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City Harvest Appeal: CBT Was Not Made Out, Says Defense

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On the final day of appeals, all six appellants argued that criminal breach of trust had not been made out by the prosecution beyond a reasonable doubt, while the DPP presented his submissions for longer sentences.

City Harvest Appeal: CBT Was Not Made Out, Says Defense

CN PHOTO: Michael Chan

The issue of wrongful loss remained the tipping point in the appeals in the City Harvest case.

Whether or not there was wrongful loss caused to the church, which rests on whether the Xtron and Firna investments were genuine, has been heavily argued by both defense and prosecution over five-day hearing of the appeals.

At the start of what proved to be an action-packed final day in the Court of Appeal, the prosecution submitted its appeal against the trial judge’s sentences for the six appellants. The deputy public prosecutor (DPP) listed his key points which included the failure of the trial judge to consider relevant sentencing precedence, the failure of the judge to consider the necessity for deterrence, his failure to give due weight to aggravating factors but instead gave undue weight to the fact that the money was returned to the church. He also argued that the judge had also given out insufficient sentences to the six, especially in the case of Chew Eng Han, Tan Ye Peng and Serina Wee.

He asked a longer jail term of 11 to 12 years jail for three of them together with Kong Hee; eight to nine years for John Lam; and five to six years for Sharon Tan.

In his replies today, Jason Chan, defense lawyer for Kong, responded to the prosecution that had said that the “desperate attempt” to return monies to the church could not be considered restitution. Chan argued that it was not restitution but a fulfilment of the legal obligation of repaying the bonds. He told the court that six made conscious and careful efforts to ensure that all the money was returned to the church and emphasized that there was always intention for the money to be returned.

Chan noted that this case was unprecedented in that it was the largest amount of money allegedly misappropriated from a charity, it was also the largest amount returned to a charity, and it was unprecedented and the accused parties had put themselves on the line to ensure that all the monies was put back into the church with interest. In reply to the DPP’s argument earlier this week that the appellants had “gained brownie points”, Chan argued that there was no wrongful loss to the church and no personal gain to the appellants, and therefore there should not have been any conviction in the first place.

City Harvest Appeal: CBT Was Not Made Out, Says Defense

CN PHOTOS: Daniel Poh

Senior counsel Kenneth Tan for Lam argued that the bonds were not sham bonds because the City Harvest Church board and trustees would have been able to sue Xtron and Firna if they failed to repay the bonds. For the bonds to be a “sham”, the parties to the bonds must have no intention for the documents to have legal obligations, he said. But the bond subscription agreement for both the Xtron and Firna bonds would have entitled the church to sue in the event that no monies were returned.

Sharon Tan’s lawyer Paul Seah, echoing Sreenivasan’s description of the prosecution’s method of “cherry-picking” evidence, told the court that the prosecution had taken four ugly pieces out of a 1,000-piece jigsaw puzzle and attempt to pass that off as the full picture of what his client did. He refuted the prosecution’s submission that the evidence BB89 was a “smoking gun” that reflected the appellants’ plan to hide the sham bonds from auditor Sim Guan Seng.

Seah told the court that the DPP had presented the exchanges in a continuous flow when in truth, the chats between Sharon Tan and Chew had taken place over several months. He proceeded to strenuously contextualize each set of messages to flesh out the surrounding circumstances in which the texts had been sent. In doing so, he established the mindset that his client had before executing the plan to redeem the bonds.

Seah showed that after Sharon Tan reported Sim’s concern regarding the bonds, Tan Ye Peng and the others complied by looking for ways to redeem the bonds. The redemption plan, which form the “round-tripping” charges, was brought to auditor Foong Daw Ching. Subsequently the board discussed it in a meeting where Sharon Tan took notes. She knew the board did not want consolidation and thus when she asked Chew in exhibit BB89 what would Sim see at the Xtron end of the transaction, her concern was that he would see a related party transaction and ask for consolidation, which would lead to the disclosure that Sun Ho’s Crossover effort was funded by the church. Seah argued that her concern was not the legitimacy of the bond and that she had no reason to think that there was anything wrong with the redemption plan.

Fund manager Chew Eng Han argued that he and his co-appellants believe the bonds had genuine obligations, which was why they worked so hard to make sure the monies came back to the church. He reiterated that he had not thought the investment by a company into an entity it controlled was illegal, as it was acceptable commercially given his 30 years in the financial markets.

He argued that he “cannot be put to a compliance test” given that there are no guidelines in SGX or MAS regulations that state that control of one entity over the other nullifies transactions between the two as illegal, as has been the prosecution’s stand. Chew argued also that he cannot adhere by standards set by the prosecution, and that he was entitled to know ahead of time what is illegal. He challenged the prosecution to bring up its proposition in parliament to make the law clear if that should be the case.

Asked by Justice Chan if he had considered other investments, Chew answered yes. He also pointed out that in the post-global subprime crisis climate, most stocks in the market suffered a 60 per cent loss in value, while the church had successfully redeemed its monies in full, with interest.

City Harvest Appeal: CBT Was Not Made Out, Says Defense

Tan Ye Peng’s lawyer N Sreenivasan put forth that the prosecution had “reverse engineered” its charges. This was why the prosecution’s own witnesses, Wahju Hanafi and the other Xtron directors, who purportedly “rubberstamped” documents, were not charged. In fact, said the senior counsel, the prosecution had failed to address Hanafi’s own testimony that he was liable to personally pay the church back for the $11m Firna bonds, a liability which he had fulfilled.

The senior counsel also told the court that although the trial was never about wrongful gain, the prosecution tried to introduce it at appeal. But the evidence is that Sun Ho’s royalties had been waived.

Sreenivasan argued that, given the prosecution’s penchant for “flip-flopping” and “shifting the goalpost”, the appeal judges must “cut off the hyperbole and exaggeration” of the prosecution, and base their findings on facts and the evidence.

Addressing that there was a natural “dissonance” between how the church did things and how outsiders believed things should be done, Sreenivasan argued that while one cannot do reckless, negligent things under the guise of faith, faith does give provision for a different starting point in doing things. He argued that it is not for the prosecution to set the standard for the church.

With regards to sentencing, Sreenivasan asked the court to base its judgment on what the appellants truly deserved and not on existing sentencing tariffs as it was a case without precedence.

Sreenivasan also pointed out that the trial judge did not ask the fundamental question of whether the bonds were real; if they were real, there would have been no false appearance created because “truth is the best defense.”

City Harvest Appeal: CBT Was Not Made Out, Says DefenseSerina Wee’s lawyer Andre Maniam concluded that criminal breach of trust is a personal offense, and if the offenders subjectively believed they were acting in the best interest of the church, as found by the trial judge, that would have to amount to the absence of an intention to cause any loss to the church.

Justice Chao, in closing the appeals today, said that the panel had to give ample consideration to the arguments and the “volumimous” evidence, but that they would return with a verdict “asap”.


中文报道 – 城市丰收审讯上诉:辩方称:“失信罪不成立”

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