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CHC Trial, Page 2

CHC Trial 21 Oct 2015 – Verdict

I found the full oral judgment in TODAYonline news.

Just go to this link to download the pdf file https://drive.google.com/file/d/0B3A-00dAvijTNXAyaGEyLUtZdW8/view?pli=1

Source: http://tablet.todayonline.com/singapore/city-harvest-verdict-excerpt-oral-judgement

The judge read the verdict from the 15 pages oral judgment.

An excerpt from the oral judgement.

I am therefore satisfied beyond a reasonable doubt that the six accused persons are guilty of all the charges that have been brought against them. I note that all of them believed that they had acted in what they considered to be the best interests of CHC. There is no evidence of any wrongful gain – that was never the prosecution’s case in any event as the charges were premised on wrongful loss caused to CHC through the misappropriation of CHC’s funds.

I consider that John Lam, Eng Han, Serina and Sharon were all acting in accordance with the instructions of people they considered to be their spiritual leaders deserving of their trust and deference, and Ye Peng, although a leader in his own right, similarly trusted completely the leadership of Kong Hee. But no matter how pure the motive or how ingrained the trust in one’s leaders, regardless of the context in which that trust operates, these do not exonerate an accused person from criminal liability if all the elements of an offence are made out.

Accordingly, the accused persons stand convicted as follows:

(a) John Lam is convicted on the first to third charges;
(b) Kong Hee is convicted on the first to third charges;
(c) Sharon is convicted on the fourth to tenth charges;
(d) Eng Han is convicted on the first to tenth charges;
(e) Ye Peng is convicted on the first to tenth charges; and
(f) Serina is convicted on the first to tenth charges.

Prosecution will file the written submission [Sentencing Proposal] by Nov 6 and the respective accused will submit the mitigation pleas by Nov 13. Hearing will be delivered on Nov 20 at 9.30am.

CHC Trial (Sep 15, 2015) – Eng Han Oral Submission

Continue from CHC Trial (Sep 15, 2015) – DPP Oral Submission

Reply Submissions by Chew Eng Han

Your Honour, I will just start off by addressing some of the points of the prosecution in the oral submissions.

Again, the lack of disclosure, the minimizing of disclosure, whether to the EMs and to the public, the real key issue is whether we hid it because we knew we were doing something wrong and that the bonds were shams, or because there was another pure reason for it.

Your Honour would also remember that, at the ruling of the no case to answer, your Honour said that each individual has to be assessed for their own individual state of mind. For each accused, they have to answer what was the reason they went along with Kong Hee’s preference not to disclose.

For myself, your Honour, the most telling is found in the Charlie Lay incident, which, ironically, the prosecution keeps hammering on.

I will read a part of the email without turning to it.

I said: “I prefer to keep this within a small circle because of the proximity of Xtron to Sun and therefore to Pastor Kong. If one day someone turns away from CHC and becomes nasty he may say all kinds of baseless things.”

This was my state of mind, your Honour, regarding why not disclose to Charlie Lay, because of the proximity of Xtron to Sun and therefore to Pastor Kong. In other words, the chief concern, as far as I thought it was, was the misperception which will result in a baseless accusation that the Crossover was done for Kong Hee and for Sun’s personal gain. And that was exactly the same accusation that Roland Poon had thrown at us, that Sun had become the centre of worship, that everything was all about Sun. When I said that it’s because of Roland Poon, I meant it, your Honour, and it shows in the emails.

The prosecution has failed to show any evidence that I went along with the discreet strategy because I knew it was sham bonds. There’s not a single piece of evidence.

They make an issue that we cannot use E-537, where it shows the projections for 1.5 million copies, because that was done way before the inception of the bonds, and they added on another thing. They said because that did not take into account the bonds.

The prosecution makes it like it is so complicated, so difficult to assess whether the bonds can be recovered. It’s actually very simple, your Honour.

The bond amount that is being budgeted for is basically the expenses. If Kong Hee says, “We need $13million, it means the expenses for the Crossover is $13million. Therefore, if the sales is more than $13million, it automatically means the bonds can be repaid and the Crossover is profitable.

It’s not a rocket science. All you need to know are just a few basic figures. If the sales is more than the bond amount, the bonds are good. You don’t need to go into some detailed sophisticated number-crunching to know whether the bonds can be repaid.

…….

If Xtron is controlled by the church, how does it show a mens rea? Yes, granted, there are certain actus reus that does lead to inferences of mens rea, but those actus reus have to be very close to the scene of misappropriation and misspending. Where the scene is, where the money is, where the money is being used or misused, all I get is evidence of how the bonds were structured, was there negotiation. That is far from the scene, your Honour, of where the dishonesty is.

We spent two years arguing whether Sim Guan Seng conveyed the impression that he wanted the bonds redeemed. Now the prosecution is saying it is irrelevant. Of course it’s relevant, your Honour. There is a big difference between wanting to hide the bonds because we knew it was a sham and bowing to the auditors’ request to remove the bonds.

The learned counsel Mr Seah said, “Did we commit a crime just because to deal with the audit issue, to case loss to the church, to defraud the auditors just to solve an audit issue of valuation?”.

The consequences for CBT, your Honour, and falsification, are severe. When I look at what we have done versus the charges, they are out of balance.

The prosecution says that we wanted to remove the bonds without the auditors knowing that it was done using the church’s own funds.

Your Honour, can I trouble your Honour to go to appendix 5 again. [Appendix 5 not show to the public.]

….

Your Honour will see that before the restructure, what the auditors see in that CHC has exposure to Firna bonds, $11million, and $21.5million in Xtron bonds, of which $13million has gone into deferred expenditure, which is the album.

After the restructure, the auditors will see that CHC has given $21.5 million plus $11.5million of ALRA to Xtron. The auditors see that Xtron has taken $11.5 million of the ARLA, which is CHC’s funds, the church’s funds to buy Firna bonds. Unless Sim Guan Seng is blind, your Honour, he knows that church funds have been used to buy Firna bonds. So what is the prosecution taking about? In what way have we defrauded the auditors? When Sim Guan Seng now wants to value the ARLA, after the restructure, he needs to take into consideration the $13million of deferred expenditure, which you see in the diagram. If that is written down, the ARLA needs to be written down. They need to take into consideration the fact that Xtron has exposure to Firna in the form of the Xtron Firna bonds, and that if $11.5 million bonds has to be written down, then the ARLA, correspondingly, has to be written down.

The prosecution said yesterday[September 14] they have to thank Chew Eng Han for producing these exhibits because it shows that there are so many things that are not visible to the auditors…… Your Honour, the question is not whether the auditors see everything; the question is, given what is visible to the auditors, do they have a true and fair impression of the restructure and the church’s exposure to Xtron and Firna? I submit that, if you look at the diagram, the auditors have a fair and true view of the restructure of debts, and the church is now funding Xtron in the form of the ARLA, and that Xtron has refinanced Firna.

The question is whether what is visible to the auditors, are they able to fairly value CHC’s exposure in the form of the ARLA? And I have already explained they are able to do that. There is no defrauding.

Just because they don’t see in some of the transaction, it doesn’t mean they have been defrauded. [Refers to Ultimate Asset transactions.]

The prosecution says that my argument that the Xtron and Firna bonds were in substance investments into the album ironically means that the bonds are not investments. I’ve already shown from the diagrams that Xtron’s exposure is into the album, and, therefore, when the church buys Xtron bonds, the probability of Xtron repaying the church depends on the album. That’s why I said the substance of the bond is the album. The prosecution themselves queried me during cross-examination, “What is the underlying for the SOF? For it to be an investment, there must be an underlying”. I said it is the album. They are now questioning my same reasoning, that the substance of the bonds are the album.

If you invest into Xtron and Frina and doesn’t invest into anything else, how can Xtron and Firna repay it with interest?

The underlying asset is the album. The probability of the album producing enough sales determines the ability of the two entities to repay the debts. There’s nothing conflicting about it.

They go on to talk about the Firna bond purchase, and said that they are now so shocked that I’ve sort of shifted my position on Firna bond, because I used the RUL example. They say that my position that the real substance of the Firna bond purchase was not that the church was buying new bonds in Firna but that the church was taking over an existing debt owned to UA by Firna. I didn’t say the church didn’t buy new bonds with Firna, your Honour.   For the last time, I will just ask the prosecution to stop twisting my evidence.

Of course, the church bought new bonds with Firna. It was through that purchase that CHC then owed a debt to Firna. What I’m saying is that, looking in totality at all the transactions, which include, number one, UA’s previous loan to Firna, number two, the subscription of new Firna bonds by CHC, and then, number three, the refund of the loan by UA to Firna, the net effect of these three transactions is that CHC had effectively taken over UA’s loan to Firna, and that was similar to what happened with RUL.

I only brought up this analogy because the prosecution calls this whole structure glib fiction. I’ve shown that the net effect of all these transactions is no different from other transactions in financial markets, including the RUL case. Just because the prosecution cannot understand my explanation, doesn’t mean I’ve contradicted myself between my EIC and submissions. They call my evidence incoherent, lacking in credibility. I think they had better go and take some courses in financial markets before they throw insults at me.

They say I’m contradicting myself by saying that the ARLA was meant to provide funds for Xtron to secure a building, yet why am I claiming that the ability to acquire the building did not depend on the monies that were transferred under the ARLA that had been used to redeem the Xtron and Firna bonds? I don’t know how else to explain, your Honour. If I go on explaining, it’s going to become very complex.
Whatever ARLA had already been used for the Xtron and Firna bonds to offset them, or to replace them, remain a liability that Xtron had to satisfy.

A separate question is: does the church, and, therefore, does Xtron have enough cash to kick off the building project? I thought that was the angle that the prosecution was coming from, and that’s why I was addressing the issue and saying that there are two separate issues. One issue is whether Xtron is able to satisfy its obligations on those parts of the ARLA that were used to offset the bonds. The other issue is was there enough cash as in that $20 million to kick off Capitol or whatever project that came?

Your Honour will see in appendix 6 that Xtron, in my mind, would be able to fulfill its obligations under the ARLA eventually. The prosecution says, “Oh, you are just kicking the can down the road”. Your Honour, I had no choice. I had to kick it because the album was delayed.

Did I know that the album was going to be delayed? No.

Did I know Sim Guan Seng was going to change his mind and Foong Daw Ching was going to change his mind about related party? No.

But the state of mind is very important, your Honour. What was I thinking when I did the ARLA? Was it a sham that contained no obligations or did I think through it? If we look at appendix 6, you will find that from CHC to Xtron, there’s an obligation of $21.5million plus $11.5million, and I’m just referring to those parts of the ARLA that were used to replace the bonds. Xtron now has this obligation to go and get a building and then to pay rental to the join venture that owns the building, and that’s in step Number Ten. And the way it’s going to satisfy it is,
number one, ….. “Riverwalk Property”, it has to sell off Riverwalk, and,
number two, pay the bank the $10 million loan, and $8.5 million,
number three, will go to Xtron. The second source for the ARLA obligations to be met, satisfied, is through the album sales, and that is point
number four, in JHM, when album sales comes in into JHM,
point five, JHM channels the revenue to UA.
point six, UA needs to give the cut of the profits to Xtron.
point seven, Wahju needs to repay whatever he’s borrowed with interest, and that’s why Serina Wee was tracking the interest in the second layer of accounting. With that
point eight, UA will then inject to Firna the $11.5 million principal plus interest, and Firna would then pay it to Xtron. With a combination of the album sales and the Riverwalk property, the ARLA obligations would have been satisfied by Xtron.
Your Honour, you see, the key is still whether the album is an investment.

If the album was an investment in my mind, then the ARLA was properly recorded, and so was the SOF, because the underlying for the SOF and the underlying for the ALRA was still the album.

That’s why I say the album, the probability of returns from the album, goes right into the core of the mens rea for every transaction, including the round-tripping.

The prosecution says that I, along with Serina Wee and Tan Ye Peng, have now resorted to the alternative argument, that, even if the bonds were not investments into Xtron and Firna, they were investments directly into Sun’s career. I thought I made it very clear in my EIC, right from the start, it’s all about the album. This is not my alternative argument. This is my core argument.

I talk about how the church would have invested directly into the album, without any structure. The only reason why the structure was put up is because of Kong Hee’s preference to be discreet. So when Kong Hee makes the decision and we slot in Xtron and Firna as intermediaries, what happens is that those intermediaries now take on the primary risk for the album investment. So if the album fails, the two entities still have to repay the bonds. But the ability and the probability of repayment of the bonds depends, to a large degree, on the success of the album, and that’s why I say the substance of the investment is into the substance of the bond investment is into the album, because that is the biggest determinant of the chances of repayment.

I don’t think that’s very difficult to understand. The prosecution, again, twisted my evidence yesterday and said that I misled the EMs to think that Xtron and Firna bonds were very, very liquid. So every time something like this happens, your Honour, I go back and check the evidence again. I said I couldn’t have said that to mislead the members, so I went to read it.

In CH-28, page 13, before this part about very, very liquid, I was giving examples of illiquid investments and I said properties are illiquid …… Then I contrasted it with stocks and shares, currencies, and bonds was one of them. I quote what I said: “But instruments like stocks and shares, bonds, currencies especially, they are very, very liquid.” So the liquidity risk is very low for instruments such as currencies and deposits and bonds as well.

This is a far cry from what the prosecution is trying to say. I need to remind the prosecution, too, that one reason why I turned Tan Ye Peng’s idea of a loan into a bond is because I knew that the bonds are more liquid than loans, and, therefore, that’s why I intended to sell off some of the bonds to other investors in E-197 an to pledge them to banks such as UBS, in E-152. So I didn’t think they were as illiquid as the prosecution is deeming them to be.

The prosecution claims that I, along with the other co-accused, planned to use church’s funds to repay the debts that are owed to it under the bond obligations or the ARLA. I’ve set out in my EIC, my re-examination, my submissions, that I’m not involved in many of these schemes, especially the altering of the retainer.

The ones I am involved I want to deal with. The ABSA. Yes, it was church’s money that went to pay rental for Riverwalk that was owned by Xtron. But, your Honour, the prosecution doesn’t deny that this started in E-100.

I want to turn to E-100 for a little while. I said: “I went through Xtron cashflow with Serina last night. Assuming we drawdown total max S$22m… there will be a deficit in 2009 of $3.5m. All the other years till 2014 are ok.”

Riverwalk was proposed by me as a solution to deal with a short-term cashflow deficit in 2009. All the other years till 2014 are okay, meaning the assumption is that the album sales would come in, though a bit late, but the album is good and the bonds are good. I didn’t propose the ABSA to lengthen and to provide a means for Riverwalk rental to repay the $13m of Xtron bonds. That was not my intention.

They say that I was involved in this scheme to skim off profits from CHC’s investments through AMAC in that plan whereby AMAC had to make a minimum of 5 per cent and above, and that AMAC would then donate the excess returns to repay the loans that were taken to repay the ALRA.

First of all, there was an assumption that Sun may not launch the album after all. Secondly, I would invite the prosecution to try and make 5 percent per annum.

It is not an easy task, your Honour. If I guarantee the church 5 percent, but I only make 3, I lose 2 percent, I bear the loss. If I make 7, I take the 2. It rightfully belongs to AMAC. I’m not skimming off the church’s profits.

And again, I need to remind the prosecution, this is three years after the Xtron bond inception and two years after Firna bond. You can’t take post-bond issuance events and put a mens rea to it, unless I had a crystal ball and I knew this was going to happen.

The prosecution says it is plain what the correct entry should be for the round-tripping, and the correct course of action should be to disclose the round-tripping transactions as the sham transactions that they were.

This is a criminal case about intention. In the end, it’s not what the prosecution thinks is the right entry; It’s what I think is the right entry, or, rather, what I thought was the right entry. Till today, I cannot figure out the right entry, which means that I thought this was the right entry. I’m trained in accounting. I don’t know of any other entry, your Honour.

The prosecution has to prove that I knew that the bonds were a sham. The prosecution has to prove that I knew, by doing this, that the auditors were fooled and they thought that the bonds were redeemed not using church funds. I’ve shown through the diagram, it’s plain to see, for Sim Guan Seng to see. It was church’s funds that went to redeem the bonds.

If you look at E-32, I will just read, Serian Wee asked me:

“Xtron is going through its audit for 2009 accounts, The auditor asked about how the $11.45m Firna bonds was funded?

The funds actually came from the advance rentals.”

Serina Wee herself says, from advance rental, your Honour, means from CHC. What is my answer? My reply:

“Yes from advance rental.” In other words, from CHC:

“Tell them the whole story why the advance rental was done, and then since Xtron had no immediate need for all the funds, it was parked in bonds. Let them know. The bonds can be redeemed when Xtron needs the funds.”

In this conversation between me and Serina Wee, we are already agreeing that the funds came from the church, and we spent months arguing. The prosecution had made such a beautiful case that we fooled the auditors, that they didn’t know it came from church funds.

This whole case about round-tripping to defraud the auditors is a nonstarter.
So the auditors knew that although CHC Firna bonds were redeemed, a new set of bonds has been purchased by Xtron which got the monies from City Harvest Church. They saw it, they had every opportunity to cry foul if they thought this was wrong and to correct the accounting entries, which was what Sim Guan Send said he would. He didn’t do it, because he didn’t think it was wrong. It was a right entry.

In E-403, and I will just read out that paragraph:

I said: “I met Christina of Rajah & Tann to arrange all the legal documents, She suggests the agreement to compensate Xtron 40% pf profits be made between Xtron and US jvn as technically that makes the most legal sense.”

The prosecution is saying “all of you didn’t intend any legal obligations”.

I went on to say:

“Also to link the agreement between Xtron and Firna isn’t very good because the parties are all CHC related….”

This issue of related parties was made known to Christina Ng as well. She got the whole picture, she penned it down in the board reso. She had no issue with it. And that’s why at the end of the evening,

I said: “Also after I shared with Christina about why we are using this structure for the Crossover.”

She commented that “God is with us, so let’s pray”.

This structure refers to the shift of Sun’s management from Xtron to UA, and the issue of bonds by Firna, the withdrawal of the loan back to UA, and then UA funds the Crossover. What the prosecution calls “glib fiction” and “sham”, the lawyer and fund manager deems to be good. In the end, it is not what the prosecution thinks, it is what I think. It is my mind, my state of mind. I believe I was legally entitled to do it.

The begging question is this for the ARLA and the round-tripping transactions. We saw how Kong Hee was pressing and anxious about how the ARLA would be repaid. How is it that Kong Hee is not even involved in the round-tripping in the first place to redeem the bonds? Here, we have the auditor that’s closet to the scene, the one that has the most probability of uncovering the sham. There’s a big trap there. Kong Hee is not involved. Why? Because it’s just an audit issue, your Honour.

The financing for Sun’s career itself was not illegal. The lawyers knew it. The auditors knew it. The fund manager knew it. The professional projections for the album was what gave the Crossover an investment stamp. It is an investment because of the professionals.

I honestly believe in Sun’s past track record. It’s all over the place, your Honour. The evidence is all over. The way I fought for her and for Kong Hee. I believe in the album’s profitability. The prosecution needs to disprove this. They have half an hour to or one hour to do it.

[Mrs Light’s comment: I need to pause here, when I was in CHC, I honestly believe Sun’s past track record. BLINDED. In my mind I believe the LORD enabled the donkey to speak, the LORD enabled the horse to sing too. The whole congregation was made to believe the success. Can I just sweep everything under the carpet? Show love don’t judge.   Continue Eng Han’s oral submission.]

I’m not guilty of wanting to cause wrongful loss to the church.

I’m not taking about motive, your Honour; I’m taking about intention. If one expected album profits, if we think about it, automatically one is deemed to have intended for the bonds to carry obligations to repay, unless the accused had intention for personal benefit.

Having seen and heard about Sun’s phenomenal past success, it was innate in me to expect the album to succeed. It was inside of me, your Honour. This is something that happened over years from 2002 to 2007.

I also submit, your Honour, for every accused who did not intend to benefit from the bond issue, or to cause personal benefit to someone else, it is logical to assume, that in all likelihood, there was consideration given to the probability of the album generating returns. To assume otherwise is illogical because there’s no motivation for an accused to act this way, to be so reckless, to wake up one day in January 2007 and say “Okay, I’m going to cause wrongful loss to the church”. For what, your Honour?

Then in July 2008, I said, “I’m going to cause another $11million to be lost”.

For what purpose? Only a mad person would do this, your Honour.

An accused is likely to act so recklessly only if he stood to gain from such misspending. We shouldn’t go into argument about motives and intention, your Honour, but the motivation is important. It must not go against rational human behavior. I remind your Honour, as well, I was going through depression. What reason do I have to want to destroy the church?

How could I pen it down in my spiritual journal that I find purpose in doing this, that God is using me to cause wrongful loss to the church? The prosecution needs to answer all this, because there are too many reasonable doubts being thrown into their case scenario.

The prosecution agrees that, despite all the transformation into ABSA, into ARLA, into SOF, that the underlying liability never changed. Because the underlying liability was the deferred expenditure that had been spent on the album. They don’t realize that they are contradicting their own case. If the underlying liability doesn’t change, it means there’s no risk of additional loss through any transformation or liabilities.

If there’s no possibility of any loss, and they slapped CBT charges for this round-tripping, what’s happening, your Honur is that they’re slapping the same charges, the two charges twice, for the same potential loss. That’s why I say this is vicious. When I saw the charges, I said, “This is vicious”. You’re punished twice for the same potential loss.

Ironically, the second layer of accounting that they so happily take about shows that we knew there was only one potential loss, which is the album. I cannot commit on the second CBT for the same loss. This case, as I say, is a nonstarter. How does round-tripping result in loss?

Your Honour, I keep throwing questions because every time the defence throws a reasonable question at the prosecution’s case and they cannot answer, then there is a reasonable doubt about their case scenario and they have to get past this hurdle. I invite them to answer all these questions.

1) Why did I say that the albums will churn revenue to repay the individual loans in 2003?

2) If Sun could sell 150,000 Mandarin CDs in three months, how could I expect US album to sell only 200,000?

3) Why was I prepared to bring Xtron’s and the album’s financials to the banks knowing that it was a sham?

4) Why did I constantly discuss with Foong Daw Ching about financing the Crossover through Shamgar, through the UBS plan, the Xtron bonds, the Firna bonds, knowing that it is a sham?

5) Why did I ask Foong Daw Ching whether members can demand for more details beyond the financial statements? Could I be so bold to ask him this, knowing that my motive was to hide sham bonds?

6) Why did Kong Hee ask me to ask Foong Daw Ching to vet the profit-sharing agreement between UA and Xtron?

7) Why did I say I plan to get other funds to buy over Xtron bonds, in E-197?

8) Why did I tell Kong Hee that incurring major losses is a remote possibility?

9) Why did I propose to convert Firna debt into equity if only one-third of sales comes in? There is obligation, your Honour, on Firna. And the obligation is satisfied by the issue of shares to the church.

10) Why did I say interest for the Firna bonds can be repaid from the profits from the album at the end of the project. In other words, I expected profits.

11) Why did I visit Firna factory, look at their financials and the album projections if there was no obligations for Firna to repay?

12) Why did I tell Christina Ng everything about Xtron and Firna and UA?

13) Why did Christina Ng say “God is with us” in this structure?

14) Why did I write that God is using me for the Crossover and that I find purpose in it? To cause loss to the church?

15) Why did I tell Sharon Tan that we will continue with the Firna bonds until Palm Oil comes in when I was supposed to be so frantic and fearful that Sim Guan Seng is going to find out about these sham bonds? I told her, at the very worst, delay the financial year. He can probe all he wants.

16) Why did I get a valuation for Firna after the 9 April 2009 meeting, and I got it the next day? If I wanted the bonds off the books, I will say, “It’s impossible to get a valuation”.

All these are reasonable doubts.

17) Why did I tell the auditor the whole story about the Xtron Firna bond and the ARLA?

18) Why did Sharon Tan write CH-50b if they were not contemporaneously written? If they were not written during the board meeting, there’s only one possibility: they were written either before or after. How could she wrote it after when, if you look at all the notes and all the points in there, I don’t think Sharon Tan is capable of that, your Honour. was she writing just to practice her handwriting?

19) In what way was there risk of loss for the round-tripping, and is there evidence that the accused knew they were causing loss? There’s no CBT.

20) What benefit was there by transforming the bonds into ARLA? What benefit to the accused? They still had to face the impairment.

21) The last one: Why was Kong Hee not involved at pressing for the bond redemption?

Your Honour, I’ve finished with my submissions.

Thank you, your Honour.

 

[Mrs Light’s comment:
There is no point for me to argue who is right who is wrong. The verdict will be delivered on October 21. Let me quote what Senior Counsel Sreenivasan said in court.
It is the prosecution’s evidence that has to be tested and weighed and examined and see whether it passes the test beyond reasonable doubt.”]

CHC Trial (Sep 15, 2015) – DPP Oral Submission

DPP’s oral submission

DPP addressing to SC Kenneth Tan’s reply on behalf of Mr John Lam and SC Maniam’s reply on behalf of Ms Serina Wee. 

DDP Chionh: “Mr Tan submitted that the aim behind the sham bond investments was a laudable one; it was to evangelize, the belief of all of the accused persons was that they were doing God’s work, and evangelizing by a tent-making mission.

Mr Tan then goes on to add that the church and its board supported the Crossover Project. This is really also a part of what my learned friend Mr Maniam ended up with in his submissions, that this was really a case of well-intentioned accused who used church funds for church purposes, and that should not and cannot be criminalized.”

The case of Tan Kim Hock Anthony v PP.
The submissions we had made in relation to that case, we say, remain highly relevant for present purposes.
In the case, the appellant was the former principal of Maris Stella High School, charged with dishonestly misappropriating money from the school’s chapel building fund to pay for certain expense, including in particular, the renovation of a building, Champagnat House, which is the official residence of the Marist Brothers in Singapore. By way of background, it is an international Catholic religious order, which founded the school. The appellant himself, Brother Anthony, was a Marist Brother.

In this case, and this was on appeal before the High Court, Justice Chan Seng Onn, the submission was made on behalf of the appellant that it was reasonable for him, as long standing Marist Brother, to have thought that there was nothing untoward in his application of monies from the chapel building fund towards the renovation works at Champagnat House, and this was how the appellant sought to negative any inference of dishonest intent on his part.

In fact, his counsel argued that both Champagnat House and the school itself served in their different ways, one and the same religious mission, and that, on this view, the appellant could not have intended to cause any wrongful loss to the church, because, by improving Champagnat House with the renovation works, he believed that he was thereby benefiting the religious mission that the school was part of. Your Honour sees this at paragraph 7 of the judgment.

Your Honour will see that, in its judgment, the High Court dismissed these arguments on behalf of the appellant. The High Court noted that, although both Champagnat House and the school were no more than local touch points through which the Marist Brothers manifested its presence and advanced its mission in Singapore and that both in essence were owned by the Marist Brothers, the appellant’s submissions, the court said, had to be rejected. Because, among other things, the High Court held this: The appellant had admitted that he was aware that the chapel building fund could only be used for the school’s purposes.

This, your Honour is, in fact, the same situation we have in this case. All six accused persons admit they are aware that the Building Fund could only be used for building expenditure or for an investment.

So in Brother Anthony’s case, the High Cour said, look, the appellant admitted that he was aware that the chapel building fund could only be used for the school’s purposes, and the court noted that the monies in the chapel building fund came from public donations and the Ministry of Education and that the chapel building fund had a clear designated purpose, building a memorial chapel in Maris Stella High School.

In light of this, the High Court found that it was disingenuous for the appellant to claim that he had thought at the material time that it was permissible for there to be a loose intermingling of funds for the use of the school and Champagnat House merely because they advanced the same cause and had a common root in Rome.

Our respective submission is that, similarly, the accused persons in this case, for present purposes, John Lam, but certainly Serina and the other accused, have admitted to knowing that the Building Fund could only be used for building-related purposes or for investment. It is therefore no answer to the sham bond investment charges for the sham bond accused to say that, nevertheless, the building Fund was applied towards a laudable aim; it was applied towards a church purpose.

DPP addressing to SC Tong on behalf of Kong Hee.
DPP Chionh:
It is evident from Mr Tong’s oral reply yesterday that a key plank of Mr Kong’s defence is that Foong Daw Ching and the auditors knew all the material facts, that many CHC staff served in Xtron, that Kong Hee was “the voluntary adviser to Xtron”, that Xtron was dependent on CHC for its business, that Xtron has been insolvent for years, and that the Xtron bond proceeds were going to be used for the Crossover Project. According to Mr Tong, this is the context in which E-269 should be viewed.

With respect, your Honour, contrary to Mr Tong’s submission, E-269 was merely part of a series of deceptions perpetrated by Kong Hee and his sham bond co-accused on Foong Daw Ching and the auditors about the Xtron bonds.

…..

For E-269 itself, you have heard several times our submission, the damning truth is that this was deliberately drafted to conceal from Foong the fact that, among other things, Kong Hee and Ye Peng controlled Xtron.

For these reasons, we submit that Mr Kong’s disingenuous reliance on Foong Daw Ching and the auditors should be rejected.

SC Sreeni on behalf of Tan Ye Peng says about Foong Daw Ching
Now we come to Foong Daw Ching. I find it ironical because the ones who pushed off responsibility as far as Foong Daw Ching is concerned is TFW, where they all came and said, “You don’t need to listen to our managing partner, you don’t need to listen to the partner in charge, you don’t need to listen in fact, “You are wrong in listening to the consultant partner”. Then we had the dancing between the rain drops about why you should talk to the engagement partner ..

So as far as Foong Daw Ching is concerned, if at all there was any evasion of responsibility, it was Mr Foong himself. Your Honour will recall he can’t remember almost anything. He was a witness whom the prosecution had put forth for a limited purpose, but his evidence was enlightening.

Your Honour, I don’t intend to repeat all the key evidence, but I’m just going to highlight evidence that’s both important and representative of the position. The first document ….is TFW-14, the audit papers which counsel for the 3rd defendant had gone through great pains to take out an put.
It is stated by the auditor:
• XPL main activity is in production of music albums etc whose main artiste is Sun Ho, spouse of Pastor Kong Hee.
• Will this be viewed as for personal gain?
• XPL has no good track record to-date (making huge losses for the past few years)
• Potential Issues: Fair values of bonds at year end.
• Potential Issues: XPL ability to redeem the bonds.

Then if we go to the second side of TFW-14, they repeat the point about $7million bonds, XPL’s main activities and its poor track record, and then, under the church’s comments, in the last column,
it says: “These $7m bonds will be converted to 10 years bonds with effect from Aug 08. This $7m bond is part of the $18m bonds XPL issues to CHC..” [This is referring to the ABSA Riverwalk]
Then they have the income projections that will redeem the bonds within ten years.

So what is missing? Nothing, because when Chew Eng Han, in a few minutes back, said, “Listen, the investment was in the album”,

I mean, Xtron was a company, Xtron had the legal obligations, when you invest in something, the money must go somewhere, and, in this case, that money went to the album. TFW-14 shows, crystal clear, that the aditors knew that the money went to the album.
….
This document is E-269. So we have Tan Ye Peng talking to Serina Wee in BB-19, saying, “Hey, when we write to Mr Foong Daw Ching, can you think of all the risk factors we can tell him?’
If we want to nitpick, and if we want to criticize, we can say E-269 didn’t say this, and E-269 didn’t say that. But your Honour will recall that E-269 was produced by the defence to back up its argument that Foong Daw Ching was asked for advice, and it was put to Foong Daw Ching in his cross-examination. He was twisting and turning, but in the end he was pinned down by E-269.
The prosecution, your Honour will recall, had raised some issues about what was sent, and fortunately we also have the SMS which shows that E-269 was sent.
So when E-269 came up, as part of the defence case put to the key prosecution witness, the prosecution’s tack, which it has been since them, is it never told the whole story about E-269. Of course, it didn’t reflect what has come out in a 140-day trial. But I’m just taking BB-19 to show one thing. If there was a conspiracy, and it is part of the prosecution’s case, to mislead, that the accused persons wanted to mislead Foong Daw Ching and, therefore, your Honour should ignore John Lam and Chew Eng Han and Kong Hee and Ye Peng’s conversations and reliance with Foong Daw Ching, it’s very, very strange. You have, in the midst of preparing the document, one co-conspirator writing to another co-conspirator saying, “Can you put in all the facts that we need about the risk factors?”

[Mrs Light: My older post about Elder Foong Daw Ching]

200,000 album sales figure 
DPP Chionh:
“In his oral reply yesterday, Mr Tong also said that he wished to clarify Mr Kong Hee’s position about the 200,000 album sales figure. Mr Tong said that Kong Hee’s position is that he was aware of a possible projection of 200,000 album sales because it was one of the bases with which Justin Herz suggested that the projections be done. However, Kong Hee says that hew was not aware of this in July 2007 prior to the first Xtron Bond Subscription Agreement being entered into.

Mr Tong says that this position was not challenged by the prosecution. This is untrue, your Honour. In fact, in cross-examination, we had put it to Mr Kong that hew provided the 200,000 sales projection figure to Serina, which she then worked on in July 2007, and Mr Kong disagreed.

Your Honour has seen our detailed arguments on this at paragraphs 586 to 590 of our closing submissions. Your Honour has also seen that, completely contrary to what Kong Hee says, Mr Tan Ye Peng actually testified that the projection of 200,000 album sales in E-1 and E-197 was a figure that Kong Hee told Tan Ye eng and Serina to put into the cashflow for planning purposes.”

 

Christina Ng and Jimmy Yim
On behalf of Mr Kong Hee, my learned friend Mr Tong has also said that if, indeed, the prosecution felt that Christina Ng or Jimmy Yim was misled, it behoves the prosecution to have called that evidence, and they did not. Our short submission to this is that the argument has no merit, because the accused person’ own evidence on what the lawyers were told indicates that they were misled. A point we have made at paragraphs 165 to 166 of our reply. Since the accused person’ position on the Xtron and Firna bonds from the outset has been to deny the facts demonstrating the sham nature of those bonds, they deny, for example, Kong Hee’s and Ye Peng’s control of Xtron, they deny the Crossover teams’ control of the bond drawdowns and use of the procees since this has been their position on the bonds from the outset, it follows that they must also have taken the same position with their lawyers.

If your Honour agrees with us that the Xtron and Firna bonds were sham, it follows that the accused persons have deceived the lawyers, and cannot, in their defence, rely on their communications with their lawyers.

[To be continue…]

CHC Trial (Sep 14, 2015) – SC Edwin Tong Oral Submission

This morning in court you could see Senior Counsel Edwin Tong, the defense lawyer acting for Pastor Kong Hee.

Recount of SC Edwin Tong’s oral submission

SC Tong agreed with prosecution that the state of mind is key and critical.
SC Tong says,
I agree because it is their burden to show, beyond any reasonable doubt, that the state of mind or the mens rea, as we lawyers like to call it.

To give your Honour an example, it would obviously be crucial to look at state of mind before the bonds transactions were issued.

Again, it is something that I agree with Ms Chionh on. Not only for Xtron but also for Firna in the context of why the issue arose for Firna, how that happened.

What else was happening with the auditors when issues were brought to the attention? And crucially, what information did the auditors already have in the repository of information that they have as being the auditors of both Xtron and CHC, and indeed, Firna as well.

When your Honour looks at state of mind, it’s not just about what you might think, or what one might think about why certain emails were written. But your Honour, with respect, has to look at it in the context of the circumstances in which they occurred.

Xtron Bonds
The background of the Xtron bonds can be found in the Agreed Statement Of Facts (ASOF).
It is not disputed that all of the bond drawdowns, every single cent, went into the Crossover Project.
SC Tong: “There has been no personal gain by Pastor Kong Hee. Indeed, I think the position is on any of the accused as well.”

The idea of the bonds was conceived by Eng Han and was brought to Kong Hee who then instructed both Eng Han and Ye Peng to check with CHC’s advisers.

SC Tong: “Pastor Kong also told Mr Chew and Mr Tan to then present the idea to the board if the advisers had no issue. Indeed, Mr Chew and Mr Tan gave evidence that they met with Mr Foong Daw Ching, before the bonds were even drafted and the meeting took place on 25 June….

Mr Foong himself as being the one overseeing the team of Baker Tilly auditors, which audits both CHC and Xtron, said he had no objections. So he knew about it, 25 June 2007. This is corroborated by several pieces of documentary evidence, such as E-197, E-322 and E-426….

In addition, Mr Chew also met with Ms Christina Ng[lawyer] who told Mr Chew that, like Mr Foong, had no problems with the way in which the bonds were to be used for the Crossover Project, and proceeded to draft the terms of the BSA.”

 ….

What is wrong with a large organization relying on professional advisers, relying on the word of professional advisers? And what is wrong with the leader of an organization saying to his team, ‘In principal, I’m okay with this, we can use the Building Fund for this investment, but check it with Mr Foong, who has been our auditor for many, many years, on both sides of the equation, Xtron and CHC. Check it with the laywers.’…. What is wrong with that? Nothing. The only answer they[DPP] have now come up with is well, it’s wrong because Pastor Kong now must have know.

Your Honour must draw an inference that his team intended, and he knew that they would mislead these advisers.

Your Honour, I will come to that, but, not only is there no evidence of this, but it is also a significant departure from the prosecution’s own case.”

Firna Bonds
SC Tong says,
The sequence of events make it very clear that there could have been no intention whatsoever for Pastor Kong to have a dishonest intention, dishonest motive in relation to this. Again, let me ask your Honour to bear in mind the relevant context when your Honour assesses the state of mind.

First, how did the issue first arise?
Your Honour would have heard sometime in July 2008 there were concerns about the repayment. These concerns were not raised out of the blue; it was raised in the context of an audit that was impending. But it was an issue which Pastor Kong and his team, Mr Tan, Mr Lam, Ms Wee looked at and considered carefully.

What did Pastor Kong do when this issue arose?
He said, ‘First thing to do, consult with Mr Foong’. And that, I think, is clear from the evidence given not only by Pastor Kong himself but also from a variety of other team members.

What was said to Mr Foong at that point in time?
I know my learned friends rely on the fact that look at E-260, it is meant to be misinformation, meant to be deceitful, meant to mislead the auditors.

That is why the context is important. As of this point in time, July 2008, Mr Foong and his team had been involved with CHC and Xtron, and eventually Firna, for many years. They’ve audited those companies for many years. So information about the relationship and the interdependence and the interreliance of CHC and Xtron were not only known; they were intricately aware of this information.

But what else does the team do?
On 9 July, at E-364, Serina writes to Mr Foong and says specifically: “Is there an issue with CHC investing heavily in Xtron when it is an insolvent company for the past few years?” again, a fact which surely Mr Foong and his team must have been aware. In fact, that I were aware at the subscription of the bonds, back in the time of June 2007, when Mr Chew met with Mr Foong, that Xtron was already insolvent, had been insolvent for many years, relies a lot on CHC’s business for its continued survival. They knew all that, when Mr Chew consulted with Mr Foong in June 2007. He said “okay” to the bonds.”

You have heard Mr Foong give evidence. He didn’t reply to this. If, indeed, there was a grand plan by the accused to use Mr Foong very cleverly, somewhat presciently as well, because they didn’t know many years later they would be charged, if they used Mr Foong as cover and said, “Well, we’ve consulted with him”, then the thing to do with Mr Foong’s silence on these emails would have been to say, “Very good. We have raised it with him. He didn’t reply. He didn’t say no, let’s leave it”. This would provide the perfect cover: we have gone to him, we3 have said there’s an issue, Xtron is insolvent for many years, he’s not responded, he’s not said no, so why don’t we just leave it, because, if and when we are asked, we can say, “We raised it with the auditors”.

That might have been the mens rea of dishonest people. That might have been the mens rea of someone who intends to use Mr Foong to cover up. But not this group. This group proceeded to then actively look for Mr Foong.

 

When Ren Ci happened, MCYS was involved, Ernst & Yong was involved.
SC Tong says
Your Honour ask this question: When fraud, financial fraud or irregularity of a charity was first raised, and an issue became prevalent and they were facing issues of repayability, and bear in mind, if the prosecution is correct, at that point in time they would have just pulled off a $13m fraud on the Xtron bond. Yet….they called in the accountants. They actively sought out Foong Daw Ching.

Again, in the context, not only of the repayability of the first bond but again in the context of Ren Chi…. there were emails exchanged. Mr Foong says to them, “Do not change your auditors. Use Foong Daw Ching on both sides, Xtron, CHC and all your associate companies because we can detect better any financial irregularity”.

…..

I want to draw your Honour’s attention to one point. The structure that was conceived of was, in fact, conceived of after discussion that Mr Chew had with Christina. Your Honour will see that at E-403. Mr Chew had shared with Christina why this structure for the Crossover Project was necessary. And it was because they did not want Xtron to be related to CHC. Mr Chew was very open with Christina about the purposes and eventually that purpose was also communicated to Mr Foong. 1 August 2008, in a meeting with Mr Foong, where Pastor Kong was not present, Mr Chew explained to Mr Foong that they will have a problem if Xtron is related party of CHC.

Mr Chew also explained that they wanted to move Sun Ho away from Xtron to UA, and for CHC to provide funding into Firna through Firna bonds. So the purpose was laid clear, laid bare to Mr Foong.

See the big difference.
We don’t want Xtron to be regarded as a related party to the church and therefore not have the accounts consolidate, we don’t want that. Mr Foong, you’re the auditor, tell us whether that’s possible, and if so, how do we do that? [CHC’s action]

vs

Hiding the facts which might give rise to a consolidation, hiding the facts which might lead one to believe that one is related to the other. [DPP’s case]

CHC chose the former, not the latter. It went to the auditors with a problem and said, ‘Is it possible for us to finance Sun Ho in the Crossover some other way? Is it possible for us to do this so that we don’t have to declare it as a related party and therefore not have the accounts consolidated?”

I dare to say that accountants, auditors all over the world, when they deal with these corporate matters, look at this as one of the issues, look at this as one of the questions that need to be considered during audit season. They look at it all the time. Why do people use SPVS, use different vehicles to make acquisitions? It is because they want to ensure that what the report, as related, is within their control. This is an example of that.

……

That’s why the suggestion that there was any deception in relation to the related party transactions or the consolidation, is absolutely misconceived.

No evidence only inference

SC Tong says,
So when your Honour considers the prosecution’s submissions, your Honour needs to, with respect, ask: on what basis is the prosecution saying today that Pastor Kong Hee would not only have known but expected his team to go out there and mislead the advisers? On what basis do they say that? From where I look at the evidence, and where from where we stand, there is none whatsoever. There is no suggestion, anywhere in the emails, in the chats, the BB messages, the private messages, where Pastor King says to his team, “Please suppress this from the auditors”. There is not any of that.

Control over Xtron
I think this question of control is a complete red herring. It’s not about control. It’s not about whether there’s control, how much control, less control, more control, but it’s what the auditors were aware of. That reflects the state of mind of Pastor Kong. If you are aware of all these happenings, you are aware of all these circumstances which make the relationship between Xtron and CHC proximate, very close, and, in fact, as I said, even reliant, and Xtron was insolvent, then, I think, whether you have control or otherwise, is not the question. It’s not the right question to ask.

The right question to ask is: when we go back to ask Mr Foong to look at these transactions, look at Xtron bonds, look at the refinancing through Firna, look at moving Sun into UA. In the context of all those requests, what is the information that is already reposited inside Baker Tilly? Your Honour will have seen from the audit working papers it is a minefield of information. All the information, which they now say we suppressed, can be traced back to the audit papers.

….

Critically, that is what the prosecution’s case against Kong Hee boils down to ; a series of inference, a series of request, I would say pleads by the prosecution to your Honour, to draw that inference, to say that there must be an expectation on the part of Kong Hee that his team would go about and mislead the auditors and the lawyers. That’s what their case now is all about.

200,000 CDs
Again, your Honour, they have come back to this 200,000 as being the benchmark for saying that you must have had no expectation that it could be repaid. But, again, let me pose this in the context of the point I made earlier, at the outset, that your Honour must look at it in the context. These are projections. There will be high, medium and low projections. It doesn’t mean that if on one of the parameters your projection shows an inability to recover, that you are therefore guilty. Likewise, it doesn’t show that if you have projected carefully and you fail in the projection, that you are therefore dishonest.
So it works both ways, your Honour. These are projections. What is imporatnat is that there is a slew of projections, many of them, pressed, your Honour has seen Pastor Kong pick the tyres on many of these projection, pressed the US consultants for lower, more reasonable, more conservative, more realistic numbers. That’s why I say to your Honour that the context is important.

If my learned friends are correct in saying that these bonds are all shams, and, on their case, we can do what we like, we can spend as we wish, we can control Xtron like a puppet, we don’t bother with repayment, we can just extend it with church funds immediately, why budget or why plan?
These numbers started not in 2007; they started before, in 2005 and in 2006. Why do that, your Honour, unless it was so smart or so prescient as I said, that they would have concocted these emails because they knew that day, like today, would come, when the state of mind would be relevant?

…..

To sum up, the prosecution’s case against Pastor Kong today boils down to this: a series of inferences that they want your Honour to draw, from the facts, facts such as emails which don’t show a presence by Pastor Kong, for which they cannot get him to admit that he was aware, for which they were unable to elicit concessions or admissions. They now say, “Your Honour, draw these inferences because Pastor Kong expected his team to go out there and lie to the auditors, lie to the lawyers.”

…….

Look at it in the context of the happenings….. and decide whether or not ultimately the critical question, state of mind, is something that the prosecution can establish beyond reasonable doubt.

CHC Trial (Sep 14, 2015) – DPP Oral Submission

Preliminary issue on section 79 of the Penal Code.

DPP Chionh: “Your Honour, I think, rather than to prolong this, we will respond on what my learned friends have said so far. If I could also ask, then, that when we resume on Monday[Sep 14], that before the prosecution is called upon to respond, Mr Chan could make his position clear on the issue of section 79 and whether his client relies on it.” [Oral submission on September 10]

Today, Counsel for Kong Hee, confirmed that he is not relying on section 79.
DPP Chionh: “.. We will not be making submissions on that.”

Recount of today’s Oral Submission.

There were two rounds of written submissions. [Note: Not available to the media and public.]

DPP Chionh: “We do not intend to reiterate all the points we have made in our written submissions in the time we have had today. Instead, our oral arguments today will consist of two main parts. In the first part, we will highlight to your Honour the fundamental flaws which we submit crucially undermined the respective accused persons’ submission, and, in so doing, we will deomonstrate to your Honour why their defence must be rejected.
In the second part, we will summaries the prosecution’s case against the accused persons by highlighting the key parts of the evidence showing their guilt.”

First Part
Three common flaws which affect the defences of all the accused persons, and these are
1. Failure of the accused persons to adequately address the crucial restrictive nature of the CHC Building Fund.

2. Motive is not something that the prosecution has to prove something beyond reasonable doubt. “If dishonesty is proven the concurrent existence of a purportedly laudable motive will not provide any sort of defence in the area of mens rea.”

3. The distinction between obligation and responsibility. The accused person’s mass characterization of the prosecution case regarding the responsibility they took on themselves to ensure the repayment of the debts they had created.

DPP says,

“The elephant in the room which none of these accused persons have dared openly to confront is the fact that it was the church’s own money that was consistently used or planned to be used to repay debts supposedly owed by these entities to the church.”

Second Part
DPP Chionh: “I will not be repeating the submissions which we have already made in detail in our closing submissions and our reply. Your Honour will have seen from our closing submissions how our case is that the starting point for these offences lies in the Roland Poon incident in January 2003. Your Honour has seen from our closing submissions how we then traced from that point in time onwards the events and the actions of the accused which led to the offences concerning the misappropriation of the Building Fund for Sun’s music career.”

The first Xtron BSA being a sham, your Honour, we have consistently maintained that the determination of whether these transactions were shams depends on the intentions of the accused persons who planned, facilitated and executed them. “

Xtron bond was entered into without any consideration whether it could be paid on maturity.
The court exhibit E-1, 200,000 CDs
DPP Chionh: “The sham nature of the first CHC Xtron bond agreement, the fact that it was entered into without any consideration as to whether the bonds could be repaid on maturity. In fact, it is our submission that Kong Hee, Ye Peng, Eng Han and Serina knew that the first Xtron bond that could not be repaid by Xtron on maturity, and this is the irresistible conclusion to be drawn from the contemporaneous emails before the first BSA was entered into.
Your Honour has seen the evidence, for example of exhibit E-1.” [Click here to find out more about the court exhibit E-1.]

DPP Choinh: “We submit that the real reason why John Lam did not do any due diligence whatsoever is that he too knew all along that the first Xtron BSA was a sham. So, of course, it did not matter to him whether Xtron would be able to meet its repayment obligations on maturity.”

DPP Chionh: “Your Honour has seen throughout the trial evidence showing that, instead of Xtron taking steps to meet repayment and interest payment obligations, it was Kong Hee, Ye Peng, Serina and Eng Han had been who were responsible for arranging Xtron to get funds for this purpose.”

Control of Xtron
DPP Chionh: “The last point I wish to highlight in relation to the evidence of the sham nature of the Xtron bonds is the control which Kong Hee, Ye Peng and Serina exercised, with Eng Han’s assistance, over the drawdowns of the Xtron bonds. We submit that the control they had over the drawdowns proves the sham nature of the Xtron bonds, because drawing down on the bonds meant additional financial liability for Xtron and should, therefore, have been for the Xtron directors to decide whether and when to draw down.”

Round-tripping charges, ALRA and SOF
DPP Chionh: “As to the round-tripping charges, we have dealt with in our written submissions and reply the elements of the round-tripping charges which we have to proved……
Again, we will not trouble your Honour by repeating the submissions we have made. There is, though one point that we should deal with in the relation to the section 477A charges. and it is this. The elements of falsity of the accounting entries and of the element of willfully with intent to defraud, these elements essentially turn on whether the ALRA and the SOF tranche 10 and 11 are shams. If your Honour accepts our case that these were sham transactions, then it follows, as a matter of logic, that the accounting entries recording these as genuine transactions must be false.”

DPP Chionh: “… the detailed evidence showing that the common intention among the round-tripping accused, including Sharon, was to create the false appearance that the Xtron and Firna bonds had been redeemed, and to defraud the auditors into believing that the ALRA and SOF Tranche 10 and 11 were genuine transactions.”

DPP Chionh: “What the evidence clearly shows is that, even though CHC had already paid millions to Xtron under ARLA, the accused persons planned to channel yet more millions of dollars from the church to Xtron so that it could meet its purported ARLA obligations.”

DPP Chionh: “.. it is Chew’s reply submissions that make this clear beyond doubt. If your Honour will look at appendices 3 and 4 of Mr Chew’s reply submissions, what these diagram or flow charts confirm is that the auditors were not aware of the round-tripping of the SOF monies to Ultimate Assets and then to Firna for the redemption of the Firna bonds, nor were they aware of the subsequent round-tripping of advance rental from Xtron to Firna to Ultimate Assets and finally back to AMAC for the redemption of the two SOF tranches.”

Conclusion
DPP Chionh: “In conclusion, therefore, we submit that on the evidence we’ve adduced all the elements of each charge against each accused have been established beyond reasonable doubt by direct evidence, reasonable inferences and a combination of both. It is our submission that the prosecution’s case against each of these accused has been proven beyond a reasonable doubt.”