CHC Trial: Kong Hee Said No to 50-50 Profit Share With US Execs; Church Must Not Lose “A Single Dollar”
Email evidence showed “emphatic” re-negotiation efforts by Kong with US music executives to achieve “balanced” profit sharing arrangements so as to ensure fair deal for Xtron and allow it to ultimately repay CHC; he also did not want to take Wahju Hanafi’s “generosity and friendship” for granted.
As the “frontman” of liaison efforts with US manager Justin Herz and music producer Wyclef Jean, City Harvest founder Kong Hee was deeply involved in managing Xtron’s risk exposure in the Crossover Project, the court heard this afternoon.
In responding to his lawyer Edwin Tong during examination-in-chief, Kong added that at the end of the day, “the church must not lose a single dollar.”
In email exchanges between Kong and Herz, the court saw that Kong had requested Herz to “drive a harder bargain” in his negotiations with Wyclef Jean and Lisa Ellis, the vice president of Sony Music.
In establishing the profit sharing ratio for Sun Ho’s US album, Jean and Ellis had wanted a 50 percent cut of profits despite not committing a single dollar of financial outlay. It would not have been a fair arrangement for Xtron, according to Kong.
His main motivation?
To ensure that Xtron, as the bond issuer to CHC, would not “go into the red” in its investment into the Crossover Project and adversely affect its ability to repay the church.
Negotiations to achieve a more favorable profit sharing ratio fell through eventually, and Herz successfully made arrangements for Ho to be managed by Johnny Wright, whose clients include Justin Timberlake.
Besides the high asking price and the Asian reggae direction Jean wanted Ho to take, Kong also testified that he was concerned about seemingly un-conservative debut album sales projections provided by Ellis; to Kong, the two-million-unit album sales estimation was not realistic because it was based on sales figures of established American acts including Gwen Stefani, Mariah Carey and Kelly Clarkson; Ho was neither American nor an established singer, Kong said.
Tong was seeking to challenge the prosecution’s charge in its opening statement that “no genuine consideration” of the viability of promised returns, or the recoverability of the principal amounts.
In showing the court the conservative, detailed approach Kong took in all his correspondences with various parties, Tong was seeking to establish the fact that his client was ever mindful of the recoverability of the Xtron bonds—far from intending “to cause wrongful loss” to the church, as alleged by the prosecution.
Beyond the recoverability factor, Kong told the court that he wanted to be fair to Hanafi; he did not want to take his generosity and friendship for granted.
Hanafi eventually underwrote and covered all costs incurred through the Crossover Project when the US album did not launch in 2010.
The court also saw that co-defendant Serina Wee had made effort to keep Hanafi updated on the plans related to the production of the US music album by emailing the business plan details to him.
Questioned about his level of control over Xtron, Kong confirmed that he had influence over the Xtron directors and a measure of control, but definitely no “overriding authority,” as the prosecution had claimed in its submissions at the closing of its case.
He explained that as the senior pastor, his church was his spiritual family; while he had a level of influence over his members, he would never take advantage of that influence to make them do his bidding.
Court resumes at 9:30am tomorrow.
Source: The City News Team, CHC Trial: Kong Hee Said No to 50-50 Profit Share With US Execs; Church Must Not Lose “A Single Dollar”, CityNews, http://www.citynews.sg/2014/08/chc-trial-kong-hee-said-no-to-50-50-profit-share-with-us-execs-church-must-not-lose-a-single-dollar/, Updated 8:30pm 12/08/2014. (Accessed 14/08/2014.)