City Harvest Trial: Church's eight-year lease agreement with Xtron "didn't make sense"

City Harvest Church's $46.3 million eight-year rental lease agreement with music production firm Xtron puzzled the church's auditor, who on Tuesday said it "didn't make sense".

Under the contract, signed in October 2009, Xtron would have to procure a location to be leased to the church for worship. At the time, its lease of Singapore Expo was to expire on Sept 30, 2011.

Baker Tilly managing partner Sim Guan Seng, who presided over the church's accounts for financial years 2008 and 2009, and for Xtron's in 2008, said: "That's a big sum of money to pay to a company like Xtron."

He was taking the stand for the third day on Tuesday. "In a sense, you are paying for rental commitment when Xtron didn't have a lease to back it up. So we were wondering why was it done. Commercially it just didn't make sense."

The prosecution alluded that the sum of money was used to cover holes in Xtron's account books, after the church invested Building Fund monies into the church-linked firm that was allegedly misappropriated. This forms a part of the "round-tripping" charges faced by four of six current and former senior church leaders, who are on trial for varying counts of criminal breach of trust and falsifying accounts.

The prosecution's case was that the monies paid out to Xtron under the lease agreement were used by Xtron to purchase $11.5 million worth of glass manufacturer Firna's bonds. This sum was then allegedly used by Firna to repay a loan from Ultimate Assets - a company which Mr Sim had never heard of - that took over the management of pastor Kong Hee's wife Ho Yeow Sun's secular pop music career.

Ultimate Assets then allegedly used the money to repay a previous loan from AMAC, which "redeemed" the church's purported investment in the Special Opportunity Fund.

E-mails were also produced in court on Tuesday regarding a December 2009 meeting, where former church treasurer John Lam was advised to steer Mr Sim "away from the topic of what the SOF invested in. The $11.4 million outstanding was all in Ultimate Assets and we don't want it to surface".

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