On the first day of its cross-examination of Serina Wee, the prosecution sought to show that the transactions between CHC and Xtron were not at arm’s length.
Today in court, the prosecution tried to show that Wee and her co-defendants gave the auditors the false impression that City Harvest Church did not have control over Xtron.
The prosecutor claimed that the former Xtron accountant had fabricated the Xtron board meeting minutes for 2006 to create the “false impression” that Xtron directors had actually made decisions for Xtron. The prosecution’s theory was that Wee got the signatures of the Xtron directors on the minutes to show the auditors that they were in control when it was CHC’s senior pastor Kong Hee and deputy senior pastor Tan Ye Peng who controlled and made decisions for Xtron.
Wee disagreed with this. She maintained that while Kong and Tan made the day-to-day decisions for the Crossover Project, the Xtron directors would give the final approval for decisions. Her understanding was that because the directors had left the day-to-day operations to Kong and Tan, when the directors signed on the minutes, it meant that they were giving approval for the items in the minutes. If the directors didn’t agree with the items, they would talk to Kong and Tan, and put a stop to it if it came to that.
The afternoon saw the prosecution attempting to establish that the transactions between CHC and Xtron were not at “arm’s length” because Wee was able to manipulate the terms of those transactions.
Wee explained that she understood an “arm’s length transaction” to be one with fair terms for both parties. Two parties can be related and carry out an arm’s length transaction, she added.
The prosecution asked: If one party dictates the terms of the transaction, can it still be considered arm’s length?
Yes, if both parties are agreeable to the terms, said Wee.
Wee also testified that in the case of CHC and Xtron, the factors affecting the terms were non-commercial, in view of the long-term relationship between both entities. She agreed with the prosecution’s description of it as a “give-and-take” relationship.
The prosecutor queried Wee on an email in which she had suggested that Xtron marked up the rental it charged CHC for the use of the Singapore Expo hall.
Wee replied that that email was written in reply to audit manager Foong Ai Fang’s asking if Xtron earned a commission from the rental transaction.
She agreed with the prosecution’s observation that there was zero nett impact on the cash flow of both parties, because the markup in rental was balanced by a reduction in the retainer paid by CHC to Xtron.
The prosecutor then asked if the mark-up was motivated purely by the intention to make both the rental and retainer payments appear commercially justifiable.
The deputy public prosecutor put to Wee that this was was an example of how Wee was able to single-handedly manipulate the accounts of CHC and Xtron to create the appearance that all the transactions between CHC and Xtron done at arm’s length.
Wee disagreed, stating that there was no need to create appearances as the directors on both sides had been updated on whatever changes were made to the rental markups and retainer fees, and that these changes had also been approved by the church board.
Court resumes tomorrow at 9.30am.
中文报道 – 城市丰收审讯：黄为检方所称为虚假的“臂距”交易辩护