Simon said...
XH,
Thank you for taking the time to comment on my letter. Please allow
me to respond:
Firstly, the church is a society of members AND a charity. As a
registered charity, it is accountable to the members of the public
who are exposed to the church's fund raising activities on the
internet and at weekend services via our open door policy. And as a
church, we want to be the light to impact the marketplace and grow
our membership. So we have to care what others think.
Regarding the non disclosure agreement (NDA), in my experience in
negotiating more than 30, I have walked away if it restrains me
from doing what is necessary for the good of my company and our
shareholders. NDAs, as you had erudiated, are necessary when
negotiations are taking place. It usually expires upon deal
signing.
If it is a material transaction (like ours), a listed company would
not have sign one that survives post signing because it will need
to provide information to its shareholders in order to seek their
approval. Neither would a government agency (unless due to national
security) in matters of material expenditure because it is
accountable to the parliament (ie people).
I have been intimated by senior pastors on one reason why the
seller does not want disclosure. Without breaching confidentiality,
I can however say (in my opinion) that the reason is not prima
facie a good justification for denying our members the salient
terms of the deal. What are the salient terms I'm talking about?
Here're some for starters:
1. How the $310 million is spent:
a. Cost of acquisition of shares, % stake owned, and what options
held (if any)
b. Cost of rental p.a. and for how many years with what options to
renew
c. Estimated costs of renovations, moving and deposit
2. Quantum of savings or additional expenses compared to Expo lease
terms (similar size basis)
3. Funding arrangements (eg level of external borrowings, period
and size of installments)
4. Historical and projected financials of Suntec Convention Centre
including earnings per share
Why are these relevant to you and me? Let me give you one
example:
@ Breakdown of the $310 million
In previous building fund campaigns called “Arise and Build”
("A&B"), it is my impression that the funds raised was to be
used to procure the purchase and/or construction of building
facilities to house the congregation. The benefits of ownership and
control were often stressed, explicitly or implicitly.
However, I am now led to believe that the existing building fund’s
monies will instead be used to acquire a minority stake in a
company which owns 80% of Suntec Convention Centre, and future
A&Bs be used to pay for rental costs of leasing certain areas
of Suntec Convention.
Let me use two extremes as examples:
1) If most of the $310 million is used to acquire shares that do
not yield control or majority ownership of the Convention Centre,
can this be deemed a breach of understanding that donors have when
they donated in previous A&B campaigns?
2) If most of the $310 million is spent on future rental costs, are
donors understanding that the building fund was to be used to
secure ownership be breached?
I often use listed company disclosure and approval requirements as
a good example, not because the church is a listed company, but
because the marketplace / public deem such disclosure standards to
be best practice and the first line of defence to protect minority
shareholders and members of the public from abuses or improprieties
of the management.
This is in line with Paul example to be in line with the standards
of man, not only of God when managing money (2 Cor 8:20-21).
You may have the benefit of 10 years of experience in the church to
trust your leaders without question. But, please learn to spare a
thought for the newbies, vulnerable (minors, elderly, less
educated, etc), non Christian friends who come to visit, etc. who
do not have the benefit and depth of your past experience and
trust.
XH said...
Dear Simon, thanks for your well thought out response. I do not
deny that the church is a charity. However, people choose which
charity they want to give to and as I said, no one has been
compelled to give to the charity should they be uncomfortable or
unconvinced about its deployment of proceeds. You talk about being
concerned about what others think. Surely, you could have been more
constructive by seeking out the leadership rather than make this
less-than-private confrontation with the church which naturally
cause members to question your agenda - although you have clearly
stated that you have done this because you love the church. You do
not speak for all the members. Again, I say, giving to any charity
is a matter of choice. Just because we make online donations
available for the convenience of our members (many of whom are
overseas) and that our church is well attended by walk-ins from the
public does not mean that people give with their eyes close. And
let's be frank, the first thing people give to when they come to
church for the first few times will hardly be to the building
fund.
In fact, the church has segregated its general fund (tithes and
offerings) from the building fund and even in its financial
reporting and at the point of giving, members new and old, are very
carefully told that the general fund is used for the church
operations while the building fund is for its said use.
You use an example of a listed company and I understand that your
background as an investment banker in ECM or DCM probably
necessitates your use of such NDAs. You have your views as to the
best standards of disclosure by the church to match that of a
listed company but I have my views too - which is that these are 2
very different organizations and face different sensitivities and
obstacles that even you as an investment banker and I as a finance
professional might not understand. The NDA is not indefinite: it
will cease after 2 years. Then you will have all the answers you
need.
Your whole argument, while well-thought out, is premised on your
"impression" that the A&B is for ownership and control. 2 years
ago, the church had already begun looking for JVs, partnerships and
other ventures to co-own a stadium or audi that can sit 10000 to
15000 people. There was a resolution.
Also, I see you have diligently studied our church's financial
statements. Surely, you would have learnt that the church uses its
building fund monies to pay the Expo rental and keeping its tithes
and offerings focused on the works of the charity? It has been the
case since we moved to Expo.
I wonder why securing ownership is the be-all and end-all for your
contribution to the building fund. For many of the members, we do
not see it that way. We love our church and are willing to give to
the building fund. So in the absence of your premise of control and
ownership, which might have been of your own accord, you cannot
ascribe blame to the church.
Again, giving is a matter of freewill. Any charity will tell you
that.
XH said...
Actually, if I may probe. How many A&Bs have you been a part
of? I think that will lend some credit to your statement: "In
previous building fund campaigns called “Arise and Build”
("A&B"), it is my impression that the funds raised was to be
used to procure the purchase and/or construction of building
facilities to house the congregation."
Simon said...
Dear XH,
You speak well and mean well. May I request you respond with the
same sincerity and courtesy that I'm according you and move out of
anonymity?
It's important to be accountable to one another in what we say.
This is the same principal about transparency in managing other
people’s money. We have to account and be transparent to one
another when we commit large sums of money.
Let me give you an analogy: Does the church encourage a husband to
spend the family silver without consulting the wife? No. So, as
believers, we are one big family so let's be accountable to one
another.
Your free will offering argument is irrelevant. It's extremely a
poor defence for the likes of NKF, Ren Ci, etc. Free will or
otherwise, charities are accountable to their donors for past
donations and future solicitations. That’s what people want and
that’s what the Commissioner of Charities want as described in the
Code of Governance.
I've negotiated NDAs as a principal, not as a ECM/DCM professional.
Yes, there may be other considerations involved, but the one that
has been intimated to me by our leaders does not cut any ice. I'm
happy to share that with you in confidence offline. You have my
permission to get my email add from the blog owner.
Please counter my points with pertinent facts, or employ arguments
that show my logic is wrong.
I quoted an example why it is important to disclose certain salient
terms to donors so that they know, as a form of check and control,
the money contributed goes into expenses that they had earmarked
for.
Making moral judgments about the irrelevance of “securing ownership
as raison d’etre for people’s contribution” is not a rebuttal.
Rather, you should argue that i) the salient facts I’d quoted do
not serve as good checks and controls, or ii) checks and controls
are wrong in church governance.
Talking about financial statements, you proved the point that what
we have on line is at too high a level. For example, where can one
find that the current EXPO lease is paid out of the building fund
(rather than the general operating fund)? Perhaps, you can post the
statements with notes online for all to see?
I will conduct a poll in my cell this week and see how many people
know this. We can exchange the results with those from your
cell.
Regarding the purpose of the building fund and A&Bs, the
impression created every year has been to buy or build God a
physical house. This came from talking to members, pictures of
stadiums, land and buildings that were projected, sermons given,
etc.
Even the Harvest Times, the church's newsletter says in Issue 33
(2008): "Out of their driving desire to build God an iconic stadium
in the marketplace, for the marketplace and to penetrate the
marketplace, the members of City Harvest Church had pledged more
than S$26m"
Did the JVs, partnerships, ventures you talked about include "no
board seat", "no management involvment" like in the Suntec deal?
What we now have is a long term lease plus some passive shares. I
don't call this a JV or partnership.
I personally have no issue with leases but we should be told (2nd
example of salient terms) if the rental portion from the $310
million will last 10, 20, 50 or 78 years.
If you do a poll, most people, especially the vulnerable (ie the
youth), think it's at the upper end. That's, perhaps inadvertently
created. But if there's good transparency and we give our people
the facts, we can correct these misconceptions.
Lastly, i will not indulge in your name calling as you were not one
of the 4 senior CHC staff i met last week (ie you're not in the
loop).
Simon said...
XH, I've been through three A&Bs, including this year's.
XH said...
I hope you respect my reasons for remaining anonymous in the
public domain. I apologize if you deem it a form of disrespect and
a lack of sincerity.
I have re-read my post and do not know what name calling you are
alluding to in the last paragraph of your 1.45am posting. If I have
been rude, I apologize.
I actually think that of the 4 points of disclosure of salient
terms, only point 1 is reasonable. The Board, the voting members
and the auditors are all apparatus of control in this charity. I
personally think that to equate good checks and control to your
disclosure requirements are too onerous. But again, that is my view
and you have yours. I trust that the management has worked in the
best interest of the church in securing this deal. It is their
church too. Perhaps you find this level of trust naive but I think
as a member of this society, I give with my eyes opened.
Sincerely, the impression you have is not the impression I have
about the shape or the form the venture should take place in and I
think for good commercial reasons, the lease structure should not
be revealed.
Quote: "Talking about financial statements, you proved the point
that what we have on line is at too high a level. For example,
where can one find that the current EXPO lease is paid out of the
building fund (rather than the general operating fund)? Perhaps,
you can post the statements with notes online for all to
see?"
- On this point, I agree. I think you will not have a problem
getting the financial statements and notes from the church and I
will leave it to the church to decide if they will post the full FS
online. That's not a call for me to make on behalf of the
church.
And the fact you have been through 3 A&Bs does lend credence to
your statement. Thanks - it was important at least for me to know
that before commenting any further. That's all I have to say with
regards to this matter.
Simon said...
XH,
I accept both your apologies. I hope you understand that it's
difficult to appreciate or understand your need to remain anonymous
if you don't share what those are. I pray it is not "fear". I'm
happy to discuss further offline if that helps.
I hate to belabour the point: If one cannot be accountable for what
one says online, one loses moral right to make any judgment or
comment regarding the importance of accountability to one another.
what more in in matters of church finance.
I welcome you to elaborate why you think the other salient point
examples that I had listed are onerous. I know you mean well, so if
you really think i'm wrong, i am open to hear you out. Broad
statements do you no justice.
It is clear to me that the voting members have failed as a check
and control device in the system. One does not give carte blanche
authority without the benefit of information to make informed
decisions. If you were a director in a company, the EMs would be
charged for failing their fiduciary duties. And thus, the power to
vote should be removed from them and be given to ordinary members
too.
Auditors are the final line of defence, not the first, as their
work is "after the fact". Prevention is always better than the
cure.
