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City Harvest trial: Lam using Chew as a scapegoat, prosecution argues

Secret letters and sham bonds in the spotlight as prosecutor claims ex-board member John Lam is trying to shift the blame to former investment manager Chew Eng Han.

SINGAPORE: Former City Harvest Church board member John Lam was trying to use his co-accused and former church investment manager Chew Eng Han as a "scapegoat", alleged the prosecution, as the high-profile trial involving the six church leaders resumed on Thursday (Aug 7).

This was in relation to a "secret letter" that Lam had signed on behalf of the church board - even though the board had not been told of the letter, and had not given him the mandate to sign it.

The six defendants are accused of using millions of church dollars to buy sham bonds from two companies, Xtron and Firna, in order to fund the secular music career of Sun Ho, the wife of church founder Kong Hee.

The "secret letter" was between the church and glassware firm Firna, which is owned by Indonesian businessman and longtime church member Wahju Hanafi.

The church was given a personal guarantee from Mr Hanafi in the event the Indonesian failed to redeem the church-Firna bonds. A requirement under that agreement was that the church could convert the bonds issued by Mr Hanafi into shares in Firna if he failed to pay the church back.

But Mr Hanafi's father-in-law, who held 20 per cent of the company, was reluctant to agree as he felt it would dilute his shares in the company. As such, the secret letter was drafted which stated that the church would sell back the shares to Mr Hanafi and his father-in-law, at a nominal value of US$1, in the event the bonds were converted into shares.

Lam explained that he signed the letter because Mr Hanafi had assured Chew Eng Han that he had no intention of enforcing or using the letter, and wanted it only for the purpose of appeasing his father-in-law.

FALSE STATEMENTS

When pressed about why he had signed the letter without telling the church board, Lam pointed the finger at Chew. As Chew was the one handling the documents involving the Firna bonds, Lam said he left Chew to get the board's approval, and to "complete the job".

This prompted Lead Prosecutor Mavis Chionh to respond: "Well, that's very convenient because Mr Chew Eng Han seems to pop up very frequently in your explanations for why you did or didn't do certain things."

Lam also admitted that the statements in the letter were false, as he had no written mandate from the church board to sign it.

"If we are to believe you, this letter was going to be used to trick and bluff the father-in-law, because he had asked for some reassurance," said the lead prosecutor.

Mr Lam did not deny this.

The prosecution argued that Lam's willingness to sign the secret letter, which negates the convertability feature of the bond, is evidence that the Firna bonds were a sham. The convertibility feature, it asserts, was there to create the appearance that there was a legitimate protective feature for the church. 

The prosecution has said that the investment in the Firna bond were simply a vehicle to channel the church's monies to fund Ms Ho's music career.

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