Serina Wee projected $9.5 million loss from Sun Ho’s album

Serina Wee projected $9.5 million loss from Sun Ho’s album

Music production firm Xtron was bleeding heavily from funding singer Sun Ho's albums and singles.

It suffered losses of $9.5 million in the four years after its incorporation in 2003, based on a document shown by the prosecution yesterday.

The prosecution continued its case that City Harvest Church (CHC) founder Kong Hee and five other church leaders had used Xtron as a "shell company" to enable the misuse of church funds. (See report above.)

Kong, who is on the stand, had maintained that investing into a $13 million Xtron bond in 2007 would bring "good returns".

But Deputy Public Prosecutor Christopher Ong sought to prove Xtron, which was Ho's artiste manager from 2003 to 2008, was not as "commercially viable" as Kong had claimed it to be.

For example, an e-mail sent by former CHC finance manager Serina Wee projected a $9.5 million loss from Ho's Asian albums and US singles between 2003 and 2007. Kong said he was aware of this.

"I knew that we needed millions of dollars by the end of 2006. I knew that we needed to have a loan."

Mr Ong also presented e-mails sent in July and September 2007 by Wee, who also provided accounting services to Xtron.

Wee had projected that Xtron would take 10 years - eight more than the agreed maturity date of two years - to repay the $13m bond given its financial situation. "We based our projection on 200,000 copies of (Ho's) English album sold which would yield $2.17m, hardly enough to pay off the $13m," Wee wrote in the July 2007 e-mail.

"So we will need 10 years as previously discussed assuming no new unbudgeted expenditure."

The original $13m Xtron bond subscription agreement, which was signed in July 2007, stated the money was to be repaid to CHC after two years.

It was revised in August 2008, and amended for a total of up to $25 million. But Kong said that before the bond agreement was signed in July 2007, he did not know Xtron wouldn't be able to pay back the initial $13 million to CHC.

He also claimed Wee's projection of 200,000 copies was a "worst-case" scenario.

The actual projection that he had budgeted for was 1.5 million copies, he said.

"I know that Serina is taking an ultraconservative projection, because... the last budget that she worked together with me in the month of May (2007)... shows that the budget was rather healthy."

But Mr Ong asserted that Serina had written in one of the e-mails that her projection was what she intended to present to Kong.

'WILDLY FLUCTUATING'

He also said it was "unbelievable" that Wee's projection would differ greatly as Kong was the "primary source for projections" concerning the budget for his wife's English album.

"Isn't it very odd to have such wildly fluctuating cash flow going around and being presented to you if it ought to be clear that the estimate should be based on 1.5 million sales?"

Kong replied: "This is a question that only Serina could answer."

Mr Ong said: "I put it to you that by entering into this transaction despite knowing that there was no reasonable prospect of return, you entered into a sham transaction."

Kong said he disagreed.

Mr Ong also presented an e-mail showing that Kong had instructed his church members to buy Ho's fifth Mandarin album, Embrace.

"Anything less than (13,000 copies) shows that our members don't get it but I guess that is the rock bottom line so if we could do 20k or more," wrote Kong.

In the e-mail, Kong had also called for the members to purchase the CDs directly from stores. He explained yesterday that it was to help push Ho's album "up the charts".

"We were working on the premise... that nobody outside of our church will buy it. But, at the end of (the) day, it's up to the members."

The trial continues today.


This article was first published on August 27, 2014.
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ABOUT THE CASE

City Harvest Church founder Kong Hee and five others are on trial for allegedly misusing church funds through sham bonds.

This includes $24 million to allegedly fund the music career of Kong's wife Sun Ho, and another $26.6 million to allegedly cover up the first amount.

They are said to have done this through music production firm Xtron and glass manufacturer Firna, which are run by long-time supporters of the megachurch.

Kong, former board member John Lam, finance manager Sharon Tan, ex-fund manager Chew Eng Han, deputy senior pastor Tan Ye Peng and former finance manager Serina Wee face charges of criminal breach of trust and/or falsifying accounts.

Prosecutors had sought to show how Xtron and Firna directors had simply done the bidding of the accused.

The defence has argued that the transactions were legitimate, with the accused acting "in good faith" on the advice of lawyers and auditors

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