Court resumes with the prosecution continuing to suggest Kong Hee fully controlled Xtron.
Kong Hee enters his third week on the stand.
CN PHOTO: Daniel Poh
This morning in court, deputy public prosecutor Christopher Ong continued in his line of questioning to show that Kong Hee had full control of Xtron Productions, the artist management company for Kong’s wife, Sun Ho.
Control Over Xtron Directorship
Through emails as well as the evidence of Xtron directors, Wahju Hanafi, Choong Kar Weng and Koh Siow Ngea, given in court during earlier tranches, Ong questioned Kong on how Xtron directors, including Kong’s former secretary, were approached to become directors. Kong explained that while he nominated individuals to be Xtron directors, it was up to them to decide if they wanted to take up the role and the responsibility. Kong said he didn’t know if there were others who had also made nominations.
The DPP put forth that Kong and Tan Ye Peng were the ones who wielded control over Xtron, one of the ways being the selection of its directors. Kong disagreed, explaining that as the senior pastor of the church, he had nominated his staff members to sit on committees of para-church organizations such as the Festival Of Praise and the Evangelical Fellowship Of Singapore. While he nominated these staff, it was ultimately up to the staff members to decide if they wanted to assume the roles and responsibilities in such committees. Kong asserted that just because his staff members at in these committees, it did not mean that he had control over these para-church organizations.
The “City Harvest Group”
The prosecution showed an email from accountant Serina Wee to Kong which bore an attached document showing the directorship, guarantors and income of various organizations and entities, including Xtron, under the heading “City Harvest Group”. Ong asked if the purpose of this was for Kong to approve all the directors of all the entities.
Kong explained that the term “City Harvest Group” was coined by the auditors when assessing the entities that worked closely with CHC, which included Xtron. At that point in time, in November 2006, prominent people holding directorships in too many organizations was a hot news topic. Kong explained that in seeking proper governance, he had wanted the CHC board to have full disclosure of the directorships in all of the companies and organizations working closely with CHC. That email, said Kong, was an exercise to let everyone know what are the various boards they sat in, so that the directors could “be more circumspect” about their involvement.
“Managing Director” On Namecard
The DPP revisited the issue of Kong holding an Xtron namecard. The court saw an email in which Kong had requested to be named as “managing director” of Xtron. Tan Ye Peng indicated that it was inappropriate for Kong to take on the title of managing director because a managing director has a decision-making role. Tan suggested using “consultant” instead. Kong explained that he had asked about the “managing director” title as he wanted to be in a position to negotiate with the Americans in the music industry—the title of “pastor” would have been unsuitable.
Kong’s Lack Of Understanding Regarding How Bonds Work
The senior pastor admitted this morning that in early 2008, he had misunderstood how bonds worked, leading him to email US manager Justin Herz to delay payment and explaining that the delay was because the Xtron funds were in stocks and bonds.
“It was a huge misunderstanding on my part,” Kong said, attributing it to his ignorance about financial instruments. His assumption had been that if the bonds were not drawn down, Xtron would be making money from the bonds. It was only in July that year, the court heard, that he understood that the bonds had a two-year limit.
“I was very fuzzy in my understanding of bonds,” he admitted.
The court heard that the Crossover team had suggested to Kong to delay funds to the US side if it was not necessary at that point to make payment. The prosecution put it to Kong that it was him and his team that were controlling the bond draw-downs and not the Xtron director. Kong disagreed. “It has to do with what’s already budgeted,” he said, explaining that the Xtron directors knew beforehand what the process was going to be and had already agreed and approved the budget for the US album production.
Undeterred, the DPP then asked Kong if he had then “lied” to Herz about the reason for the delay. Kong said he didn’t disagree that he had misrepresented the circumstances but his state of mind was that, as far as possible, Xtron would not need to sell the bonds and could continue to earn the profits of the bonds.
The “Significant Breakthrough”
In May 2005, Kong wrote an email to Herz announcing a “significant breakthrough with the Xtron directors.”
The prosecutor pulled out a few emails to question Kong on what this “significant breakthrough” was, and to try to show that Kong had agreed to the US album before the Xtron directors had approved.
Kong explained that he would have obtained verbal approval from Wahju Hanafi. That email, he said, was to let Herz know “that Wahju was willing” to finance the full English album. He clarified that in his mind, he was thinking of the Xtron investors—that is, Hanafi and his wife Wei Wei—but had used the term “directors”.
This morning, the prosecutor also put it to Kong that the decision to go into the US was ultimately the senior pastor’s.
Kong emphasized that it was not his decision alone, but one made by the church and Xtron’s directors. First, “Wahju had to agree”, he said, “and second, I needed the church to feel like they were willing to release us.” He reminded the court of the survey done with 1,700 members about whether to continue with the Crossover. “The overwhelming majority wanted Sun to continue,” he said. “We prayed about it and decided to go with it.”
Among other points the prosecution put to Kong was that he tried to maintain to Herz the cover story that Xtron was independent, when he was actually the person in control.
Kong disagreed, pointing out, “If I was indeed the true controller of Xtron, he wouldn’t be bothered.”
Before the lunch break, the DPP painted a picture of how three of the Xtron directors were unaware about what the company did. Kong pointed out that with Choong Kar Weng, the exhibit showed was from the time he had been a director for a few months, and Kong had sat him down to explain the relationship Xtron had with other entities, and thereafter, Choong was up to speed. Hanafi had earlier given evidence that he made no decisions between Jan 2007 and Aug 2008—he was transitioning out of directorship during that period. Kong pointed out that Hanafi had gone with him to the US to meet Herz, had authorized him to represent him in negotiations and the two men had kept in regular contact. With regards to Koh Siow Ngea, Kong said he did not interact much with him.
The DPP insisted that it was Kong who was in control of Xtron, and that it was his “final decision that your team put into action.”
Kong disagreed. “That can’t be true when I have clearly instructed them to check with lawyers and auditors and to get the management board to decide.”
Court resumed at 2.30pm.
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