State v Asakusa (No 1) [2010] PGNC 101; N4056 (28 July 2010)

N4056

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR No. 995 OF 2008

THE STATE

V

PAUL ASAKUSA (NO.1)

Waigani: Kawi, J
2010: 2nd, 3rd, 4th & 28th July

CRIMINAL LAW - Conspiracy to Defraud - Agreement to do unlawful act -Conspiracy to defraud- offence completed when agreement made - agreement expressed or implied - acts and omissions of parties - conduct of accused suggest agreement to defraud- accused gave directions to refund government cheque - cheque refunded and proceeds paid to an individual who has no legitimate entitlement to proceeds - deposit of cheque to an individual account- monies withdrawn from individual account and used for own private purposes- funds from government appropriated under the District Support Improvement Program- Government funds - Funds dishonestly used and applied for use of an individual- Refunding a government cheque to an individual for his own use is downright stealing and amounts to a dishonest application of State Funds-State has legal and equitable interests in the funds - state funds – misappropriation - state evidence cannot be described as hopeless or unreliable and therefore cannot be intrinsically weak- Accused has a case to answer on both counts.

Cases cited:

Papua New Guinea Cases

Paul Kundi Rape [1976] PNGLR 96
The State v Roka Pep (No.2) [1983] PNGLR 287
State v Tanedo [1975] PNGLR 395
Brian Kindi Lawi v The State [1987] PNGLR 183
The State v Gabriel Ramoi [1993] PNGLR 390.
State v Ipai Koivi, Unreported and Unnumbered judgement of Kawi J dated 16th April 2010.
The State v Sebulon Watt and Miskus Maraleu [1994] PNGLR 582
Paulus Pawa v The State [1981] PNGLR 498
The State-v-James Makario (1990) Unreported N862,
The State-v- Tom Morris [1981] PNGLR 493
The State v. Devlin David [2006] SC881
State –v- Kuri [1994] PNGLR 371
SCR No 1of 1998 Reservation Pursuant to section 15 of the Supreme Court Act SC 672

Overseas Cases

R v Jones [1832] EngR 870; (1832) 110 ER 485
Churchill v Walton [1967] 2 AC 224
R v Griffiths [1967] 2 All ER 448; [1966] 1 QB 598.

References Cited:

Macquarie Dictionary 1997 Third Edition @ 569
The Osborn's Concise Law Dictionary (6th ed)
Halsbury's Laws of England (4th ed) Vol 11 (1) 1990
Oxford Dictionary of Law (1977)
Carter RF, Criminal Law of Queensland, 3rd ed; (1969), Butterworths,

Counsel:

Mr. K Pondros, for the State
Mr. C. Nidue, for the Accused

5th July, 2010

RULING ON NO CASE TO ANSWER SUBMISSION

1. KAWI, J: The accused Paul Asakusa pleaded not guilty on arraignment to one count of conspiracy to defraud the State contrary to section 517 and another count of misappropriation contrary to section 383A (1(a)(b) & (d) of the Criminal Code.

2. At the close of the State's case, the accused through his counsel opted to make a no case to answer submission mounted on both limbs of the test in the State-v-Paul Kundi Rape [1976] PNGLR 96 case. Hence this Ruling on the no case to answer submission.

THE STATE'S ALLEGATIONS

3. The accused Paul Asakusa faces two charges brought pursuant to Section 517 of the Criminal Code and Section 383A(1)(a)(b) & (d).

4. The charge under Section 517 alleges that the accused conspired with one Aloysius Kingsley to defraud the State. In the second charge under Section 383A(1)(a)(b) & (d) he is alleged to have misappropriated K50,000.00, moneys belonging to the State.

STATE ALLEGATIONS – COUNT 1

5. The State alleges that the accused was the Managing Director of the National Housing Corporation (NHC) at the relevant time. In the course of his employment, the accused received a letter dated 25th September 2007 from one Alois Kingsley. Enclosed in the letter was a cheque in the sum of K50,000.00 and made payable to the NHC. It was a Bank of Papua New Guinea cheque raised by the Department of Finance and Treasury.

6. The original purpose of the cheque was for the purchase of a house in Madang to accommodate a School Inspector. The State alleges that when the letter and the cheque were received, the accused conspired with Alois Kingsley. The State alleges that as a result of this conspiracy with Alois Kingsley the K50,000.00 cheque was deposited into the NHC bank account at Bank South Pacific (BSP) and later another BSP bank cheque in the sum of K50,000.00 cheque was drawn from the NHC bank account and made payable to Alois Kingsley. This cheque was later deposited into Alois Kingsley's private bank account and used for his own purposes.

7. This conspiracy, including the transactions and the deposit of the said cheque into the said bank accounts, occurred between the 25th September 2007 up to and including the 29th October 2007. The State alleges that the accused knew that what he was doing is contrary to law.

STATE ALLEGATIONS – COUNT 2

8. The State further alleges that from the time the cheque was deposited on the 29th October 2007 until the 19th November 2007, the proceeds of the K50,000.00 cheque were withdrawn from Alois Kingsley's private bank account. The State says that as a result of the accused's fraudulent activity, the sum of K50,000.00 was misappropriated for Alois Kingsley's own use.

9. In his opening address, the State Prosecutor asked the court to infer conspiracy from the letter dated 25th September 2007 from Alois Kingsley to the accused, who was then the Managing Director of the National Housing Corporation (NHC) together with the notations of the accused on the said letter and the other letter dated 26th September 2007, and his instructions to his sub-ordinate staff. In relation to count 2 the State prosecutor in his opening address stated that when Alois Kingsley deposited the K50,000.00 cheque into his personal bank account, and withdrew the monies, he is said to have misappropriated monies belonging to the State.

THE STATE EVIDENCE

10. To sustain its allegations the state called four witnesses. These witnesses are:

1. Mrs. Ovoa Rova;
   
2. Mr. Keilani Toea
   

100. Mr. Benjamin Goimba
     

4. Detective Senior Constable Nick Tangale.
   

11. The first State witness was one Mrs Ovoa Rova who is currently employed as a Financial Accountant with the NHC. Currently she is the Acting General Manageress, Finance and IT with the NHC. She gave evidence of receiving a letter from Alois Kingsley in September 2007. The letter was dated 25th September 2007 and was passed to her from the Managing Director's Office. The letter was addressed to the accused who at that time was the Managing Director of the NHC. Attached to the letter was a government cheque in the sum of K50,000.00. The letter reads:

"Dear Sir

EXPRESSION OF INTEREST TO PURCHASE NHC PROPERTY IN

MADANG.

I would like to seek your approval for the above as my previous offer of K50,000.00 for Section 36, Allotment 75 in Madang is now allocated to another party.

The BPNG Cheque No. 858934 dated 21 March 2007 made payable to the NHC is still current and I remain committed to make another offer for any property within Madang.

Any property for the same value would be ideal for my interests.

Your Sincerely,

Mr Aloysius G. Kingsley

Applicant"

12. Using his position as Managing Director the accused then directed Mrs Ovoa Rova to receipt and refund this cheque.

13. Mrs Ovoa in turn wrote a memo to the accused as the Managing Director, advising him against refunding the cheque to Alois Kingsley. Despite this advice the accused insisted on the cheque being receipted, deposited into the NHC bank account and then have the proceeds refunded to Alois Kingsley.

14. Alois Kingsley then wrote another letter to the accused dated 26th September 2007. That letter states:

"Dear Sir

RE: WITHDRAWAL OF DEPOSIT ON PROPERTY IN MADANG.

I would like to seek your approval for the return of the K50,000.00 deposit made against the property as the property was already sold to another person. I would like to purchase another property in Madang. Your utmost approval is sought.

Yours Sincerely

__________________

Aloysius Kingsley

Applicant"

15. Upon receiving this letter, the accused again directed Mrs Ovoa Rova as the Acting General Manager, Finance to verify the cheque with the Central Bank, have it deposited into the NHC Bank Account and then refund it to Alois Kingsley.

16. The cheque was then deposited into the NHC account. Immediately after the deposit, another Bank South Pacific Cheque No. 1000 012066 was drawn from the NHC Bank Account in the amount of K50,000.00 and was drawn and made payable to Alois Kingsley. This cheque is dated 26th October 2007.

17. During cross-examination Mrs Ovoa Rova maintained that the instructions from the accused as Managing Director were improper because there was not enough documentation such as a Contract of Sale or a Transfer Instrument, to verify the cheque payment. Neither were there any other supporting documents from the Department of Finance and Treasury.

STATE WITNESS #2 – MR KEILANI TOEA

18. The second State witness was Mr Keilani Toea. At the relevant period in 2007 he occupied the position of General Manager, Properties. The thrust of his evidence is that:

(a) As a result of the directions from the accused as the Managing Director of the NHC, the K50,000.00 cheque was receipted against Alois Kingsley's rental account and then deposited into the main NHC account.

(b) After it was deposited into the NHC bank Account, another BSP cheque of K50,000.00 was drawn against the NHC account and then paid to Alois Kingsley.

(c) There was no property bearing the description Section 76, Lot 10 in Madang for sale. The only property bearing that description in Madang is the present NHC Office complex. This NHC Office complex was never for sale to anyone, let alone to Alois Kingsley.

(d) He further stated that there was never any sale offer of that property. According to Mr Toea, the K50,000.00 payment was received prior to an offer being made and so this cheque should be treated as null and void from the outset.

(e) There were no other documents such as a Contract of Sale, a Transfer Instrument, or other supporting documents from the department of Finance and Treasury, accompanying the cheque.

(f) Mr Toea says that on a number of occasions he had verbally advised the accused to return the cheque to Mr Alois Kingsley but the accused insisted on having the cheque deposited and refunded.

STATE WITNESS NO. 3 – MR BENJAMIN GOIMBA

19. The third State witness was a Benjamin Goimba, a Bank Reconciliation Clerk in the Department of Finance. He gave evidence of receiving a letter from Police on this complaint and provided evidence of the K50,000.00 cheque payment from the Department of Finance and Treasury to the National Housing Corporation. His evidence reveals that the K50,000.00 cheque payment came from the National Government's District Support Improvement (DSIP) Program and was meant to purchase a house in Madang to house a school inspector in Madang. The request for this payment was made by the Madang Open Joint District Planning and Budget Priorities Committee (JDP & BPC) in its Meeting No.2 of 2007. The payment was eventually released from the Trust Account Section of the Finance Department.

20. He also identified other necessary account documents that were provided to support and justify the cheque payment of K50,000.00.

STATE WITNESS #4 – DETECTIVE SENIOR CONSTABLE NICK TANGALE.

21. The final State witness was Detective Senior Constable Nick Tangale.

22. He gave evidence of receiving a complaint of this K50,000.00 transaction from the Housing Minister, Mr Andrew Kumbakor and then investigating the complaint. His investigations led to the arrest of Mr Asakusa. Senior Constable Yangale also conducted a Record of Interview with the accused on Tuesday 25th March 2008.

23. The record of interview was also tendered into evidence. His investigations revealed the following:

(a) A Department of Finance cheque in the amount of K50,000.00 was made payable to the NHC on account of paying for a school inspector's house in Madang.

(b) The cheque No. 858934 and dated 21 March 2007 was initially raised on 21st March 2007. It was made payable to NHC but was collected and held by Alois Kingsley in his custody for some six (6) months.

(c) This cheque originated from the Trust Section of the Finance Department and was meant to pay for a school inspector's house in Madang.

(e) The deposit slip of the K50,000.00 cheque being deposited into the private bank account of Alois Kingsley was tendered into court through this witness. He confirmed Kingsley's account as 1000149889. The cheque of K50,000.00 was paid into Alois Kingsley's account on the 29th October 2007 and the first withdrawal of K30,000.00 was a counter withdrawal made at BSP Bank Boroko on the same day (i.e. 29/10/07).

Thereafter, Alois Kingsley began withdrawing money from his personal bank account with the first counter withdrawal being made in haste on the same day.

PRINCIPLES OF LAW ON A NO CASE TO ANSWER SUBMISSION

24. The tests or principles of law governing a no case to answer submission have been enunciated in the case of The State –v- Paul Kundi Rape [1976] PNGLR 96. In that case, two distinct but related tests were enunciated and they may arise at the close of the case for the prosecution or indeed at any stage of the trial. See also The State v Misimb Kais [1978] PNGLR 241.

25. The first test is, whether on the evidence as it stands the accused could be lawfully convicted.

26. The second test is this: where there is a case to answer, the accused may as a matter of law be called upon to answer it, but there is a discretion vested in the judge to take the case away from the jury or a tribunal of fact or not.

27. The National Court also had the occasion to amplify the no case to answer principles in the State –v- Roka Pep [1983] PNGLR 19. This case was decided some years after Paul Kundi Rape's case. The court expressed the two tests laid down in the Paul Kundi Rape case in this way:

"A submission of no case to answer at the close of the case for the prosecution is a question of law for the Judge to decide, the prosecution case will not be proved beyond reasonable doubt or the prosecution case will not improve, or the prosecution case is hopeless or intrinsically weak, then the Judge has a discretion to acquit the accused on the no case submission."

28. Perhaps a better understanding of the principles is the summary in the decision of the Supreme Court in the State –v- Roka Pep No. 2 [1983] PNGLR 287 which adopted and expanded the principles in the State –v- Paul Kundi Rape. The Supreme Court (per Kidu CJ, Kapi DCJ, Andrew and Kaputin JJ) expanded the principles in this way;

"Where in Criminal proceedings at the close of the case for the prosecution, there is a submission of no case to answer, the question is for the Judge as a tribunal of law; the test is whether the evidence supports the essential elements of the offence."

29. Where the tribunal decides there is no case to answer, the accused is acquitted and that is the end of the matter.

30. Where the tribunal decides there is a case to answer, it nevertheless has discretion to stop a case at the close of all the evidence in appropriate circumstances; this discretion is exercisable where there is a mere scintilla of evidence and where the evidence is so lacking in weight and reliability that no reasonable tribunal could safely convict on it.

31. A tribunal should make a finding of no case to answer where (a) there is no evidence to establish an element of the offence charged; or (b) there is some evidence covering the elements of the offence charged but it is tenuous or incredible or discredited that it amounts to only a scintilla, and thus could not be accepted as persuasive by any reasonable person (Per Pratt J)

32. As it is, the prosecution must show some evidence of the existence of the elements of the offence under Section 517 and the existence of the elements under Section 383A (1(a)(b) & (d) of the Criminal Code.

33. At this stage I must warn myself that the question is not whether the State has established its case beyond reasonable doubt; rather on the evidence as it stands the question is whether the accused can be lawfully convicted?

ELEMENTS OF THE OFFENCE UNDER SECTION 517 AND 383A OF THE CRIMINAL CODE

34. The no case to answer submission rests on both legs of the Paul Kundi Rape case. Simply put, the defence argues, that the State's evidence as it stands is intrinsically weak, as it does not establish the elements of conspiring to defraud the State. Neither does it establish elements of conspiracy.

35. Furthermore, it does not establish that the accused misappropriated State funds as alleged. In other words, it is argued that first there is no evidence of conspiracy between the accused, Paul Asakusa and Alois Kingsley and secondly the State has not produced any evidence to establish dishonesty on the part of Paul Asakusa in relation to the receipt and refund of the K50,000.00 and therefore there is no evidence of misappropriation.

36. The State concedes that it does not have any direct evidence to establish the elements of the existence of a conspiracy to defraud and dishonestly applying State funds pursuant to a conspiracy agreement, but says that its case rests entirely upon circumstantial evidence. The court is invited to draw logical and rational inferences to establish the elements of these offences from the evidence as it stands.

37. Indeed there is no rule of law which says that the State can only prove its case by hard credible evidence or direct evidence. It is open to the State in any criminal case to prove its case by circumstantial evidence and in this case a finding of a no case to answer was dependent on the acceptance of the circumstantial evidence.

THE LAW ON CONSPIRACY

38. Section 407 of the Criminal Code makes provisions in respect of Conspiracy to defraud in the following terms:

(1) A person who conspires with another person –

(a) by deceit or by fraudulent means to affect the market price of any thing publicly sold; or

(b) to defraud the public, or any person (whether or not a particular person; or

(c) to extort property from any person is guilty of a crime.

Penalty: Imprisonment for a term not exceeding 7 years.

(2) A person shall not be arrested without a warrant, for an offence against subsection 1.

39. As to conspiracy generally, the Criminal Code makes provisions for these in s 515 to s 517; s515 conspiracy to commit crimes; s516 conspiracy to commit other offences and s 517; other conspiracies.

40. The law on conspiracy is briefly stated in the National Court decision in The State –v- Tanedo [1975] PNGLR 395 and The State –v- Sebulon Watt and Miskus Maraleu [1994] PNGLR 582. In these two cases it was essentially held that conspiracy is an Agreement between parties to carry out an unlawful purpose by unlawful means or a lawful purpose by unlawful means. It was further stated that conspiracy could be inferred from the conduct of the alleged conspirators.

41. His Honour Sakora J reviewed all legal and academic authorities and made a very comprehensive exposition of what the law is on conspiracy in the case of The State –v- Iori Veraga [2005] N2849. I propose to adopt as my own some of the very comprehensive statements of law as defined by His Honour from case authorities law both in Australia and England which His Honour has eloquently canvassed upon.

42. Halsbury's Laws of England (4th ed) Vol 11 (1) 1990, provides the common law definition of conspiracy as follows:

A person who agrees with one or more other persons by dishonesty:

(1) to deprive a person of something which is his or to which he would or might be entitled: or

(2) to injure some propriety right of a person

is guilty of conspiracy to defraud at common law.

43. The Osborn's Concise Law Dictionary (6th ed) re-iterates the definition of "conspiracy" as:

The agreement of two or more to do an unlawful act, whether criminal or tortuous in its nature, or to do a lawful act by unlawful means, whether the act is committed or not.

44. The new edition (1977) of the Oxford Dictionary of Law defines the term as follows:

An agreement between two or more people in a manner that will automatically constitute an offence by any one of them (for example, two people agree that one of them shall steal while the other waits in a getaway car). The agreement is itself a statutory offence, usually punishable in the same way as the offence agreed on, even if it is not carried out.

45. Thus, the offence of conspiracy consists of an agreement between at least two persons to do an unlawful act or a lawful act by unlawful means. This is the classic definition that owes its origin to Lord Denman CJ in R v Jones ([1832] EngR 870; 1832) 110 ER 485.

46. The guilty act, the actus reus, of the offence of conspiracy is the agreement to do an unlawful act, or a lawful act by unlawful means. The prosecution must prove the existence of an agreement. The physical acts by which the conspirators formed the agreement are the relevant facts. Once the agreement is formed, the crime is committed. It is to be noted that the prosecution need not prove that there was an agreement regarding the way in which the unlawful act was to be performed, only that there was agreement to perform the unlawful act.

47. The mens rea for 'conspiracy' is similar to 'attempt', in that anything less than the intent to perform an unlawful act will be insufficient. Thus, 'recklessness' will not ground liability: The prosecution must prove what is termed 'a community of purpose', that is to say:

(a) the intent to perform an unlawful act;

(b) the intent to agree with one or more members of the group.

48. To prove the existence of conspiracy it must be shown that the alleged conspirators were acting in pursuance of a criminal purpose held in common between them: Carter RF, Criminal Law of Queensland, 3rd ed; (1969), Butterworths, p. 473. The learned author there added further:

The conspirators may join in the conspiracy at various times; any one of them may not know all the other parties, but only that there are other parties; and any one may not know the full extent of the scheme to which he attaches himself; but each alleged conspirator must know that there is in existence a scheme which goes beyond the illegal acts which he agrees to do and must attach himself to that scheme. The kind of conspiracy known as the 'wheel conspiracy', where each conspirator is said to conspire with a central villain but not with the other named conspirators, is not known to the criminal law: R –v- Griffiths [1967] 2 All ER 448; [1966] 1 QB 598.

49. Therefore in order to prove conspiracy it is not necessary, to show that there was direct communication between each conspirator and every other party involved, provided that there is a design which is common to all of them. The overall intention of the conspirators is, thus, relevant, rather than the conspirators' relationship to each individual overt act relied upon: Kalajzich and Orrock (1989) 39 A Crim R 415.

50. In the case of R v Churchill (No. 2) [1967] 1 QB 190 which went to the House of Lords from the Court of Criminal Appeal as Churchill v Walton [1967] 2 AC 224, their Lordships in reversing the decision of the Court of Criminal Appeal, held that:

. . . on a charge of conspiracy to commit a statutory offence that is an absolute offence, the question essential to the determination of the issue whether there was agreement to do an unlawful act is still "what did the parties agree to do?", if what they agree to do was, on the facts known to them, an unlawful act, they are guilty of conspiracy and cannot excuse themselves by saying that, owing to their ignorance of the law, they did not realize that such an act was a crime; but if on the facts known to them what they agreed to do was lawful, they are not rendered artificially guilty of agreeing to do an unlawful act by the existence of other facts, not known to them, giving a different and criminal quality to the act agreed on.

THE LAW: MISAPPROPRIATION

51. Section 383A (1) of the Criminal Code defines the offence of misappropriation as follows:

(1) A person who dishonestly applies to his own use or to the use of another person –

(a) property belonging to another; or

(b) property belonging to him, which is in his possession or control (either solely or conjointly with another person) subject to a trust, direction or condition or on account of any other person,

is guilty of the crime of misappropriation of property.

52. The law is well settled in this jurisdiction as to what the constituent elements of this offence are from a line of decided cases over the years. These are restated hereunder as follows:

(a) dishonesty;

(b) application to own use or use of another; and

(c) property must belong to another.

53. The prosecution must prove these elements beyond reasonable doubt in order to find the accused guilty. The cases of Brian Kindi Lawi v The State [1987] PNGLR 582, The State v Gabriel Ramoi [1993] PNGLR 390, and The State v James Makario (1990) Unreported N862, amongst many others, emphasize these principles.

FINDINGS

1. AGREEMENT TO DO AN UNLAWFUL ACT.
   

1. Was there an Agreement to conspire to do an unlawful act through unlawful or lawful means between the accused Paul Asakusa and Alois Kingsley? The defendant submits that on the evidence as it stands, there is no direct evidence to establish the existence of an agreement to conspire. The State on the other hand submits that while it is true that there is no direct evidence showing conspiracy, this lack of direct evidence should not prevent the court from drawing inferences of conspiracy from the conduct of the accused. Such conduct includes directing sub-ordinate staff to undertake the following actions:
   

i) verify the cheque; and

ii) receipt the cheque; and

iii) deposit the cheque into the NHC account; and

iv) refund the cheque back to Aloysius Kingsley;

2. The State also relies on the two letters from Alois Kingsley dated 25th September 2007 (Exhibit 1) and 26th September 2007 (Exhibit 3), to infer the existence of conspiracy between the accused Paul Asakusa and Alois Kingsley to defraud the State. While it is true that there is no direct evidence to show a conspiracy between Paul Asakusa and Alois Kingsley, there is no rule of law which says that the State can only prove its case by direct evidence.
   

100. Indeed it is the judgement of this court that the State can prove its case by circumstantial evidence. See The State –v- Ipai Koivi Unreported and Unnumbered judgement of Kawi J dated 16th April 2010. The principles of law on the reception of circumstantial evidence has been comprehensively summarized by the National Court in the case of The State-v- Tom Morris [1980] PNGLR 493 where it was stated:
     

"Where there are a number of competing inferences it is a question of fact for the court to decide which inferences should be drawn, which rejected, which are reasonable, which are mere conjecture, and which party, if any, they favor and at the end of the prosecution case there are inferences inconsistent with the guilt of the accused, there is a discretion to acquit."

4. These principles have been applied in many cases. Thus the Supreme Court restated these principles as follows in The State –v- Paulus Pawa [1981]PNGLR 498:
   
   • The accused must be acquitted unless the facts proved in evidence are inconsistent with any reasonable hypothesis other than guilt; and
     
   • To enable the Court to be satisfied beyond reasonable doubt of the guilt of the accused it is necessary not only that his guilt be a rational inference, but that it be the only rational inference that the circumstances would enable it to draw.
     
5. In Devlyn David –v- the State [2006] SC 881 the Supreme Court re-stated the Paulus Pawa principles by saying that the question to be asked is:
   
   • Do the proven facts lead reasonably to only one conclusion- that the accused did all the things constituting the elements of the offence? If yes, the accused is guilty. If no, the accused is entitled to an acquittal.
     
6. In the State –v- Iori Veraga, His Honour Sakora J described the nature of conspiracy to defraud as follows:
   

"By the very nature of an offence such as conspiracy, rarely if ever are there any direct evidence of an Agreement between persons to involve in criminal activities. The rare occasions when direct evidence may be available is when a co-conspirator admits the offence and turns State witness to give evidence against the other. Direct evidence may also be available from electronic eaves dropping. But this source is often fraught with uncertainty as such evidence may be liable to successful challenge on Human Rights arguments on the issue of admissibility.

Thus case law demonstrates that the success of a State case may depend on circumstantial evidence, on reasonable inferences that are capable of being drawn".

7. I adopt and apply His Honor's very concise statement of law because they are very relevant to the circumstances of this case. Based upon reasonable inferences drawn from the evidence as it stands, there is some evidence to establish the major elements of the offence alleged.
   
8. The conduct of the accused as evidenced by his notations scribbled on the letter from Alois Kingsley dated 25th September 2007 and 26th September 2007 in directing his subordinate staff to receipt and verify the cheque, deposit it into the NHC bank account, and then have it fully refunded to Alois Kingsley points fingers to something very fishy and smelly. It pinpoints to the existence of an agreement to defraud the State of its K50,000.00.
   
9. The letter from Alois Kingsley to Paul Asakusa dated 25th September 2007 (Exhibit 1) never requested the NHC to receipt the cheque and then have the amount of K50,000.00 refunded to him. It was the accused himself who on his own initiative directed his sub-ordinate staff to receipt the cheque, have it deposited into the NHC account, and then have it refunded to Alois Kingsley. Only Paul Asakusa knows why the K50,000.00 was to be refunded to Alois Kingsley.
   
10. The most logical and rational inference to be drawn here is that there was an agreement to conspire and defraud the State of its money (K50,000.00 ) and that Paul Asakusa pursued that agreement by directing his subordinate staff to receipt and verify the cheque, deposit it into the NHC bank account, then have it fully refunded to Alois Kingsley.
    
11. Another logical inference to be drawn here is that the letters of the 25th and 26th September 2007 were intended to make wholly corrupt this evil scheme and the motives and desires appear lawful, when they were simply not. Alois Kingsley wrote those two letters with the connivance and knowledge of Paul Asakusa to orchestrate and engineer their evil plot.
    

50. There was never any property for sale within the township of Madang or anywhere bearing the description Section 36, Allotment 75, Madang. There is no record, from the past or present, of the NHC offering to sell a property bearing the description section 36, Allotment 75 within the township of Madang or anywhere or offering to sell property valued anywhere near K50,000.00 to Alois Kingsley. Likewise, there was never any contract of sale between the NHC and Alois Kingsley for the sale of any NHC property to the value of K50,000.00.
    

13. To say that a property bearing that description was for sale was simply a deceitful cover up to swindle K50,000.00 and make things look as if they were legal and normal when they were simply fishy right from the outset.
    
14. In pursuance of this corrupt scheme, two deceitful letters were written. These two letters from Alois Kingsley to Paul Asakusa dated 25th and 26th September 2007 were seemingly written with false and deceitful motives to defraud the State of its K50,000.00.
    
15. The K50,000.00 cheque payment was treated as if it was indeed a deposit payment, when it was never a deposit payment. There can be no legitimate deposit payment for a non existent property or put simply, for a ghost property that was never sold to anyone, let alone offered for sale. If there was ever a sale offer, then it was a ghost sale or a ghost offer of which only Paul Asakusa and Alois Kingsley are aware of. This is a pretentious ghost deposit over a ghost property which never existed.
    
16. The success of this seemingly evil and corrupt scheme depended very much on Paul Asakusa using his position as Managing Director of a profit making organization, the NHC, to direct his sub-ordinate staff to successfully implement what appears on its face to be a corrupt scheme using lawful means.
    
17. Instead of stopping the perpetration of this corrupt scheme, the accused became its chief implementer. He was an intricate part of this scheme. The accused and Alois Kingsley acted in concert. This is ably demonstrated by the kind of directions he was giving to his subordinate staff, especially the acting General Manager, Finance, Mrs Ovoa Rova to have the cheque deposited and then refunded to Alois Kingsley. The accused's notation on the letter of the 25th September is quite telling.
    

It states:

" 25/9/07

A/GM – Finance

A Bank of PNG Cheque of K50,000.00 has been drawn for NHC. Please have this receipted and refunded.

Signed:

Paul/MD

25/9/07"

18. Even more revealing is the other footnote notation scribbled on the letter of the 26th September 2007 which appears in these words:
    

"Mr Kingsley insisted we (NHC) verify the cheque with the Central Bank and have it deposited to our account and later refunded. For your information and action".

Paul/MD

1/10/07"

19. The letter from Alois Kingsley was indeed misleading and intended to divert attention as to his evil motives and malicious desires that both him and Paul Asakusa were pursuing and perpetrating. The letter never "insisted NHC to verify the cheque with Central Bank nor deposit it into the NHC account and then have it fully refunded to Alois Kingsley". This is Paul Asakusa's own doing to implement the conspiracy between him and Alois Kingsley.
    
20. Neither did the letter requested a refund of the K50,000.00. Refunding the cheque for K50,000.00 to Alois Kingsley was something within the peculiar knowledge of Paul Asakusa but this is the ultimate objective of the conspirators, Alois Kingsley and Paul Asakusa.
    
21. The most logical and rational inference to be drawn here is that Paul Asakusa and Alois Kingsley had a separate Agreement pursuant to which Alois Kingsley insisted that Paul Asakusa deposit the money into the NHC Account and later have it refunded to him. Paul Asakusa thus became the chief implementer of this seemingly evil scheme. This is the conspiracy agreement that only the two of them have peculiar knowledge of.
    

5. The conduit through which this evil scheme was to be perpetrated and implemented was designed by its chief implementer Paul Asakusa himself and it was to be achieved using what appears to be a lawful process. This include:
   
   1. Verifying the cheque with BPNG; and
      
   2. Depositing the cheque into the NHC Bank Account;
      
   3. Drawing another bank cheque from the NHC bank account in favor of Alois Kingsley as a full refund of the K50,000.00
      

23. If there were no documents to verify the cheque, and the cheque was already endorsed, a man of integrity and reason of Paul Asakusa's experience and intelligence would direct that it be immediately returned to the Department of Finance and Treasury as advised by his acting General Manager- Finance Mrs Ovoa Rova. He did not have to wait for the cheque to be verified first before he could do this.
    

10. By directing the cheque to be verified Paul Asakusa was only buying time to make it look as if he was undertaking lawful enquiries when he was clearly pursuing an evil scheme using lawful means. Instead, he blatantly directed that it be refunded to an individual whose only legitimate claim to the cheque was a deceitful and corrupt motive and an evil desire for its proceeds.
    

25. Based on the evidence as it stands and inferences drawn, this court cannot describe the State evidence as intrinsically weak or so hopeless and unreliable that any reasonable tribunal of fact cannot convict upon it.
    
26. It certainly cannot be described as being so tenuous or lacking in weight and reliability and is so hopeless that it only amounts to mere scintilla that the court ought to exercise its discretion to stop it at this stage.
    
27. It is the judgement of this court that drawing reasonable inferences from the behavior of the accused the court finds that there was a conspiracy agreement between Paul Asakusa and Alois Kingsley to defraud the state of K50,000.00. Defrauding the State is the unlawful act. There is therefore sufficient circumstantial evidence to infer the existence of this agreement to defraud the State.
    

2. TO DEFRAUD THE PUBLIC OR ANY PERSON.

1. There is no doubt that the K50,000.00 came from the Government and was intended for public purposes. This is clearly borne out by a letter dated 16th March 2007 (Exhibit 8) to the Secretary for Finance from Alois Kingsley in his capacity as Member for Madang Open in the National Parliament.
   
2. In that letter Mr Kingsley advised the Secretary for Finance of the different Appropriations done by the Madang Open Joint District Planning and Budget Priorities Committee (JDP & BPC) in its Meeting No.2 of 2007. The Madang Open Electorate JDP & BPC in its Meeting had clearly appropriated K50,000.00 for purchasing a School Inspectors House in Madang among its other appropriations.
   

100. These appropriations were then submitted to the Secretary for Finance for the appropriate payments to be raised. Cheque No.858934 dated 21st March 2007(Exhibit 2) in the sum of K50,000.00 was raised by the Department of Finance from Government funds allocated under the District Support Improvement Program(DSIP) to be spent on developmental and community orientated projects within the Madang Open Electorate. These funds are held and controlled by the Department of Finance and Treasury.
     

4. At the request from the member for Madang Open, and his JDP & BPC the funds totaling K50,000.00 was paid by a cheque from the Department of Finance & Treasury to the NHC. At the directions of the accused as the Managing Director of the NHC, the cheque was paid into the bank account of the NHC and later refunded to Alois Kingsley who used the proceeds for his own purposes.
   
5. The word Defraud is defined by the Third Edition of the Macquarie Dictionary at page 569 as "to deprive of a right or property by fraud or cheat".
   
6. Drawing logical and rational inferences from the evidence as it stands, the conduct of Paul Asakusa and Alois Kingsley clearly show that they intended to cheat or deprive the public which in this case are the people of the Madang Open Electorate of K50,000.00.
   
7. The funds here came from the Government DSIP and should be used for purposes earmarked or identified under that program and non other. In this case the purpose of the funds appropriated under the DSIP funds were to purchase a house to accommodate a school inspector in Madang and were not meant for Alois Kingsley as an individual person.
   
8. In the State –v- Kuri [1994] PNGLR 371 at page 375 Woods J made the following comments which I find are very relevant in this case:
   
9. "The people of Papua New Guinea are entitled to expect some responsibility with the administration and spending of government resources and money. Public accountability of public monies demands proper appropriations and control of such monies. Public or government funds are not personal accounts which those in control should have the right and power to dip into when they wish to ensure their support or help their friends.
   

If people in control or leadership create schemes for such an indiscriminate use of public monies, they are leaving themselves open to such charges as this one, misappropriation for their own ends, to help their friends, rather than the proper management for the people as a whole and the nation".

10. The court finds that by refunding a government cheque to a private individual, Paul Asakusa has by his conduct deprived or directly cheated the people of the Madang Open Electorate of K50,000.00. For all these reasons it is the judgement of this court that the State has established the element of defrauding.
    

MISSAPROPRIATION SECTION 383A 1 (a)(b) & (d).

54. Section 383A 1(a)(b) & (d) relate to misappropriation and dishonest application of funds. Section 383A 1(a)(b) states:

"(1) A person who dishonestly applies to his own use or to the use of another person –

(a) property belonging to another; or

(b) property belonging to him, which is in his possession or control (either solely or conjointly with another person) subject to a trust, direction or condition or on account of any other person,

is guilty of the crime of misappropriation.

55. Under this provision the State evidence must prove the following elements of the offence of misappropriation:

1. Dishonesty;
   
2. Application to own use or use of another;
   

100. The property must belong to another.
     

1- DISHONESTY

1. There are many judgments of both the National and Supreme Courts which affirm these principles. I will only refer to a few of these cases which re-state these principles. Three such cases are:
   
   1. Brian Kindi Lawi –v- the State [1987] PNGLR 582.
      
   2. Gabriel Ramoi –v- the State [1993] PNGLR 390
      
   3. The State –v- James Makario (Unreported) N862.
      
2. In Gabriel Ramoi's case, Salika J (as he then was) held that the word "Dishonestly" in the Criminal Code relates only to the state of mind of the person who does the act which amounts to misappropriation. The State of mind, when a person applies the property is a question of fact for the trial judge on all the facts presented before him. And when the judge considers the facts on how the property so applied was dishonestly applied. 'Dishonest' is defined in the Oxford Advanced Learners Dictionary of Current English as 'intended to cheat, deceive or misled'
   

100. In the State –v- Francis Natuwohala Laumadara [1994] PNGLR 291, at page 293, Injia AJ (as he then was) said:
     

"The question whether the accused acted dishonestly is an objective one. At the same time it is also a subjective one. The court must look into the mind of the accused and determine whether, given his intelligence and experience, he would have appreciated, as right minded people would have done, that what he was doing was dishonest."

4. In that case His Honour also said that (at page 302) where the accused instructed a sub-ordinate to make payment on his behalf, it is immaterial that the accused did not pay the money in person. The point was that the money was applied to the personal use of the accused in paying his loan debt.
   
5. In the present case applying both an objective and subjective test the following facts are taken into account to establish the element of dishonesty.
   
   1. The letter from Alois Kingsley dated 25th September 2009 never requested a refund of the K50,000.00.
      
   2. The direction to deposit, verify the cheque, have it deposited and then refunded to Alois Kingsley came from the accused. Drawing inferences from the State evidence as they stand, it is logical to conclude and the court so finds that Paul Asakusa was acting pursuant to an agreement between himself and Alois Kingsley to defraud the State of this K50,000.00 when he gave directions to refund the money to Alois Kingsley.
      
   3. He may not have physically refunded and paid the money to Alois Kingsley in person. But his direction to a subordinate to deposit and refund the money is sufficient to establish that State money which has come into his possession and control by the act of depositing into the NHC account was applied for the use of another person namely Alois Kingsley.
      
   4. This whole transaction depended very much on the accused using his position to direct his sub-ordinates to deposit the cheque and then have it refunded to Alois Kingsley. Depositing a government cheque and than refunding its proceeds to an individual who had no entitlement to it whatsoever amounts to a downright dishonest application, stealing and misuse of government funds.
      
   5. A person of Paul Asakusa's intelligence and experience as the Chief Accounting Officer of the National Housing Corporation should have appreciated that what he was doing was down right dishonest. He did not have to wait for his sub-ordinate officers to verify the cheque first before he could decide whether or not to return the cheque to the Department of Finance and Treasury.
      
   6. One need not be a rocket scientist to understand that refunding a government cheque earmarked for specific projects under the DSIP program to an individual is day light stealing of public funds.
      
   7. A person of Paul Asakusa's intelligence and experience, need not have to wait for the cheque to be verified from either the Bank of Papua New Guinea or the Department of Finance and Treasury to understand that this was government cheque and any refund of the funds would have to go back to the drawer which is the Department of Finance and Treasury and not to an individual such as Alois Kingsley.
      
   8. Paul Asakusa's actions in directing that the cheque be deposited into the NHC Account which was done and then to have it refunded, by drawing another BSP Bank cheque No. 239808 (Exhibit 18) to Alois Kingsley for K50,000.00, were designed to deprive and cheat the people of the Madang Open Electorate of their money and his actions are downright dishonest.
      
   9. Taking both a subjective and objective view on these transactions so far the court finds that a person of Paul Asakusa's standing and, his level of sophistication and intelligence and his experience as the Chief Accounting Officer of the National Housing Corporation his state of mind in ordering these actions can be best described as dishonest and cheating the people of Madang Open Electorate.
      

2. APPLICATION TO OWN USE OR USE OF ANOTHER
   

1. When Alois Kingsley wrote a letter to the accused dated 25th September 2007, the accused directed his sub-ordinate, the acting General Manager, Finance, Mrs Ovoa Rova to verify the cheque, have it deposited into the NHC account and then have the amount of K50,000.00 refunded to Alois Kingsley. The acting General Manager protested against this in her memo to the accused also dated 25th September 2009.
   
2. Part of her memo reads;
   

"Boss, it is not that I am going against your decision, but I feel it is not proper to receipt this cheque and refund due to the fact that the necessary details/documentation to the property is not provided to support this cheque."

100. Despite this good advice, the accused insisted on doing what he directed initially. The most logical inference to be drawn here of his insistence is that this was a calculated move and a conduit through which this evil scheme was to be perpetrated and so the accused would have to disregard and defy any sound advice from any one which may run counter to a successful implementation of this evil scheme.
     

4. On the 1st of October 2007, the accused again abused his position and power by directing the acting General Manager, Finance through this notation on Exhibit 3, i.e. the letter from Alois Kingsley, dated 26th September 2007.
   
5. "a/GM (Finance)
   

Mr Kingsley insisted that we (NHC) verify the cheque with Central Bank and have it deposited into an account and later refunded. For your information and action.

Paul/MD

1/10/07

6. The cheque was eventually deposited into the NHC Bank South Pacific Account. On the 26th October 2007, a Bank South Pacific cheque No. 2398089 (Exhibit 18) was raised to Alois Kingsley. The amount on that cheque was K50,000.00. This cheque was then deposited by Alois Kingsley into his personal Bank South Pacific account No. 1000149889

on the same day.

7. The bank statement Exhibit 16 confirms this. Immediately after the NHC cheque of K50,000.00 was deposited into his private bank account, Alois Kingsley made a counter withdrawal of K30,000.00 on that same day for his own personal usage.
   
8. The BSP Bank Statement (Exhibit 16) and the BSP Withdrawal Form (Exhibit 18) confirm this transaction. The fact that he withdrew K30,000.00 in haste on the same day smells of evil and deceitful motives. Why did Alois Kingsley withdraw K30,000.00 in such a hurry on the same day? And did BSP Bank Policies allow the withdrawal of such a huge amount of cash over the counter? One can only conclude that perhaps there were bank tellers as well who were part of this evil scheme. This fact of withdrawing K30,000.00 in haste on the same day is again a downright act of dishonesty and stealing in itself. The BSP bank statement (Exhibit 16) and the BSP Withdrawal Form (Exhibit 18 confirm this same day transaction.
   
9. The court therefore finds that the K50,000.00 belonging as it is to the Department of Finance and Treasury and therefore the State, was dishonestly applied for the personal use of Alois Kingsley, a person who is not lawfully entitled to the use of that money for his own personal uses. And this could not have been achieved without the prominent role played by the accused as the chief implementer of this scheme.
   
10. The State has sufficiently established this element.
    

3. THE PROPERTY MUST BELONG TO ANOTHER
   

1. The defence argues that the moment the cheque was deposited into the NHC account, it became the property of the NHC. It submits that legally therefore the NHC is not part of the State or an arm of the State and when the cheque of K50,000.00 was deposited into the NHC bank account the State lost all control and interest in the K50,000.00.
   
2. Therefore the K50,000.00 once deposited into the NHC bank account ceased to become state property. This submission is legally flawed and grossly misleading to say the least.
   

100. It is the judgment of this court that the court does not need to determine whether NHC falls within the definition of the word State to maintain the offence under count No. 2. It is the judgement of this Court that Section 383A(1)(3)(d) adequately provides the answer to the defence submission.
     

4. It is in these terms:
   

"persons to whom property belong include the owner, any part owner, any person having a legal or equitable interests in or claim to property and any person who, immediately before the offenders application of the property had control of it."

5. In the present case the cheque was a government cheque. The funds came from the State, through the Department of Finance and Treasury. It was appropriated under the DSIP program for purposes of buying a school Inspector's house in Madang. The Department of Finance and Treasury then released this cheque. When the BPNG cheque No. 858934 (Exhibit 2) was deposited into the NHC bank account, the State did not automatically lose all interest in the K50, 000.00.
   
6. The court finds that the State may have lost some physical control but it still had a legal and equitable interest in the cheque, as after all, when the money is used for its intended purpose, the recipient is required to acquit the funds to the State and not to the NHC. Immediately before Alois Kingsley's application of the funds for his own use, the State acting through the Department of Finance and Treasury had control over those funds. It had sufficient legal and equitable interests over these funds and how it is disbursed.
   
7. Even then the State has a chose in action over this money. In my view the terms of section 383A(1)(3)(d) are sufficient and wide enough to include and embrace a chose in action.
   
8. To argue as the Defence did that by depositing the funds into the NHC account the State has lost all control and interest over those funds, is rather fictitious, polemical and grossly misleading. Indeed what the accused and his counsel failed to point out when relying on the Supreme Court decision in SCR No 1. of 1998 Reservation Pursuant to section 15 of the Supreme Court Act SC 672 for the proposition that NHC is not an instrumentality of the State or part of the State, is the Supreme Court rationale in that decision.
   
9. The rationale of the Supreme Court decision in SCR 1 of 1998, SC 672 is the degree of political and financial control the National Government exercised over Provincial and Local Level Government funds. In that case the issue was whether the immunity provided by section 13 of the Claims By And Against the State Act applied to funds held by Provincial Governments.
   
10. The Supreme Court found that the sources of the funds held by Provincial Governments were public funds appropriated under the Organic Law on Provincial and Local Level Governments. Being government funds the immunity provided by section 13 of the Claims By And Against the State Act also covered Provincial Government Funds.
    
11. In making these findings the Supreme Court explained the rationale of its decision to hold that Provincial Governments are part of the State and its funds are subject to the immunity under section 13 of the Claims By And Against the State Act.
    

50. The Supreme Court looked at:
    
    • the Source of funds;
      
    • The degree of financial control exercised by the National Government over these funds;
      

13. It then explained its rationale of its decision as follows:
    

" It was submitted that whilst an elaborate political and administrative system is established for provinces, there is a high degree of National Government control through the relevant Ministers over the affairs of the Provincial and Local Level Governments. ......... The principal source of the funds for Provincial and Local Level Governments is through the various grants under the Constitution from the National Government which it can control. The principal source of funding for the Provincial and Local Level Government is the grants from the National Government through the National Budget. These are public funds which ought and should be protected from the execution process in the same way as funds and assets of the National Government.

They are funds and assets that belong to the same people that constitute the same the Independent State of Papua New Guinea, represented by the next political level government. We are of the opinion therefore that a provincial government is a "government body" making up the Independent State of Papua New Guinea for the purposes of the Claims By And Against the State Act.

The power of the people is vested in all "government bodies" which administer and exercise them on behalf of the people. These governmental bodies include "the National Government", "a Provincial Government", "an arm, department, agency or instrumentality of the "National Government or a Provincial Government" or a body set up by statute or administrative act for government or official purposes. This power is exercised by these "governmental Bodies" on behalf of the same people. The finances administered by a Provincial Government, is for and on behalf of the same people. The National[Provincial??]Government administers the National Government funds and assets. In principle therefore the assets and funds administered by Provincial Governments belong to the same people of Papua New Guinea that the Claims By and Against the State Act protects from execution. The term 'State' therefore includes Provincial and Local Level Governments for purposes of the Act."

14. In this case the source of this K50,000.00 were funds appropriated under the District Support Improvement Program(DSIP) by the National Government. DSIP is a state sponsored program. Accordingly the State has both legal and equitable interests in these funds because after all the source of these funds is the National Government Budgetary appropriation under the DSIP Program.
    
15. It is blatantly erroneous and misleading to say that once these funds are deposited into the NHC account the State has lost all controlling interests in the funds. Even if the National Housing Corporation does not fall within the definition of the word State, it is nonetheless a "Governmental Body" as defined by section schedule 1.2 of the Constitution. As a governmental body it is subject to policy directions and control of a Minister of the State. Hence it is the judgement of this court that as a governmental body, any state funds, received by the NHC are public funds and the NHC has a public duty to properly account for and acquit such funds and not blatantly misuse these funds for individual or private purposes.
    
16. It is the judgement of this court that the State has sufficiently presented evidence which satisfies all the elements of the offences charged under both counts.
    
17. The State evidence as they stand cannot be simply described as hopeless or intrinsically weak and that calling the accused to give evidence cannot improve the State's case, or it is so unreliable and tenuous that no reasonable tribunal could lawfully convict upon it. In fact the State's evidence was never really discredited in cross-examination such that it was rendered unsafe or unreliable to convict upon it. While there were some minor inconsistencies, those alone does not render the entire State evidence hopeless or so tenuous or unreliable that it would be unsafe to convict upon it.
    
18. For all these reasons, the no case to answer submission mounted by the accused on both legs of the rule in Paul Kundi Rape's case is hereby dismissed. Applying the principles in Paulus Pawa as affirmed by Devlyn David it is the judgement of this court that there is sufficient circumstantial evidence for the accused Paul Asakusa of Angoram, East Sepik Province to answer the allegations of conspiracy to defraud the State and misappropriation charges proffered against him.
    

It is therefore the judgment of this court that the accused Paul Asakusa has a case to answer, and his No Case to Answer Submission is hereby dismissed.

Judgement Accordingly.

_____________________________________________
Public Prosecutor: Lawyer for the State
Canute Nidue Lawyers: Lawyer for the Prisoner