Verdict on $50m case expected tomorrow
The saga began in 2002, with a pop singer's music ambitions and a church's desire to spread the Gospel.
A decade later, six former and current City Harvest Church (CHC) leaders were arrested to face varying charges of criminal breach of trust and falsifying accounts.
They are accused of misappropriating and misusing $24 million in church funds, which were allegedly ploughed into bogus bond investments that funded the singing career of church founder Kong Hee's wife, Ms Ho Yeow Sun.
A further $26 million was then supposedly used to cover up the misdeed. In total, $50 million was allegedly misused.
The Straits Times looks at the issues debated in court over the 140-day trial, whose verdict is expected tomorrow.
THE CROSSOVER PROJECT
Much of the case centred around the Crossover Project - a CHC mission to spread the Gospel. It was started in 2002 to reach out to the unchurched using Ms Ho's music.
Initially, Ms Ho's first two Mandarin music albums were funded directly by CHC.
Then, in January 2003, came the Roland Poon incident - which would set off a chain of events leading to the criminal charges, according to the prosecution.
Former church member, Mr Poon, alleged that church funds had been used to finance Ms Ho's publicity and promotional campaigns. He later retracted his claims, and apologised, but his accusations left the spotlight on the megachurch.
The prosecution argues that the uncomfortable scrutiny that followed drove CHC's spiritual leader Kong Hee to devise ways to fund his wife's career with the church's money in such a way that no one would know, except for a select few.
The very first step on this path, according to the prosecution, was to set up a company to look after Ms Ho's career, and alter minutes of past meetings to make it seem that Indonesian businessman Wahju Hanafi had donated seed money of $1.27 million to the project in 2002.
At CHC's AGM on April 27, 2003, Kong referred to the donation, saying "not a single dollar or cent is from your (tithes), your offerings or building fund from the church account".
But the prosecution alleges that the $1.27 million was money which Mr Hanafi had originally donated to the church's building fund that was returned to him and he then re-donated to the Crossover cause.
THE XTRON BONDS
In 2003, music production company Xtron was set up to manage Ms Ho and the Crossover.
Crossover costs increased dramatically once the decision was made to enter the United States market, and Kong reportedly told the US producers to "be bold with (their) budgeting" and "plan as if the sky is the limit".
Noted music producers Wyclef Jean and Justin Herz were hired and it was recommended that Ms Ho try an "Asian-Reggae" fusion sound. It led to the making of China Wine, an English single released in 2007. Ms Ho was criticised over the risque music video.
Because of mounting expenses, and the fact that her earlier Mandarin albums were not making money, $13 million from CHC's building fund was allegedly poured into Xtron bonds - which would pay for Ms Ho's US album.
The court heard that funding was often channelled to Xtron discreetly. In one instance, CHC refunded a $674,700 donation that Mr Hanafi made earlier to the building fund, with the understanding that he would inject the money into Xtron.
Other church members were also supposedly encouraged to divert their tithes and donations to Xtron.
The firm was painted to auditors as an independent entity, but the prosecution said this was not so.
Deputy Public Prosecutor Mavis Chionh pointed out that Kong and his right-hand man, deputy senior pastor Tan Ye Peng, not only made operational decisions, but also picked the company's top leadership.
Tan's lawyer N. Sreenivasan has called the tussle over Xtron's control a "red herring" and said in court that efforts by the church to distance itself from Xtron did not imply "dishonest intent".
The prosecution maintains that the bonds were a sham because they were effectively conduits for money to be funnelled to Ms Ho and there was no expectation they would be repaid. It also argues that the bond investments were not an authorised use of the building fund.
Both points have been hotly contested by the defence.
THE FIRNA BONDS
But in 2008, auditors raised related-party concerns over Xtron and CHC, so the church moved Ms Ho's management under Ultimate Assets (UA), a company owned by Mr Hanafi, so argues the prosecution.
A new round of alleged sham bonds into glass manufacturer Firna, which is owned by Mr Hanafi, was arranged.
But the role of Firna was "simply that of a conduit used for passing money" from the church's building fund to bankroll Ms Ho's career, said Ms Chionh earlier this year in court. In total, about $11 million would be drawn down under the Firna bond agreement.
That same year, when the defendants realised the initial Xtron bonds could not be repaid, they allegedly came up with a plan to buy an $18.2 million Riverwalk property. This was part of a revised loan agreement that subsumed the initial loan and gave Xtron 10 years to pay back everything.
In 2009, church auditor Sim Guan Seng met church leaders and reportedly said he "doesn't like the bonds" and wanted them off CHC's books.
The prosecution argues this set off an elaborate plan to cover up their initial misuse of funds - this round-tripping had been described as a "merry-go-round" by John Lam, CHC's former finance committee member, in court.
Through a series of transactions involving rental agreements and new investments, fresh funds from the church were used to offset the bonds.
Said the church's former investment manager Chew Eng Han: "But if money goes one round from CHC to Amac, to UA, to Firna and back to CHC, surely there can be no loss to the church."
Amac was the church's fund manager, and Chew was the one who devised the financial instruments.
The defence has pointed to the round-tripping as proof that the church "suffered no wrongful loss".
But the prosecution notes that the accused had also falsified their accounts with the intention to defraud their auditors.
FRIENDS TO ENEMIES
All defendants have maintained that they have done nothing wrong.
It would have been a united front, if not for Chew's departure from the church in 2013.
In court, Chew accused Kong of lying to church members about Ms Ho's success, which he said was "not real", and a result of church members spending hundreds of thousands of dollars to buy her CDs.
Chew, who is conducting his defence, told Kong: "One of the reasons I left your church is that I realised that you deceived... the people who are closest to you."
ALL IN GOOD FAITH
Will the defence's "good faith" argument convince the court?
At the closing, Ms Chionh asked: "The question that remains for Your Honour at the end of the day is: When did they act in good faith?"
Regardless of the result, CHC told The Straits Times that it has been "preparing itself for the conclusion of this court trial" and would continue its work in the local community and overseas missions.
During the church's service on Oct 10, Kong, too, said he had prepared training materials and charted out the church's direction for the future.
"If we have the worst possible outcome, you are ready for the next generation of leaders to take you forward... I have tried my level best to put everything in place," he said.
This article was first published on October 20, 2015.
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