City Harvest Appeal: Judges Challenge Prosecution’s “Control” Argument; Mens Rea Revisited
The prosecution’s submissions today gave rise to long arguments over the importance of control, intention vs motive and the absence or presence of dishonest mens rea.
After three days of the defense team giving their oral submissions, the prosecution made their submissions in court today. The deputy public prosecutor (DPP) set out to summarize the key factual findings of the trial judge and deal with the oral submissions of each defendant.
Before the DPP began, the court questioned the prosecution’s emphasis on the appellants’ control over Xtron. It is the prosecution’s case that the six had control over Xtron, and thus the bonds were not genuine.
Judge of Appeal Chao Hick Tin asked if it is the prosecution’s case that if the appellants had no control over Xtron, it means that the investments were genuine. The DPP clarified that while it is an important issue, it was not the sole factor determining if the investments were genuine. He said had to take into account the appellants’ intentions as well.
When the prosecutor pointed out that the appellants were not consistent on their position on whether they had control over Xtron or not, Justice Woo Bih Li questioned: if the auditors knew that the end destination of the bond proceeds was the Crossover Project, why was it so important whether or not the appellants had control over Xtron? The judge went on to note that this was not a case of the appellants saying that the bond proceeds would fund one project but it went to funding something different, so how does the control issue affect the reasoning of whether the investments were genuine?
The DPP alleged that the appellants had to hide the fact that they had control in order to avoid having the auditors ask questions that would lead to the discovery that the bonds were a sham.
Justice Woo, however, went on to note that the auditors would know that the Crossover Project must be successful in order for Xtron to repay the bonds, and they would know that it was not a transaction done at arm’s length.
The prosecutor explained that the auditors would expect CHC to hold Xtron responsible if the Crossover Project failed, that Xtron was unable to repay the bonds, and that ultimately it was the six defendants that were going to repay.
Judge of Appeal Chao Hick Tin then pointed out that the auditors knew that Xtron was created by the church and that Xtron had no money; that’s why the bonds were created. If control is such a crucial point, he asked, wouldn’t the auditors have said that they would have to keep the church and Xtron separate or it would be an offence? The DPP submitted that the auditors had done just that.
When the DPP brought up the shift of bond investments from Xtron to Firna, Justice Woo noted that the issue there was consolidation, and that the auditors did not say that the investments were unauthorized or not genuine.
It was portrayed to the auditors that the investment was recommended by AMAC, the fund manager, the DPP replied. It was the prosecution’s case that AMAC was a proxy used to channel funds into Xtron. The DPP also said that the appellants had falsified minutes of investment committee meetings to show that the board deliberated the Firna bonds and that they had given false information to deceive the auditor when he asked questions. At this juncture, Justice Chao asked the DPP to show evidence of this alleged false information given.
Justice Chao also asked about the prosecution’s position on the motive of the appellants in committing a criminal act, noting that it concerned mens rea, or what their state of mind was when it came to the question of honesty.
The prosecutor replied that under Section 24 of the Penal Code, dishonesty is defined as an intention to cause wrongful loss, and while he acknowledged that motive and intention are two different matters, he argued that motive cannot be used as an excuse for a criminal act.
The DPP went on to say that if honesty were tied to a personal belief of altruism, it would lead to a “slippery slope” wherein every man would be able to self-define what constituted a crime. He used the example of Robin Hood who robbed the rich to help the poor, stating although there was no personal gain to himself, there was an intention to cause a loss to others.
He added that a crime committed to further what the perpetrator believed to be a good objective, is still a crime; the element of motive is completely irrelevant.
The prosecution also sought to challenge the defense’s use of illustration (d) under the section on criminal breach of trust in the Penal Code, highlighting that the illustration related to an authorized use of funds to make investments, with the only dispute being that the executor of the will decided to invest the owner’s funds in the bank instead of government securities because he believed that to be more advantageous to the owner.
Justice Chao then presented the DPP with a scenario that mirrored Jean Valjean’s in Les Miserables: if a person, being entrusted to put a pool of funds to a certain use, sees a needy mother with a child and gives her $10 from that fund, is it considered wrong? The prosecution replied yes, it would constitute criminal breach of trust, as the owner would have been deprived of $10.
The prosecution reiterated its position that while it accepts that the motive of the appellants was to further the church’s vision, the six had resorted to illegal means.
In the final part of the day, Kong Hee’s lawyer senior counsel Edwin Tong gave his replies to the court addressing questions throughout the defense’s appeal that had been asked by the judges and addressing certain points raised by the prosecution.
Tong debunked the prosecution’s use of the Robin Hood illustration, stating that Robin Hood had intentionally caused the rich wrongful loss, while in this case, the trial judge had clearly stated in his grounds of decision that Kong and the others meant no harm to the church.
Tong also maintained that illustration (d), contrary to being inapplicable to this case according to the prosecution, shows that mens rea is an element assessed separately from wrong use, and that a good faith desire to achieve an advantage for the owner of the funds does not constitute dishonesty. Merely limiting the illustration to its exact details about alternative investment options is too narrow, said the senior counsel.
He also questioned how the issue of control held by Kong over the use of the bond proceeds would lead to an inference of dishonesty, when it had been established that all the monies went solely toward the Crossover Project.
The truth of the matter was that his client, along with the other co-appellants, had put themselves “in harm’s way” to ensure that every single cent that went out of the building fund came back to the church—this surely could not be attributed to an intent to cause loss to CHC, he said.
The senior counsel also sought to show, as the trial judge had found, that Kong Hee was meticulous about the expenditure and projections of the Crossover. Tong revisited evidence which showed candid exchanges between Kong and US music producer Justin Herz which showed that his client consistently took a realistic, conservative approach to budgeting and sales forecasting, in order to protect the investment against losses.
He closed his submissions by calling for the convictions of the six to be set aside, saying that the element of dishonest mens rea could not be made out, because there was none.
Court resumes tomorrow morning at 9.30am with the prosecution’s submissions on sentencing.