Kong ‘knew Xtron would not be able to redeem bonds’

SINGAPORE — Even before they bought bonds from a church-linked entity, City Harvest Church leaders knew they would not be seeing returns when the bonds were due, argued prosecutors trying to nail six leaders for misuse of church funds yesterday.

From August 2007, the church bought bonds worth S$13 million issued by Xtron Productions — which managed the pop music career of Ms Ho Yeow Sun, wife of church founder and accused Kong Hee. However, a month before this, three of the accused persons — Serina Wee, Tan Ye Peng and Chew Eng Han — had discussed how projected sales of Ms Ho’s debut English album in the United States would generate only a fraction of the revenue needed for Xtron to redeem the bonds.

The 200,000 copies expected to be sold would yield only S$2.17 million, and Xtron finance manager Wee said it would take 10 years to redeem the bonds. Under the agreement, the bonds were due to be redeemed in August 2009.

The prosecution’s case is that the bonds were sham bonds through which the church funnelled money to fund Ms Ho’s career, also known as the Crossover Project, which used pop music to evangelise.

There was no reasonable prospect of returns when the Xtron bonds matured, and Kong knew it, argued Deputy Public Prosecutor Christopher Ong.

He contended that Kong must, in fact, have provided the sales projection, given his role in budgeting for the Crossover in the US.

However, under cross-examination yesterday, Kong maintained that he did not know about this “conservative” number and insisted the projected sales figure at the time was 1.5 million copies, which would enable Xtron to repay its loans with money to spare by the end of 2008. Only Wee could explain the projected sales figure she had used, he said.

Earlier in the day, Kong conceded that there were no records of the church board approving the Xtron bond transaction before it took place.

DPP Ong also tried to show that the church had helped Xtron’s bottom line even in the earlier Mandopop phase of Ms Ho’s career. An April 2007 email among Kong, Tan, pastors and staff discussed the number of CDs church members would need to buy for Xtron to break even for the album Embrace. Kong explained that they had been “working on the premise ... that nobody outside of our church will buy it” and added that members were not forced to buy her album.

The prosecution continues to cross-examine Kong today.