City Harvest was never at any risk of losing the money it had loaned to a company, and the financial transactions were reasonable and legitimate. Defence lawyers said this on Monday as they tried to explain the allegedly suspicious loan given by the church to glassware manufacturer Firna.
The loan was given in 2008 after the financial crisis had started. It made sense for the church to invest in Firna's bonds - which are loans that guarantee a fixed return - rather than the turbulent financial market. It also made sense for Firna to borrow money from the church as its terms were better than those offered by the troubled banks, defence lawyers said.
Firna needed the money at the time because it had cash flow issues, but its financial statements showed that it had more than enough assets to repay the loans. It had also grown 40 per cent from 2006 to 2007 and 48.6 per cent from 2007 to 2008, which showed its good financial health, the defence added. This meant the church was never at any risk of losing its investment.
The prosecution believes these and other bonds were nothing more than sham investments meant to funnel church funds illegally to finance City Harvest co-founder Ho Yeow Sun's pop music career. Ms Ho's husband and co-founder Kong Hee and five of his deputies were charged last year with misusing about $50 million of church funds to finance Ms Ho's career and to cover this up.