Let's do some back-of-the-envelop calculations on the account of Arise and Build Fund.
Total Arise and Build Funds raised for the new building >$130,000,000.
Valuation of Suntec Convention Center after the latest renovation (Asset Enhancement Initiative - AEI) : $400,000,000
Asset:
CHC's 39.2% Stake in $400,000,000 Suntec Convention Center : $156,800,000.
Equipment (Announced during Special OM Meeting in 2011) : $13,000,000
Total asset of Arise & Build Account: $169,800,000
Liability of Arise and Build Account:
Liability assumed by CHC for the $180,000,000 renovation loan raised by Suntec REIT : $70,560,000
Liability assumed by CHC for the $50,000,000 private loan to acquire additional 19.2% in 2011 : $50,000,000
Provision by CHC for the non-performing investment with AMAC Capital since 2010 : $18,000,000
Total liability of Arise & Build Account: $138,560,000
Net Asset Value (NAV) of Arise and Build Fund : $169,800,000 - $138,560,000 = $31,240,000
Take into account the depreciation of equipment and the servicing interest cost (15% for the $50,000,000 private loan as announced, albeit briefly, during the last AGM), the Net Asset Value of the Arise and Build Fund is probably less than $10,000,000.
A NAV of less than $10,000,000, a mere 7.7% of an initial cash cahce of $130,000,000.
One may argue that the cash had been expended in rental and shifting of premises for the last few years.
But if $130,000,000 has been invested in DBS Perpetual Bond which has a BBB+ rating that yields 3.9%, it would have generated $5,070,000 income each year, more than enough to pay for the yearly rental and expenses of Hall 8 at Singapore Expo. Arise and Build Fund would still have a NAV of $130,000,000, instead of the pathetic $10,000,000.
Why did they do such a silly deal?
1) Transfer rental expense from operating budget to Arise & Build Account. This shifts rental and equipment expense from CHC Operating Budget ($40,000,000+/year) to A&B Account. This creates room for Mission Expense of $12,000,000 each year. Where did the bulk of the $12,000,000 end up?
A case in point: $3,000,000 donation to City Harvest KL ended up with "Crossover" project.
How much of it was actually spent on outreach program? Nobody knows.
2) Initial 20% stake in Suntec was $43,000,000. But it was bumped up to $310,000,000, additional $267,000,000 for using the 44% of Suntec facilities on 80+% of the weekends over next 10 years.
Additional purchase of 19.2% Suntec at $54,000,000 in 2011. Miraculously, the 10 year budget is still $310,000,000.
3) The moving in and out of Suntec created opportunity to make extraordinary profit. Each move is $1,000,000 plus many miscellaneous charges.
4) These imprudent expenses, amounting to almost $30,000,000 during the first year of using Suntec location alone, make it necessary to conduct another 7 to 8 Arise & Build exercises. Opportunity to raise more money for unaccounted mission donations, more $1,000,000 moves and fees.
How come COC did not intervene earlier?
*Article first appeared on https://www.facebook.com/CHCConfessions/posts/614107505275297