- POSTED: 21 Jan 2014 14:29
- UPDATED: 21 Jan 2014 23:35
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The lead auditor going through the City Harvest Church's books testified on Tuesday that the bond investments made by the church and some related firms "do not make sense" and had "gone one round".
SINGAPORE: The lead auditor going through the City Harvest Church's books testified on Tuesday that the bond investments made by the church and some related firms "do not make sense" and had "gone one round".
On the stand for the third day, Sim Guan Seng of Baker Tilly was taken through the church's investments, which were subsequently invested in or loaned to other firms.
These related firms were AMAC Capital Partners, Xtron, Firna and Ultimate Assets.
The church had invested in a "special opportunity fund" (SOF) in AMAC, which was owned by accused Chew Eng Han.
AMAC was the fund manager of the church at that time.
Through documents raised in court, Mr Sim said AMAC then loaned the church's money to Ultimate Assets, which in turn used the same sum of money and loaned it to Firna, also known as PT The First National Glassware.
Ultimate Assets and Firna are owned by businessman and long-time church member Wahju Hanafi, who testified in the trial previously.
Mr Sim added that Firna then used the same sum to redeem the Firna bond.
He described this as "round one".
The witness said "the same thing happened" for "round two", where a similar cycle took place.
In all, the church invested S$11.4 million in AMAC's SOF in different tranches.
Mr Sim noted the initial sum of S$11.4 million made "one round".
Mr Sim said adding to the "confusing" transactions was the advanced rental agreement between the church and events company Xtron, which also made "one round".
Mr Sim told the court that the advanced rental from the church paid to Xtron was used by Xtron to invest in Firna bonds.
Firna would then repay the loan it took from Ultimate Assets and then Ultimate Assets would repay the loan to AMAC.
This made it possible for AMAC to redeem the S$11.4 million bonds bought by the church.
When asked about the significance of these transactions, Mr Sim said it meant that the church started off with an investment in Firna and ended up with advanced rental paid to Xtron in their books.
"Looking at the Excel sheet would lead me to question whether the investments by CHC in SOF... are really investments in the first place or if they are done to facilitate or to help Firna repay the Firna bonds that City Harvest had invested in," said Mr Sim.
"The amount transferred seems to facilitate that.
"Just looking at this spreadsheet, it seems to be a plan to enable Firna to repay the bond before the end of the financial year. So, that means the SOF investment itself would be a very questionable investment."
Mr Sim added that this would then raise the doubt that the church and Xtron entered into the advance rental agreement for purposes other than what was represented to him.
The prosecution's case is that church founder Kong Hee and his five deputies misused millions of the church's building fund to boost singer Sun Ho's career.
They alleged that the accused did so through "sham bond investments" in Xtron and Firna.
It is also the prosecution's case that some of the accused tried to cover up the misuse through what it calls "round-tripping".
The court heard that the church had previously declared that no money was lost from its kitty.
This is also part of the accused persons' line of defence.
During the hearing, Mr Sim also said Baker Tilly had resigned as auditors of the church last October.
He said they had conducted their audit for 2010 mid-way and had raised several issues to the management and board but were unable to obtain satisfactory answers, so they decided to step down.
The firm has resigned from Xtron as well.
Mr Sim will be cross-examined by the defence on Wednesday.