Senior counsel for Serina Wee, Andre Maniam set out to show his client’s frame of mind and understanding about the Xtron bond redemption and the US album sales.
When he was asked if the church’s financial transactions were legal and above board, all auditor Foong Daw Ching had advised was that the church must benefit. This was the recollection of finance manager Serina Wee today in court.
The prosecution has suggested that the accused knew Baker Tilly auditor Foong Daw Ching was not a lawyer, and therefore he could not be relied upon to advise them on the legality of the bond transactions.
In addressing this, defense counsel for Wee, Senior Counsel Andre Maniam asked his client why auditor Foong Daw Ching was consulted about the legality of the church’s bond transactions.
In a document detailing Xtron’s transactions with CHC and the relationship between the two, the court saw that Wee had inserted a question asking Foong if there was any breach in governance and if the bonds were legal.
Wee replied that Foong was a professional; he was experienced in auditing churches and charity organizations. Foong’s answer to her questions was that everything the church did had to be in its own interest, she recalled.
The prosecution had put to several defendants that they never had any genuine consideration on whether the Xtron bonds could be recovered upon maturity. One of its basis for this theory is an email in which Serina Wee told Chew Eng Han that Xtron would need 10 years to repay the bonds based on an album sales projection of 200,000 copies.
Today, Wee explained, echoing her co-defendants, that the 200,000 unit projection was just a worst-case scenario and did not reflect the team’s expectation of actual album sales. Justin Herz, Sun’s US music producer, had already projected the sales of 1.5m units of the English album. Wee understood that Kong had given instructions to Tan Ye Peng to work on a Xtron cash flow based on 200,000 units sold for worst case scenario planning so that they could come up with a contingency plan. Wee told the court that this was the team’s common way of budgeting.
In the email, Wee told Chew her concern that proceeds from the US album would not be sufficient for bond redemption by the end of 2008, and felt they would need to reissue when the Xtron bonds reached maturity. Wee told the court she was quite frustrated when Chew suggested a 1.5 year bond period even though the worst case scenario showed that Xtron would need 10 years to repay the bonds, Wee explained today that she emphasized in her email that they would “definitely” need to re-issue bonds so that Chew would understand the outcome of the worst case scenario.
She also told the court that Chew had expected the album to do well because he had seen Herz’s projection of 1.5m units sold when he was applying for the Citic Kar Wah bank loan. That was why in the email, he questioned if it would really take 10 years for Xtron to repay the bonds.
In another email, Wee made note that City Harvest Church cannot “keep having the $13m invested in bonds” once the building is on the way and completed. She explained to the court that at that point in time, there was no pending building project but she did expect the building project to start within the next few years. In response to her counsel’s question, Wee said that if Xtron really needed 10 years to repay the bonds but the building project needed the funds, Xtron would have to source for other loans or raise sponsorship to repay the bonds. She emphasized that the building project would not be hindered.
Maniam also sought to establish that the CHC board knew and gave their approval for the $13m Xtron bonds. Under his questioning, Wee explained that the board minutes did not reflect the board’s resolution for the Xtron bonds because the amount had already been given to AMAC when the board gave the mandate to invest $25m of the building fund; there was no need for approval for individual investments. Wee testified that the board was told that out of this $25m of investment, $13m will go to Xtron to fund the Crossover Project. Auditor Foong Daw Ching was also told about the Xtron bonds and he said that as long as it was beneficial for the church and the investment yielded good returns, he was agreeable to it.
The court also saw the projection done by the US accountants based on 1.5m units of the album sold. Wee testified that the projection showed that there would be a profit of $26m after recouping what had been put into the project. Xtron would have been able to redeem the Xtron bonds by September 2008, Wee told the court.
Court resumes on Monday, 27 April at 9.30am.
中文报道 – 城市丰收审讯：审计师建议：一切需为CHC的利益进行