Xtron bonds come under scrutiny

SINGAPORE - Thr supposed sham bonds at the heart of the City Harvest criminal trial took centre stage on Thursday, as defence lawyers and the state tussled over their legitimacy.

Church members knew about them and approved of their purchase, said defence lawyers. A lawyer from Drew and Napier at the time who drafted one of the bond agreements did not raise any issues with the issuing firm's director.

The focus was on $13 million worth of bonds issued by music firm Xtron Productions which the church invested in 2007.

The state charged City Harvest Church founder Kong Hee and five of his deputies last year for using $24 million of the church's building fund to buy "sham bonds" in Xtron and another church-linked company, Firna, to fund the music career of Kong's wife, Ms Ho Yeow Sun.

They later allegedly used another $26 million to cover up this first amount.

In 2007, church executive members themselves had not objected to the use of the church's building fund for investments in general.

On Thursday, the defence noted that later, in 2010, after the Commercial Affairs Department had started investigations into these bonds, members voted to approve the specific bond transactions retroactively.

Earlier in the week, the lawyers had also noted that an auditing firm which vetted both Xtron and City Harvest also did not raise any concerns over the two entities' transactions to Xtron director Choong Kar Weng.

The state, however, rebutted these claims yesterday, saying that the auditors would have seen these bonds only after they were issued, when they opened the church's and Xtron's books at the end of the financial year.

And while defence lawyers showed on Wednesday that detailed profit and loss projections of Ms Ho's American debut meant the church and Xtron, which was managing her, had put much thought into whether the project was financially viable, prosecutors disputed that.

Deputy Public Prosecutor Christopher Ong pointed out yesterday that e-mails between Kong and American music producer Justin Herz detailing the projections were sent to Kong in 2008, a year after the church invested in the Xtron bonds.

That means they were irrelevant to the church's decision to invest, suggested Mr Ong.

This was supported by e-mails the prosecution produced earlier from Xtron accountant Serina Wee to church leader Chew Eng Han - two of the accused - written before the bonds were issued, saying that Ms Ho's album sales would not be enough for Xtron to repay the church's $13 million.

The state believes this showed the bonds were not legitimate as the church invested in them even as it knew the firm would have problems paying back the money.

When questioned, Mr Choong said he had seen other cash-flow projections that indicated the firm could repay the church, but said they were not among the e-mails produced by the defence.

zengkun@sph.com.sg

Next page:Exchanges in court

Exchanges in court

AMONG the skirmishes in court today was this exchange between Deputy Public Prosecutor Christopher Ong and the defence's Senior Counsel N. Sreenivasan.

During his examination of Mr Choong Kar Weng, the director of production house Xtron Productions, DPP Ong spent a couple of minutes working up to a question on whether the company did anything more for the Crossover Project, apart from paying for it.

The state is trying to prove that Xtron was nothing but a puppet company doing the church's bidding. Before the question could be asked, Mr Sreenivasan stood up to challenge.

MR SREENIVASAN: "May it please you, your Honour, this really is not re-examination. It is either a series of puts, of leading questions, of summing-up, not a single clarification has been sought... I said I won't stand up. I have to, your Honour. I think your Honour should stop him."

SENIOR DISTRICT JUDGE SEE KEE OON: "Mr Ong, I was waiting for a question."

DPP ONG: "I've come to the question, your Honour."

SENIOR DISTRICT JUDGE SEE KEE OON: "It is a very long lead-up to the question."

DPP ONG: "Mr Sreenivasan has the knack of standing up just as I was about to ask the question."

MR SREENIVASAN: "No, my patience was being tested."

- MELODY ZACCHEUS

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