Monday 25 August 2014

What if Sun Ho's China Wine was a success...?

Here's a hypothetical question that I would like to tackle today, various people have asked me this question and in essence, they would like to know if Sun Ho had been a commercial success in America, if her English language album did generate a lot of sales, then would Kong Hee and gang be still charged with a crime today? That's an interesting question and one that does not actually has a simple, straightforward answer. In principle, the answer should be no - because it boils down to financial fraud. But let's run with the hypothetical question and explore this in more detail.
What if China Wine was a big hit? What then?

Let's imagine an alternative universe where China Wine did go to number one in America and a lot of countries and Sun Ho made a lot of money from that single. The profit from the business venture still does not change the fact that it was a business venture funded through improper means, by siphoning church funds that were not meant for Sun Ho's music career. That is still a crime in itself, but if there was a lot of money made, that means Kong Hee could have easily covered his tracks and avoid anyone even noticing that there was some kind of accounting irregularity.

If a tree falls in the forest but no one hears it, does it make a sound? So if a crime it committed but no one notices, is the person who has committed the crime still a criminal or a respectable member of society? I would say that it is the latter, because the person has effectively gotten away with the crime. Allow me to give you an analogy. Say I wanted to go to dinner at a restaurant with my friends after work but I realized that I have no money left in my wallet, rather than take a detour to the ATM, I help myself to $50 from the petty cash drawer in the office. I don't tell anyone that I took it because I am not supposed to do so - but the next morning, I promptly put $50 back in that drawer before anyone notices. Well, did I do anything wrong? Yes, in principle. Did I get caught? No. So would I be punished? No.
Do you understand round tripping?

How about this - what if I decided to go to the casino after work and I help myself to the same $50 from the petty cash drawer. However, I lost all the money at the casino and I have no money the next day to put the $50 I took back into the petty cash drawer. Now what? Instead, I create a bunch of small false invoices for deliveries of stationary, photocopy paper and toilet paper so as to create the impression that $50 has been spent. Since nobody actually counts the amount of toilet paper, pens, or photocopy paper there actually is at the office as it is a big, busy office, then I am counting on the fact that nobody is going to actually realize that $50 has gone missing. That, in essence, is round tripping on a very small scale and people can get away with it is quite simply, they are not caught. So in this case did I do anything wrong? Yes, definitely. Will I get caught? No, not if I cover my tracks carefully. So would I be punished? No. Not if I am not caught. Such is the art of a thief covering his tracks.

I have spoken with a criminal about the art of theft (very long story, another interview for another blog post) and he was a very successful crook. I shall refer to him as "Conrad". This is what Conrad told me about stealing, "a smart thief only steals what he knows he can get away with, the kinds of thieves who get caught are those who steal out of need or greed. An example of a thief stealing out of need is a woman who has two hungry children at home - she has no other way to put food on the table for her kids unless she turns to crime, so she tries to steal something despite the fact that her chances of getting away with it are pretty low. But if she doesn't try, her kids will go yet another day without food, so she tries out of desperation and probably will get caught. Sadly, there are many cases like that.
What is your motivation to steal?

The other kind of thief that gets caught is the one who sees something he likes and steals it because he likes the object, rather than because he can get away with it. It is a foolish mistake as this thief is motivated by the wrong reasons - you're far better off stealing something you know you can get away with to make some money and then going into the shop to pay for the item you really like. It is a process that may take a lot longer but you are not going to get caught - that's the golden rule: don't get caught. Study the CCTVs, the security arrangements, the route you have to take and if the odds are not good, then don't do it, don't take the risk, find something else to steal. Don't allow desperation or greed to cloud your judgement when it comes to evaluating what kind of risks you should take. You should only steal what you know you can get away with, never steal anything you need or like."

So in the case of Kong Hee, clearly he is not stealing out of desperation - it is the latter, he is stealing out of greed. As a criminal, he is pretty sloppy because he made the mistake of not evaluating what he can get away with and put himself in a position whereby he was completely dependent on Sun Ho's American career being successful. He didn't have a plan B, he clearly didn't think he needed one so when her career flopped at the cost of S$24 million. Conrad said that you must always have a plan B when attempting any theft, you need to plan for every possible outcome should things go wrong and have an exit strategy which allows you to walk away without being caught.
In the court of public opinion, Kong Hee has been sentenced a long time ago.

Why didn't Kong Hee come up with a plan B then? My opinion is that he is not a hardened criminal but a foolish man who is incredibly naive about what he thinks he can get away with.  Don't forget, this is a man who claimed that 'god' said sorry to him during this trial - what kind of man expects his god to apologize to him? There is a certain naivety about Christians who expect their projects to succeed for no other reason than their religious faith and that is just plain stupid, but hey, even the most intelligent people can have their better judgement clouded by their religious ideas.

In any case, we should not make any assumptions - even if Sun Ho did achieve commercial success in America and let's say she makes US$24 million and breaks even after having spent S$24 million, that merely gives Kong Hee some leeway to cover up his actions in the first place, it doesn't negate the fact that he broke the law in the first place. The tax and financial affairs of the rich and the famous do attract a lot of attention from the authorities if it is suspected that these people broke the laws or even bent the rules. British comedian Jimmy Carr as well as former Take That singer Gary Barlow made the headlines recently when they were both investigated for participating in a tax evasion scheme, but they are hardly the first celebrities to be investigated for their financial affairs. Have a look at this list here: Martha Stewart, Wesley Snipes, Willie Nelson, Nicholas Cage, even Boris Becker have all been found guilty of breaking the law when it comes to not paying your taxes - and what made them think they could have gotten away with it?
Are you afraid of your financial affairs being scrutinized?

If Sun Ho did become an international superstar like Psy, Kylie Minogue or Shakira, then she will not just attract the attention of the fans who like her music, she will also be attracting the attention of the authorities who will take an interest in the way she funded her career and every single aspect of her career will be under scrutiny. People will start digging for dirt on you once you're in the international spotlight so you had better make sure you have nothing to hide. The more famous you become, the more attention you will attract.

When Gangnam Style became the infectious K-pop hit that took the world by storm in 2012, it seemed that Psy could do not wrong - everyone was doing the Gangnam Style and loving this chubby K-pop stuperstar. Then people started digging into Psy's history and unearthed a controversial song from 2004 called Dear America which had lyrics calling for American soldiers to be killed. This was a song in protest to the invasion of Iraq and Psy had to make a grovelling apology to salvage his American career as he went from pop hero to public enemy overnight. Note the gap of 8 long years between the performance of Dear America in 2004 and his groveling apology in 2012 - for 8 years, nobody really cared what he had to say about America or what they did in Iraq but the moment he became popular, people started digging and boy they found a lot of dirt on Psy. When you become that famous, not everyone will become your fan.
Conrad recalled the story of how he had to flee Scotland in a hurry after having successfully robbed a goods depot. "I was working near Glasgow when we had the opportunity to rob a goods depot - this was a big depot in an industrial park where the goods would arrive there after having been shipped here from abroad. All day long the lorry drivers would bring the goods from all over to the depot. The retailers would collect the goods from the depot and whilst no money changed hands at the depot, some of the goods were very high value. We're talking top end electronics, jewelry, mobiles and computers. A truck could easily contain over a million pounds worth of goods."

We had an inside man on the job who told us that the depot was short handed and chaotic at the best of times and that the new manager there was extremely disorganized. On top of that, they used a lot of part time staff, many of them Eastern Europeans so it was an easy job so there were new faces around all the time. There was security but they were clueless and mostly teenagers fresh out of school who spent most of their time staring down at their mobile phones instead of working. We used no guns, no violence, no one got hurt, there was no confrontation. We just walked in there pretending to be delivery staff, loaded many boxes of goods into our truck and drove off. As it was in the middle of winter, we covered our faces up and no one bat an eyelid as it was freezing cold that morning. We had another guy who managed to find a buyer for our stolen goods and we pulled it off. We were pros, the alarm was raised only about 7 hours later by which time we had already moved the stolen goods. We had picked the perfect target to rob.
Conrad's accomplice made a stupid mistake. 

The only problem was that our inside guy at the depot started spending money and showing of his new found wealth - he got so excited, he had never seen so much money in his life before. So he bought a new car, he was buying rounds at the pub, he was buying his girlfriend all these gifts, he got new clothes and people were getting suspicious: how did this guy who works at a goods depot suddenly have all this cash? He drew attention to himself. Anyway, I didn't stick around - I got the hell out of Scotland and lay low, very low on the continent for a few years. The guy got arrested and went to jail but luckily he didn't know enough about me to let the police catch me, but I didn't dare come back to the UK for many years until I was completely sure no one was looking for me. So the moral of the story is this: once you pull off a crime successfully, you lie low, you keep your mouth shut and you do not draw any attention to yourself. Act as if you're still broke, even if you are sitting on a pile of cash you just stole, so no one will suspect you."

Therein lies Kong Hee's catch 22 situation - even if Sun Ho did become a big star in America, the chances of CHC's financial affairs being investigated are still very high. But if her career bombed (the way it did), then the gaping hole in CHC's financial affairs would still lead to an investigation - either way, he had put himself in a situation where he simply couldn't win. Kong Hee may have been an extremely successful pastor at CHC, but when it comes to financial crime, he was a fumbling amateur who didn't know how to come up with a half decent plan when it came to covering his tracks. It was not only brazen but foolish, but it seems Kong Hee doesn't really care what the law in Singapore has to say about round tripping as he answers to a high authority. How else can you justify the brazen way he has behaved thus far?
Either way, the law would have caught up with Kong Hee.

So there you go, that's my take on the question for the day - ironically, the outcome would have been the same at the end of the day. Though I must say, most Singaporeans have reacted so badly to Sun Ho's godawful music that it has prejudiced their views on this case. Sun Ho desperately needs to hire a half-decent PR manager to help guide her through these next few months - heck, you've already spent S$24 million, why are you suddenly being so careful with your money? As usual, please do let me know what your opinion is on this question, thank you for reading.

9 comments:

  1. if xtron made a profit, or if, as KH claims, the indonesian owner will make up for the loss, and the bonds CH bought gets redeemed with interest, then CH suffers no financial loss; however, legal financial procedures had been violated and Ho/KH received high payments during the project while these violations were ongoing, so I dont think he would escape responsibility completely

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    1. Precisely, thus my point that Kong Hee didn't really think this through, he had neither an exit strategy or a plan B - so whilst he was able to funnel money into Sun Ho's career easily, he didn't think about the consequences of a simple audit.

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  2. Yes, the outcome would be the same but there's a lot of difference between stealing $24 million (or $50 million) and returning it and not returning a cent but covering it up. The difference in sentences would be years. In the former he might get with say 2-5 years but for the latter it can start from 8 -10 and go even further based on past cases with such large amounts.

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    1. Well, I am not a legal expert so I don't wanna guess what the difference is - my point rather in this post, was that if you stole something then put it back, chances are, you may well get away with it because no one will notice that it was gone in the first place. It would take an auditor to go through your books with a fine comb to notice any wrongdoing if you are going to uncover any kind of wrong doing. Like Conrad explained, when you commit a crime like that, you lie low and don't draw attention to yourself - recording China Wine is the precise and exact opposite of that.

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  3. Thanks for your insight. Yeah there's nowhere to hide once you are the subject of an audit and the auditors will flush out any irregularities. I am glad that someone did make a complaint to the COC because it shows that s/he is doing his/her job properly and not just blinded by either faith or starstruck by Sun Ho.

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  4. Agreed with you that Sun Ho's success is irrelevant.

    "Why didn't Kong Hee come up with a plan B then? My opinion is that he is not a hardened criminal but a foolish man..."

    I think they were deluded. I could imagine them giving each other a slap on the back congratulating themselves that they have structured the transactions to "solve" the crossover project funding requirements. Most probably saw a feat in financial engineering worthy to be in one's CV. Even in court, the defence argument is that all transactions were vetted by auditors and lawyers. What they failed to understand is that the court and prosecution are not interested in dotting the "i"s and crossing the "t"s. It is simple issues of conflict of interest, breach of trust and fraud.

    To use an analogy: If an employee is caught partying all week while supposedly on medical leave in hospital, having properly applied and obtained medical leave as per company's procedures will unlikely be relevant in the bosses' mind.

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    1. Hi and thanks for your comment. I totally agree that they are deluded. On top of that, they are still in denial. LOL.

      Nice analogy :)

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  5. The word to describe all this denial is "round-tripping". The defence lawyer is rather silly to suggest that since they did it for an evangelical purpose, that whatever was done was therefore justifiable. It has a logic of stating, "O, since we are 'spreading the gospel of Christ', we can do ANYTHING we deem it." Well, we know that stating that you are 'evangelizing' does not mean that you can steal money from other people. Even if the members of that church agreed to it, it is, legally speaking, still stealing money because it is using it for a purpose other to the reason as to why members even gave the money to begin with.

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  6. i think there could be more than one whistle blower. a staff of chc ? a ordinary member who has financial background or even a outsider who works in baker tilly auditing firm where foong daw ching is a partner?
    i know for a fact that some auditing firms hire retired accountants / auditors on ad hoc basis , maybe baker tilly hired a retired accountant to got thru the chc accounts and he or she found it fishy and made an excuse not to do it and reported it to the cad? maybe more than 2 or 3 people reported chc to the cad?

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