State v Epei; State v Ipuke (No 2) [2010] PGNC 32; N3992 (24 March 2010)

N3992

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR NO 829 OF 2008

THE STATE

V

ANDREW EPEI

AND

CR NO 1007 OF 2008

THE STATE

V

FRANCIS IPUKE

(No 2)

Mendi: Makail, J
2009: 17th, 18th & 23rd March &
2010: 22nd & 24th March

CRIMINAL LAW - Misappropriation of public monies - Multiple accused - Not guilty pleas - Trial - Criminal Code, Ch 262 - Section 383A (1)(a)&2(b)&(d).

CRIMINAL LAW - Practice & Procedure - No case submission - Misappropriation of public monies - Element of dishonesty - Proof of - Dishonesty involves state of mind of a person - Question of fact - Determined on the facts of entire case - Measured on the standard of reasonable and honest people - Criminal Code, Ch 262 - Section 383A (1)(a)&2(b)&(d).

Cases cited:

The State -v-Paul Kundi Rape [1976] PNGLR 96
The State -v- Napilye Kuri [1994] PNGLR 371; (1993) N1269
Brian Tindi Lawi -v- The State [1987] PNGLR 582
The State -v- Gabriel Ramoi [1993] PNGLR 390
The State -v- James Makario (1990) N862

Counsel:

Mr P Kaluwin, for the State
Mr P Kumo, for the Accused

RULING ON NO CASE SUBMISSION

24th March, 2010

1. MAKAIL, J: At the close of the State’s case on 22nd March 2010, in relation to a charge of misappropriation of monies belonging to Ialibu Urban Local Level Government against the two accused persons under section 383A(1)(a)&(2)(b)&(d) of the Criminal Code Ch 262, counsel for the accused made a no case submission on the basis that the State had not proven one of the elements of the charge of misappropriation based on the evidence presented thus far. The no case submission, it would seem was based on the first leg of the case of The State -v-Paul Kundi Rape [1976] PNGLR 96. That is, the evidence presented by the State thus far does not establish one of the elements of the offence of misappropriation such that the accused persons could lawfully be convicted. They ought to be discharged. The call by them requires me to re-look at the evidence presented by the State thus far and decide if there is sufficient evidence demonstrating dishonesty, but I need not be satisfied beyond reasonable doubt at this stage. The State had called 3 witnesses to testify against the accused persons. They were:

1. Luke Upa;

2. Timon Ombiolu; and

3. Lambi Kinch.

2. In addition to the evidence of these witnesses, the State, with the consent of the defence, had tendered the following documentation:

1. Record of Interview of Francis Ipuke dated 29th April 2008, (exhibit "P1");

2. Record of Interview of Andrew Epei dated 17th January 2008; (exhibit "P2");

3. Statement of Edward Libaba dated 12th October 2006, (exhibit ‘P3");

4. Statement of Reynold Mairave dated 06th February 2007, (exhibit "P4");

5. Telikom (PNG) Limited Cheque No 236121 dated 09th April 2003 for the sum of K240,000.00, (exhibit "P5");

6. ANZ Bank Account Opening Application Form dated 13th February 2003, (exhibit "P6");

7. ANZ Bank Deposit Slip dated 10th April 2003, (exhibit "P7");

8. Statement of accounts of Ialibu Urban Local Level Government Internal Revenue Account dated 30th October 2006, (exhibit "P8");

9. ANZ Bank cheque of K20,00.00 drawn to Nupan Agency Limited dated 10th April 2003, (exhibit "P9");

10. ANZ Bank Deposit Slip dated 10th April 2003 in the sum of K20,000.00 deposited into Nupan Agency Limited, (exhibit "P10");

11. Cheque drawn from Ialibu Urban Local Level Government Internal Revenue Account in the sum of K70,000.00 dated 14th April 2003, (exhibit "P11");

12. Cheque of 10th March 2003 made payable to Asi Holding Limited in the sum of K20,000.00 from Ialibu Local Level Government Internal Revenue Account, (exhibit "P12");

13. Cheque dated 10th April 2003 drawn from Ialibu Urban Local Level Government Internal Revenue Account in the sum of K10,000.00 made payable to Luke Puiye, (exhibit "P13");

14. Cheque in the sum of K60,000.00 drawn on the Ialibu Urban Local Level Government Internal Revenue Account dated 10th April 2003 made "pay cash", (exhibit "P14");

15. Cheque in the sum of K1,730.00 made "pay cash" dated 01st May 2003 drawn on Ialibu Urban Local Level Government Internal Revenue Account, (exhibit "P15");

16. Cheque dated 10th April 2003 drawn on the account of Ialibu Urban Local Level Government Internal Revenue Account in the sum of K20,000.00 made "pay cash", (exhibit "P16");

17. Cheque dated 30th April 2003 drawn on the account of Ialubi Urban Local Level Government Internal Revenue Account in the sum of K7,800.00 made "pay cash", (exhibit "P17");

18. Cheque dated 01st May 2003 in the sum of K15,000.00 drawn on Ialibu Urban Local Level Government Internal Revenue Account made "pay cash", (exhibit ‘P18");

19. ANZ Bank Deposit Slip dated 01st May 2003 in the sum of K15,000.00 deposited into Asi Holdings Limited, (exhibit "P19");

20. Cheque dated 18th April 2003 drawn on the account of Ialibu Urban Local Level Government Internal Revenue Account in the sum of K2,500.00 made payable to Ela Motors Port Moresby, (exhibit "P20");

21. Cheque dated 07th May 2003 drawn on Ialibu Urban Local Level Government Internal Revenue Account in the sum of K2,000.00 as "pay cash", (exhibit "P21");

22. Cheque dated 30th April 2003 drawn on Ialibu Urban Local Level Government Internal Revenue Account in the sum of K1,922.62 payable to PNG Power Limited, Ialibu, (exhibit "P22");

23. Cheque dated 22nd March 2004 drawn on Ialibu Urban Local Level Government Internal Revenue Account in the sum of K1,300.00 made "pay cash", (exhibit "P23");

24. Minutes of Meeting No 1 of 2003 dated 6th February 2003 by Ialibu Urban Local Level Government, (exhibit "P24");

25. Statement of Luke Upa dated 20th January 2008 in relation to Andrew Epei, (exhibit "P25");

26. Statement of Luke Upa dated 02nd May 2008 in relation to Francis Ipuke, (exhibit "P26"); and

27. Statement of Lambi Kinch dated 06th October 2006 and Report by Lambi Kinch, (exhibit "P27").

3. The allegations of fact put to the accused persons during arraignment were; between 1st March 2003 and 31st March 2004, the accused persons were employed by Ialibu Urban Local Level Government. Francis Ipuke was the District Administrator and Andrew Epei was the Deputy District Administrator. Prior to this period, there was a telecommunication tower built at Ialibu in which Telikon (PNG) Limited ("Telikom") agreed to rent the land upon which the tower was on from Ialibu Local Level Government for K5,000.00 per month or K60,000.00 a year.

4. On 13th January 2003, an account was opened at ANZ Bank in Mt Hagen, styled "Ialibu Urban Local Level Government Internal Revenue". The accused persons and one other by the name of John Wagl were signatories to the said account. In the month of March 2003, a cheque of K2,700.00 was paid by Telikom to Ialibu Urban Local Level Government and was debited into the said account. Another cheque of K240,000.00 also drawn on Telikom’s account was debited into the said account.

5. Between the said period, several withdrawals and transactions took place until the account was closed on 27th May 2005. The State alleged that monies withdrawn from the said account were done by the accused persons as co signatories and put to their own use or to the use of other persons. The State further alleged that the establishment of the said account was done without lawful authority or in accordance with the provisions of the Public Finance (Management) Act, 1995, hence, void abinitio.

6. Section 383A of the Criminal Code, Ch 262 provides as follows:

"383A. Misappropriation of property.

(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.

(2) An offender guilty of the crime of misappropriation of property is liable to imprisonment for a term not exceeding five years except in any of the following cases when he is liable to imprisonment for a term not exceeding 10 years:-

(a) ..............;

(b) where the offender is an employee and the property dishonestly applied is the property of his employer;

(c) ..............;

(d) where the property dishonestly applied is of a value of K2,000.00 or upwards.

(3) For the purposes of this section -

(a) property includes money and all other property real or personal, legal or equitable, including things in action and other intangible property; and

(b) ............; and

(c) ...........; and

(d) ............" (Underlining mine).

7. 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.

8. Except in a no case submission, the prosecution must prove these elements beyond reasonable doubt in order to find the accused guilty. The cases of Brian Tindi Lawi -v- The State [1987] PNGLR 582, The State -v- Gabriel Ramoi [1993] PNGLR 390, and The State -v- James Makario (1990) N862, amongst many others, emphasize these principles.

9. In the present case, as I understood the submissions of counsel for the accused, he only took issue with the element of dishonesty and not the others. He argued that the State had failed to present evidence of dishonesty, that is, the evidence presented so far, could not pin the accused persons down on the charge of misappropriation. This is because while it is acknowledged that the said account may have been opened improperly to cater for monies paid by Telikom as rentals for Telikom’s use of the Ialibu Urban Local Level Government’s land, there is no evidence to establish that the accused persons paid the monies to themselves for their own use or to the use of other persons. It was suggested by counsel that evidence of how the monies had been used should have come from members of the Ialibu Urban Local Level Government. As no such evidence had been led, there is no evidence of dishonesty.

11. Counsel drew an analogy by submitting that this case was akin to a village councilor entrusted with monies for certain purposes on behalf of his people, but instead of keeping them in a bank account, he kept them in a safe in his house. He later distributed the monies in accordance with the intended purpose. In such a case, there cannot be any dishonesty on the part of the councilor. The present case, he strongly argued, is no different to the hypothetical case. He argued that here is a case where monies had been paid into an unauthorized account, it would seemed, and may be argued, but as there is no evidence that monies were paid improperly or not in accordance with the intended purpose, there can be no dishonesty on the part of the accused persons.

12. First and briefly, Luke Upa gave evidence that he received a complaint in relation to the monies paid by Telikom to Ialibu Urban Local Level Government were misappropriated and conducted an investigation. His investigations revealed that the monies were paid by Telikom to Ialibu Urban Local Level Government as rentals for use of land by Telikom to house its tower at Ialibu. An account was opened at ANZ Bank, Mt Hagen Branch styled, "Ialibu Urban Local Level Government Internal Revenue". The accused persons and one John Wagl were signatories to the account. In the month of March 2003, a cheque of K2,700.00 was paid by Telikom to Ialibu Urban Local Level Government and was debited into the said account. Another cheque of K240,000.00 also drawn on Telikom’s account was debited into the said account.

13. Subsequently, monies were withdrawn either by way of negotiable cheques or "pay cash" cheques to various recipients, some known and many unknown. Copies of the cheques drawn are marked as exhibits above. There were no records of supporting documents such as purchase orders, quotations, vouchers, invoices and payment breakups produced to him to show that the monies were properly expended or expended according to the intended purpose.

14. Secondly, Timon Ombiolu gave evidence in relation to the procedures for opening bank accounts for Local Level Governments. As a Local Level Government Coordinator, he said that the Public Finance (Management) Act, 1995 required a Local Level Government to conduct two bank accounts at any given time. The first is an operating account, and the second, a general account. He further said that the procedure for opening a bank account included inter-alia, a decision by the finance committee of a Local Level Government approving an opening of additional accounts, the decision to be forwarded to him for consideration and further submitted to the Provincial Administrator for consideration. If the Provincial Administrator approved the request, the Provincial Administrator shall submit a report to the Secretary for the Department of Finance for final approval. If approval is given, an account is opened, and as the Local Level Government Coordinator, he must be one of the signatories to the account. He said, none of these procedures were followed in the instant case.

15. Finally, Lambi Kinch gave evidence that he also conducted an audit into allegations of misappropriation of monies in the Ialibu Urban Local Level Government. He compiled a report which revealed inter-alia, that instead of Ialibu Urban Local Level Government having two bank accounts, it closed one and operated only one. It closed the general account. A general account is established for a Local Level Government so that all internal revenues collected by a Local Level Government would be paid into it and monies for the recurrent expenditures (paid by National Government) are paid into the operating account. However, a Local Level Government may conduct other accounts apart from the operating and general accounts but there are procedures to be followed to obtain approval for additional accounts. The procedures, he said, were highlighted by Mr Ombiolu in his evidence. He said Ialibu Urban Local Level Government had not followed those procedures and so the said account was illegal.

16. Given the above evidence, has the State presented sufficient evidence on the element of dishonesty? The element of dishonesty is a question of fact as it is related to the state of mind of a person. It is a profound fact that no one can read a person’s mind except God, thus the architects of the law had devised a way to "go inside" a person’s mind and read it. They came up with this principle; where a person is accused of committing a crime and where the Court must decide the person’s state of mind, like in this case, dishonesty, the law requires the Court to determine the person’s state of mind on the entire facts of the case and according to the ordinary standard of reasonable and honest people. In The State -v- Napilye Kuri [1994] PNGLR 371; (1993) N1269, Woods, J said:

"One of the necessary elements to find a charge of misappropriation under section 383A proved is there must be a finding of dishonesty. This was carefully considered in the case of Brian Tindi Lawi -v- The State [1987] PNGLR 183 where the Supreme Court held that as the word dishonestly in the Section only relates to the state of mind of the person who does the act which amounts to misappropriation, whether the accused has a particular state of mind in relation to the application of property which is dishonest is a question of fact for the trial judge to consider on all the facts of the case before him and according to the ordinary standards of reasonable and honest people. I am satisfied that for a number of reasons which includes the changing of the names of persons in the application, the preference of the applications being for certain purposes, but then being used for other purposes, the giving out of money in cash form to persons other than the original applicants, could all lead a reasonable and honest person to consider that there has been dishonesty in the way these funds have been obtained and applied. The facts surrounding these two grants and cheques are such that it is open to me and I am satisfied that there was dishonesty involved."

17. I have reviewed and also have set out in a brief way above, the evidence presented by the State thus far, and I must agree with the State prosecutor’s submissions that there is sufficient evidence establishing all the elements of the charge of misappropriation, including dishonesty. The evidence of Luke Upa the police investigating officer from the fraud squad, Timon Ombiolu the Local Level Government Coordinator and Lambi Kinch the Senior Auditor with the Department of Provincial & Local Level Government Affairs sufficiently demonstrates a case where monies paid by Telikom to Ialibu Urban Local Level Government as rentals for the use of land for its tower were paid to an account other than the general account. It has been argued that the monies should have been deposited into the general account as it is the only authorized account for such purpose. It is also noted here that the monies are public monies as they belonged to the Ialibu Urban Local Level Government.

18. There is also evidence from these witnesses that the accused persons were signatories to the said account, and that the said account was unauthorized as it is said that no approval was obtained from the finance committee of Ialibu Urban Local Level Government and ultimately, the Secretary for the Department of Finance for its establishment. There is also sufficient evidence in the form of cheques (negotiable and "pay cash") and bank statement of the said account before me to demonstrate that monies of various amounts, and I should say some of them of very substantial amounts were withdrawn from the said account subsequent to Telikom’s payment of rentals in excess of K240,000.00 into the said account. There is also evidence from Mr Upa that, there are no supporting documents such as payment orders, vouchers, quotations, invoices and payment break ups to justify the various payments to various recipients (both known and unknown) out of the monies held in the said account. Finally, the accused, I should say here, had not denied that they signed the cheques for the payment of monies out of the said account.

19. Following the law on reading of a person’s state of mind since the element of dishonesty is an issue in this case, and as briefly discussed above, I must look at the entire circumstances of the case and not just one or two aspects to determine if there is some evidence of dishonesty on the apart of the accused persons, and in so doing, I must say, there is. That means, I am unable to agree with the submissions of counsel for the accused persons that there is no evidence of dishonesty. The submission that none of the members of the Ialibu Urban Local Level Government gave evidence in relation to how the monies were dispersed or spent and that in the absence of such evidence, it is presumed that the monies were properly expended or dispersed in accordance with their intended purposes are just two aspects of the State’s case that do not seriously affect the entire evidence of the State’s case.

20. When I look at the entire circumstances of the case, I am satisfied that the opening of the said account without the approval of the finance committee of the Ialibu Urban Local Level Government, it would seem, the closing of the general account, the accused persons being signatories to the said account to the exclusion of Mr Ombiolu as the Local Level Government Coordinator, cheques drawn as "pay cash" to many recipients whose identities are not known and no supporting documents such as, payment orders, vouchers, quotations, invoices and payment breakups, could all lead a reasonable and honest person to consider that there has been dishonesty in the way these monies have been obtained and applied and the accused persons must be called upon to explain. I am, therefore, satisfied that the State has made out a prima facie case against the accused persons and now call them to answer to the charge accordingly.

Ruling accordingly.

_______________________________________
Acting Public Prosecutor: Lawyers for the State
Public Solicitor: Lawyers for the Accused