State v Niso (No 2) [2005] PGLawRp 35; [2005] PNGLR 308 (15 November 2005)

[NATIONAL COURT OF JUSTICE]

THE STATE

V
DERRICK SAKATEA NISO (NO. 2)
WAIGANI: GAVARA-NANU J

16, 19 - 22 July, 3 September 2004; 11 February, 15 November 2005

CRIMINAL LAW – Sentence – Conspiracy- Forgery- Fraudulently uttering a false document – Aggravating factors - Misappropriation of substantial amount of money belonging to the employer– Offender a senior clerk in the central bank – Duties involving handling of large investments – Holding responsible position - Duty to the bank and to the customer investors – Breach of trust – Effects of the crimes on the bank.

CRIMINAL LAW – Sentence – Mitigating factors - Offender not in the same category as a director or a manager of a company or a leader entrusted with control of funds – Opportunity crimes – No plans or schemes involved in the commission of crimes - Substantial amount has been accounted for – Accomplice must share the blame – Offender’s part critical – Punishment must fit the crimes – Long punitive sentence warranted.

Facts

The accused was found guilty of four charges relating to conspiracy, forgery, fraudulently uttering a false document and misappropriation contrary to s.407 (1) (b); s.462 (1); s.463(2); and s.383A(1)(2) of the Criminal Code Act. The accused committed all the four offences when he was employed by the Bank of Papua New Guinea as the Senior Clerk and Supervisor in the General Ledgers Section. At the time of the commission of these offences, the accused had been in the employment of the bank for twenty two years. (See infra, pp.34 et seq-)

Held

1. The sentencing ranges as set out in Wellington Bellawa v The State in [1988-89] PNGLR 496 is no longer appropriate because of the frequency and the prevalence of misappropriation cases since Wellington Bellawa. The offences are serious and warrant a long punitive sentence to serve both as a personal deterrent to the accused and others. (Wellington Bellawa v The State in [1988-89] PNGLR 496; State v Doreen Liprin SC673; The State v. Dobi Au N2247. The State v Daniel Mapiria (2004) CR 1118 of 2000 distinguished)

2. The aggravating factors include, holding responsible position taking into account the status and role of Bank of Papua New Guinea as the country’s reserve bank with powers to regulate, control, supervise and even monitor the nation’s banking industry, and financial institutions; betrayal of trust; no show of remorse; other wider implications that the offence has created (The State v Alice Wilmot N2857); unnecessary expenses caused to the Bank to prosecute the case. The mitigating factors include, his age, no prior convictions; and 22 years of unblemished record with the bank.

3. The mitigating factors are that, whilst holding a responsible position, he does not stand in the same position as a director or a manager of a company having control of funds or someone entrusted with the control of funds allocated for specific projects; and that the co-perpetrator played a major role, without his assistance, the accused may not have succeeded in the commission of these offences.

4. The accused sentenced to 7 years 6 months with hard labour, less 8 months already spent in custody.

Papua New Guinea cases cited

Joshua Yaip Avini and Plaridel Nony Acosta v The State [1997] PNGLR 212.

The State v Alice Wilmot N2857.

The State v Buygonnes Tuse Nae N1474.

The State v Daniel Mapiria (2004) CR 1118 of 2000.

The State v Dobi Au N2247.

The State v Dorren Liprin SC673.

The State v Iori Veraga [2005] PNGLR 332

The State v Ludwina Tokiopron (2005).

The State v Paroa Kaia N1930.

The State v Robert Muring Antap (2003).

The State v Yaip Joshua Avini and Pralidel Nony Acosta (1994).

Wellington Bellawa v The State [1988-89] PNGLR 496.

Counsel

S Kesno, for the State.
D Dotaona, for the accused.

Gavara-nanu j.

The accused was found guilty of four charges relating to conspiracy, forgery, fraudulently uttering a false document and misappropriation, after a trial lasting four days.

First count is that he between 30 August and 4 October, 2002, at Port Moresby conspired with one Soni Harvies and other unknown persons to defraud the Bank of Papua New Guinea of K500,000.00 contrary to s.407 (1) (b) of the Criminal Code Act Chapter No. 262 (hereinafter referred to as ‘the Criminal Code Act’).

This offence carries the maximum penalty of seven years imprisonment.

The second count is that he on 4 October, 2002, at Port Moresby, forged a Westpac Bank (PNG) Ltd cheque account application form in the name of one Raymond Mell, contrary to s.462 (1) of the Criminal Code Act.

This offence carries the maximum penalty of three years imprisonment.

The third count is that he on 04 October, 2002, at Port Moresby, knowingly and fraudulently uttered a false document purporting to be a Westpac Bank (PNG) Ltd cheque account application form in the name of Raymond Mell, contrary to s.463 (2) of the Criminal Code Act.

This offence carries the maximum penalty of three years imprisonment.

The fourth count is that he between 7 and 21 October, 2002, at Port Moresby, applied to his and to the use of others, K5000,000.00, the property of the Bank of Papua New Guinea, contrary to s.383A (1) (2) of the Criminal Code Act.

This offence carries the maximum penalty of ten years imprisonment.

All these offences were committed when the accused was employed by the Bank of Papua New Guinea as the Senior Clerk and Supervisor in the General Ledgers Section.

At the time of the commission of these offences, the accused had been in the employment of the bank for twenty two years.

The Supreme Court has set out ranges of sentences that may be applied in misappropriation cases in Wellington Bellawa v The State [1988-89] PNGLR 496. However, whilst the principles to be applied when determining sentences in that case are relevant and applicable, the ranges of sentences recommended there are in my opinion inappropriate to the facts of this case. Indeed the current trend in the range of sentences have markedly increased from those suggested in Wellington Bellawa. The Courts have regarded the sentencing ranges suggested in that case as outdated and no longer appropriate because of the frequency and the prevalence of misappropriation cases since Wellington Bellawa.

Both counsel have referred me to cases in support of their respective submissions on sentence.

Mr. Dotaona cited a number of cases which he submitted should provide guidance to the Court in determining the sentence for the accused. I will refer only to three. First is The State v Doreen Liprin SC673. In that case the accused was a former bank employee. She was charged with forgery, uttering and misappropriation of K6,000.00. She was sentenced to 1 year each for forgery and uttering and 3 years for misappropriation. All the sentences were suspended on the condition that she repaid the money in two months from the date of sentence.

The other case is The State v Dobi Au N2247. In that case the accused was found guilty after trial for misappropriating K37,526.58 and attempting to misappropriate another K5,980.70 from the State. The accused was sentenced to 3 years but the sentence was wholly suspended on certain conditions including making restitution of the monies misappropriate.

The last case is The State v Daniel Mapiria (2004) CR 1118 of 2000. In that case the accused was found guilty after a trial for misappropriating K3.18m. The accused countersigned 41 "pay cash" cheques. He was the Chairman of the National Gaming Control Board. The accused was sentenced to 9 years but the sentence was fully suspended on certain conditions including repaying K1.m to the Gaming Board.

I do not find these cases of any real assistance because there are obvious differences between those cases and this case. The first two cases involved amounts which were much smaller than the amount in this case and in regard to the third case, it is currently under appeal.

Mr. Kesno also cited cases for Court’s guidance in determining the appropriate sentence for the accused. First is The State v Paroa Kaia N1930. The accused in that case was an Accounts Supervisor with ANZ Bank. He pleaded guilty to misappropriating K94,478.31. The accused fraudulently transferred funds from various customers’ accounts to his associates’ accounts. The monies were then withdrawn from his associates’ accounts and shared amongst themselves. He was sentenced to 4 years.

In The State v Buygonnes Tuse Nae N1474, the accused pleaded guilty to 14 counts of misappropriation. The amount involved was K103,587.70. The accused was involved in a rural housing scheme and he invited members of the public to become members with membership fees ranging from K50.00 to K200.00. After collecting money from the members, he used the money. He was sentenced to 4 years.

In The State v Yaip Joshua Avini and Plaridel Nony Acosta (1994), the accused misappropriated K100,000.00 which was for two road projects. They were both found guilty after a trial. The first accused was a member of Parliament and the second accused was the Managing Director of a company. Both were sentenced to 8 years. The Supreme Court in Joshua Yaip Avini & Plaridel Nony Acosta v The State [1997] PNGLR 212, affirmed the sentences.

In The State v Iori Veraga [2005] PNGLR 332, the accused who was a valuer was convicted after a trial on two counts of conspiracy to defraud and 4 counts of misappropriation. The amount misappropriated was K144,955.00. The accused fraudulently invoiced the National Provident Fund with excessive amounts for his services and when he was paid the money, he shared it with his accomplice who was the Chairman of the National Provident Fund Board. The accused was sentenced to total term of 6 years.

In The State v Robert Muring Antap (2003), the accused was found guilty after a trial for misappropriating K210,000.00. He was sentenced to 8 years. No other details about this case were provided.

In The State v Ludwina Tokiopron (2005), the accused pleaded guilty to misappropriating K200,000.00. In that case, the accused obtained money from the victim on the pretext that the money would be invested in a Pyramid Scheme in Singapore but the money was never invested, it was used by the accused. The accused was sentenced to 6 years.

These cases clearly put sentences for misappropriation cases involving large amounts of money well above the sentencing ranges recommended in Wellington Bellawa.

I am grateful to both counsel for their assistance in their able submissions. I will consider them in deciding the punishment for the accused. Ultimately of course, the punishment given will be decided on the merits of this case.

The accused is 51 years old and comes from the Enga Province. He is married with 6 children, 4 of them adopted.

He is quite well educated and his educational career path took him to attend the Port Moresby Technical College in 1976, then in the following year in 1977, he studied surveying at the University of Technology. He left University without completing his studies. In 1980, he joined the Bank of Papua New Guinea and had since been with the bank until 2002, when he left the bank following these offences.

The amount misappropriated by the accused is K500,000.00 or half a million kina which is a substantial amount. For that reason, I requested for a Means Assessment Report for the accused to see if the accused could make restitution. So a Means Assessment Report was prepared and submitted for the Court together with a Pre- Sentence Report by the Probation Officer. I am grateful for the reports.

It is noted in the Means Assessment Report that the accused has no savings or other means which can be readily available for him to make restitution. Mr. Dotaona also told the Court that the accused is not in the position to make restitution.

There is evidence that total amount of K193,911.71 was frozen by the Bank of Papua New Guinea in various bank accounts. So while that amount can be accounted for and recovered, the remaining amount of K276,088.29 cannot be accounted for.

Of the K193,911.71, the amount of K27,291.52 was frozen at Westpac Bank, bogus cheque account No. 600680347. The amount of K103,156.23 was frozen from the accused’s son Delfred Sakatea Niso’s trust account No. 1000188097 with the Bank of South Pacific, Port Moresby and the amount of K63,463.96 was frozen from Soni Harvie’s bank account No. 1000982927 with the Bank of South Pacific, Waigani Branch.

From the Means Assessment and Pre-Sentence Reports as well as the written submission by Mr. Dotaona, it is noted that the accused still denies the charges. Although he seems to have accepted some responsibility for the K150,000.00 cheque he deposited into his son’s trust account, he still says that the cheque was given to him by an unknown person. So he still denies that he wrote that cheque.

I note these, as they indicate the general attitude of the accused even after the guilty findings. No remorse was expressed by the accused either.

This is a very serious case not only because the amount misappropriated is substantial but also because of the effect it has on the bank.

The accused occupied a responsible position because his duties involved dealing with large amount cheques which were paid out in treasury bill investments. Hence, the trust reposed on him by the bank was great.

The bank affected here is the central bank of Papua New Guinea which serves as the country’s reserve bank with powers to regulate, control, supervise and even monitor the nation’s banking industry and financial institutions. It also deals with overseas commercial banks and financial institutions such as the World Bank, the IMF and others.

Because the bank has such status, its employees are expected to apply highest degree of professionalism, honesty and work ethics when discharging their duties. They are the hands, eyes and the mind of the bank. Thus they are entrusted with complete trust of the bank that they should uphold the integrity of the bank at all times in the discharge of their duties. The accused betrayed that trust. The offences have the effect of eroding public confidence in the bank. They also affect the bank’s ability to provide and promote good governance and sound and effective financial and economic management. These offences therefore have wider implications. They also paint a bad picture of the bank here and abroad. See, The State v Alice Wilmot N2857.

The case naturally has affected other employees of the bank, especially those who were unnecessarily put under emotionally stress because of accused's denial of the offences and his attempts to put the blame on those staff. The accused has as a result created distrust and suspicion amongst the staff. This can demoralize them. Not only that, but the bank itself was put to unnecessary expenses, because it had to do its internal investigations and then assist in the prosecution of the case. Furthermore, the State was also put to enormous expenses to prosecute and prove its case.

Against these aggravating factors, there are also factors which in my opinion weigh in favour of the accused, which I should take into account in exercising my sentencing discretion. The accused has no prior convictions. This includes 22 years of unblemished record with the bank. He is now 51 years old. That is a relevant factor to take into account.

These were opportunity crimes in that there was no planning or premeditation of the crimes. In that regard, I have no doubt that the accused fell into temptation to steal the cheque when the cheque came into his possession in the normal flow of work between the Clearing Section and the General Ledgers Section. Whilst he was holding a responsible position because of the nature of his job, he does not stand in the same position as a director or a manager of a company having control of funds or someone entrusted with the control of funds allocated for specific projects. Thus, the case stands in a slightly lower scale to the cases referred to by Mr. Kesno, where the accused either had direct control over funds or where professionals were involved in fraudulent schemes with degrees of sophistication.

Having said that, the amount involved is much more than those in the cases referred to by Mr. Kesno. Thus it requires careful balancing of the relevant factors in determining the appropriate sentence.

Besides these factors is that one of the main players in these crimes namely, Mr. Soni Harvies has not been arrested and charged. He played an equally significant role in the commission of these offences because he used his position and knowledge as a banker with the Westpac Bank, Port Moresby to help the accused to first open the bogus cheque account with that bank. That included assisting the accused with all the paper work to open the account. He then helped the accused to deposit the K500,000.00 cheque into that bogus cheque account. Again that involved assisting the accused with all the paper work to effect the deposit. He then personally went to the Bank of Papua New Guinea for the K500,000.00 cheque to be cleared on the same day it was deposited. He did not go once but twice. He then assisted the accused to make large withdrawals against the K500,000.00 starting from the day the cheque was deposited. He personally verified all the withdrawals.

This clearly shows that Mr. Soni Harvies played a major role. It is quite obvious that without his assistance, the accused may not have succeeded in the commission of these offences. Mr. Soni Harvies clearly had a part in each of the four offences the accused has been found guilty of.

The other factor is that K193,911.71 will be recovered by the bank, so in that regard, the bank has not lost all of K500,000.00. I will take these into account.

I remind myself that Mr. Harvies did all he did only after the accused got the cheque and gave it to him. So the accused was the one who set everything in motion. Then he of course benefited subsequently. For that reason, the accused must carry greater part of the blame.

The offences are serious for the reasons given and they warrant a long punitive sentence to serve both as a personal deterrence to the accused and others.

But before I announce the sentences for the accused, I feel compelled to make some remarks regarding the co- perpetrator, Mr. Soni Harvies. As I said, he played a major role in the commission of the offences for which the accused is about to be punished. The reasons why Mr. Harvies has not been arrested and charged are known only to the police. However, for me, his participation in these offences is very clear and I see no reason why he should not be arrested and brought to justice immediately.

I therefore strongly recommend to the Police Commissioner and the arresting officer to immediately take appropriate steps to arrest and charge Mr. Harvies so that he can be dealt with under the due process of the law. It is in the public interest that Mr. Harvies is brought to justice as soon as possible. Any inaction by the police in that regard would send a wrong signal to the public that perpetrators of serious offences such as this can easily escape the long arm of the law. That should and must not be the case if the public is to have confidence in the police and the criminal justice system.

In regard to the punishment for the accused, taking into account all the relevant factors, I impose the following sentences:-

(i) For the first count, I sentence the accused to 3 years 6 months IHL.
(ii) For the second count, I sentence the accused to 1 year 3 months IHL.
(iii) For the third count, I sentence the accused to 1 year 3 months IHL.
(iv) For the fourth count, I sentence the accused to 7 years 6 months IHL.
(v) I order that sentences for first, second and third counts be served concurrently with the sentence for the fourth count.
(vi) Thus the effective term of imprisonment is 7 years 6 months IHL. From this, I will deduct the period spent in custody, which is from 15 February, to 15 November, 2005, which is 8 months. This leaves the balance of the effective sentence at 6 years 10 months IHL. He will therefore serve 6 years 10 months IHL.
(vii) I order that the accused's bail money of K200.00 be forfeited and the money be paid to the Bank of Papua New Guinea as part of the restitution of its monies misappropriated by the accused. The payment is to be made by the Registrar in the manner and at a time and venue convenient to both the Registrar and the bank.

Lawyer for the State: Public Prosecutor.
Lawyer for the accused: Dotaona Lawyers.