Kong Hee is questioned on the purpose of Xtron and how the Xtron and Firna bonds are in line with the church’s investment policy.
Kong Hee arriving at the State Courts this morning.
CN PHOTO: Daniel Poh
This morning in court, deputy public prosecutor Christopher Ong questioned defendant Kong Hee about the Xtron sponsors—members who “as described in Chew Eng Han’s plan, withdrew their building fund and then used it to capitalize Xtron”, if what they did was the same as what Wahju Hanafi did by withdrawing his building fund and capitalizing City Harvest Pte Ltd to pay off the album expenses.
N Sreenivasan, senior counsel for Tan Ye Peng, questioned the relevance of this line of questioning relating to events of 2003, noting that the prosecution’s own witnesses Foong Daw Ching and the other auditors of Baker Tilly, had given “evidence that there was nothing wrong with this.”
The DPP, after explaining that he was trying to show the role of Xtron in the financing of the Crossover, admitted, “Your Honour, I don’t think it’s part of our case to take a position on this, because, obviously, they’ve not been charged with any of these acts.”
REASONS FOR XTRON’S INCORPORATION: NO INTENTION TO MISLEAD
DPP Ong tried to show that Kong and the other accused persons intended to hide information from church members and auditors Ernst & Young—appointed by MCYS to do a governance review on charities—that the purpose of Xtron was to manage Ho’s singing career.
Over a series of exhibits which included minutes of the church’s annual general and extraordinary general meetings, emails to the auditors, and a list of possible questions from Ernst & Young, the prosecutor put it to Kong that there were three different versions given with regards to the purpose of incorporating Xtron in 2003, 2007 and 2010, and in 2008, the prosecutor pointed out, Kong had given the executive members of the church only one of the reasons.
Kong said, “Your Honour, I accept, I don’t deny that it’s inaccurate, but there was no intention to mislead or to lie to our members.”
The DPP replied, “I’m not suggesting that there was an intention to mislead.”
HOW XTRON CAME INTO THE PICTURE
In a series of emails starting from Apr 25, 2003, lawyers had drafted an artist management agreement and communicated that there was no need to incorporate a new company to manage Ho, as there was the existence of Xtron.
In response to this, Chew Eng Han emailed John Lam, Wong Foong Ming and Tan Ye Peng affirming that Ho be managed by Xtron in order to separate the music album work from the church.
The court saw that at that time, Chew brought up the issue of raising funds, and that they would need more withdrawals from Hanafi, Chew himself, Kong and others for the music album, without using church funds. Eventually the revenue would need to go back to the church.
Kong’s response to the prosecutor was that while there was the desire to capitalize Xtron, care was taken every step of the way to ensure it was done in a legal and proper way. Xtron donors who wanted to withdraw their building fund needed to do so out of a freewill, and auditor Foong Daw Ching had to be in the know.
When Ong pointed out that this relocation of funds were not made known to the members, Kong replied that when Hanafi withdrew his building fund, auditor Foong Daw Ching in his video statement (drafted by lawyers and vetted by Foong) announced that no church funds were used, hence that was Kong’s mindset at that time. If donors wanted to withdraw their building fund for the Crossover, then along with what Foong had said, no church funds were used.
Kong conceded that “the church may have lesser amounts of money in their Building Fund, but the church also benefited in the missions of the Crossover Project.”
IN LINE WITH CHURCH’S INVESTMENT POLICY
That the investment into Xtron and Firna bonds was not in line with the church’s investment policy was another point of contention between the prosecution and Kong. As laid out in the church’s investment policy, all investment of building fund monies must have the purpose of maximizing the value of the building fund.
The DPP submitted to Kong that the bonds were not in line with the church’s policy because their alleged purpose was in funding the Crossover, and not in maximizing the value of the building fund.
Kong replied that the investment policy did not state that investments could not be made for the any other purpose other than to maximize the value of the building fund. As long as that purpose was met, there is nothing wrong with achieving another purpose at the same time, which is to use the bonds proceed to fund the Crossover.
The DPP told Kong that his reply was nonsensical, to which Kong replied that he disagreed and could not see the logic in the DPP’s argument.
Court hearing resumed at 2.15pm.
WHY WAS XTRON INCORPORATED?
Over a series of exhibits which included minutes of the church’s AGM and EGM, emails to the auditors, and a list of possible questions from Ernst and Young, DPP Ong put it to Kong that there were three different versions given with regards to the purpose of incorporating Xtron.
Version 1 – An email to Foong Ai Fang showed that Xtron was incorporated by members who had a vision to create a company for AV work and media production.
Version 2 – An email to auditor Foong Ai Fang stated that Xtron was incorporated by members for the preparation of a future building for the church.
Version 3 – An email to Hanafi stated that it was a management board decision to incorporate Xtron as an independent company to handle all the income and expenses related to the album.
Ong highlighted the inconsistencies found in the different versions, that the first two versions did not mention anything about Xtron being involved in the production of Ho’s music albums. The DPP put it to Kong that this was because Kong and his team wanted to hide that the real reason for incorporating Xtron was because there was a plan to distance Sun from appearing to be financed by the church.
Kong disagreed, highlighting that the 2003 email to Foong Ai Fang stated that the principal activities of Xtron were the production of CDs, albums and events management. Ong countered that the email did not explicitly mention “Sun Ho”. Kong replied that at that time, the only artist Xtron was managing was Ho.
Later on, Kong had the opportunity to clarify that Ho was not financed by the church. Prior to 2003, she was sponsored by individuals, but after 2003, CHC invested into Xtron and Firna, and the proceeds were used for the Crossover albums.
The DPP ended with this, “Witness, I put it to you that there was no mention of the actual reason, actual, specific reason why Xtron was incorporated in 2003 to distance Sun from the church after the Roland Poon incident in this general meeting that we’re looking at now.”
Kong replied, “Your Honour, I didn’t have the awareness that I had to be so, so specific. If I had, and I knew that there’s a legal obligation to disclose in such a specificity, I believe I would have done it.”
中文报道 – 城市丰收审讯：康若早知情就会透露思创明确细节
