Kong's Tong claims Foong's wrong all along!

Hi everyone! Yes it is an alliteration overkill, but I couldn't resist it. Here's the latest piece of news emerging from the CHC saga: they are blaming it on the auditor. Well, Edwin Tong's (Kong Hee's lawyer) latest strategy seems to be to prove the the auditor Foong Daw Ching is an unreliable witness. Whilst this strategy may not do anything to try to prove Kong Hee's innocence, they are trying to discredit Foong as a key witness in the case - thus forcing the case against Kong Hee to collapse. Would this latest strategy by Edwin Tong actually work? Or is this Tong vs Foong strategy but a wild goose chase that will lead nowhere for Kong's defence team?

Salah salah... Aiyoh. 

Allow me to cut and paste some of the exchange between Tong and Foong from the ST's report.

Exchange #1

• Mr Tong: "It is because you are trying to distance yourself that you then suddenly, despite your fairly sterling CV and many years of experience, and many appointments, and accolades, that you suddenly become, at least based on the evidence of the last four days, someone who can descend to saying that he is not very good technically as an auditor, or that you don't even like to read agreements. Can you explain that?"

• Mr Foong: "... I think the learned counsel is too presumptuous making that (statement). When I'm an expert in one case, I'm assisted by a group of people, including my consulting partner...
• "I'm the weakest among the partners, as far as the financial instrument is concerned... It's not a single person effort you know."

Exchange #2

• Mr Tong: "... you have held yourself out to be and you knew that City Harvest saw you as the person having principal conduct of their work?"

• Mr Foong: "How they think about me, I do not know. But I do not agree that I have control over the audit."

Exchange #3

• Mr Tong: "I suggest to you that the evidence you have just given is not truthful."

• Mr Foong: "I disagree your Honour."

Well allow me to analyze the role of Foong, the auditor. I see a huge flaw in Tong's argument - Tong tried to show that the prosecution witness has been trying to distance himself from the advice he had given to the six accused City Harvest leaders. Even if Tong does succeed in discrediting Foong as a witness by aggressively interrogating him on the witness stand (in the hope that a nervous Foong would trip up under the avalanche of confusing questions), this still begs the question: even if you could blame this on Foong as the auditor and that Foong had indeed a close relationship with the City Harvest leaders, which involved him giving detailed advice on investments and how to disclose them to church members - what does Foong get out of this, by arranging the round tripping in the first place? Foong did not benefit financially from this arrangement - it was Kong Hee and especially Sun Ho who enjoyed the windfall.

Even if Foong was placed in a position to commit financial fraud as the auditor, I fail to see his motive - most people who commit fraud do so for financial gain. After all, Foong is a partner at Baker Tilly TFW - they are part of the International Baker Tilly group, one of the world's biggest accountancy firms. Doing audits for large organizations is a big part of their business - it's nothing exciting but it is lucrative nonetheless. Why would Foong knowingly give CHC bad advice then? And even if he did give bad advice to CHC by advising them incorrectly that what they did was legal, did he stand to gain financially (or in any other way) by allowing Sun Ho to benefit from that money to further her music career? What does Foong get out of this? Clearly, he is not a blind follower of Kong Hee who is willing to take the fall for Kong - quite the opposite, so in the absence of any motive for Foong, why would he deliberately act in an illegal way on behalf of CHC then when he is merely an accountant at the end of the day?

Accountancy... not the most exciting career path.

Let me share a story that my investment banker buddy Phil told me about accountants. "During the gold rush in California, many people flocked there thinking that they would get rich overnight if they found one big nugget of gold, they would never ever have to work again. Maybe a handful of them actually did find nuggets of gold which were that big, but most of them found very little gold and made barely enough money to feed themselves. The hard work, accidents and disease killed a number of them as well - even those who managed to find gold were often robbed of their money by bandits. But who do you think made the most money in that time?"

"It was the humble men who ran the hardware stores, selling those pans the used for 'panning for gold' on the river beds, along with other tools like shovels, spades, wheelbarrows and pails used for the mining industry. Their fortunes were not dependent on striking gold on some riverbed - they simply sold the mining supplies for a profit and these miners all arrived in California with gold on their minds, they were not going to care if they were paying an unreasonable price for a small pan or pail. As long as there was a supply of miners panning for gold, the hardware stores had plenty of business. By the time the gold ran out, these men who ran hardware stores had made enough money to buy large tracts of land and retire on those profits."

"In the world of banking and finance, accountants are the same as those hardware store owners in the gold rush years - nothing they do is all that exciting or sexy, but it is a reliable way to make a lot of money because every company will need accountants and the accountants who do a good job can charge a hefty fee to do an audit. You don't get superstar accountants who become famous like fund managers or entrepreneurs, but they do make a lot of money and you should check out the car park at the accountants that my investment bank uses - it is full of really expensive cars. They don't need to commit fraud or take unnecessary risks to make a lot of money - they just need to do what they do. It is one of the best kept secrets of the City, after all, few young people aspire to become accountants - they think it is boring, the ambitious ones want to do something a lot more exciting like work in investment banking or become a trader. Is accounting boring? Probably, almost certainly. But it sure is very lucrative."

With that in mind, why would someone like Foong, a partner at Baker Tilly FTW no less, indulge in what is clearly fraud? As a highly trained accountant, Foong would know exactly how illegal what happened was. Did he knowingly give bad advice to CHC? Was he complicit in the round tripping? Or is he completely innocent? Given his position in CHC as a church elder, he's involved to some degree but just how involved is he? Let's explore the possibilities.

Just how involved is Foong in this case?

Foong is not some external accountant contracted purely to do the audit as an independent third party - quite the opposite, Foong is in fact a church elder at CHC, Kong Hee even solemnized the wedding of  Foong's daughter. In fact church members had gone to Mr Foong for advice since he led the City Harvest audit in 1993, so Kong and Foong do go back a very long way. However, Foong had not led CHC's audits since 1993 and was only approached "on an ad hoc basis" for advice, which he gave voluntarily. You can read more details on the report here.

It is clear however, that even if Foong is proven to be an unreliable and untrustworthy witness, it doesn't negate the fact that financial fraud has been committed - so trying to make the case against Kong Hee collapse by discrediting Foong seems like a bizarre strategy at best. The case made by Mr N.Sreenivasan (lawyer for deputy senior pastor Tan Ye Peng) read more like an internal dispute between friends, the assertions of how Foong "broke their hearts" - fair enough, we don't doubt that they felt betrayed by Foong's desperate measures to distance himself from this case. Sure this makes for a juicy scandal (I bet the journalists are loving this) - but what can Kong Hee's defence team gain by washing dirty in public? Is this really going to save Kong Hee from a long prison sentence?

Is it just Foong's reputation on the line here?

It almost seems like a vindictive move on their part against Foong - certainly, after this episode, would anyone in Singapore like to have Foong audit their company? Hardly, but then again, he's 63 and very rich - sure you may taint his reputation by revealing that he offered CHC very bad advice, but can you blame this whole sorry episode on Foong? What is the worst that can happen to Foong? Ooh you can force him into early retirement (if he is not already retired), he just has to renew his golf club membership and play a few more rounds of golf. Oh dear, he might even get sunburnt from all that golf. Or he might be forced to take a few more holidays abroad - damn, think of all the hours he has to spend waiting around at airports for his flights. He may even be forced to pay for an overpriced meal in some crappy airport restaurant in Innsburck, Paris or Dubai. Damn, it's a hard life for some.

The question I want to ask is this: where is Edwin Tong going with this then? I don't know - I am not convinced that this will do his case and cause any good, but then again, if both Tong and Sreenivasan are going down this path, I'm willing to suspend my disbelief for a moment, give them the benefit of doubt for now and say, "okay guys, you seem convinced you know what you're doing here. Please show me where you're going with this." And we shall wait and see... Certainly, after how they have all first turned against Chew Eng Han (and now Foong), is this just the beginning of a new stage in the battle where they start to turn against each other? We eagerly await the next installment of this saga. I just wonder who they are going to try to blame next, come on Edwin Tong, who else can you pin this on?

As usual, if you have any comments or question, don't be shy - leave a comment below. Thanks.