SINGAPORE - City Harvest Church (CHC) may have allegedly issued illegal loans worth millions in exchange for high interest rates - according to its former fund manager Chew Eng Han.
This was revealed yesterday, as a judge explained why he has allowed Chew to defend a $21 million civil suit brought against his investment firm by the church.
Chew is also embroiled in a separate criminal trial. He and five other church leaders, including its founder Kong Hee, were found guilty in September of misusing around $50 million of church funds. They are due to be sentenced today.
But 55-year-old Chew, who left CHC in June 2013 after 17 years, is also being sued by the church for $21 million, which was paid over four tranches, in unreturned investments. The money included $4.6 million in interest.
Last October, CHC obtained default judgment against Chew's firm AMAC Capital Partners and separately sought summary judgment against him. But in June, Chew was given the go-ahead to defend his case on condition the $21 million claim was paid to CHC first. He and AMAC appealed to the High Court.
Judicial Commissioner Chua Lee Ming in judgment grounds released yesterday found that Chew could enter his defence unconditionally on three of the tranches worth around $9.5 million. For the fourth tranche worth around $11.5 million, Chew was told to provide $1.5 million security upfront.
According to the court documents, Chew's firm was appointed the church's investment manager in 2007. Two years later, he was approached by one Oh Chee Eng, who hoped that the church could lend money to his firm Transcu Group.
Between March 2009 and the middle of 2010, the church provided 16 tranches of money, to be repaid within a short period. In most cases, the sum was at least $3 million. The interest rates were high.
For instance, in one tranche of $1.5 million, which was given for just a week, the interest rate worked out to 156 per cent a year. In another one-week tranche of $2.35 million, the interest was 52 per cent per annum. Most of the money was paid back by AMAC but for four tranches after Transcu defaulted.
Chew's lawyer A. Rajandran argued that CHC should not be allowed to claim the money since the church had in effect breached the Moneylenders Act by acting as an unlicensed moneylender.
The Judicial Commissioner agreed the loans could hardly have been made for CHC's business as a church and the purpose was "simply to earn a high rate of interest".
He held that for three of the tranches that were the subject of the suit, there was enough evidence to go to trial to decide if the church was breaking moneylending rules. Both Chew and AMAC are appealing against the Judicial Commissioner's ruling on the $1.5 million security to be provided.
This article was first published on Nov 20, 2015.
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