Wahju Hanafi - Just one of the Instrument Pieces to "Make Things Happen"?

We have examined the relationship between CHC and Xtron. Now we turn our attention to another company linked in the sham bonds allegations - PT Firna Glassware owned byWahju Hanafi who is also a good friend of Pastor Kong Hee, and an ex-Xtron Director. So how is Wahju Hanafi and his company involved in this case?

According to various sources including CityNewsSG and Pastor Kong himself, the Hanafi family is very supportive of Sun Ho's Crossover project, and have sponsored her singing career from as early as 2003. Hanafi also considers himself a good friend of Pastor Kong, and would bless him with things every year, including a share of ownership in a Sentosa Cove property.

Referring to a ST report (source), "the prosecution's charges against Kong and four other senior CHC members yesterday said that alleged dishonest transfers of $11 million from CHC's building fund to PT The First National Glassware between Oct 6, 2008 and June 19, 2009 were meant to fund Ms Ho's career and "for the purpose of providing funds to one Wahju Hanafi".

Why would a church invest in corporate bonds and is there anything wrong with a church investing in a corporate bond? Firstly, for a church like CHC with millions of cash assets, it is wise to invest the money into good quality bonds in order to hedge inflation. Furthermore, investing in bonds allows the church the potential to earn a higher return than what the banks can offer. Definitely the works of a faithful steward one would think.

So what is the problem here? 

While investing in bonds is a perfectly legitimate financial activity that a charity would engage in, the issue here seems to be the way which the bonds were structured is of a suspicious nature - CHC wanted to invest $11million in Firna bonds as a way to divert funds to finance Sun Ho's singing career.

Now this got me asking - if the defense's case was that "it was always clear the church's building fund monies were used to produce Ms Ho's music albums and that the auditors signed off on the various audits", then why is there even a need to channel funds through Firna to finance it in the first place? Why can't CHC just outright transfer the money over to fund Sun Ho's career?

Let us just say that they want to keep the activity a "stealth" and discreet affair (we will examine this "stealth" business in another post) - and CHC prefers to invest in another company (Firna) who will in turn invest in Sun Ho's singing career. Fair enough. So within the bond agreement, CHC included a convertible clause which allows CHC to convert the bonds into Firna shares in the event Firna cannot redeem its loan. This ensured some form of protection for CHC, which is the right thing to do.

However, there seems to be more than meets the eye - the DPP uncovered "emails of a secret letter" which is to be sent to Firna owners (Wahju and his father in law). This secret letter contains a promise that the church will sell the converted Firna shares (in the event Firna cannot repay the loan and convertibility option was exercised) back to them for a nominal value of $1! (source) This effectively removes whatever protection to CHC for their investments. Now - why would the leaders of CHC want to do that, if Firna is not in any way related to them? 

Furthermore, according to the recent cross examination (source), another tranche of bonds was issued to Firna to redeem the earlier bond carried out through a complex chain of companies:

CHC invested into AMAC Capital Partners' Special Opportunity Fund (SOF). This company was the fund manager of CHC and was owned by one of the accused, Chew Eng Han. AMAC then loaned the money from CHC to Ultimate Assets, a company owned by Wahju Hanafi, who then loaned it to Firna to redeem the bonds. Certainly looks a complicated chain of money transfer to challenge the IQ of Einstein. An overview of the entire round-tripping is shown below:

If these are not already intriguing enough, in an earlier cross examination in May 2013, the DPP also showed an email chain between some of the accused and another accountant. Within this email, Wahju, when asked to "keep to the timeline" and "complete certain transactions in the soonest possible time frame", include this statement in his reply:

"All these costs are to be borne by Xtron or whatever company. We are just instruments to make things happen." (source)

All these and the defense have no case to answer? I think the 6 need to clarify many things in court and let Singapore hear their side of the story. Meanwhile, the mystery continues...