City Harvest appeal: Ruling may have serious implications on corruption cases, says Shanmugam

Court's decision to cut jail terms could have impact on other corruption cases

NEED TO TAKE TOUGH STANCE

From the Government's point of view, this legal reasoning has serious implications in other cases, including corruption cases, (and) our zero-tolerance approach for the future and we will have to consider as a matter of policy what other steps to take because we cannot relax our stand on that... We will have to make sure that the position is as strict as we have always maintained it. So I've asked AGC to advise whether we need to do anything.

LAW MINISTER K. SHANMUGAM, on the appeal verdict's serious implications. City Harvest Appeal

The Attorney-General's Chambers (AGC) is considering if it can take further steps in the City Harvest Church case, given that the decision to cut the jail terms of the six convicted could have serious implications for corruption cases, said Law and Home Affairs Minister K. Shanmugam yesterday.

"We will have to consider as a matter of policy what other steps to take because we cannot relax our stand on that," he said, referring to Singapore's zero-tolerance towards corruption.

A day earlier, all six church leaders in the largest case of misuse of charitable funds in Singapore's history had their sentences slashed by a three-judge panel in the High Court, despite the prosecution's appeal for longer jail terms.

Their original jail terms, ranging from 21 months to eight years, were cut, in some cases by over half. The 52-year-old church founder Kong Hee, for instance, had his eight-year term cut to 31/2 years, while former fund manager Chew Eng Han, 56, had his six years reduced to three years and four months.

A critical reason for the High Court's decision was the ruling that directors are not agents under the more serious Section 409 of the Penal Code dealing with criminal breach of trust. The bench majority replaced the offence with basic criminal breach of trust, resulting in lighter sentences.

Referring to this legal point, Mr Shanmugam said it has serious implications for other cases, including corruption cases in which company directors are taking bribes.

But he sounded a note of caution, saying people can disagree with the court but they should be careful about "casting improper ulterior motives" on the judgments.

"The reasoning is there, they set it out, we agree, disagree, and from a Government point of view, if we disagree, then we always consider what we do. If necessary, we legislate through Parliament," he added.

In November 2015, the church leaders were found guilty of channelling $24 million in church funds into sham bonds in music production company Xtron and glass- maker Firna, then using another $26 million to cover up the misdeed.

The church had said the money was used to fund the singing career of Kong's wife, Ms Ho Yeow Sun, as part of what it described as a church mission to evangelise through her music.

All six appealed against their convictions and sentences, while the AGC appealed against the sentences for being too low. Mr Shanmugam said the Government agreed with the AGC's push for longer jail terms.

Referring to the four judges - three High Court judges and one State Court judge - who heard the case in total, Mr Shanmugam said two judges had thought "either the sentences should be as they are or higher". Justice Chan Seng Onn, in differing from Judge of Appeal Chao Hick Tin and Justice Woo Bih Li, had said in his dissenting judgment that there were elements of benefit to Kong and his wife, and also permanent financial loss to the church.

The appeal judgment had commented on how the prosecution had not focused on whether any third parties had reaped gains from the church leaders' actions, even though this may have been suggested in the charges.

This point was not raised in the prosecution's written submissions for the appeal or at the trial.

As a result, the court had approached the sentencing in this case "as one without any element of wrongful gain or personal financial benefit, either direct or indirect", said the oral judgment.

Mr Shanmugam said he has "noted the court's comments on the way the matter was handled by the prosecution", and has asked Attorney-General Lucien Wong and his deputies to look into the matter.

Association of Criminal Lawyers of Singapore president Sunil Sudheesan told The Sunday Times the AGC could go to the Court of Appeal "to clarify section 409 once and for all". This must be done within a month of the High Court's decision.

Lawyer Lau Kah Hee said if the apex court takes a different view on the legal question, it could then decide on suitable sentences or send the case back for resentencing.

City Harvest verdict: AGC to take case to Court of Appeal

SINGAPORE - The Attorney-General's Chambers (AGC) said on Monday (April 10) that it will be taking the case involving the misappropriation of millions in City Harvest Church (CHC) funds to the Court of Appeal on questions of law.

Church founder Kong Hee, 52, and five other leaders had their sentences slashed last Friday after a three-judge High Court panel reduced their convictions for criminal breach of trust (CBT).

The six were originally convicted for CBT as agents, under Section 409 of the Penal Code. But in a two-one split decision, the High Court ruled that the six church leaders are not considered agents under the provision and replaced the offence with basic criminal breach of trust, under Section 406.


In a statement on Monday, the AGC said: "Having carefully considered the written grounds, the prosecution is of the view that there are questions of law of public interest that have arisen out of the High Court's decision, including and in particular, whether a director or a member of the governing body of a company or organisation who is entrusted with property, or with any dominion over property, is so entrusted in the way of his business as an agent for the purposes of section 409 of the Penal Code.

"The prosecution has accordingly filed a criminal reference today, to refer these questions of law to the Court of Appeal."


Under the Criminal Procedure Code, the Court of Appeal, in hearing and determining any questions referred to it, may make such orders as the High Court might have made as the Court of Appeal considers just for the disposal of the case.

The AGC statement said that if the Court of Appeal agrees with its submissions, the prosecution intends to ask the apex court to "reinstate the appellants' original convictions under section 409 of the Penal Code and make necessary and consequential orders in relation to the sentences given".

Kong, deputy senior pastor Tan Ye Peng, former fund manager Chew Eng Han, former finance manager Serina Wee, former finance committee member John Lam, and former finance manager Sharon Tan, were originally sentenced to between 21 months and eight years' jail.

They were found guilty, after a marathon trial that started in 2013, of misappropriating millions in church funds to fuel the pop music career of Kong's wife, Ms Ho Yeow Sun, in a church mission known as the Crossover Project.

They had channelled $24 million from CHC's building fund into sham bonds in music production company Xtron and glass-maker Firna. This money was in fact used to fund the Crossover Project. Later, another $26 million was used to cover up the initial misdeed.

The prosecution appealed for higher sentences. The six appealed against their conviction and sentences.

On Friday, the jail terms were drastically reduced.

Kong's original sentence of eight years was cut to 3½ years.

Tan Ye Peng, 44, had his 5½ years in jail cut to three years and two months.

Former fund manager Chew Eng Han, 56, who originally got six years in jail, had it reduced to three years and four months. Former finance manager Serina Wee, 40, had her five-year jail term halved to 2½ years.

The three-year sentence of former finance committee member John Lam, 49, was also halved. Former finance manager Sharon Tan, 41, will be jailed for seven months instead of 21 months.

City Harvest appeal: Leaders lied for sake of Church, not personal gain

SINGAPORE - They were not motivated by personal gain and they thought they were acting in the best interests of City Harvest Church (CHC).

Ultimately, the church leaders believed that their actions would advance the Crossover Project, a church mission to spread the gospel through pop music, which was found to be generally supported by the congregation.

These were the "exceptional" mitigating factors considered by a three-judge panel, in reducing the jail terms for the six convicted CHC leaders on Friday (April 7).

The six, who had appealed against their conviction and sentences, were given reduced jail terms raging from seven months to three years and six months.

In a 304-page written judgment, the judges noted that the case should not be seen as a "sinister and malicious attempt" by the six to use the church's funds for their own purposes, despite the huge sum of about $50 million involved.

Rather, they had "resorted to deceit and lies", such as hiding the truth of their transactions from auditors and lawyers, because they wanted to keep the use of the church's monies for the Crossover Project confidential. They had also feared that questions would be asked.

"Their fault lies in adopting the wrong means," the judges said.

The prosecution, in calling for stiffer sentences, had earlier stressed on the misappropriation of charity funds as among the key aggravating factors.

But the court, in the written judgment, clarified that while CHC is a charity organisation, it is not a charity that is also an Institution of Public Character (IPC).

This means that donations to the church are not tax-deductible.

Thus, unlike funds that are held by IPCs, such as the National Kidney Foundation, donations to church funds "are invariably made by its members for the benefit of the church" and do not serve the community as a whole.

In addition, while the six had been "reckless" with the funds, the court accepted that had no intention to cause permanent financial loss to the church.

"The appellants had, at all times, intended for the funds ... to be eventually returned to CHC with the stated interest even if they might not have been entirely sure as to how or when they could do so at the time when they entered into the transactions," the judges said.

In meting out the harshest sentence among the six to Kong, the judges agreed that he was the "ultimate leader" of the Crossover Project and gave the overall direction and moral assurance to the five others.

He was also one of the main players - if not the main one - who had directed and influenced the others to using the church's Building Fund to purchase sham bonds, even if he did not directly participate in redeeming them.

Touching on the issue of personal gain, the judges said: "While the Prosecution did, in its oral submissions before us, attempt to make the point that a benefit had accrued to Kong Hee's wife, Sun Ho, this point was not raised in its written submissions for the appeal." The issue of personal benefit was, therefore, not factored into the sentencing.

The judges also disagreed with the prosecution that former CHC finance committee manager John Lam, 49, was an "inside man" integral to the success of the conspiracy.

Instead, the judges found Lam's involvement to be "relatively limited" and "only at some junctures", thus sentencing him one year and six months, down from three years.

Former CHC fund manager Chew Eng Han, 56, had "employed his wits and financial expertise to mask the reality of the transactions", even though he was not a spiritual leader of the church.

As he had been the person trusted in all financial matters, the court handed him a jail term of three years and four months, down from six years.

CHC deputy senior pastor Tan Ye Peng, 49, was jailed three years and two months. This was a reduction from his orignal sentence of five years and six months.

While he was a spiritual leader in church, the judges accepted that he did not have the trust and authority that Kong had.

Finally, the judges found that former CHC finance managers Serina Wee, 40, and Sharon Tan, 41, were less culpable as they were not leaders in church.

Wee was an "administrator" helping out with accounts and documentation. She received two years and six months' jail, down from the five years that was previously given.

As for Tan, who took over the role from Wee, the judges agreed that she was "only an employee" and was merely carrying out instructions by the decision-makers in the church. She was given the lowest sentence of seven months, instead of 21 months previously.

Kong Hee asks church to fulfil building fund

City Harvest / Kong Hee Appeal - Five key highlights of the judgment

WHY WERE THE CBT CHARGES REDUCED?

The court found that City Harvest Church founder Kong Hee, 52, deputy senior pastor Tan Ye Peng, 44, and former finance committee member John Lam, 49, were not "agents" entrusted with dominion over CHC's funds.

While they held important positions in the church, it does not mean they were offering their "services as an agent to the community at large" or making their living as an agent. This is unlike a banker, a broker or a lawyer.

With this, the aggravated charge of CBT under Section 409 of the Penal Code, which involves CBT by a public servant, banker, merchant or agent, was reduced to a simpler charge under Section 406.

http://www.straitstimes.com/sites/default/files/attachments/2017/04/08/st_20170408_sewrap08_r2_3063398.pdf

WHY WERE SENTENCES CUT?

The lesser charge of CBT had a "significant impact" in the reduction of the sentences, as the maximum punishments of the two are "markedly different", the court said. The maximum jail terms under Section 406 are less than half that for those under Section 409.

Despite the huge sum of about $50 million involved, the court recognised that there had been no personal gain, among other mitigating factors, and "their fault lies in adopting the wrong means".

WHY WERE THE ACCOUNT FALSIFICATION CHARGES UPHELD?

These were related to entries recorded in the church's accounts in October and early November 2009 showing that the sham bonds purchased by the church's building funds were redeemed. The court held that the accused were aware the entries were false and they intended to defraud.

WHAT DID JUDGES SAY ABOUT KONG HEE?

Kong's role was that of "spiritual leader" of the five others, providing the "overall direction and moral assurance for their actions". Thus, his overall culpability was the greatest.

He was also one of the main players - if not the main one - who had influenced the others into using the church's funds to purchase sham bonds, even if he did not directly participate in redeeming them.

WHAT DID THE DIFFERING JUDGE SAY?

Justice Chan Seng Onn, in differing from Judge of Appeal Chao Hick Tin and Justice Woo Bih Li, noted there were elements of benefit to Kong and his wife, Ms Ho Yeow Sun. There was also permanent financial loss to the church.

Justice Chan called for a dismissal of the appeals for the six accused and prosecution.

Rise and fall of a superstar pastor

On Friday, Kong Hee sat stony- faced in the High Court, as a three- judge panel delivered its verdict.

Clad in his usual sharp black suit, the 52-year-old looked steelily ahead when he later exited the court, ignoring the barrage of questions from the media scrum.

It was a marked contrast to the charismatic eloquence that had helped propel his City Harvest Church (CHC) to its superstar status over the past three decades.

In 1989, the computer science graduate, then 25, started CHC in a single-storey terraced house at 41A Amber Road. It was called Ekklesia Ministry. His congregation comprised 20 teenagers.

The Raffles Institution old boy would cycle to see church-goers. Sometimes he would turn up for work dressed in a T-shirt and slippers, according to a church member interviewed for a 2002 article.

He married Ms Ho Yeow Sun in 1992, and the couple set up home in a Tampines flat although they would later live in a $9.3 million Sentosa Cove penthouse.

Registered as a society in 1992, CHC had few assets - it had no place of its own and services were held at rented conference rooms.

Mr Kirk Png's journey with CHC began at one such venue in 1993 - at the World Trade Centre. Then a Buddhist, Mr Png had been invited by friends. He said: "The congregation was about 800-strong. It was the friendship and presence of God that led me to stay when I faced parental objections."

The compliance consultant, 42, described the church's early years as "young and dynamic". "Many of us were young Christians. We learnt how to build up our character to be good Christians so we would make an impact when we stepped out."

In 1995, CHC moved to the Hollywood Theatre in Tanjong Katong. During its six years there, its congregation swelled from 1,300 to 10,000. Then came the millennium, with 2001 as a pivotal year. It erected a $47.6 million compound in Jurong West with a $583,000 fountain. At its peak, its coffers and congregation expanded - to $100 million and 33,000, respectively.

But controversy followed.

In 2002, Ms Ho recorded her first Mandopop album, Sun With Love, for what CHC called the Crossover Project - a mission to spread the Gospel through pop music. It was meant to launch her career in the US. That same year, Kong was asked whether it was appropriate for a pastor to be a pop star. He replied: "Why don't we wait and see... if Sun compromises on her integrity and values. I have a feeling she won't."

But some church-goers were concerned. In 2003, a member, Mr Roland Poon, alleged that the church's building fund had been misused to finance Ms Ho's music career. He later retracted the allegations and took out advertisements in five newspapers to apologise.

Later, Ms Ho outraged some when she was photographed in a revealing red Armani dress at the Hollywood Film Festival. Some also expressed discomfort over her music videos being played before services.

During the trial, the court learnt that more than US$8 million (S$11 million) had been spent on Sun With Love. This included US$1.6 million in production fees for American rapper Wyclef Jean.

But the album was never released although singles were produced. Of these, the 2007 music video China Wine - in which Ms Ho adopted a persona called Geisha - was the most controversial.

Now 44, Ms Ho was reported to have received over half a million in bonuses and advances, including a $30,000 birthday cash gift and an $80,000 "special performance bonus for hits in the US or the United Kingdom" in 2006.

In court last year, deputy public prosecutor Christopher Ong noted that Kong and the other five accused church leaders had not shown remorse - which ordinarily would be a mitigating factor.

During the case, CHC's attendance fell. In 2015, it drew a congregation of 16,482 - a 30 per cent drop from 2009, a year before investigations began. But Mr Png said of the dip: "What is important is not who has left but who has stayed. When things happen you don't just leave the family and move on."

On the status of the Crossover Project, a CHC spokesman told The Sunday Times: "As a church, we believe that the cultural mandate and marketplace evangelism are every believer's calling.

"As for the means in which we express these, we need to take time to pray and seek God for the future."

Over the past four years, it had also become more transparent about the management of its assets and funds, she added.

Kong Hee seeks church's forgiveness

There was a rousing cheer as City Harvest Church (CHC) founder Kong Hee walked onstage yesterday at the packed Suntec convention centre auditorium.

But as he addressed the congregation that had gathered for the 5pm service, the crowd numbering in the thousands grew quiet.

"I'm so sorry for all the hurt, all the disappointment and all the painful ordeals you've been through," he said in a shaky voice.

"I really, really, really wish that I was and am a better, wiser leader. Pastor is deeply sorry and sincerely asks for your forgiveness. Please forgive me," he added.

He also thanked them for being members of the church at the first service held a day after the High Court reduced the sentences of all six church leaders, including Kong, in the biggest case of misuse of charity funds in Singapore history.

Executive pastor and president of the CHC management board Aries Zulkarnain later took to the stage to lead the church in prayer, together with Kong and his wife Ho Yeow Sun.

Nearing the end of the two-hour service, Kong returned onstage, saying he had learnt "many lessons through this entire ordeal".

In the midst of the church's quick growth, he admitted, he had not "slowed down, paused and prayed more" and made "unwise decisions" in the process.

In November 2015, Kong and five CHC leaders were handed jail terms ranging from 21 months to eight years. The prosecution and all six later launched appeals.

Following the High Court's decision, a spokesman for the Office of the Commissioner of Charities (COC) told The Sunday Times it will resume removal proceedings to protect the assets of the charity.

COC had previously said seven individuals involved will be banned from being a governing board member, key officer, trustee, agent or employee of CHC. Kong can continue with his religious duty as a pastor.

Many in the congregation declined to speak to The Sunday Times.

Yesterday, Kong promised the congregation that "whatever happened in the past will never repeat itself in the future".

"We must never let it happen again," he said. "It was a steep learning curve for all of us."

City Harvest appeal verdict: Six church leaders get reduced jail terms, Kong Hee gets 3.5 years

SINGAPORE - A three-judge panel on Friday morning (April 7) reduced the jail sentences for all six City Harvest Church (CHC) leaders who were convicted of criminal breach of trust and falsification of accounts in a high-profile case involving the misuse of millions of dollars of church money.

Church founder Kong Hee. 52, who was  handed an eight-year jail term in November 2015, will spend 3½ years behind bars.

The other five - deputy senior pastor Tan Ye Peng, 44; former CHC finance managers Serina Wee, 40, and Sharon Tan, 41; former CHC finance committee member John Lam, 49; and former CHC fund manager Chew Eng Han, 56 - also  had their jail terms reduced after the court, in a split decision, allowed their appeals against conviction and found them guilty of a less serious charge of criminal breach of trust.

The six were found guilty in 2015 after a marathon 142-day trial that started in 2013.

City Harvest trial: Church leaders weave web of lies to deceive church members, auditors, lawyers, says DPP

SINGAPORE - The six City Harvest Church (CHC) leaders deceived church members, auditors and lawyers, and weaved a web of deceit to subvert the church's internal governance bodies.

That was what Deputy Public Prosecutor Christopher Ong told the court on Tuesday (Sept 20) morning. He was responding to the arguments against conviction put forth by the six CHC leaders at the centre of a multi-million dollar financial scandal.

In October last year, the six CHC leaders were convicted of misappropriating millions in church funds to fuel the pop music career of CHC senior pastor Kong Hee's wife, Ms Ho Yeow Sun, in a church mission known as the Crossover Project.

The court found that they had invested $24 million from CHC's building fund in bogus bonds from music production company Xtron and glass-maker Firna, but this money was, in fact, used to fund the Crossover Project.

Later, another $26 million was used to cover up the initial misdeed.

The six, including Kong, are appealing against their convictions and sentences, while the prosecution is also appealing - for longer sentences.

DPP Ong said the CHC leaders knew the bond instruments were not investments but were in fact "excuses to expend building fund money on Sun Ho's music career".

Addressing the arguments by the CHC leaders that there was a need for secrecy in carrying out the Crossover Project in order to avoid uncomfortable public scrutiny, DPP Ong said it was "strange" that the only thing that needed to be "secret" was the fact that Ms Ho was funded by the church's building fund - which was "buried so deep that even the auditors don't know about it".

He told the court that it was public knowledge that Ms Ho was the "famous pastor Kong Hee's wife" and that Kong would come out to preach at the end of her concerts.

"Where is the secrecy in this?" asked DPP Ong.

The prosecution had initially asked for much harsher sentences - jail terms of 11 to 12 years jail for Kong, CHC deputy senior pastor Tan Ye Peng, former CHC fund manager Chew Eng Han and former CHC finance manager Serina Wee; eight to nine years for former CHC finance committee member John Lam; and five to six years for former CHC finance manager Sharon Tan.

Instead, the court handed out much lower terms in part because it found that the six had not been motivated by personal gain, and the church had not suffered any wrongful loss.

The six were given jail terms of between 21 months and eight years, with Kong facing the longest term.

The appeal is being heard by Judge of Appeal Chao Hick Tin, and Justices Woo Bih Li and Chan Seng Onn.

Arguments for the appeal will continue on Wednesday.

City Harvest leaders deceived members, auditors, lawyers: DPP

They subverted church's internal governance bodies, used positions of trust to misspend funds, court hears

The six City Harvest Church (CHC) leaders deceived church members, auditors and lawyers, and subverted the church's internal governance bodies, the High Court heard yesterday.

They used their positions of trust to misspend millions of dollars in charity funds - the largest amount in such a case in Singapore's legal history - on a pop singer's music career, according to Deputy Public Prosecutor Christopher Ong.

He was responding to the arguments against conviction put forth by the six CHC leaders at the centre of the financial scandal.

In October last year, the six were convicted of misappropriating millions in church funds to fuel the pop music career of CHC senior pastor Kong Hee's wife, Ms Ho Yeow Sun, in a church mission known as the Crossover Project.

The court found that they had invested $24 million from CHC's building fund in bogus bonds from music production firm Xtron and glass-maker Firna, and the money was used to fund the Crossover Project. Later, another $26 million was used to cover up the initial misdeed.

The six, including Kong, are appealing against their convictions and sentences - ranging from 21 months' to eight years' jail - while the prosecution is appealing for longer sentences.

DPP Ong said the CHC leaders knew the bonds were "excuses to expend building fund money on (Ms Ho's) music career" and not investments.

Addressing the arguments by the CHC leaders that there was a need for secrecy in carrying out the Crossover Project in order to avoid uncomfortable public scrutiny, DPP Ong said it was strange since the only thing needing to be "secret" was the fact that Ms Ho was funded by the church's building fund - which was "buried so deep that even the auditors don't know about it".

He said it was public knowledge that Ms Ho was "famous pastor Kong Hee's wife", and Kong would come out to preach at the end of her concerts.

"Where is the secrecy in this?" asked DPP Ong, adding that Kong and his conspirators also controlled the bond proceeds, choosing to spend them on the Crossover Project and deciding how and when they would be repaid to the church.

Justice Chan Seng Onn asked: "If I put out the money and eventually pay back to it myself, just sweeping around, playing around it myself, having full control of it, how can you call it an investment?"

DPP Ong replied: "Yes, your Honour, that is exactly our point."

Another issue discussed in court yesterday was whether the offences committed by the six CHC leaders fell under the ambit of Section 409 of the Penal Code that they were charged under.

This is the most aggravated form of criminal breach of trust, and sets out the offence as one committed by a person "in the way of his business as a banker, a merchant, a factor, a broker, an attorney or an agent banker, merchant or agent".

In this context, Justice Chan asked if "the church, as a society, is in the business of courting donations", with agents of the church then being seen as agents carrying out such business. DPP Ong disagreed. But he said Section 409 concerns individuals who "customarily and regularly are entrusted with funds which they are then supposed to take responsibility for".

Judge of Appeal Chao Hick Tin said that if the elements of Section 409 are not satisfied, the charges could be reduced. Arguments for the appeal will continue today.

Judge See Kee Oon’s assessment over City Harvest Church case

All of the CHC six were found guilty of all charges in court on 21st Oct 2015 .



Judge See Kee Oon has published material explaining his judgments and findings.



IN THE STATE COURTS OF THE REPUBLIC OF SINGAPORE

District Arrest Case 023145 of 2012 and others

Between

Public Prosecutor

And

(1) Lam Leng Hung
(2) Kong Hee
(3) Tan Shao Yuen Sharon
(4) Chew Eng Han
(5) Tan Ye Peng
(6) Serina Wee Gek Yin

ORAL JUDGMENT

PUBLIC PROSECUTOR
V
LAM LENG HUNG & 5 ORS

State Courts — District Arrest Case 023145 of 2012 and others
Presiding Judge See Kee Oon

21 Oct 2015 Judgment reserved.

Presiding Judge See Kee Oon:

Overview

1 This was a 140-day trial involving 43 charges against the 6 accused persons. They were tried primarily on charges of conspiring to commit criminal breach of trust (“CBT”) by dishonestly misappropriating funds belonging to City Harvest Church (“CHC”) that had been entrusted to one or more of them. There are two broad groups of charges involving CBT. The first group comprises the first to third charges and pertains to what have been referred to in the course of the trial as the “sham bond investments”. The second group comprises the fourth to sixth charges, pertaining to what has been termed “round-tripping”. A third group of charges, the seventh to tenth, concerns falsification of accounts in CHC’s books relating to the “round-tripping” transactions.

2 I do not propose to set out the evidence as it is lengthy and voluminous. It suffices to note that the main background facts are largely undisputed or uncontroversial. I will set out my findings in relation to the elements of the offence of CBT first, leaving aside the issue of the mens rea of dishonesty. I will then focus primarily on the extent of the accused persons’ knowledge and involvement in the plans to use funds belonging to CHC for the Crossover Project (“the Crossover”) and on whether their conduct in the circumstances shows that they had acted with dishonest intent.

Criminal breach of trust – elements

3 In relation to the elements of the offence of criminal breach of trust by an agent, leaving aside the mens rea element, I shall state my conclusions briefly. First, I am satisfied that Kong Hee, Tan Ye Peng (“Ye Peng”) and John Lam Leng Hung (“John Lam”) were, as members of CHC’s management board, each entrusted with dominion over CHC’s funds, whether in the Building Fund (“BF”) or the General Fund. Second, I am bound to hold that they were entrusted with such dominion in the way of their business as agents because, being board members, they were so entrusted in their capacities as agents of CHC. Third, I am satisfied that the various plans to use CHC’s funds amounted to putting these funds to unauthorised or wrong use.

“Wrong use” of CHC’s funds

4 The BF was a restricted fund that could be used only for building-related expenses or investments for financial return. I find that the Xtron and Firna bonds were not genuine investments but were a wrong use of the BF. I find also that Tranches 10 and 11 of the Special Opportunities Fund (“SOF”) were not genuine investments but were transactions designed to create the appearance that the Firna bonds had been redeemed. I find, finally, that the payment under the Advance Rental Licence Agreement (“ARLA”) was not abuilding-related expense but was a transaction designed to perpetuate the appearance that the Firna bonds had been redeemed. They were therefore all wrong uses of CHC’s funds.

5 I turn next to the accused persons’ involvement and knowledge in the various plans to use CHC’s funds.

Funding the Crossover – being discreet

6 The accused persons understood that Kong Hee’s preference to be discreet about the funding for the Crossover was for the sake of ensuring the success of the Crossover, but being discreet was also synonymous with non-disclosure and mis-statements. Kong Hee had explained that it was his preference to avoid disclosure of CHC’s involvement in Xtron to avoid any misconception that Sun Ho’s secular music career was “not real” and that CHC was (still) using its money to promote her career. But in relation to both aspects, the evidence shows that it was true that her perceived success was inflated from rather more modest levels and Xtron and the Crossover team had to rely heavily on sponsorship from CHC members or supporters to help prop up her album sales and promote her career. When these sources of financial support which did not directly flow from CHC were insufficient, they had to come up with other means.

Xtron bonds

7 Xtron was CHC’s special purpose vehicle for the Crossover, and for this purpose Xtron was clearly under CHC’s control and not independent. The plan formulated in 2007 was that CHC’s funds, specifically funds from the BF, would be channelled through Xtron to be used for the Crossover, and the use of the funds was controlled entirely by Kong Hee and his team. In truth, this was analogous to an elaborate extension of a pattern of financial assistance via “sponsorship”, lending or prepayment to Xtron that had already either been taking place or been contemplated prior to 2007. These were seen as short-term measures to put Xtron in funds and support the Crossover. The mindset was thus that the Xtron bond issues were only yet another “temporary plan” albeit one which involved borrowing from CHC’s BF, and hoping that the funds would somehow find their way back to CHC at some unspecified future point.

8 Kong Hee, Ye Peng, Chew Eng Han (“Eng Han”) and Serina Wee (“Serina”) each clearly played a substantial role in conceiving and executing this plan to channel CHC’s BF through Xtron for the Crossover. John Lam’s role was evidently less substantial, but I am satisfied that he had his own part to play as a board member and investment committee member. All of them knew that the BF was a restricted fund to be used only for specific purposes. They claim that they believed the Xtron bonds were genuine investments. They believed the Xtron bonds would bring CHC financial return. But on my evaluation of the evidence I consider that the prosecution has proved beyond a reasonable doubt that they did not hold that belief.

9 I find that the accused persons were planning on the basis of Sun Ho’s planned US Crossover album being realistically capable of generating sales of

only 200,000 units, and although their projections showed that the bonds could not be redeemed by the maturity date, they were unconcerned since Eng Han assured them that the maturity date for the bonds could always be extended or fresh bonds could be issued. I am unconvinced that they could have had a genuine belief in Sun Ho’s prospects of success for the US Crossover given their consciousness that much of her earlier success was contrived and contributed to by CHC itself. Serina readily conceded that Sun Ho’s Asian Crossover albums all made losses and Xtron had thus incurred substantial accumulated net losses. Kong Hee, Ye Peng, Eng Han and John Lam also knew that CHC was involved in propping up her Mandarin album sales. I am unable to see how there can be any genuine or honest grounds for their claims that they expected far higher sales for her planned US album well in excess of the projection of 200,000 units. This was no more than an optimistic hope. It was definitely not a realistic expectation. All this strongly militates against their claims that the Xtron bonds were motivated by the realistic prospect of financial return and were genuine investments.

10 Further, the accused persons were all involved in making plans to put Xtron in funds to redeem the bonds. They knew that these plans would involve CHC paying money to Xtron under the guise of legitimate transactions, when in fact the real concern was Xtron’s cashflow difficulties and the purported transactions were mere excuses for CHC to channel money to Xtron. Thus they knew that there was a strong possibility that the apparent financial return under the Xtron bonds would come from CHC itself. This knowledge further undermines their claim that they believed the Xtron bonds were a genuine investment.

11 In addition, the accused persons hid or obscured material information from others. Eng Han and John Lam kept the truth about the Xtron bonds from Charlie Lay. All of them at various times gave the auditors the impression that CHC and Xtron were independent of each other, when they knew that Kong Hee in fact made all decisions on Xtron’s behalf in relation to the Crossover without reference to the Xtron directors, who were mere figureheads. The auditors were not told that Xtron was in fact controlled by Kong Hee and Ye Peng and that they together with their co-accused would exercise control over the use of the bond proceeds. There is no doubt that they knew that they had something to hide.

12 In all the circumstances, I am satisfied that the accused persons knew that the Xtron bonds were conceived first and foremost to support the Crossover and not for financial return. The prospect of any financial return was a secondary consideration at best and even then I do not accept that they genuinely believed that the sale of Sun Ho’s music albums would generate sufficient profit for CHC to enjoy financial return. They knew that any financial return to CHC might be illusory in the sense that it was CHC’s own money that might need to be channelled to Xtron to redeem the bonds. Given their knowledge, I cannot accept their claims that they believed the Xtron bonds were a genuine investment. Accordingly, they caused CHC to subscribe to $13 million in Xtron bonds knowing that they were not legally entitled to do so. Thus they acted dishonestly, and I find that the first and second charges have been made out against John Lam, Kong Hee, Eng Han, Ye Peng and Serina.

Firna bonds

13 In respect of the Firna bonds, the accused persons all knew that the primary purpose of the bonds was also to channel money from CHC’s BF to the Crossover. Kong Hee, Ye Peng, Eng Han and Serina knew that they, and not Wahju, were the ones controlling the Firna bond proceeds and deciding how the proceeds should be applied towards the Crossover. Yet they took the inaccurate position that Wahju was somehow “independently” supporting the Crossover using his “personal monies”, and this was what they told the auditors and lawyers. They knew that the financial return under the Firna bonds would not come from the profits of Firna’s glass factory business but depended entirely on the success of the Crossover. If the revenue from Sun Ho’s albums was not adequate, they would find alternative sources of funds for Firna, and that might include channelling CHC’s own money into Firna through various means. Given this knowledge, I do not think Kong Hee, Eng Han, Ye Peng and Serina could have believed that the Firna bonds would generate financial return for CHC, and so they could not have believed that the bonds were a genuine investment.

14 John Lam was further removed from the Firna bonds than the other accused persons. But he signed the “secret letter” that secured the signature of Wahju’s father-in-law on the Firna BSA. I am satisfied that he knew that the prospect of financial return for CHC did not depend on the success of Firna’s glass factory business. He knew that it was a very real possibility that the Crossover would not be profitable. Thus I find that he too did not believe that the Firna bonds would generate financial return for CHC, meaning that he did not think the bonds were a genuine investment.

15 Therefore, in causing CHC to subscribe to $11 million in Firna bonds, the accused persons knew that they were not legally entitled to do so. They thus acted dishonestly. As such, I find that the third charge has been made out against John Lam, Kong Hee, Eng Han, Ye Peng and Serina.

16 At the centre of the first to third charges is how the BF came to be applied for the Crossover when it was a restricted fund for specific purposes – either for building or investment. In my judgment, the Crossover was not one of these purposes. It was not an investment since by their own characterisation, it was meant to serve a “missions” purpose all along. I am not convinced that there was any “mixed motive”, “dual purpose” or “hybrid” intent behind the use of the BF. These are creative labels tacked on in an attempt to strain and stretch the plain meaning of the word “investment”. They were plainly fabricated in an attempt to justify their past conduct and misuse of the BF. I do not see how they can be said to have acted in good faith in relation to the charges they face.

17 The accused persons have of course pointed to the fact that the money did come back to CHC with interest. However, this is patently due to their efforts to put Xtron, Firna and AMAC in funds to facilitate these repayments through the round-tripping transactions. It does not confirm that there was any actual intention at the outset to invest for the purpose of maximising returns. What is more telling is that it was consistently represented to CHC’s Executive Members that investing the BF in this fashion was meant to maximise returns. There was no mention at all that the investment was in the Crossover, let alone that it was for “spiritual returns” or for both spiritual and financial return from the Crossover. The failure to mention those facts buttresses my conclusion that the accused persons knew that they were not legally entitled to cause CHC to enter into the Xtron and Firna bonds.

Round-tripping and falsification of accounts

18 As revealed by the evidence adduced at trial, there was never any financial “return” derived from any of Xtron’s and Firna’s Crossover-related activities. Instead, when the time came to deal with the auditors’ queries and to address Sim Guan Seng’s concerns, they resorted to removing more funds from the BF and also the General Fund under the pretext of making further “investments” into Tranches 10 and 11 of the SOF and purportedly for a building purchase by Xtron through the ARLA. The round-tripping transactions were crafted to create the appearance that these were genuine transactions involving the redemption of bonds when they were not. They were not genuine transactions because the accused persons controlled these transactions every step of the way, and the substance of it was that CHC was channelling money through various conduits in order to pay itself.

19 Given that Ye Peng, Eng Han, Serina and Sharon Tan (“Sharon”) were fully aware of the whole series of transactions, they could not have believed that Tranches 10 and 11 of the SOF were genuine investments, or that the payment under ARLA was a building-related expense. They say that they viewed all this as “restructuring”, but that to my mind is fundamentally inconsistent with a belief that the transactions were genuine investments or building-related expenses, and this inability to provide a coherent explanation for their conduct strongly suggests that they knew they were not legally entitled to cause CHC to enter into these transactions. They may have apprised the CHC board of an earlier version of the transactions, but they kept that knowledge from the lawyers and the auditors. Taking into account all the circumstances, I am satisfied beyond reasonable doubt that the fourth to sixth charges have been made out against them.

20 I am also satisfied that there was falsification of CHC’s accounts following from the attempts to disguise the SOF and ARLA transactions as genuine transactions. In relation to the ninth charge, the accounting entry recording a redemption of Xtron bonds in the form of a set-off against advance rental was false, because it was not a case of CHC and Xtron making independent decisions to pay advance rental on one hand and redeem bonds on the other. I find that the accused persons knew that false accounting entries would have to be made pursuant to their plan to create the appearance of redemption of bonds, and hence I find that they each had intent to defraud. I am therefore satisfied that the seventh to tenth charges have been made out against Ye Peng, Eng Han, Serina and Sharon.

Objective evidence and inferences

21 I note that there was an extensive record which comprised an elaborate patchwork of emails, Blackberry messages, phone SMSs, hard copy documents and numerous other documented exchanges in some form or other. The fact that there was a mass of available evidence which when woven together amounted to a paper trail is not necessarily indicative of innocence. In my view insofar as much of it was incriminating, it is more suggestive of a mindset of presumptuousness or boldness, demonstrating that the accused persons were overconfident in their belief that they could replace the funds in time before suspicions were aroused.

22 The case against the accused persons depended heavily on inferences to be drawn from the objective evidence. Much of these inferences can be readily drawn as the tenor and language in the communications adduced at trial strongly point to their dishonest intent. In short, the documentary evidence goes a long way in demonstrating their subjectively guilty knowledge. I am not convinced that they have raised any reasonable doubt in this regard.

23 I find that the accused persons were variously inextricably entangled in two conspiracies to misuse CHC’s funds. One conspiracy consisted of misusing BF monies for the Crossover, and the other involved misusing CHC’s funds, a substantial portion of which comprised BF monies, to create the appearance of bond redemptions and to defraud the auditors via falsified accounts through the various roles they played. Each of them participated and functioned in their own way as crucial cogs in the machinery. Although there are distinctions in their respective levels of knowledge and participation, I am unable to discern any rational basis to exclude any of them from being implicated and characterised as conspirators.

Beliefs, motives and mindsets

24 Much of the defence centred on the beliefs and motivations of the accused persons. If it can be shown that they genuinely, honestly and reasonably held the view that what they were doing was legitimate in the sense that they were legally entitled to do it, and they went ahead to act in good faith as a result, I think there may well be room for doubt as to whether they had acted dishonestly. The weight of the evidence however points to a finding that they knew they were acting dishonestly and I am unable to conclude otherwise.

25 Where professional advice was sought, this was really mainly an attempt to seek out self-supporting confirmatory advice based on selectively-
disclosed information. They omitted mention of the crucial fact that CHC remained in control of Xtron and would correspondingly control the use of the funds. They provided leading questions for belief confirmation and support from only those advisors whom they trusted to support the Crossover vision and were quick to reject or filter out any disconfirming information.

26 The accused persons chose to support the Crossover vision and to act and participate in acts in support of it. The Crossover became a comprehensive logic for justifying their beliefs and actions, and for doing whatever was expedient for its advancement. The pervasive mindset seemed to be one of short-term expediency; the use of means involving dubious methods was worth the risk to them if there was some hope of longer-term gain.

Conclusion

27 In their defence, all the accused persons testified largely to the same effect: they love CHC and would not have wished to do harm to CHC. They never intended to cause loss to CHC. They consulted and cleared their proposals with their lawyers, the auditors and the CHC Board. They were motivated by CHC’s cultural mandate and they believed in the Crossover vision. They pointed to pure motives and a justifiable purpose in the use of CHC’s funds. Ultimately the funds which were removed were for Church purposes and were returned to CHC.

28 The crux of their defence was that there was no conspiracy and no dishonesty. All six would never intend to cause harm or loss to CHC and the ultimate objectives were in furtherance of the Great Commission. It may be arguable that all of them thought they were not acting dishonestly to cause wrongful loss since no permanent loss was intended, but this was premised on their unquestioning trust and belief in Kong Hee and their confidence that the Crossover would succeed. Thus they convinced themselves that it was both morally and legally permissible to temporarily use the money from CHC’s funds when they knew it was not.

29 The accused persons chose to engage in covert operations and conspiratorial cover-ups. They contrived to create cover stories and clever round-trips concealing their unlawful conduct. They chose to participate in the conspiracy to misuse CHC’s funds, which included siphoning off large amounts from the BF for Sun Ho’s music career and eventually for the round-tripping transactions to enable the bond redemptions. They chose to defraud the auditors with falsified accounts suggesting a series of genuine transactions for the redemption of bonds and advance rental. The evidence points overwhelmingly to a finding that they had all acted dishonestly and in breach of the trust reposed in them and they played their respective roles in a conspiracy with intent to cause wrongful loss to CHC and to defraud the auditors.

30 I am therefore satisfied beyond a reasonable doubt that the six accused persons are guilty of all the charges that have been brought against them. I note that all of them believed that they had acted in what they considered to be the best interests of CHC. There is no evidence of any wrongful gain – that was never the prosecution’s case in any event as the charges were premised on wrongful loss caused to CHC through the misappropriation of CHC’s funds.

31 I consider that John Lam, Eng Han, Serina and Sharon were all acting in accordance with the instructions of people they considered to be their spiritual leaders deserving of their trust and deference, and Ye Peng, although a leader in his own right, similarly trusted completely the leadership of Kong Hee. But no matter how pure the motive or how ingrained the trust in one’s leaders, regardless of the context in which that trust operates, these do not exonerate an accused person from criminal liability if all the elements of an offence are made out. In my judgment all the elements of the relevant offences have indeed been made out. Accordingly, the accused persons stand convicted as follows:

(a) John Lam is convicted on the first to third charges;

(b) Kong Hee is convicted on the first to third charges;

(c) Sharon is convicted on the fourth to tenth charges;

(d) Eng Han is convicted on the first to tenth charges;

(e) Ye Peng is convicted on the first to tenth charges; and

(f) Serina is convicted on the first to tenth charges.

Source: https://drive.google.com/file/d/0B3A-00dAvijTNXAyaGEyLUtZdW8/view?pli=1. (Accessed 23/10/2015.)

City Harvest Church leaders tried to "bamboozle" auditor: Prosecution

By Alice Chia : 25 Sep 2014 Channel NewsAsia

Messages between church leaders Sharon Tan and Chew Eng Han were cited by prosecutors as proof that they tried to not let the church's auditor find out that church funds were used to redeem Firna bonds.

• APTION 

SINGAPORE: At the City Harvest Church trial on Thursday (Sep 25), the prosecution said finance manager Sharon Tan was not the "innocent follower" that she tried to paint herself as, when it came to plans to use church funds to redeem sham bonds.

Tan was taking the stand for the tenth day. She is one of six church leaders who are accused of using millions of dollars from the church's building fund to buy sham bonds in two companies, Firna and Xtron.

Lead prosecutor for the case, Mavis Chionh, showed the court messages between Tan and co-accused Chew Eng Han, in which Tan proposed using a third party to redeem the Firna bonds. She had proposed using Pacific Radiance, a company linked to member John Lam who is one of those on trial.

In one message, Tan said that even if church auditor Mr Sim Guan Seng suspected that church monies were used to redeem the bonds, "he can't fault or pinpoint". The prosecution accused Tan and Chew of trying to "bamboozle" Mr Sim and not let him find out that church funds were used to redeem the Firna bonds.

Tan disagreed and said that she was worried about "disclosure" as she had the understanding that the drawdown from the Firna bonds would be used to support the Crossover Project, which involved church co-founder Sun Ho recording and launching secular music albums.

The prosecution also showed a chart drawn by Chew during a meeting on Sep 29, 2008, with co-accused Serina Wee and Tan. The chart illustrated the flow of funds and transactions for the redemption of Xtron and Firna bonds. After the meeting, Tan updated deputy senior pastor and co-accused Tan Ye Peng about the plans.

It is the prosecution's case that these were not genuine investments and that the four accused were planning to use church funds to redeem the Firna bonds by roundtripping the funds in a series of transactions.

For example, in one chain of transactions, the church would invest S$11.4 million in a Special Opportunities Fund by investment company AMAC Capital Partners (AMAC), which has Chew as its sole director.

AMAC would then loan the amount to Ultimate Assets, a company owned by Indonesian businessman and church member Wahju Hanafi. Ultimate Assets would in turn loan the amount to Firna, which would use the money to redeem the bonds.

- CNA/xy

CHC - E-mail with :) under the spotlight (Emoticon would not be sent if there was a conspiracy, says accused)

BY FENG ZENGKUN  September 19, 2014



A smiley face emoticon which one accused e-mailed another came under the spotlight in the City Harvest Church trial yesterday.

Former church fund manager Chew Eng Han said the icon, which was sent to him by church finance manager Sharon Tan, showed that he and his alleged co-conspirators did not believe they were doing anything illegal.

"Sharon, you and I have been charged for conspiring to defraud the auditors," Chew told Tan, who turns 39 today.

"If we were really conspiring, would you put a smiley face (in the e-mail), unless you are a seasoned conspirator?"

Tan, who had inserted the icon at the end of a series of e-mail messages discussing what to tell church auditors about various church-financed investments, replied: "No."

Tan, Chew, church founder Kong Hee and three others face charges for their part in allegedly misusing some $50 million of church funds for the secular music career of Kong's wife, Ms Ho Yeow Sun, and then covering it up.

Chew, who is representing himself, yesterday used his chance to cross-examine Tan to refute the prosecution's allegation that his fund management firm AMAC Capital Partners was nothing more than a shell set up to funnel church funds illegally into Ms Ho's career.

AMAC had helped the church buy $13 million worth of bonds issued by Xtron, the company that managed Ms Ho's singing career. The bonds, allege the prosecution, were "sham".

In one e-mail, Chew instructed Tan to keep details of various AMAC investments financed by the church from auditors, since there was no legal obligation to disclose the information.

He told the court yesterday that he did so because "some of the loans that were made to shareholders of listed companies were sensitive information".

"We were not trying to make the job difficult for the auditor," he said.

He also pointed out how AMAC, through investments unrelated to Xtron, had also made "serious money" for the church, with one deal reaping $703,500.

Tan simply nodded or said yes to most of Chew's assertions, a stark contrast to her demeanour earlier in the day.

Having broken down on Wednesday as the day's hearing drew to a close, she was again in tears yesterday when describing her long relationship with the church, which she insisted precluded her from doing anything to harm the organisation.

She told the court how she had joined City Harvest when she was 15, then worked there for more than a decade and married a cell group leader. Now, her three children are members.

"This is my first and only church. Everything that is me right now I learnt from this church," she cried. "I never had the intention to cause any loss to the church. Never."

- See more at: http://www.straitstimes.com/the-big-story/chc-funds-case/story/e-mail-under-the-spotlight-20140919#sthash.OEkZAHTO.dpuf

City Harvest trial: Finance manager concedes her action may have deceived auditors

BY IAN POH  26 September 2014



SINGAPORE - City Harvest Church finance manager Sharon Tan broke down on the stand on Friday, even as she conceded that information she had inserted into church board meeting minutes may have deceived auditors.

Choking up under cross-examination by Deputy Public Prosecutor Mavis Chionh, the 39-year-old said: "Your honour, it might be seen like they are being deceived, but... it wasn't my intention."

Tan had inserted information into the document, dated Sept 12, 2009, that the board had approved "advance rental" payments to music production firm Xtron of $7 million per year for eight years - part of a plan to purge bonds held in the firm from the church's books.

The court heard that the information was false, as no such approval was received from the board on that day.

Tan is one of six people, including founding pastor Kong Hee, accused of misusing $50 million of church funds to boost the music career of Kong's wife, Ms Ho Yeow Sun, and covering up the misuse. The prosecution believes that all of the accused, except Tan, channelled money from the church's building fund into sham bond investments in Xtron, which is Ms Ho's management company, and glass manufacturer Firna. Four of them, including Tan, then allegedly devised transactions to clear the sham bonds from CHC's accounts to throw auditors off the scent.

Friday's hearing has centred on the church's book-keeping, with Tan taking the stand for the tenth day. This is the third time she has broken down on the stand.

- See more at: http://www.straitstimes.com/the-big-story/chc-funds-case/story/city-harvest-trial-finance-manager-concedes-her-action-may-have-d#sthash.xgmnDDOF.dpuf

City Harvest Saga continues. Analysis into the wealth of City Harvest Church (part 2)

by Think free and fair

It has been two years since I wrote an analysis on the wealth of City Harvest Church (CHC). This week, news broke out that the Pastor has been arrested over alleged misuse of church funds. It is really amazing that the most fervent defenders of the Pastor are the very victims whom he was alleged to have abused - the stakeholders of City Harvest Church. A business with such loyal following among its stakeholders can easily survive adversities. From this single characteristics springs forth strengths that I shall outline in the subsequent paragraphs. Again, please read this article as a business analysis and not an insinuation that CHC is acquiring wealth through questionable means. I apologize upfront if some readers are still offended.

My observation of events that followed after the arrest has reaffirmed my belief on the wonderful business characteristics of CHC. In addition to the 14 points raised in my first article, I have more to add here;

15. Extremely forgiving customers who will keep coming back for more no matter what

CHC members have taken plenty of battering from the public this week. The moment a person reveals he is from City Harvest Church, people will look upon him like a brain-washed idiot who is unable to see the obvious "truth" (verdict is not out yet, so nobody knows the truth. Wait for Pastor to tell his side of the story first).  The mere association with CHC brings embarrassment.

When a business has such a firm grip on its customers that they refuse to go away despite suffering lots of abuse, this business is on solid ground.

Any business(even reputable ones) that has been in existence long enough will eventually make a big screw-up or even get indicted in scandalous frauds. However, if that business has loyal and forgiving customers like CHC's, it can be assured that its customers will probably keep coming back. It is very hard to erode its customer base as they can take a lot of beating before saying goodbye. Such a business is certainly built-to-last.

16. Very easy to raise money from loyal and trusting shareholders

CHC has a special characteristic in that the customers are also the shareholders because CHC raises funds from its church members.

In my first article, I concluded that if CHC were listed on the Singapore Stock Exchange, I will surely buy it. With the benefit of hindsight, some netizens sneered at this conclusion. They said that I would have lost lots of money this week if CHC were listed as a stock. If CHC were an average business, I would certainly have lost my pants. Most stocks would have crashed on allegations that the Founder has defrauded its shareholders. Shareholders will sell first and ask questions later. Not CHC. Its loyal and trusting shareholders will probably buy on the dips/crashes and no need to ask questions at all. Their faith alone in the company is enough.

With such loyal shareholders, it is very easy for a company to raise new funds for future expansion. It can set up building funds to buy new buildings to house its ever-rising membership. In fact, this was exactly what CHC did 2 years ago when it bought Suntec City.

17. Highly motivated and loyal employees who will work for little money with great passion

City Harvest Church has a unique stakeholder characteristic. The extremely loyal customers and shareholders as mentioned above are also the same group of people who are the employees. Therefore, it naturally follows that CHC has a very loyal team of employees.

HR departments like to say our greatest assets lie in our human resource. Nothing can be more true when this is applied to CHC. Some CHC members (or employees) work as volunteers for little or no money but carry on their work with great passion and sacrificial spirit. Internet stories abound on how much personal time some members devote to church activities. It is a compliment to CHC members on their self-sacrificial spirit in volunteering their free-time for church work (provided they do not neglect their earthly family duties).

These dedicated volunteers are not paid a salary but perform essential operations for the church. This results in tremendous cost savings for operating the company. The company does not need to pay for this voluntary workforce and yet enjoy amazingly high staff morale. I challenge readers to find me another company in the world with such an amazing workforce. Where can you find a passionate voluntary workforce who not only are not paid a salary but actually are encouraged to pay until tears stream down their cheeks in order to have the privilege to work for the company? Little or no salary, high staff morale, work with passion and dedicaion, even pay to work ... WOW!!

The heavy commitment and sacrifice put in by the employees serves yet another advantage to CHC. The more time and money and sacrifice a person puts into an endeavor, the harder it is to let go when the turn of events suggest that he may be wrong. Once he has invested too much, it becomes very hard to "cut loss". A person faced in such a situation may resort to self-denial as a form of psychological defense mechanism to protect himself from facing the pain of meeting reality head-on. It is this defense mechanism which plays an important role in strengthening employee loyalty to the company in crisis times.

CHC enjoys another advantage with the employee pool. In 2010, 47.3% of its members are below the age of 25 and the majority are young professionals aged 25 to 35. The young workforce injects awesome energy and dynamism into the business at little or no cost because they are mostly volunteers.

Having a young membership works towards enhancing corporate loyalty for a church business. When it comes to transmitting a set of beliefs, it is preferable to start with the young as it is easier to shape and mould young minds. Some friends have jokingly suggested starting an Internet church preaching prosperity gospel to get rich (let's ignore the morals of such an enterprise for the sake of discussion).It will not work. To have a firmer grip on the minds of its stakeholders, the church should ensure that members' lives revolve around the church. The more social interaction, the more time/effort put in, the lesser exposure to outside influences from other churches (or even disapproving parents), the tighter will be the bonds. Left alone in front of the computer, people are more discerning and analytical without social pressures from the crowd. Just a few simple searches on Youtube turns out videos highly critical of Prosperity Gospel.

http://www.youtube.com/watch?v=ymBzhmaou7U&feature=related

http://www.youtube.com/watch?v=82owdNdAy58&feature=related

Full-time CHC employees are loyal for a good reason. They are very well rewarded financially. Although CHC is registered as a charity, in the 2008 financial statement, CHC distributed $2.9m out to charity and spent 3.2 times more ($9.29m) on its own employees. This will motivate its volunteer workforce to work hard to get a chance to join its full-time staff.

To sum up, with the extremely loyal team of employees, shareholders and customers, CHC as a business is unbeatable.

18. Need not incur any expense to deliver on customer promises

This business characteristic distinguishes City Harvest from all other businesses I have encountered. If a customer entrusts huge sums of money to a bank which promises 30-fold, 60-fold, 100-fold returns and the bank does not return a single cent, the customer can sue for fraud. If a Prosperity Gospel church makes similar promises and fails to deliver, the customer will have to die first and find out the truth on Judgment day. In the mean time, the Church can cite the Bible story of Job and tell its followers to be patient. Better still, a sharp businessman can turn adversity into opportunity by telling its followers the reason they are not prosperous is that they have not given enough to the Church. Did you give until your heart breaks? Did you give until tears stream down your cheeks? If not, do not expect God to repay you with prosperity in Harvest proportions.

The CHC business is able to collect revenue on a service offering that does not require expenses to be incurred in its development. Even better, if delivery quality falters, tell the customer it is his fault because he did not pay enough. The customer has no way to verify on this claim. He probably will pay more eventually. What can be more wonderful for a business than that?

PS: Throughout history, religious organizations have a strong controlling power over their followers because they can make claims that cannot be proven (obey me and you shall go to Heaven), promises that need not be delivered (give me and you shall be prosperous) and threats that cannot be verified (defy me and you shall go to Hell). Under such uncertainty, even intelligent people lose their critical faculty to discern out of fear and greed. Christian crusaders were told they will go to heaven if they die in war. Same goes for the Muslim terrorists. More than a thousand years ago, the Roman Catholic Church claimed it could forgive sins on behalf of God so that rich donors can enter the Kingdom of God if they donate enough money to the Church. Behind every great fortune probably lies a great sin, this was great business.

Who knows for sure if they are right? There is no way to know until Judgment day. What we can be sure is that the interpretations of the holy book certainly suits right for those manipulative and self-serving religious leaders (who are exceptions rather than the rule). I believe religions are good with the best of intentions for their followers. Having a religion has its advantages but be mindful of manipulation by people who use religion as a tool to advance their own interest. I have no doubt these people truly believe in their own message, otherwise they could not have been so convincing. Intelligent and even kind people have a way of inventing reasons to convince themselves to justify means that benefit themselves at the expense of others. All of us are guilty of this sin to some extent, including myself.

We are blessed by God with a brain to think for ourselves. European civilization was held back by their religious leaders because they let the religious leaders do the thinking for them for the benefit of the few at the expense of the rest. Try to think freely but fairly for yourself. We can interpret the Bible our own way if we feel uncomfortable with that of our religious leaders. Why should I donate 10% of my income if what is left is insufficient for my parents and personal savings? Instead of 10% of my revenue (salary), would it be better if it were 10% of free cashflow (salary - necessary expenses for my earthly obligations and survival)? In all fairness, family obligations have to come before the church. It is not fair to our parents if we give more money to the Church than them.

I cannot agree with the Prosperity Gospel. It insults my concept of a loving God. If a God who claims to love me rewards me only after I have to give until my heart is broken, then He is lesser than my parents who has been giving to me starting from the moment I was born even before I knew how to give at all.

AN ANALYSIS INTO THE WEALTH OF CITY HARVEST CHURCH (part 1)

AN ANALYSIS INTO THE WEALTH OF CITY HARVEST CHURCH (Part 1)

by Think free and fair

Although I am aware that City Harvest is one of the richest churches in Singapore, I am still shocked that it is rich enough to pay $310 million dollars for a stake in Suntec City. Nevertheless, an entity which is able to amass such wealth is certainly worth studying. I was determined to understand the secrets to the church’s wealth.

I apologize upfront if the points raised give offense to loyal followers of City Harvest Church. Please regard this article as a business analysis of the factors that contribute to the wealth of City Harvest Church, not as an insinuation that the Church got rich through questionable means. The fact is that CHC is very rich and this makes for a fascinating academic exercise to examine its sources of wealth. Just treat it as a business case study. I have tried my best to stick to the facts. Please correct me if there are factual mistakes. However, if there are differences in opinions, please disagree with courtesy.

1. Clever packaging of Sunday services

The income of a church is dependent on the tithes collected (10% of income from church-members). Therefore, the earning power of a church is highly dependent on its ability to retain its existing church members and attract new ones. The larger the church membership, the greater its earnings.

I watched a sample of CHC weekend service on its website.  Compared to the boring Sunday classes I attended as a kid, CHC church service was most refreshing (Watch “The 10 Laws Of The Harvest”). The beginning part resembles a rock concert with good singing and enthusiastic audience. It is an entertaining way to enjoy your Sunday mornings. Going to church becomes a weekly event to look forward to rather than a chore to attend to.

With church services so well packaged for its customers, its customer retention rate and new customer acquisition figures should look good.

2. Extra revenue in the form of advertisements, sales of CDs

This church is unlike the other churches I know. It generates extra revenue through advertisements during its Sunday service (watch the videos). It sells audio CDs on its website. There is an online shopping cart for convenience to those who want to buy online.

3. Efficient collection of tithes

Church-members can pay their tithe online via credit card, eNets or even Giro!! Once members started donating using Giro, the earnings quality of the church improves. Donation collected via Giro tend to be more stable.

With a globalised economy, people travel round the world a lot and may miss Sunday services. In the past, the churches will lose income when these members fail to turn up to pay their tithe. Now, with online payment, they can continue collecting the tithe even when the church-member is working overseas for an extended period of time. With Giro, the church can continue collecting tithes for a few more months even when the member leaves the church as people have a habit of forgetting what they pay on Giro.

4. 30-fold, 60-fold, 100-fold returns on your church donations

This is where the genius of CHC lies and the secret to its superior earning power. In fact, I have yet to encounter any public-listed company on SGX, HKSE, NYSE, Nasdaq that demonstrates better potential.

The pastor preaches that God will give 30-fold, 60-fold, 100-fold returns on your tithe. But, you have to be generous in your donations first so that you will receive in harvest proportions. I guess that is the origin of the name City Harvest. Please watch the video ”The 10 Laws Of The Harvest” yourself in its entirety and interpret for yourself.

It is a message that cleverly uses an astute understanding of human nature to maximize profits. If I were a CHC member, I will be tempted to increase my tithe as much as possible. Not mincing my words, I am doing it out of pure greed. I do not think I will be alone. It is perfectly fine if members of CHC strongly disagree and thinks that I am not representative for most of them. After all, I can only speak for myself.

5. Quality of customers

With the 100-fold return message, the kind of church members attracted will be most conducive to profit-making. Money-minded people will be attracted to the church. These money-minded people tend to be ambitious and have a great desire to make lots of money. Millionaire minds have a higher chance to become rich. Hence, the quality of customers that CHC attracts are of the highest quality. The richer the church-member, the higher is the church’s tithe per member.

Customer quality will be enhanced through the passage of time due to survivor bias. Suppose out of this pool of Millionaire-Mind Christians, 50% become satisfactorily rich and the remaining 50% still unsatisfactorily middle-class. The 50% who got rich will donate even more because they think their source of wealth comes from their donations. It is most unlikely they will cut back on their tithes  because they will be afraid God will punish them by cutting back the returns. If they are not afraid, the church will be there to warn them not to do so. The remaining 50% who did not get rich will be disillusioned and probably leave the church. The loss is of little significance to the church. These people are not rich and their tithes will not amount to much.

Many Christians will be disgusted with the concept of using tithes to get rich. These people will probably leave the church after attending a few Sunday services. Again, the loss is of little significance to CHC. These people will not be highly profitable to the church even if they are rich because they are not going to tithe as much as the others who believe their tithes is the way to wealth.

To the credit of the Pastor, I think he has devised a wonderful process of filtering out non-profitable customers and sucking in the lucrative ones. There is only so much physical space that a church can have to service its church-members. To maximize profits, the church has to ensure that each unit of space is used for servicing lucrative customers.

6. Kill off competition

CHC has tremendous economic moat that kills off competition. In the video “The 10 Laws of The Harvest”, the Pastor cited Law #5 “Your Seed must be planted in Good Ground” which is an effective weapon in killing off his competition – the smaller churches. Many Christians feel that they ought to donate to the needy, smaller churches rather than rich mega-churches like CHC. The Pastor’s argument is that you do not get good returns like 100-fold in the small churches. You have to donate to mega-churches to maximize returns on your tithe because they have a track record (rich church members). In other words, the seed is not planted in good ground when you donate to the small churches. In his own words, ”I don’t always give to the neediest but to the ground that will give the greatest yield”. To illustrate his point, he used an analogy on weak banks and strong banks. You do not deposit your money in a weak bank because it desperately needs fresh funds to survive. You deposit your money in a strong bank which invests your money wisely and yields good returns.

The church has an iron-grip on its members who believe its message. As illustrated previously, its customer base is of the highest quality. This is its track record. Existing church-members will definitely not move to another smaller, needier church with poorer track record.

It has a very strong economic moat as it is very hard for its competitors to get its customers to switch over.

7. Providing a place where the rich can network

As the Pastor said, his church provides a good ground on which you can grow your riches. Rightly so, indeed. For property agents or insurance agents trying to hit their sales quota, City Harvest Church will be an ideal place to hunt for lucrative clients. This church concentrates several rich and money-minded people into a single location. The church offers a unique advantage to sell things. In a religious setting, people tend less to be on their guard and can be more easily persuaded to part with their money.

Businessmen also like to network in places where there are rich and powerful people who will come in handy in future. The Pastor has done a good job in gathering such people in his church and it makes good sense to make use of this advantage by joining the church.

The rich will attract more rich and the gathering moss snowballs to provide an ever-rising pool of donation to the church.

8. Preach what people like to hear. 

As a teenager, I was discouraged when I read Bible verses like Matthew 19:23-24 “I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” and Matthew 6:24 “No one can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other. You cannot serve God and wealth.”

It seems like if I become rich, I will be condemned to hell.

In the video ”Rich God? Poor God?”, the Pastor preaches that it is absolutely ok to be rich. Some prophets of God were very rich. (Abraham, David, Solomon)

There is nothing more musical to a money-minded person than to hear that God is on your side in your pursuit of money. The church-members who are more money-minded will love this and donate even more.

9. God pays for the returns, not the church.

The church collects the money, but God pays for the returns. The church does not need to pay a single cent for the 30-fold, 60-fold, 100-fold returns on the donations.

This is as good as you do the work for me, but not only do I not pay you, I shall also collect your salary. You toil and sweat, but I shall eat your bread. God must surely be a miracle worker and people will pay handsomely for his service. I cannot think of a more advantageous economic position to be in to be able to collect money rendered by a miracle worker.

10. Social pressure to conform in church settings and ease of influence

If everyone around you donates, it is hard not to. When everyone else makes sacrifice, the one who does not will look like an outcast. There is tremendous pressure to conform in such a herd setting.

11. Tremendous future earning power

Take a look at the congregation and you will notice the large number of young people. The income growth of young people is the fastest in the population. In the Pastor’s words, “You may be poor today, but you will not be poor all your life”. That is a long-term business plan in cultivating its customers.

Therefore, if CHC can be viewed as a growth stock, its prospects are very bright as its young customers will accelerate its earnings.

12. Stable earnings in times of depression

Besides being a growth stock, CHC can also be viewed as a defensive and safe stock. People pray hardest when they fall in hard times. Strangely, some people have an urge to tithe when they are in financial troubles.

In fact, in the video (The 10 Laws Of The Harvest), a couple came on stage. They talked about the dire straits they were in when they started out. Things change when God challenged them to GIVE themselves out of poverty (exact words from the speaker). Despite not having any money, they still pledged $250 to the building fund. In his own words again, “we often emptied our savings to give to the House of God knowing that this will be the answer to our financial problems”. Hence, not only will the church earnings be stable in times of depression, it may even grow.

13. Using Prosperity as a theme to appeal to customers

The Pastor preaches Prosperity Gospel which resolves around money. His business genius lies in choosing this theme for his church. Money has universal appeal. Everyone worships money regardless of race, culture, age, gender, sexual orientation. In one fell swoop, he has enlarged his market to cover the entire world. It is much easier to convert people to your belief by dangling money and promising great prosperity. After all, who does not love money?

By enlarging his potential market catchment with a greater chance of increasing membership, more donations will flow in.

14. Tax benefits as church is registered as a charity

This creates a huge, unfair advantage compared to all other businesses. This is what landed CHC in controversy. Enough has been said.

If one day the Pastor switches to become a businessman, I will definitely consider investing in the company that he heads and founds.

If City Harvest Church is listed on the Singapore Stock Exchange, I will certainly buy it. It will be one stock that I am confident of hitting a return of 30-fold, 60-fold, 100-fold returns.

PS: People tend not to question critically when it comes to religion. A charming smooth talker can easily sway minds with his interpretation of the Bible. In the final analysis, Faith is about simply believing. You cannot approach it scientifically because there is no way to test religious theories using the scientific method. We will only know the real truth when judgment day comes.

The danger is that there is no accountability on the part of the preacher on whether his teachings are true or not. Even he himself cannot be sure that his interpretations is 100% correct. Given human nature, the interpretations will tend to be self-serving. In fact, it is not only dangerous to the students but to the teacher as well. People will believe their own lies if it yields tempting benefits. That was how Wall Street drank its own Kool-Aid.

While I respect the Pastor for his business savvy, I cannot agree with his interpretations of the Bible. I pray for good health, peace and harmony for my family. Money-minded as I am, I am not comfortable with commercializing my relationship with God by asking for money. The Christian God that I know from my own reading of the Bible is not 财神爷. Of course, if God wants to drop money from heaven on me, I will be more than happy to embrace it.

City Harvest Saga continues. Analysis into the wealth of City Harvest Church (part 2)

CHC Trial - Kong decided on 'what money to spend, how much and where it would come from'

BY FENG ZENGKUN

SINGAPORE - City Harvest founder Kong Hee was the key decision-maker behind plans to sink church funds into his wife's Ho Yeow Sun's music career in the United States, the prosecution said in court on Wednesday.

They also sought to show that Kong closely supervised the other co-defendants. Deputy Public Prosecutor Christopher Ong produced a 2007 e-mail in which Kong had berated Tan Ye Peng for failing to ensure that his wife's China concerts were a success.

"The Beijing and Shanghai events cost us so much money... but at the end, who came? It was a joke!" said Kong in the e-mail. "Time wasted. Efforts wasted. Objectives not met. Money thrown away unnecessarily. I don't get it. How have we become good stewards of money? We tried to save a few thousands on hotels and (threw) hundreds and thousands on result-less concerts."

Kong added: "How I wish I can run the whole show the way I run our church (in) the last 18 years! But I can't... (My wife and I) are putting our lives and destiny at the hands of our disciples, our spiritual children. We hope you guys don't let us down."

While Kong has maintained that he was involved only in the budgeting for the US foray and left the fundraising to others, the prosecution alleged that Kong made decisions about "what money to spend, how much and where it would come from". The prosecution produced statements made by Kong's co-defendants to the Commercial Affairs Department (CAD) to bolster the point.

Kong and five others face various charges for their part in the alleged misuse of some $50 million of church funds to boost Ms Ho's music career, and then to cover up the deed. Several of them allegedly got the funds out of City Harvest coffers by investing the money in sham bonds issued by two companies, Xtron Productions and Firna, which were run by church members. Xtron was Ms Ho's artist manager at one time.

While Kong maintained that Xtron directors had to give approval for company transactions to finance her career, statements made by Kong's co-defendants Serina Wee, Chew Eng Han and Tan to the CAD contradicted this, said the prosecution.

According to the three defendants, Xtron directors were "updated" only after Tan, Wee and Kong had made the decisions. "Xtron directors were not actively involved," said Chew in his statement. "Technically they can challenge (the decisions), but they would not because they are doing the right thing by giving their full support," he said.

Kong disagreed. He said that Xtron directors being "updated" meant their approval for the transactions were sought, and in the end it was the directors who had final say over whether the deals were made.

- See more at: http://www.straitstimes.com/news/singapore/courts-crime/story/kong-decided-what-money-spend-how-much-and-where-it-would-come-201#sthash.Ltek2Eb1.dpuf