SINGAPORE — When Indonesian businessman Wahju Hanafi was facing a cashflow crunch six years ago, City Harvest Church leaders stepped in to help. He thought the money was coming from the church — only to find out later that the S$1,664,700 loaned was from Xtron Productions, the very company of which he was director.

Three of the accused in the trial of five church leaders and a former leader knew of the loans from Xtron: Church co-founder Kong Hee, former board Vice-President Tan Ye Peng and Xtron accountant Serina Wee Gek Yin.

Mr Hanafi yesterday admitted he was not in control of Xtron during a period of time in late 2007. The admission marked a milestone of sorts for prosecutors, who had strenuously tried to prove since the start of the trial that the audio-visual services company, which also managed the music career of Kong’s wife Ho Yeow Sun from 2003 to 2008, was controlled by the church.

Mr Hanafi , 53, said his business in Papua New Guinea made “very modest” profits in 2007. That year, he had taken millions of dollars in loans to take over PT The First National Glassware (Firna), an Indonesian company belonging to his father-in-law and brother-in-law. He had also promised his daughter US$500,000 (S$638,940) for her wedding, and needed to pay about US$2 million in bonuses to the 1,600 staff of Firna.

He told Kong about his cashflow woes in November 2007 and the latter said he would help, roping in Tan Ye Peng to meet and share “some ideas” with Mr Hanafi.

Mr Hanafi thought he would be borrowing from the church — to which he had donated over S$5 million since 1998 — until emails several days later from Wee, sorting out details of the funds transfer, showed that the funds would come from Xtron. Needing the money, he had “no choice” but to accept the funds and think about repayment in January or February 2008, Mr Hanafi told the court.

Examined by Deputy Public Prosecutor Tan Kiat Pheng, he admitted he did not have control of Xtron at the time. But he said there was “nothing wrong” with Xtron lending him money as he was ultimately liable for Xtron’s losses via a personal guarantee. Xtron was seeking funds for Ms Ho’s music career around the same time.

Mr Hanafi has since paid back the loans, including 7 per cent interest for a portion of the sum. The purchase of Firna paid off and the company became profitable by the end of 2007, after it secured bumper orders when another glassware company suffered damage from floods, he said.

Earlier yesterday, Mr Hanafi told the court that the Xtron Directors made the final decision on matters such as bond transactions involving the company, although its vision came from the church. This was also the stance of two witnesses — former Xtron Director Koh Siow Ngea and current Director Choong Kar Weng — before him.

The six accused face three to 10 charges each of criminal breach of trust and/or falsification of accounts for allegedly misappropriating S$24 million of church funds into sham bonds issued by Xtron and Firna, then “round-tripping” another S$26.6 million to cover up the first amount.

The defence is arguing that the bonds are genuine. The prosecution continues to examine Mr Hanafi, a long-time church attendee, today.