City Harvest trial: Leaders followed advice to 'keep it simple': Defence
Published on Jan 23, 2014 2:15 PM
Defence counsels for the City Harvest Six, on trial for various counts of criminal breach of trust and falsifying accounts, on Thursday said their clients were simply acting on the instructions of audit firm Baker Tilly managing partner Sim Guan Seng.
These impressions - warranted or misguided - formed the crux of their argument as they tried to poke holes into Mr Sim's earlier testimony, even as they reinforced their position that Baker Tilly should have full awareness of church transactions.
The court heard that City Harvest's board had fully acted on Mr Sim's advice to "keep it simple" on matters regarding bond investments in two church-linked companies - music production firm Xtron and glass manufacturer Firna.
Mr N. Sreenivasan, representing deputy senior pastor Tan Ye Peng, said in his cross-examination of Mr Sim: "I'm not insisting that their understanding was right or wrong, but I'm told the understanding was you wanted the Xtron and Firna bonds off (the church's books) as an asset because they were creating too many problems."
Mr Sim agreed: "I think it's quite (a) fair (understanding) that the client would get the impression, because I was asking a lot of questions about valuations, security and risk of default," he said. "It would be a recurring question for the next 10 years since the Xtron bond has a 10-year maturity, and for Firna, as a commercial paper, my comment was why don't you buy Capitaland or something that is safer."
The defence counsels cited an e-mail sent by church finance manager Sharon Tan, writing about what Mr Sim had told her in a "conversation" after an on-the-record meeting with her, deputy senior pastor Tan Ye Peng, and board member John Lam.
She reported to pastor Tan and Lam that Mr Sim "still does not agree with the valuation (of the bonds) done but for this time he will just pass it first", and that he "hopes to see this Xtron issue being solved this financial year."
It is with this impression that the board might have proceeded to restructure the bonds such that they would no longer appear in the books, suggested defence counsel Michael Khoo, who represents Chew Eng Han, the director of the church's investment manager AMAC Capital Partners. Mr Sim said bond restructuring was "one of the options".
Mr Sreenivasan also reiterated that the church board should not be faulted for thinking that communications they had with Baker Tilly's then-managing partner Foong Daw Ching would eventually be passed on to the firm's auditors working on their accounts.
"At a law firm, as managing partner, when clients call me and tell me something, they can assume that they are talking to Straits Law LLP, because they think I'm the boss," said the lawyer.
Mr Sim replied: "That's not how an audit firm works."