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Kong told Sun Ho's album producers to plan 'as if the sky's the limit': Prosecutors

The court heard that even before City Harvest Church entered into bond transactions with Xtron - Sun Ho's artiste management firm - founder Kong Hee had made decisions concerning the financing of her music career, before getting approval of Xtron directors.

SINGAPORE: In the ongoing City Harvest Church trial, the prosecution charged that founder Kong Hee and his deputies controlled when to draw down Xtron bonds, and how these funds would be used. It said the bonds were simply a sham mechanism to tap on the church's building fund to obtain money whenever needed to finance the church's Crossover Project.

Kong and his five deputies are in the dock for allegedly using millions of the church's money to buy sham bonds. The project, fronted by Kong's wife Sun Ho, is a way of evangelising through secular pop music.

The court heard that even before the church entered into the bond transactions with Xtron - Ms Ho's artiste management firm - Kong had made decisions concerning the financing of her music career - before getting the approval of Xtron directors.

S$300,000 "UNANTICIPATED PAYMENT"

The prosecution produced a 2006 email where Kong approved a S$300,000 "unanticipated payment" to an American music producer as an example. These included expenses for a party in the Hamptons - a popular seaside resort in the US with some of the most expensive residential properties. It was estimated that this would cost between S$70,000 and S$150,000 to have a "name celebrity" host the party.

Kong admitted that there was no standing instruction that Xtron directors should be informed about the ad-hoc payment as soon as possible. He said he would usually approach his co-accused Serina Wee, who was then managing Xtron accounts about such ad-hoc payments, and she would let him know if there was any leftover in Xtron's budget for the Crossover Project.

In the case of the S$300,000, the payment was later given the green light by the Xtron directors when the budget for the next phase of the project was approved. He added that there were times he would be "scolded" by one of the directors Wahju Hanafi for "overspending the money."

The prosecution pointed out that the Xtron directors were not involved in the decision-making over what to spend the drawn down funds on, and that they were just "rubber stamps" for the expenses. Kong refuted this, saying the Xtron directors would have seen and approved a comprehensive budget.

"PLAN AS IF THE SKY'S THE LIMIT"

"The prosecution also said that Kong had not been as conservative in his budgeting for Ms Ho's US album as he had claimed. It produced emails from Kong to American music producers in which he told them to plan as if the sky was the limit, and to "spare no expense."

Deputy Public Prosecutor Christopher Ong charged that Kong's lack of consideration in budgeting in May 2008 - especially with a two-year maturity date on the Xtron bonds approaching - showed that he was "unconcerned" with repaying the bonds. This despite the knowledge that the project would now take five to seven years to break even, rather than two years as initially projected.

"Didn't you hesitate and wonder, hang on, does Xtron need to repay the bonds before that? This would be a major change in the circumstances of the project budget," asked Mr Ong. Kong denied this, saying he had not been aware of the two-year maturity date, and that the budget had been crafted with recoverability in mind.

Mr Ong refuted this, saying: "You had no consideration for whether Xtron could repay the bonds because there was no intention on the part of you, Serina (Wee), (Chew) Eng Han, (Tan) Ye Peng and John Lam, that Xtron would actually be responsible for paying the bonds." He added that the repayment of the bonds was "just another cash-flow deficit" that Kong and his deputies would solve, to keep the Crossover Project going.

NO EVIDENCE OF PERSONAL GUARANTEE

Kong has also on a number of occasions told the court that he relied on a personal guarantee from Xtron director and Indonesian businessman Wahju Hanafi, to underwrite any losses from the production of Ms Ho's album. Mr Hanfi is also a long-time member of the church.

However, the prosecution said that there was no evidence that such a guarantee existed, and that Mr Hanafi and his glassware company Firna were simply a "conduit" for funds to be channelled to the Crossover Project. It pointed to an email exchange between Mr Hanafi, Chew Eng Han, and Serina Wee dated October 2008, where Mr Hanafi asked if Firna was "only helping to pass through the money".

Chew responded: "Firna 'pays' but of course, in the end it is us, who will take care of the repayment of the bonds when it matures ... just as for the Crossover costs."
Mr Ong added that when the church entered into the first bond subscription agreement with Xtron, it was "not working on the belief that Wahju Hanafi would be responsible for covering the losses if Xtron defaulted." 

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