The City Harvest Church (CHC) trial yesterday was dominated by discussions on the purchase of "palm oil" - the church's code name for the Suntec convention centre back in 2009 when it was hoping to buy a stake in the property.
Church finance manager Sharon Tan said the reason the church had pumped funds into Xtron was for the purpose of buying a stake in Suntec.
Xtron was the vehicle it would use as the church did not want to be seen as vying for a commercial property, she said. The money for the purchase would be paid to Xtron as advance "rent" and the church would then "lease" the property from it.
According to Tan, the purpose of delinking Xtron from the church was also for this - so that it did not look as though it was the church that was buying Suntec which would jeopardise its chances of doing so. The code words were used for the same reason - to keep the transactions confidential so as not to jeopardise the purchase, she added.
Tan is among six, including founding pastor Kong Hee, accused of misusing $50 million in church funds to boost the music career of Kong's wife Ho Yeow Sun and covering up the misuse.
The prosecution has alleged that all the accused, except Tan, funnelled money from the church's building fund into sham bond investments in Xtron and glass manufacturer Firna. The prosecution contends that four of them, including Tan, then devised a series of transactions to clear the sham bonds off CHC's accounts in order to throw auditors off the scent. These "round-tripping" transactions made it look as if Xtron and Firna had redeemed the sham bonds when, in reality, the redemptions were financed with church funds.
They include a $12 million payment from CHC to Xtron, which Tan said was advance "rent" for the Suntec property it intended to buy.
Tan's lawyer, Senior Counsel Kannan Ramesh, also suggested yesterday that there was a legitimate reason the bonds were redeemed - it was the church's external auditor who had suggested getting rid of them. He took her through a meeting in April 2009 between the church's new auditor, Mr Sim Guan Seng, and board member John Lam as well as deputy senior pastor Tan Ye Peng.
Sharon Tan said Mr Sim "did not like" the church's bond investments in Xtron which he felt complicated the accounts. She said Mr Sim was "relentless" in his view that CHC and Xtron were obviously related and told them to "clear" the bonds off the church's books.
Told the payment would be given as rent, Tan said she had "no doubts" about the legitimacy of the plan, as it was just a "reclassification" in the books, from investment to pre-payment. The church board was very serious about buying "palm oil" and had discussed using Xtron to secure Suntec, she added.
This article was first published on Sep 17, 2014.
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