SINGAPORE - Music production firm Xtron was not an "independent commercial entity at arm's length" from City Harvest Church, but a puppet of the church board, prosecutors argued on Friday.
In questioning former board member John Lam, the first of six indicted church officials to testify, Chief Prosecutor Mavis Chionh painted a complicit web of business ties that the church had tried to keep under wraps - even from its own members.
Lam, 46, earlier testified that Xtron and various other entities were not linked to the church. He also said that there were fears of public disapproval of its Crossover Project, which was fronted by founder Kong Hee's wife, Ms Ho Yeow Sun.
The church had wanted to woo non-converts through Ms Ho's secular pop music. Kong, Lam and four others are accused of siphoning about $50 million from the church's building fund into sham bonds with two firms, including Xtron, to bankroll her career.
Xtron was Ms Ho's artiste manager from 2003 to 2008. The for-profit company had also leased out the Singapore Expo Hall 8 premises to the church for services.
Yesterday, Ms Chionh cited e-mails to show that Kong and the church board had a hand in deciding the directors of Xtron and other "independent" entities. People with ties to the church were chosen, she said, adding that in Xtron's case - the duo selected were former church board members Choong Kar Weng and Koh Siow Ngea.
Ms Chionh asked: "If these companies are all independent of the church, then why should Mr Kong, the pastor of the church, be in a position to say who he wants to be made responsible for the running of the companies?"
Lam replied that the companies had shared "common objectives" with the church, and the arrangement was in spirit of "cooperation and partnership" with the church.
Ms Chionh then cited documents showing that Xtron had not charged any mark-up to the church in renting out the Expo site.
It was co-accused Serina Wee, then finance manager of the church, who highlighted that it "does not make business sense", according to an e-mail read out in court. Wee had also said that Xtron must earn a profit for it to be "deemed an arm's length transaction".
The church's concern about bringing public attention to Xtron, a company with no apparent ties to the church, was also questioned. Lam said the church's ties with Xtron had to be kept discreet because Xtron was "making a profit... We were afraid that the public would disapprove".
The hearing yesterday was characterised by many long pregnant pauses, with Lam taking his time to ponder Ms Chionh's questions.
At one point, she said he was lying. At another, she asked: "Is there any particular reason why you are so afraid of answering this general question that I'm putting to you?" Lam said no.
This came after she got a series of non-answers despite asking Lam at least three times: "Do you agree that typically before an investor decides to put his money in a bond, he would carry out due diligence on the bond-issuer?"
Lam has in his testimony maintained that it was the church's external fund manager, Amac Capital Partners, run by another former board member and co-accused Chew Eng Han, that held "complete and unfettered discretion" in investing church monies. The board had no say at all, he claimed.
"The fund manager buys and sells in order to generate a profit for the investor, which is City Harvest Church," Lam said, explaining that if the church board entered into the bond deals itself, it will assess if they are financially sound.
Presiding Judge of the State Courts See Kee Oon then interrupted, asking for an answer to Ms Chionh's question to "try to move this along". Lam agreed that investors would typically conduct due diligence before buying bonds.
The trial continues on Aug 4.