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Channel News Asia reports,
CHC trial: Lead auditor takes issue with CHC’s investment in Xtron
SINGAPORE: Some of the financial moves made by the City Harvest Church did not make any sense, said the external lead auditor of the church’s book.
Mr Sim Guan Seng of accountancy firm Baker Tilly took the stand on Monday in the trial of the six church leaders accused of misusing millions of church funds.
Mr Sim said he took issue with the investment in Xtron.
The church had bought S$13 million worth of Xtron bonds initially. This bond subscription agreement was subsequently raised to S$18 million and then to S$25 million.
The revision was to raise enough money for Xtron to purchase a Riverwalk property.
Mr Sim said he thought it was possible for the church to buy the property directly without having to invest in Xtron. He then told the church’s management to check with their lawyers to see if this was possible.
At the time of the purchase, Xtron, which already had S$18 million, borrowed another S$10 million from the bank.
Referring to email exchanges dated August 2008, between accused Serina Wee, Chew Eng Han, Sharon Tan and Tan Ye Peng, the prosecution asked if there was any reason the four would want to hide the bank loan from auditors.
Mr Sim said he was not aware and added that he found it puzzling that Xtron had to borrow money from the bank when it was supposed to have enough cash.
Later in the day, the court heard that the S$13 million had been drawn down before the property was bought.
Earlier on Monday, Mr Sim had told the court he initially had various concerns, chief of which was that Xtron was “not the most financially healthy” company and he wondered why the church would invest in Xtron.
The court also heard that the witness was not aware of several discussions, one of which involves a letter of guarantee made by businessman and former Xtron director Wahju Hanafi, indemnifying Xtron.
Mr Hanafi was in turn indemnified by four others, including church founder Kong Hee and his deputy Tan Ye Peng.
When asked, Mr Sim said he was not aware of these personal guarantees.
He also questioned why these were not disclosed to the auditors.
When told by the prosecution that the guarantee letter was prepared in 2010 but dated 2007, Mr Sim said he was “puzzled by the purpose of this guarantee” when the audit was already over.
Pointing to various documents produced in court, Mr Sim said that it would seem like the bond transactions between the church, Xtron and another firm, Firna, were set up for specific purposes, which would “raise a lot of red flags”.
Firna, a glassware company owned by Mr Hanafi, was allegedly used in what the prosecution calls “sham bond investments”.
Kong and five of his deputies are accused of misusing the church’s building funds through “sham bond investments” to boost the music career of Ms Ho, Kong’s wife.
The trial continues.
Source: By Clair Huang, CHC trial: Lead auditor takes issue with CHC’s investment in Xtron, Channel News Asia, http://www.channelnewsasia.com/news/singapore/chc-trial-auditor-would/960498.html, 20/01/2014. (Accessed 20/01/2014.)