Saturday 30 June 2012

City: Harvest is ours

* All 6 accused, including founder Kong Hee, found guilty of all charges

City Harvest disputes '$50m cheating charges'
Church stands by its 5 leaders who were charged
By Leonard Lim, The Straits Times, 29 Jun 2012

CITY Harvest Church last night disputed allegations that its leaders had conspired to cheat the church of $50 million.

In a strongly worded statement, it maintained that it did not lose any funds and no personal profit was gained by those involved in the transactions.

Executive pastor Aries Zulkarnain, 39, said: 'It has been suggested that the church has been cheated of $50 million.

'This is not accurate. The $24 million, which went to investment bonds, was returned to the church in full, with interest. We didn't lose the $24 million, nor did we lose 'another $26.6 million' as alleged.'

He added: 'The church did not lose any funds in the relevant transactions, and no personal profit was gained by the individuals concerned.'

When asked to respond to the church's statement, a spokesman for the Attorney-General's Chambers said last night: 'We wish to reiterate that as criminal charges are now before the court and will be subject to adjudication by the court; and that as such, neither the prosecution nor any other party should comment on issues which will be subject to adjudication and on which evidence will be led in court.'

Similarly, the police, responding to the same statement, said: 'Generally, in law, the offence of criminal breach of trust of monies is established once there is misappropriation of the monies with the requisite intent, regardless of whether there have or have not been subsequent attempts at restitution by the accused.'

On Wednesday, City Harvest's founding pastor Kong Hee, 47, and four others were charged with conspiring to cheat the church to finance the music career of Kong's wife, Ms Ho Yeow Sun.

Court documents allege that $26.6 million of church funds was used to cover up an initial $24 million, which had been taken from the church's building fund and put into sham bond investments.

These investments, in turn, were allegedly used to further the music career of Ms Ho, 42, popularly known as Sun Ho.

Kong and the others were charged with varying counts of criminal breach of trust as an agent. His deputy, Tan Ye Peng, 39, finance manager Sharon Tan Shao Yuen, 36, and investment manager Chew Eng Han, 52, were also accused of falsifying the church's accounts.

Church management board member John Lam Leng Hung, 44, was the fifth person charged and, like the rest, will return to court on July 25.

In the church's statement last night, Mr Zulkarnain also said that the church 'stands with' the members involved.

He said Kong remains the church's senior pastor, and that the Commissioner of Charities (COC) has confirmed that Kong and his deputy Tan can continue to preach at the church.

Speaking on behalf of the church's board, Mr Bobby Chaw, the pastor in charge of missions, said that City Harvest had, over the last two years, taken action to comply with the code of governance set out by the Ministry of Community Development, Youth and Sports (MCYS).

Half of the board were replaced with new members, for instance.

Mr Chaw added that RSM Chio Lim - an accounting and business advisory firm - had been engaged to do a full internal audit.

'We have been putting their recommendations into action, and will continue to do so. We appreciate the need to maintain good corporate governance, and we are continually working with MCYS to do so,' he said.

He expressed disappointment with some of the media coverage, particularly in relation to reports following Tuesday's statement on the COC inquiry into the church.

'In some instances, they seem to have pre-judged us. We will be dealing with this in due course,' he said.

Mr Chaw said he was also surprised that the COC had, on the same day, suspended eight church members - including the five charged and Ms Ho - without prior notice.

'We have been cooperating with COC for two years since the start of the case, so these sudden suspensions came as a surprise to us,' he said of the probe.

The statement added that the church's Crossover Project was 'not about one person's singing career', but 'a mission that is fundamental' to the congregation.

Started a decade ago, the Crossover Project's intention was to use Ms Ho's secular music to extend the church's reach.

Support for the church leaders and the project continued online among the congregation, even as other commentators posted scathing remarks.

Church's remarks raise questions
It could be seen as interfering with judicial process, say some lawyers

By Leonard Lim and Bryna Sim, The Straits Times, 30 Jun 2012

THE unusual move by City Harvest Church to issue a statement dismissing the allegations of misuse of funds before the case has gone to trial has fuelled questions of its intent.

Insiders said the church, now headed by executive pastor Aries Zulkarnain, 39, deemed the statement necessary to allay the concerns of its 30,000 members.

An executive member who has been with the church for more than a decade said City Harvest, in making that strongly worded statement, was seeking to lift the congregation's spirits and 'unite them'.

The church's founding pastor Kong Hee and four others, charged in court on Wednesday, could face lengthy jail terms - even for life - if found guilty.

Lawyers yesterday said that the statement by the church was risky - if not reckless - because it could be construed as interfering with the judicial process.

The statement, posted on the church's website and sent to the media on Thursday, said the church stood with those involved in the case, including Kong.

It added that church activities were unaffected and that Kong, 47, and his deputy Tan Ye Peng could continue to preach at the church.

The pair have been charged with criminal breach of trust as agents.

They, with three others, are alleged to have funnelled $24 million into sham bond investments to further the music career of Kong's pop singer wife Ho Yeow Sun, and alleged to have misappropriated a further $26.6 million in church funds to cover up the first amount.

The five have not entered pleas and are due in court on July 25.

What surprised many was that in the City Harvest statement, Mr Aries addressed the allegations and maintained that the church did not lose any funds in the alleged transactions.

He also said the accused did not make any personal profit.

Lawyers interviewed were divided on whether his comments constituted subjudice, a legal concept referring to words or actions that may affect or prejudice the outcome of court proceedings. It is an offence to do so.

The president of the Association of Criminal Lawyers of Singapore Subhas Anandan said: 'To address the allegations is subjudice, as the evidence has not been heard in court.'

But others said it is debatable whether Mr Aries' comments were in contempt of court.

Criminal lawyer R. S. Bajwa said that while the church has said no funds were lost, it remained up to the prosecution to decide if that will be a point of contention.

'If the prosecution decides to debate on whether restitution was in fact made, then what the church has said would be considered subjudice,' he said.

The Attorney-General's Chambers, asked to respond to the church's statement, said that criminal charges were before the court and that neither the prosecution nor any other party should comment on issues which will be subject to adjudication and on which evidence will be led in court.

The police gave a similar response: 'Generally, in law, the offence of criminal breach of trust of monies is established once there is misappropriation of the monies with the requisite intent, regardless of whether there have or have not been subsequent attempts at restitution by the accused.'

Meanwhile, church members The Straits Times spoke to said the statement had reassured them and clarified the situation.

Communications manager James Yan, a 31-year-old who has been with the church for more than 10 years, said: 'The statement was helpful. It did not speculate, but merely clarified certain facts.'

Church members say they back their leaders
By Ng Kai Ling and Bryna Sim, The Straits Times, 30 Jun 2012

WHILE five City Harvest Church leaders have been charged with criminal breach of trust (CBT) as an agent, many of the congregants interviewed appear to be supportive of them.

On Wednesday, founding pastor Kong Hee and four others were charged with conspiracy to commit CBT as an agent under section 409.

Court documents state that $26.6 million was allegedly used to cover up an initial $24 million which they had taken from the church's building fund and put into sham investments.

These investments in turn were alleged to have been used to finance the music career of Kong's wife, pop-star Ho Yeow Sun.

According to the Penal Code, CBT happens when a person, entrusted with a certain property, purposefully and dishonestly failed to carry out what was expected of him.

Giving an example, Associate Professor Mak Yuen Teen of the National University of Singapore Business School, said: 'If I man a till, and I decided to take the money in the till to spend on myself, and the next day I put back the money, it is still criminal breach of trust.'

But even before the case goes to trial, some congregants have stated online and elsewhere that they have no problem with the use of church funds to finance Ms Ho's music career.

They said it was the church's intention to reach a wider audience through her music.

Said marketing specialist Charlene Sng, 26: 'When I gave, I believed I was sowing in God's kingdom and I trust the pastors to use the money in whatever way it should be used.'

Lawyers, however, pointed out that the issues before the court have nothing to do with whether or not the congregants mind how the church used their money, but whether they had been properly informed of what the money collected was for, and how it would be used.

A lawyer said that it is for the prosecution to prove that the five accused had actively misled church members to think that the money was going to be used on the church but was instead spent elsewhere.

She explained that if proven that the money was not used as it was intended, a crime had been committed.

A law to protect whistleblowers?
By Goh Chin Lian, The Straits Times, 30 Jun 2012

IN THE light of the City Harvest case, corporate governance advocate Mak Yuen Teen talks about the governance of charities.

The National University of Singapore don is a member of the Charity Council, set up under the Charities Act to promote good governance standards in the charity sector.

Are you following the City Harvest case? Is it deja vu?

Yes and no. There are obviously parallels with certain cases in terms of a charismatic leader, questions about board independence, and a whistleblower having to apologise.

No, in the sense that the allegations about how transactions were executed and attempts to hide them are somewhat different from those in other charity cases, and are more similar to some corporate cases.

Also, the alleged amounts involved are larger. But let's be clear that they are only allegations at this stage.

How do you feel about the way governance of charities and regulatory oversight have evolved since the National Kidney Foundation saga?

Both have improved a lot. Charity rules, guidelines and codes have been enhanced. Regulatory oversight has been enhanced as well, for example, having regulators for different sectors, sector administrators and also governance reviews of charities.

Overall, awareness of governance and implementation of good governance practices have improved. But there will always be exceptions when we are talking about around 2,000 charities in total.

The 7th Charity Council Governance Seminar in March this year was titled Good Governance Keeps The Regulator Away. However, again, the regulator has to step in. Is the charity sector as a whole and on group level doing enough to ensure good governance?

Well, when there are governance concerns, this will bring the regulators in. That is their role. If charities do the right thing, they should never worry about regulators looking over their shoulders.

I think awareness has improved a lot, and implementation is happening, perhaps more in some sectors than others. For example, the religious sector tends to have lower compliance with the code of governance on the degree of management involvement in the governing board, including in chairing the board, because some view these as secular guidelines which do not really apply to them.

To what extent have charities and their members internalised the values of good governance? What are the challenges?

One of the challenges in the sector is that people may volunteer to be on the board and, because it's voluntary and honorary, may not give the required commitment and be quite passive.

The selection process may also be ad hoc because it's honorary.

They may also not be willing to commit time to learn about their duties and responsibilities through attending professional development programmes.

What about concerns that yet another high-profile case will lead to tighter regulations that affect the operations of charities?

This is a risk and I think it's best not to react to the moment and just introduce new rules.

If there is another scandal, as I am sure there will be just like in the corporate sector, there may be different issues involved.

You then end up with rules being put together like patchwork.

The Sarbanes-Oxley Act in the United States is a perfect example. The Act was written very clearly to address the problems in two major scandals - Enron and WorldCom. Guess what? Lots of other things were not addressed and we ended up with the global financial crisis starting from the US.

This is not to say that we should not consider rule changes, but we need to be considered in how we do this.

What more would you like to see done?

Enforcement must be strong where there is proven wrongdoing.

I still believe we should consider legislation to protect whistleblowers who blow the whistle in good faith and with reasonable belief, as in some of the more developed markets.

We may wish to consider modifying our defamation laws. It's just too easy for someone who is rich or who has the backing of a wealthy organisation to sue someone, even if comments may have a reasonable basis.

There is a danger in suppressing fair comment and I think that is unhealthy for us in the long term.

And we should keep improving the quality of people who serve on boards in the sector, and continue to help charities build capacity to improve their governance.

More checks and balances not the solution: fraud expert
By Joanne Chan, Channel NewsAsia, 29 Jun 2012

Despite the latest high profile case involving the alleged misuse of S$24 million by senior members of City Harvest Church, more checks and balances are not the solution, says a fraud expert. Instead, the public needs to be more vigilant and report wrongdoings.

The City Harvest case is the biggest financial scandal involving a registered charity in Singapore to date.

S$24 million from the church's building fund was allegedly invested in two companies.

The prosecutors said that these investments were "sham transactions", and the money was instead used to fund Sun Ho's music career - an unauthorised use of the fund.

The prosecution said the group misappropriated another S$26.6 million of the church's funds to cover their tracks.

The term "round-tripping" introduced in court papers, also referred to as "lapping", can be used for fraud, said fraud expert Peter Coleman, who is the head of forensic services at Deloitte (Singapore & Southeast Asia).

He said: "Fraud always involves money. So the money has to be moved from point A to point B. It has to be transferred from one bank account to another bank account, one journal to another journal. It takes an overt act of a human being to do that. If the funds are being used other than for the direct benefit of the organisation itself, if the funds are being used for the benefit of the management committee on a personal level, that's never going to be okay."

Many fraud cases can go on for years without detection. Mr Coleman said non-profit organisations go through less vigorous auditing processes.

He said: "We don't want to think of them as not being honest, so therefore we give them a fair amount of leeway. And it would be a difficult job and it would be costly to require not-for-profit organisations to go through the same rigorous and onerous audit procedure that a public company has to go through. Because then you're taking the funds that have been raised to benefit the members or the beneficiaries of the fund, to pay for auditors.

"And then it becomes more difficult, because it gets into this cycle that, I'm paying a lot for the administration of this organisation. If only 60 per cent of my dollar is going to serve the people or beneficiaries of this fund, I'll give my money to a different organisation."

Still, Mr Coleman does not believe more regulation is needed, and said the high profile nature of the recent cases has resulted in more scrutiny and publicity on the governance of charities. The numbers of such cases though, are small.

"There are hundreds and hundreds and hundreds of not-for-profits in Singapore who never cause any problems at all. They are run by decent, honest, hardworking people who have their heart in the right place.

"And the difficulty is, it's like using a sledgehammer to crack a cashew nut. If you are going to apply the standards that these high profile cases would have required to keep them under control, to every not-for-profit, then you will lose 80 per cent of them," said Mr Coleman.

He added that the public needs to be more vigilant, and be more comfortable with whistle-blowing - something he said, is increasingly prevalent in Singapore. 

Learn from finance sector

WEDNESDAY'S article ('5 City Harvest leaders arrested') reported that five leaders of City Harvest Church had been arrested for alleged criminal breach of trust.

The Code of Governance issued by the Charity Council lists the following key areas that senior managements of charitable organisations should abide by:
- Financial management and controls 
- Disclosure and transparency 
- Public image 
- Fund-raising practices 
- Conflict of interest 
 -Reserves policy
These are the components of prudent management of a charity.

However, what would seem encompassing here may not be sufficient in the implementation and oversight of these policies.

By contrast, the governance standards and requirements for the financial sector seem a few notches higher than those set by the Charity Council for charitable organisations.

For example, all financial institutions are required to put in place policies governing risk management, business contingencies, anti-money laundering and fraud control, as well as a code of conduct on anti-graft and anti-bribery policies.

In addition, the Monetary Authority of Singapore requires all financial institutions to set up compliance units and have risk officers to ensure adherence to the rules in corporate conduct and governance practices.

The Commissioner of Charities should require all religious mega organisations that report a gross annual receipt exceeding $10 million to each appoint an ethics officer, to ensure oversight and compliance with ethical rules in the charity sector.

He should advise the charity on proper conduct, and report directly to the Charity Council.

Another loophole in the Code of Governance is that there is no requirement for a whistle-blowing policy, which is a critical component of good corporate governance.

Religious organisations and charities should take a leaf from the book of corporate governance standards.
George Lim
ST Forum, 30 Jun 2012

Cut out unhelpful behaviour, let law run its course

IN YESTERDAY'S report ('City Harvest disputes '$50m cheating charges''), City Harvest Church executive pastor Aries Zulkarnain disputed allegations that its leaders had conspired to cheat the church of $50 million.

The Attorney-General's Chambers and the police then responded to the church's statement.

While the church may be concerned about its leaders, it should not make the ongoing investigation sound like a witch hunt directed at its leaders.

Instead, it should allow the law to run its course.

Making strongly worded statements as well as accusing the media, which has a job of factual reporting to do, of pre-judging the case are neither constructive nor helpful.

And turning up in droves outside the court, blocking photojournalists from taking pictures, and exhibiting unbecoming behaviour send the wrong signal to Singaporeans, Christians or otherwise.

The church needs to understand that if its leaders did not commit the alleged offences, they will be vindicated and exonerated, and if they did, the long arm of the law will prevail.
Lee Swee Mei (Ms)
ST Forum, 30 Jun 2012

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