On the 100th day of the CHC trial, the prosecution’s case becomes clearer. One of its key points is that it thinks the bonds were sham because the accused never believed the bonds could be redeemed.
He had to structure the Firna bonds because the funding of the Crossover Project needed to be discreet in order to avoid public backlash. This is what Chew Eng Han told the court this morning, on the 100th day of the City Harvest trial. He had not structured the bonds because it was wrong to invest the church’s building fund into the Crossover Project, said Chew, because investment was a legitimate use of the building fund. He told the court that even if the building fund had been invested into Justin Herz Music directly for the Crossover Project, it would not have been wrong.
Chew was responding to the prosecution’s claim that the Firna bonds was just a means of transferring City Harvest Church’s building fund to fund the Crossover Project, hence making it a sham bond. Chew maintained that the Firna bonds were an investment with legal obligations—Firna would be liable to make good on the repayment. Chew added that if Kong Hee had not been “afraid of the public backlash”, Chew would have gotten JHM to issue bonds to CHC so that CHC could invest directly into the Crossover Project, he told the court.
Chew also told the court that there were a few lines of repayment for the Firna bonds. The first line of repayment was to use the profits from Sun Ho’s album sales, if that fell through, the second line of repayment would be for the Crossover team, which comprised Chew and his co-defendants, to source for funds. The third line of repayment would be for Firna and its director, Wahju Hanafi to come up with funds.
Deputy public prosecutor, Christopher Ong, produced a series of emails that showed Chew, Serina Wee and Tan Ye Peng discussing ways to make up for the losses in the event that only a third of the album revenue came in. Ong took issue with their plan of getting funds from donors, the multi-purpose fund and rental income from Xtron to cover up the deficits and questioned Chew why Firna was not involved in the bond redemption plan.
Chew explained that this was a scenario planning exercise in which Kong had merely asked them to find a solution. Chew said that even if he came up with plans, it did not mean that the plans would necessarily work. Chew pointed out that, in fact, the team could not find funds in 2010 when Firna was forced to repay the bonds, and Hanafi had to get bank loans to repay the sum. The DPP pressed on and said that there was no assumption in the emails stating that Hanafi would not be able to repay the sum, so why did they not go to him for money first? Chew explained that if only a third of the revenue came back, Kong would feel responsible for the loss because he was the manager of the Crossover Project. He would ask the team to come up with solutions before going to Hanafi.
The DPP then put to Chew that there had never been any intention for Firna and Hanafi to repay the bonds. Chew disagreed and maintained that Firna had a legal obligation all along to repay the bonds.
In the afternoon, the prosecution took the court through the mechanism behind the Firna bond subscription by bringing up email exchanges among the accused and Wahju Hanafi regarding the drawdown of the bond proceeds.
The prosecution put to Chew that the bond proceeds were never meant for Firna’s use but for the Crossover Project. Chew replied that the funds had indeed belonged to Firna, but were subsequently moved by Hanafi to Ultimate Assets which was the artiste management firm for Sun Ho.
The prosecution then questioned Chew at length about the “secret letter” which had been created to appease the concerns Wahju Hanafi’s father-in-law had about the convertibility feature of the Firna bond agreement.
Chew conceded that the letter was written without the knowledge of the lawyer who had drafted the Firna bond agreement, leading the prosecution to state that this was done to hide the sham nature of the bonds from the lawyer.
Chew responded that just because a bond agreement does not contain a convertibility feature—which the secret letter would have nullified if it had been legally binding—it did not necessarily constitute a sham.
There was an understanding with Hanafi that both the convertibility feature and the secret letter were never intended be enforced, explained Chew.
The prosecution reminded Chew that its position is that when the accused entered into the Xtron bonds in 2007, they didn’t believe that the bonds would be redeemable upon maturity in 2009. This calls into question the genuineness of the bonds.
At this point, Tan Ye Peng’s lawyer Senior Counsel N Sreenivasan to question the prosecution that if it included refinancing in its position. The prosecution reiterated that its belief is that the accused entered the bonds knowing they could not be redeemed and so they kept the plan going to continue funding the Crossover.
Sreenivasan then summarized with a question: was it the prosecution’s case that short term borrowing or refinancing for long-term liability was an offense.
Cross-examination of Chew Eng Han continues tomorrow at 9.30am.
中文报道 – CHC审讯：被告是否真心相信债券可赎回？