, Chew disagreed.
He rebutted that if AMAC really had full discretion over the church’s investments, he would not have put in place more stringent controls by having three CHC board signatories approve the release of any funds from its bank.
The prosecution also questioned Chew’s frame of mind at the time the Xtron bond agreement was entered into. Based on Serina Wee’s conservative projection of 200,000 copies, did he really believe that the bonds would be redeemable within two years?
Chew replied yes, and explained that if that were not the case, he believed it would still be redeemable within the next one or two years. It was just a matter of time, he said.
The prosecution nevertheless put it to him that he had entered into the bond transactions knowing that they would not be payable upon maturity.
Chew continues on the stand tomorrow at 9.30am.
中文报道 – 城市丰收审讯：周：我只不过是思创债券的“投资顾问”