Wrongful Loss?

[Dear friend, See my reply in blue.

I have included my comments in blue. The Crossover was the church mission, and there was no personal gain. (Agreed statement of facts)

The trial judge found that there is no evidence of any wrongful gain.
To refresh your memory, below is an excerpt from the trail judge’s findings. 

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.] 

Dear Mrs Light

This is what I heard from Court on the case on Wrongful Loss. You can share this in your blog:

JC (Justice Chan) asked CO (Deputy Public Prosecutor Christopher Ong, not Cross Over) if it’s a case of wrongful loss where there’s no more funds as the whole lot of funds were expended into something else and so no church were built. And whatever they did, they intended to deplete the funds and would have know that no church could be built.
CO replied that all these amounted to wrongful loss.

But JC asked what is exactly wrongful and asked CO to define it.
CO referred to trial Judge See’s finding that wrongful loss is that they took money out from the BF (Building Fund) to spend on the CP (Crossover Project) or to do the round-tripping, that money was then no longer in the BF or General Fund in the case of the round-trip. Therefore money was no longer available to the church for the purposes that it was meant to be used for.  Basically the church is deprived of those funds because those funds have been used for other purposes. 

[Judge of Appeal Chao quoted an example. In this example, he asked DPP Christopher Ong how would he interpret it and if there was a CBT.

A gives B $10 for a specific purpose to get something. Along the way, he sees a woman and a child in poor condition begging.

DPP replied that it was a clear CBT. He associated this example to being Robin Hood.
Robin would still be convicted despite his good intentions as he ultimately caused a loss.

From what I heard in the court, this is what I caught and my own inference.
I would think that what he was saying is the appellants already have the knowledge of the restriction imposed upon the Building Fund, but they have used the Building Fund for the Crossover. If they used the money for this purpose, that money is deemed to have gone out of the church.
So, the church has been deprived of the money to which it is legally entitled to. Whatever good motive is not important as the legal definition of dishonesty has been fulfilled. It is CBT.

Justice Woo divided the argument into some logical questions:
1. Is there a loss?
2. Is it wrongful loss?
3. Did they know or intend to cause the loss?

The DPP believed all three to be affirmative as the church has been deprived of the money it is legally entitled to. This is due to the decrease in the Building Fund balance. ]

JW (Justice Woo) asked:

Is there a loss? And prosecution is saying temporary deprivation, with or without profit, is still a loss.
But is it a wrongful loss? That would depend on whether you can use money in these bonds, etc and that leads to the question of whether it is genuine investment, etc.
If wrongful use has been established, the next very important question is did they have knowledge that it is wrongful? Then the question of intention comes in.

To the judges, the real question is still whether what they did amounted to a real investment. This raises the question of projection. Are those projections real, realistic? That’s when the contemporaneous evidence will be important.

JA Chao pointed that the court accepted that if the investment went directly to JH (Justin Hertz), there would have been no problem. CO replied that that would depend on whether the purpose of investing in JH company fell within the restrictions of the investment policy.

[Judge of Appeal Chao quoted trial Judge’s finding in para 156. Below is an excerpt from the trail judge’s findings. 

I am prepared to accept that it would have been a genuine investment, and therefore an authorised use of the BF, to have pumped money directly into Justin’s company for the purposes of the Crossover. But in my view it does not follow that the Xtron bonds were a genuine investment even if the ultimate purpose is the same, that is, to fund the Crossover. The material difference between the two situations is not simply a matter of form; the difference of substance is that, in the case of the direct investment into Justin’s company, Kong Hee and the relevant co-accused would be relinquishing any control over the BF monies that they might have had as CHC leaders and staff, whereas in the case of the Xtron bonds they were putting those monies within their complete control. 

So when comes to the argument of investment policy. Prosecution’s case is the investment policy is drafted to facilitate the sham bonds. 

Defence argument is the CHC constitution expressly gave the board the power to invest surplus funds. This means even the funds is in a Building Fund, if the board considers that a certain amount is surplus, it can invest. Mr Foong Daw Ching was the chairman of the task force programme known as social investments.  His advice was for good order draft an investment policy. The investment policy is drafted for good order.

SC Maniam says, “If they had evil intention, they should have done nothing or they should have been advised to do nothing.”]

CO think that the existence of projections is neither here nor there. He thinks the court should look more into the internal projections. (Meaning the 200,000 album sales projection) [No more 200,000 copies argument.  There are many other objective evidence that shows other projections.]  

To the prosecutor, just because there are projections doesn’t make it a genuine investment because the projections can be done in support of their conspiracy. [This is prosecutor's position]
CO also said that there is no evidence that the church members supported the financing of the CP using church funds.

Kenneth Tan, defence for John Lam later replied to the question would the members still support the CP when actually told about the details of the investment. He pointed out that in the agreed statement of facts on 1 Aug 2010 EOGM, the members were told that BF were used for Xtron and Firna Bonds. And the members approved to continue with the CP and authorize the Board to support the mission of the church. He said that was after all the adverse publicity after the CAD and the members still supported it.

[The DPP position is that the appellants are not remourseful in their actions and continue to come up with excuses for their actions. The meeting on 1 Aug 2010, the appellants did not give the full picture to the EMs.]

Since we are still on this issue about Wrongful Loss, I might as well shared something related to that. Did TYP, CEH, SW and ST intended any loss to happen through payment of the GST?

Defence of TYP and ST brought up to the 3 judges that the issue of GST was only brought up for the first time by the prosecution when the 6th accused took the stand. The others were not cross examined on that point. Thus CEH and Sreeni objected during the cross exam at the Sub Court. At that point of time, judge See stepped in and said that he don’t think that the prosecution is saying that they intended to misappropriate. And so, they left it as that. But when it came to the verdict and summary, GST was ruled to be misappropriated.

Besides asking that this finding on GST be disregarded, Paul Seah, the defence for Sharon also went on to explain that GST was duly and rightfully paid as it was not a false transaction because Xtron did provide the Expo premises under the ARLA.

[The prosecution case is that the round tripping accused wanted to remove the bonds (the track) without the auditors knowing that it was done using the church’s own funds.

The trial judge found that the ARLA was not genuine transaction, therefore GST was ruled to be the wrongful loss.

In Eng Han’s EIC he has submitted to the court that, the auditors have a fair and true view of the restructure of debts, and the church funded Xtron in the form of the ARLA, and that Xtron has refinanced Firna. (read my archive)

On September 16, Eng Han reiterated the point on what the auditors can see.

Chew says, “When we did a round-trip, the question is did the auditors then think that the Building Fund was no longer applied to the Crossover?  The answer is “no”, because the bonds were just simply replaced by the ARLA. The ARLA came from City Harvest Church Building Fund.”

If the tracks were supposed to be that the Building Fund was used for the Crossover. He has not covered anything.

Chew says, “I think if I really wanted to conspire to do all these things, this was the worst thought-out conspiracy ever.”

Judge of Appeal Chao agreed with his point on worst thought-out conspiracy. ]