State v Bae [2019] PGNC 227; N8029 (20 September 2019)

N8029

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR FC (35) OF 2019

THE STATE

V

EDWARD BAE

Waigani: Berrigan, J
2019: 4, 6 June, 10 July and 20 September

CRIMINAL LAW – Practice and procedure – Sentence – Part VIA of the Criminal Code - Money laundering – S. 508B of the Criminal Code – “Criminal property” – Stand alone charge of money laundering – Nature of offence – Sentencing considerations.

The offender, an employee of Westpac Bank (PNG) Limited, transferred monies in the sum of K72,380.30 from two of the bank’s income accounts to his brother-in-law’s bank account without supporting documentation or approval. He then withdrew the monies from the account or spent them via eftpos using his brother-in-law’s bank card, which he was in possession of without the latter’s knowledge.

The indictment contained a standalone count of money laundering contrary to s.508B(1) of the Criminal Code, to which he pleaded guilty.

The State submitted that the sentence should be determined applying the same considerations outlined in Wellington Belawa v The State [1988-89] PNGLR 496 for dishonesty offences.

Held

(1) In order to establish the offence of money laundering contrary to s. 508B(1) of the Criminal Code, the State must prove that an accused dealt with “criminal property”, that is property, in whole or in part and whether directly or indirectly, derived from, obtained or used in connection with, past or completed criminal conduct, such that an offence has already been “constituted” or committed: s. 508A read together with s. 508F(a)(i)(ii) and (b)(i)(ii) of the Criminal Code.

(2) The State may prove criminal property by one of three ways: a) by establishing the particular criminal conduct, or the underlying or predicate offence, from which the property derived; b) by proving the “general type or types of criminal conduct from which the property derived”; or c) by proving “that the circumstances in which the property is handled are such as to give rise to the inference that it can only be derived from criminal conduct”: ss.508A read with 508F(a)(i)(ii) and (b)(i)(ii) of the Criminal Code.

(3) It was permissible for the State to proceed on a standalone money laundering charge, that is without charging the criminal conduct from which the criminal property derived: s.508F(a)(i)(ii) and (b)(i)(ii) of the Criminal Code.

(4) In this case the monies withdrawn from the offender’s brother-in-law’s account were criminal property, having derived from the offender’s past criminal conduct, namely the dishonest application to his own use of the monies to the account, i.e. misappropriation, contrary to s. 383A of the Criminal Code.

(5) In determining sentence on a money laundering charge, it is not the case that the sentence that would have been imposed for the underlying offence should automatically apply. Nor is money laundering an alternative for, or equivalent to, misappropriation or other dishonesty offence. Money laundering is a distinct and serious offence in its own right, which is intended to capture quite different conduct.

(6) In general terms, money laundering is the dealing with, or the processing of, monies or assets that are already the proceeds of criminal conduct so as to conceal their criminal origin and convert them into property which appears legitimate. The threat of money laundering to the economy and the community is recognised internationally. It undermines the integrity of financial systems, shields criminals from detection, protects their profits and provides the funds and incentive for future criminal conduct, which is ultimately detrimental to the community and society at large.

(7) The offence under s. 508B(1) of the Criminal Code is deliberately broad and designed to capture a wide range of conduct relating to money or other property arising from crime. Given its breadth the maximum penalty has been designed to accommodate a very broad range of offending behaviours. While that is necessarily the case with all maximum penalty provisions, the more general the provision the broader the range of offending conduct it will capture. In the circumstances sentencing in such cases will require a careful assessment of the objective seriousness of the offending under consideration: Thorn v R [2009] NSWCCA 294; (2009) 198 A Crim R 135; Clarke v The Queen [2019] NTCCA 2 adopted.

(8) The following matters may be relevant when considering the objective seriousness of a money laundering offence: a) the amount or value of the criminal property involved; b) the source of the criminal property dealt with or the seriousness of the criminal conduct from which the property derived; c) the period over which the offence was perpetrated and the number of transactions involved; d) the sophisticated nature of the offence and the extent of planning involved; e) the role of the offender, or the authority with which he acted; f) the nature of the dealing or the use to which the money was put, including the extent to which the offender personally benefited; g) the state of mind of the offender, or the extent to which he knew the property was criminal property; h) the extent to which the offender abused a position of power or trust; and i) the impact of the offence on the public and public confidence.

(9) A sentence for money laundering should normally reflect the need for general deterrence to a very significant degree because of the serious nature of, and the potential risks posed to the economy and society by, the offence.

(10) In this case the offence of money laundering was a highly technical breach of s. 508B of the Criminal Code. The offender was merely spending the money obtained by the misappropriation. He was doing nothing to hide the source or change the nature of the funds. He was simply “using” them and it is on this basis that his conduct is caught for the purposes of s. 508B of the Criminal Code, because the offence is drawn so widely.

(11) The underlying criminal conduct, however, from which the property was derived was serious. The offender was personally responsible for misappropriating the funds, and he was well aware of their source. He also personally benefited from those funds.

(12) In the circumstances the sentence imposed in this case should, despite the much greater maximum penalty available under s. 508B(1) of the Criminal Code, be proportionate to that which would have been imposed for the underlying offence of misappropriation had it been charged on the indictment. This is not to be seen as endorsing the approach taken by the State, namely proceeding with a technical breach of s.508B when it could have proceeded with the substantive charge of misappropriation, which would have reflected the nature and extent of the offender’s criminal conduct and provided an appropriate basis for sentence; nor to suggest that the State should have charged both misappropriation and money laundering in this case, given that the latter did not add to the offender’s overall culpability in any substantial way.

(13) Sentence of 4 years of imprisonment in hard labour imposed.

Cases Cited:
Papua New Guinea Cases

Goli Golu v The State [1979] PNGLR 653
The State v Tardrew [1986] PNGLR 91
The State v Frank Kagai [1987] PNGLR 320
Wellington Belawa v The State [1988-89] PNGLR 496
Lawrence Simbe v The State [1994] PNGLR 38
The State v Ngasele (2003) SC731
State v Scholar Zuvania (2004) N2641
The State v Niso (No 2) (2005) N2930
Yalibakut v The State (2006) SC 890
The State v Daniel Duk (2009) N3924
The State v Tiensten (2014) N5563.
State v Sarry Moere, CR (FC) 153 of 2017, 6 November 2017, unreported
The State v Owen Yamboli, CR(FC) 253 of 2017, unreported
Roland Tom & Anor v The State (2019) SC1833

Overseas Cases

Scott v Metropolitan Police Commissioner [1975] AC819
R v Easton [1993] QCA 255; [1994] 1 Qd R 531
R v Huang [2007] NSWCCA 259; (2007) 174 A Crim R 370
Thorn v R [2009] NSWCCA 294; (2009) 198 A Crim R 135
Nahlous v The Queen [2010] NSWCCA 58
R v Li [2010] NSWCCA 125; (2010) 202 A Crim R 195
R v Guo [2010] NSWCCA 170; (2010) 201 A Crim R 403
R v Greaves [2011] 1 Cr. App. R. S.
R v Ansari [2007] NSWCCA 204; (2007) 70 NSWLR 89
Clarke v The Queen [2019] NTCCA 2

References Cited

Sections 19, 383A, 508A, 508B, 508C, 508D, 508E, 508F, 508G of the Criminal Code.

Counsel

Ms L. Jack, for the State
Mr E. Sasingian, for the Accused

DECISION ON SENTENCE

20 September, 2019

1. BERRIGAN J: The offender pleaded guilty to one count of money laundering contrary to s. 508B(1) of the Criminal Code (Ch. 262) (the Criminal Code). Pursuant to s. 508B(1)(a) the penalty in the case of a natural person is a fine not exceeding K500,000 or imprisonment for a term not exceeding 25 years, or both.
   
2. The indictment alleged that the offender “dealt with monies in the sum of Seventy Two Thousand, Three Hundred and Eighty Kina and Thirty Toea (K72,380.30) that is criminal property in one John Kila’s account by using that money and had knowledge or ought reasonably to know that the property was criminal property”.
   
3. The issue now for determination is an appropriate sentence.
   

Facts

4. The offender pleaded guilty to the following agreed facts. During the relevant period he was employed by Westpac Bank (PNG) Limited as a Check in Officer. On twenty one (21) occasions between 9 November 2017 and 19 January 2018 the accused used his unique posting identification number to transfer a total of K72,380.30 from two Westpac Bank Commission Accounts, the bank’s own income accounts, without supporting documentation or approval, to the credit of the Westpac bank account of John Kila, Account Number 6004984183. John Kila is the offender’s brother-in-law.
   
5. During the same period the offender was in possession of Mr Kila’s Westpac Bank card, without the latter’s knowledge. The offender used the card to deal with the monies by withdrawing them from automated teller machines (ATMs) or conducting various purchases from the account via eftpos.
   

Money laundering contrary to s. 508B of the Criminal Code

6. This is only the second time an offender has been sentenced for money laundering in this jurisdiction, pursuant to s. 508B(1), which was inserted into the Criminal Code by the Criminal Code (Money Laundering and Terrorist Financing) Amendment Act 2015.
   
7. Section 508B(1) of the Criminal Code provides that a person who “deals with property that is criminal property and who knows or ought reasonably to know that the property is criminal property is guilty of an offence”.
   
8. “Deals with property” is defined in very broad terms, a matter I will return to below, and includes one or more of: a) conceals; b) disguises; c) converts; d) transfers; e) removes from Papua New Guinea; f) brings into Papua New Guinea; g) receives; h) acquires; i) uses; j) possesses; k) consents to or enables any of the actions referred to in a) to j); and l) uses an electronic system or device to do any of a) to k): s. 508B (3) of the Criminal Code.
   
9. “Conceals or disguises property” includes concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it: s. 508B(4) of the Criminal Code.
   
10. “Criminal property” is defined in s. 508A of the Criminal Code to mean (emphasis mine) “property that is, in whole or in part and whether directly or indirectly, derived from, obtained or used in connection with criminal conduct and includes any interest, dividends or other income on or value accruing from or generated by such property, regardless of who carried out the criminal conduct or who benefited from it”. “Property” for the purposes of the division includes assets of every kind, tangible or intangible, corporeal or incorporeal, moveable or immovable, however, acquired.
    
11. “Criminal conduct” is defined in the same section as conduct which (emphasis added):
    

“(a) constitutes an offence in Papua New Guinea for which the maximum penalty is death or a term of imprisonment for at least six months; or

(b) would constitute an offence in Papua New Guinea if it occurred in Papua New Guinea and for which the maximum penalty under the law of Papua New Guinea is death or a term of imprisonment for at least six months” .

12. In order to establish the offence of money laundering the State must prove that an accused dealt with “criminal property”. It is not necessary, however, for the purposes of s. 508B of the Criminal Code, for the State to establish who committed the criminal conduct in relation to the property; or, that there is a charge or a conviction relating to the criminal conduct: s.508F(a)(i) and (ii), respectively. It follows from the definition of criminal property contained in s. 508A and the terms of s. 508F(a)(i) that it is possible for a person to launder criminal property generated from their own criminal conduct or that of another person.
    
13. Nor must the State prove that the property was derived from particular criminal conduct, but “must prove either the general type or types of criminal conduct from which the property was derived”, or “that the circumstances in which the property is handled are such as to give rise to the inference that it can only be derived from criminal conduct”: s.508F(b)(i) and (ii) of the Criminal Code.
    
14. Nevertheless, it is my view, having regard to the above, that the State must establish for the purposes of s.508B past or completed criminal conduct, such that, an offence has already been “constituted” or committed from which the property has been “derived”, whether or not the particular criminal conduct is proved: s.508A read together with s.508F of the Criminal Code. This is sometimes referred to in other jurisdictions as the “predicate” or “underlying” offence, the proceeds of which form the subject of the money laundering offence.
    
15. As I see it, the State may prove criminal property by one of three ways, that is a) by establishing the particular criminal conduct, or the particular underlying or predicate offence, from which the property is derived; b) by proving the “general type or types of criminal conduct from which the property derived”, for example by establishing from circumstantial evidence that the monies came from drug trafficking even if the particular offences of trafficking cannot be established; or c) by proving “that the circumstances in which the property is handled are such as to give rise to the inference that it can only be derived from criminal conduct”, for example because of the lengths the accused went to conceal the money or the complexity of the scheme through which money was moved: 508A and 508F(b)(i)(ii) of the Criminal Code.
    
16. I note here, that except for the financing of terrorist activity, Part VIA of the Criminal Code does not contain an offence of money laundering found in some other jurisdictions which prohibits dealing with money for the purposes of facilitating the commission of an offence envisaged or contemplated in the future. For example, see s. 400.3(1)(b)(ii) of the Crimes Act (Cth) (Australia).
    
17. Where a money laundering charge is contained on the same indictment as the underlying offence then it will be clear from what criminal conduct the State alleges the property is derived, and if that underlying offence is proved then “criminal property” will also be proved to the requisite standard as part of the proceedings.
    
18. In this case the State has proceeded on a standalone money laundering charge, that is without charging the criminal conduct from which the proceeds derived. That is permissible having regard to ss.508F(a)(i)(ii) and s.508F(b)(i)(ii) of the Criminal Code.
    
19. Nor has the State identified or particularised the offence which constitutes the criminal conduct, that is, the predicate or underlying offence. It follows from the above that they are not required to do so.
    
20. Whatever facts or circumstances the State rely upon, however, must establish that the property dealt with was criminal property. Here the State relies on the specific facts contained in the agreed facts on arraignment. It is not enough for the State to say that those facts admitted point to some “fraudulent debiting” and therefore establish some “general type” of dishonesty offence. The facts must show that the monies derived from past criminal conduct, that is from a “constituted” or completed criminal offence, that the accused dealt with those monies, and that he knew or ought to have known that the property was criminal property at the time. That is particularly so where the State has broken down conduct which might otherwise form the basis of one charge, for instance, misappropriation, so that it can charge money laundering as a separate, or in this case, standalone charge of money laundering.
    
21. It is also well established in this jurisdiction that it is the duty of the judge on a guilty plea to examine the depositions to check that there is evidence of the elements of the offence: Yalibakut v The State (2006) SC 890.
    
22. In this case the facts to which the offender pleaded guilty, supported by the depositions, established the elements of the offence under s.508B(1) of the Criminal Code, i.e. that at the time the offender dealt with the monies from Mr Kila’s bank account, he was aware that the monies were criminal property, that is that the monies were derived from criminal conduct. In particular, I found that the monies derived from misappropriation. At the time the offender transferred the monies to Mr Kila’s bank account without the knowledge and approval of the bank, he dishonestly applied the monies to his own use, contrary to s.383A of the Criminal Code. It was at that point that he diverted the monies from the purposes of the person to whom they belonged, namely the bank, dishonestly and for his own use: R v Easton [1993] QCA 255; [1994] 1 Qd R 531 at 534 adopted and applied. The application was without supporting documents or approval. It was dishonest according to the ordinary standards of reasonable and honest people and the accused knew that what he was doing was dishonest according to those standards: The State v Francis Laumadava [1994] PNGLR 291 applying Brian Kindi Lawi v The State [1987] PNGLR 183. The facts to which he pleaded may also have disclosed other criminal conduct but this is sufficient to establish that the property he subsequently dealt with was criminal property and that he knew or ought to have known that it was criminal property.
    
23. Furthermore, the agreed facts, supported by the depositions, established that the prisoner “dealt” with the criminal property by “using” it, that is by accessing it from Mr Kila’s bank account via ATM or eftpos: s.508B(3)(i) of the Criminal Code.
    
24. Finally, it is permissible, as in this case, for a single charge of money laundering to be laid even though it may include more than one instance of the person engaging in conduct, whether that conduct occurs at the same time or at different times: s. 508E of the Criminal Code.
    

State’s Submissions

25. The State submits that the case may be considered “through the underlying offence”, such it may be likened to misappropriation and that, like all offences containing “an element of dishonesty”, the guidelines contained in the Supreme Court decision of Wellington Belawa v The State [1988-89] PNGLR 496 should apply on sentence.
    
26. It is not entirely clear whether the State is submitting that money laundering in general terms should be equated with misappropriation for the purposes of sentencing, or whether it should in this case because the underlying offence is misappropriation.
    
27. With respect, I don’t agree with either proposition in general terms. Whilst, as discussed further below, the nature of the criminal conduct from which the criminal property has been derived will be highly relevant on sentence for an offence under s.508B of the Criminal Code, to suggest in general terms that the sentence that would be imposed for that underlying offence automatically applies misconceives the nature of a money laundering offence.
    
28. Nor is money laundering simply an alternative for, or equivalent to, misappropriation or other dishonesty offence. Money laundering is a distinct and very serious offence in its own right, which is intended to capture quite different conduct.
    
29. In general terms, fraud and dishonesty offences are intended to deprive a person of something which is his or to which he might be entitled: see for example the definition of “to defraud” in Scott v Metropolitan Police Commissioner [1974] UKHL 4; [1975] AC 819, adopted and applied in Roland Tom & Anor v The State (2019) SC1833. On the other hand, money laundering is the dealing with, or the processing of, monies or assets that are already the proceeds of criminal conduct so as to conceal or disguise their criminal origin and convert them into property which appears legitimate. Here it is important to bear in mind that money laundering is not confined to cash. The offence can be committed by hiding the proceeds of crime in physical and other assets, for example investment properties or share purchases. Nor is money laundering confined to the proceeds of dishonesty offences. Property derived from any criminal conduct, as defined under s. 508A, can form the basis of a charge.
    
30. The offence of money laundering under s. 508B was inserted into the Criminal Code in 2015 as part of a suite of legislation enacted by the Papua New Guinea Parliament to strengthen its anti-money laundering and counter terrorism (AML/CMT) measures, in response to recommendations by the inter-governmental Financial Action Task Force (FATF) (on Money Laundering) and in recognition of “the importance of a robust AML/CMT regime to the financial stability and security of our nation and the region”: see the extract of a letter from Prime Minister O’Neill to FATF in February 2014 as contained in the “National Anti-Money Laundering and Counter Terrorist Financing Strategic Plan 2017-2022”[1].
    
31. In his Second Reading Speech at the time, the Minister for Justice and Attorney-General described money laundering as “the process of making funds derived from crime appear legitimate – the process of ‘cleaning dirty money’ by disguising ill gotten gains...”[2].
    
32. The threat of money laundering to the economy and the community is recognised internationally. It undermines the integrity of financial systems, shields criminals from detection, protects their profits, and provides the funds and incentive for future criminal conduct, which is ultimately detrimental to the community and society at large. This is particularly so where large scale organised crime is involved.
    
33. It is clear from the terms of s. 508B of the Criminal Code that the operation of the provision extends well beyond the simple descriptions set out above but it is useful to bear the general nature of money laundering in mind.
    

Considerations on Sentence for Money Laundering

34. As above, this is only the second time that an offender is being sentenced for money laundering in this jurisdiction. I have set out below some of the matters that may be relevant on sentence in such matters. The considerations are not intended to be exhaustive, and given the nature and breadth of the money laundering offence under Part VIA of the Criminal Code, which includes both s. 508B and s. 508C, the latter an offence of even broader application, they are likely to develop over time as more matters are brought before the Court.
    
35. For the reasons set out above, I don’t agree that the principles set out in Wellington Belawa automatically apply as if the offence is a dishonesty offence. As will be seen below, however, some of the considerations outlined by the Supreme Court in that case will also be relevant on a sentence for money laundering, albeit for somewhat different reasons.
    
36. In addition, whilst offence provisions in this jurisdiction are not identical to those in other common law jurisdictions like Australia and the United Kingdom, the provisions are similar, and I have found some of the authorities from those jurisdictions instructive and have referred to them below.
    
37. In my view the following matters may be relevant when considering the objective seriousness of a money laundering offence:
    

1. The amount or value of the criminal property involved will be a highly significant factor. For reasons similar to that outlined in Wellington Belawa, it follows that when dealing with an offence concerning money or property, in general terms, the greater the value of the property laundered, the more serious the offence. This is similar to the approach taken in both Australia[3] and the United Kingdom[4]. It may be useful to suggest sentencing ranges based on the value of criminal property involved at some point in the future, but given the particular circumstances of this case it is unnecessary, for the reasons discussed below;
   
2. The source of the criminal property dealt with, or the nature and seriousness of the criminal conduct from which the property was derived, will also be highly relevant. For example, the proceeds of drug activity, people trafficking, organised crime or high level corruption might well be regarded as extremely serious;
   

100. The period over which the offence was perpetrated and the number of transactions involved are also significant matters which may indicate the extent of an offender’s criminality. Again this logically follows given the nature of the offence: R v Huang [2007] NSWCCA 259; (2007) 174 A Crim R 370 at [35]; R v Li [2010] NSWCCA 125; (2010) 202 A Crim R 195 at [41] and R v Guo [2010] NSWCCA 170; (2010) 201 A Crim R 403 at [87], [89] considered;
     

4. The sophisticated nature of the offence and the extent of planning involved will be relevant for similar reasons. In some cases money laundering is conducted by one person by very simple means, in others it involves elaborate schemes involving multiple entities, other actors, and even cross-border transactions;
   
5. The role of the offender, or the authority with which he acted, will also be relevant when determining culpability, particularly where the laundering involves multiple players: R v Ansari [2007] NSWCCA 204; (2007) 70 NSWLR 89; R v Li (supra) considered;
   
6. The nature of the dealing or the use to which the money was put will also be a relevant consideration, including the extent to which the offender personally profited or benefitted from the money laundering: R v Li (supra) considered;
   
7. The state of mind of the offender, that is the extent to which the offender knew that the property was criminal property will be highly relevant, and in general terms the greater his knowledge, the greater his culpability: R v Li (supra) at [41] considered;
   
8. The extent to which the offender abused a position of power or trust to conduct the offence is another relevant consideration; and
   
9. The impact of the offence on the public and public confidence will also be relevant. For instance, money laundering through a large financial institution might in some circumstances be regarded as impacting on the public confidence in the integrity of the financial system.
   

38. As above, the list is not intended to be exhaustive and does not include those subjective matters taken into account in the normal course of sentencing, for instance the nature of the plea, remorse and so forth.
    
39. It is also my view that a sentence for money laundering should normally reflect the need for general deterrence to a very significant degree because of the serious nature of the offence and the potential risks posed to the economy and society.
    

Comparative Cases relied upon by the State

40. Having regard to its principal submission, the State referred to the guidelines contained in Wellington Belawa and the following cases in support of its submission that a sentence of between 4 and 6 years’ imprisonment would be appropriate.
    
41. In Wellington Belawa v The State [1988-1989] PNGLR 496 the Supreme Court identified a number of factors that should be taken into account on sentence for an offence involving dishonesty, including:
    
    1. the amount taken;
    2. the quality and degree of trust reposed in the offender;
    100. the period over which the offence was perpetrated;
    4. the impact of the offence on the public and public confidence;
    5. the use to which the money was put;
    6. the effect upon the victim;
    7. whether any restitution has been made;
    8. remorse;
    9. the nature of the plea;
    10. any prior record;
    11. the effect on the offender; and
    50. any matters of mitigation special to the accused such as ill health, young or old age, being placed under great strain, or perhaps a long delay in being brought to trial.
        
42. In addition, the Supreme Court suggested that the following scale of sentences may provide a useful base, to be adjusted upwards or downwards according to the factors identified above, such that where the amount involved is between:
    
    1. K1 and K1000, a gaol term should rarely be imposed;
    2. K1000 and K10,000 a gaol term of up to two years is appropriate;
    100. K10,000 and K40,000, two to three years’ imprisonment is appropriate; and
    4. K40,000 and K150,000, three to five years’ imprisonment is appropriate.
       
43. The State submits that this case falls within the fourth category of Wellington Belawa. Whilst the principles to be applied when determining sentence remain relevant and applicable, it is generally accepted that the ranges suggested in that case are now outdated because of the frequency and prevalence of misappropriation and related offences: see The State v Niso (No 2) (2005) N2930; and The State v Tiensten (2014) N5563.
    
44. It also asks the Court to have regard to The State v Owen Yamboli, CR(FC) 253 of 2017, which was the first case where a sentence was imposed in this jurisdiction for money laundering. The offender pleaded guilty to two counts of money laundering contrary to s. 508B of the Criminal Code. Between 19 April and 7 June 2016 the offender, an Information Security Officer with Bank South Pacific used another employee’s access code to register a mobile phone number against a particular BSP bank account without the account owner’s knowledge. He then transferred money from the account through Wantok Moni and purchased Digicel mobile credits through mobile banking. In total he dealt with K24,183, of which he had restituted K7000 prior to pleading guilty. Having regard to the guidelines contained in Wellington Belawa, the offender was sentenced to 3 years’ imprisonment in hard labour, wholly suspended on the basis that he restitute the balance of K17,183.
    
45. The State also referred to the following:
    
    1. State v Sarry Moere, CR (FC) 153 of 2017, 6 November 2017, unreported, Salika DCJ (as he then was), in which the offender pleaded guilty to one count of misappropriating K295,099.35 whilst employed by the Ombudsman Commission as its payroll officer by manipulating the payroll system and transferring the money to his own account. He was sentenced to 6 years’ imprisonment in hard labour;
       
    2. State v Scholar Zuvania (2004) N2641, Cannings J, in which the prisoner pleaded guilty to one count of misappropriating K22,685.43 belonging to the Ponam Local Church and Ecom High School in Manus Province, whilst employed as a bank officer with BSP. The offender transferred the monies to her sister in law’s account and then, used her sister in law’s card, without her knowledge, to withdraw monies for her own use. Restitution was almost completed prior to sentence. She was sentenced to 4 years’, wholly suspended on conditions; and
       
    100. The State v Daniel Duk (2009) N3924, Cannings J, in which the offender pleaded guilty to misappropriating K32,800 to his own use from customer accounts whilst an employee of Wau Micro Bank. He was sentenced to 4 years of imprisonment in hard labour.
         
46. I have also had regard to the following:
    
    1. The State v Lukeson Olewale (2004) N2758, David AJ (as he then was), in which the prisoner pleaded guilty to one count of uttering and one count of misappropriating a cheque for K40,000 against the account of the Fly River Provincial Government, his employer. The prisoner conspired with others including a bank manager and was sentenced to 4 years’ imprisonment, wholly suspended on conditions including restitution with assistance from his family;
       
    2. The State v Benson Likius (2004) N2518 in which Lenalia J sentenced the prisoner to 5 years’ for misappropriating K68,674.06 the property of his employer, Lihir Management Company using a scheme applied over a period of more than 20 months. Three years of the sentence was suspended on conditions including restitution;
       
    100. The State v Iori Veraga (2005) N2849, Sakora J, in which the prisoner was found guilty following trial of conspiracy to defraud and misappropriation of K144,955 from the National Provident Fund as a result of inflated land valuations. He was sentenced to 7 years’ on the (4) conspiracy charges and 2 years’ on the corresponding misappropriation charges, to be served cumulatively, with an effective sentence of 6 years’ IHL; and
         
    4. The State v Christian Korei (2005) N2946 before Lay J in which the prisoner pleaded guilty to misappropriating a sum of K82,202.73 donated for the purpose of building a classroom for his community. On discovery the prisoner made restitution of K65,000. He was sentenced to 4 years’ imprisonment, wholly suspended on conditions including full restitution.
       

Nature and Circumstances of the Offence

47. In this case the offender transferred monies to his brother-in-law’s bank account and then withdrew the money from the account or used it to conduct eftpos transactions. It is this “use” of the monies, the withdrawals and eftpos transactions, that constitutes the “dealing” for the purpose of the offence under s.508B of the Criminal Code.
    
48. It is well established that the Public Prosecutor (and indeed any State Prosecutor, subject to his direction) has an absolute power to decide and present whatever charge he considers the State will be able to prove against an offender. That power is not subject to any direction or control from or by anybody. Section 525(1)(a) of the Criminal Code gives that power: The State v Ngasele (2003) SC731.
    
49. Nevertheless, it is my view that the gravamen of the conduct alleged, or the substantive offending in this case, during the period charged was in the nature of a dishonesty offence, in particular misappropriation. Such a charge would have reflected the nature and extent of the criminal conduct and provided an appropriate basis upon which to sentence the offender[5]. Moreover, the money laundering offence upon which the State proceeded was a highly technical one.
    
50. Courts in Australia have been critical of the prosecution where it has laid a separate money laundering charge in circumstances where the substantive charge on the indictment readily encompasses the criminality of the money laundering charge: Thorn v R (2009) A Crim R 135; Nahlous v The Queen [2010] NSW CCA 58 c.f. the discussion in Clarke v The Queen [2019] NTCCA 2.
    
51. Similarly, the Courts in the United Kingdom have expressed the view that where the offender responsible for the primary offence is also guilty of money laundering there should only be an additional penalty if the conduct involved in the money laundering adds to his “overall culpability”. In appropriate cases the penalty for the money laundering offence may take the total penalty above the maximum for the primary offence, or it may even itself exceed that maximum: R v Greaves [2011] 1 Cr. App. R. S.[6] See the discussion in Archbold, 2014 Edition at [26-46], noting, however, that the Sentencing Council’s Guidelines now apply: see Archbold, 2015 Edition at [26-42].
    
52. Section 508G of the Criminal Code provides that nothing in Part VIA, Division 2 of the Criminal Code, precludes a person from being charged with or convicted of any criminal conduct, in addition to being charged with or convicted of a crime against 508B or 508C. Putting that aside there can be no issue of oppression here given that the money laundering offence stands alone. That does not alter the fact, however, that the criminality in this case was very much in the dishonest application of the monies to Mr Kila’s bank account and not in their use.
    
53. In Thorn (supra) the appellant fraudulently obtained about AUD312,000 from the Australian Tax Office (ATO) as a result of submitting false tax returns on behalf of his company. Those funds were transferred by the ATO to his company’s account, at which point the underlying offence was complete, for which he was charged.[7] He was also charged for laundering about AUD103,000 of the monies, which he obtained personally. The words of Howie J at [27] and [31] could equally apply to the present case (emphasis mine):
    

“This was an unusual use of a money laundering offence. To the extent that there was an overlap with the fraud offences the charge represented the use of the funds that had been dishonestly obtained under those offences. The criminality was very much in the obtaining of the funds not in their use. It is somewhat analogous to a robber being sentenced for both robbery and being in possession of stolen goods. But in the present case, according to the maximum penalties prescribed, the money laundering offence was more serious than the frauds by which the money was obtained...

But here the applicant was merely transferring the money obtained by the fraudulent claims from the company accounts to his personal account or drawing it from an ATM so that he could use it to gamble. He was doing nothing to hide the source or to change the nature of the funds. He was simply gaining access to them. The activity came within the scope of the offence ... because the offence is so widely drawn. But it was a highly technical version of the offence.”

54. The Court of Criminal Appeal went on to say that because of the unusual circumstances of the offence the maximum penalty was not a reliable guide to the seriousness of the conduct involved in the offence as the provision embraces a very broad range of both conduct and criminality: Thorn (supra) at [33].
    
55. Having made those comments, the Court re-sentenced the offender to imprisonment for three years for the fraud offences and imprisonment for two years and eight months for the money laundering offence with some cumulation (one month) to reflect that the criminality of that offence was not entirely captured by the fraud offences.
    

Sentence

56. Returning to the present case, I have taken the following matters into account when determining sentence.
    
57. The maximum penalty for an offence under s. 508B(1) of the Criminal Code in the case of a natural person, is a fine not exceeding K500,000 or imprisonment for a term not exceeding 25 years or both.
    
58. The Court has broad discretion on sentence pursuant to s. 19 of the Criminal Code. It is also well established that the maximum penalty is normally reserved for the most serious instances of the offence: Goli Golu v The State [1979] PNGLR 653. As discussed above, this case does not fall within that category. The sentence in this case will be determined having regard to its own facts and circumstances: Lawrence Simbe v The State [1994] PNGLR 38.
    
59. The offence under s. 508B(1) of the Criminal Code is deliberately broad and designed to capture a wide range of conduct relating to money or other property arising from crime. I share the view expressed by the Courts in Australia with respect to similar provisions that, given its breadth, the maximum penalty has been designed to accommodate a very broad range of offending behaviours. While that is necessarily the case with all maximum penalty provisions, the more general the provision the broader the range of offending conduct it will capture. In the circumstances sentencing in such cases requires a careful assessment of the objective seriousness of the offending under consideration: Thorn (supra); Clarke (supra) at [62], [65] and [83] adopted.
    
60. The State seeks a penalty of four (4) to six (6) years on the basis that the same sentence for the underlying offence should be imposed. It submits that the offence is becoming prevalent. That can hardly be the case when this is only the second time a person has been convicted of money laundering.
    
61. The defence also relies on sentencing practice for dishonesty offences and submits that a sentence of three (3) years is appropriate. Neither party suggest that a fine is appropriate in this case.
    
62. Despite the fact that applying the considerations outlined at [37] above, the money laundering offence involved a significant sum of money, K72,380.30, was conducted over a period of three months, involved a number of transactions, from which the offender personally benefited, the offence was of a highly technical nature, and towards the lower range of the type of offending covered by s. 508B of the Criminal Code.
    
63. The money laundering was not sophisticated and there was no plan to “deal” with the money, other than to spend it. The planning was in the underlying offence. The offender did breach Mr Kila’s trust by using his bank card without his knowledge but the substantive breach of trust was the crediting of funds to his brother-in-law’s account without his knowledge, again as part of the underlying offence.
    
64. The underlying criminal conduct, however, from which the property was derived was very serious. The offender was personally responsible for misappropriating the funds, and he was well aware of their source. He also personally benefited from the funds.
    
65. Whilst not binding, by analogy and extension to the cases referred to above at [50] and [51], it is my view that as the money laundering offence was of a technical nature in this case, the sentence imposed should, despite the much greater maximum penalty applicable under s. 508B(1) of the Criminal Code, be proportionate to that which would have been imposed for the underlying offence of misappropriation under s. 383A(1)(a)(2)(d) of the Criminal Code had it been charged on the indictment.
    
66. This is not to be seen as endorsing or encouraging the approach taken by the State in this case, i.e. proceeding with a technical breach of s. 508B of the Criminal Code when it could have proceeded with the substantive charge of misappropriation, which would have reflected the nature and extent of the offender’s criminal conduct and provided an appropriate basis for sentence; nor to suggest that the State should have charged both misappropriation and money laundering, given that the latter did not add to his overall culpability in any substantial way.
    
67. Applying the principles outlined in Wellington Belawa to the underlying offence, it concerned a significant amount of money in the sum of K72,380.30. The offender abused a significant position of trust as an employee of the bank, to dishonestly apply the funds to Mr Kila’s account, which he did over a period of three months, through no less than 21 transactions, indicating planning and ongoing dishonesty during the period. As above, he also breached the trust of his brother-in-law to use his account, without his knowledge, as the vehicle for conducting the misappropriation. The offence was conducted for financial gain. There was no restitution and the victim, Westpac, ultimately suffered the loss of the monies transferred to Mr Kila’s account. Misappropriation is prevalent and the offence calls for general and specific deterrence.
    
68. The State’s submission on the effect on the public and public confidence is directed at the money laundering charge and is unclear. It appears to be saying that the public will lose trust in the banking industry as a result of the offence. The money laundering was the use of the offender’s brother-in-law’s bank card without his knowledge. That is not a matter to bring public confidence in the banking industry into question. Any impact on the public or public confidence of the underlying misappropriation offence was also limited. Whilst conducted by a bank employee, it was relatively unsophisticated, for personal gain and detected by the bank within three months.
    
69. Taking into account the objective circumstances outlined above, an appropriate sentence for the underlying offence of misappropriation in my view would be between four and five years of imprisonment.
    
70. In mitigation this is the offender’s first offence. The offender admitted the offence to his employer upon detection and cooperated with police from an early stage, making admissions in his record of interview, taking responsibility for the conduct alleged. He also admitted the offence at the District Court and expressed his intention to plead guilty before the National Court at a very early stage. This early and ongoing cooperation is a significant matter and will be reflected in the sentence. It will be taken into account on the utilitarian basis that it has saved the State the cost and inconvenience of running a trial.
    
71. I will also take his early plea into account as indicative of remorse. In this regard he expressed remorse on allocutus, which I accept as genuine. He apologised to his employer for the loss of the monies and to the Court for wasting its time. He asked for leniency and expressed his intention to repay the money.
    
72. The offending is out of character. According to the pre-sentence report, the offender is 27 years of age from Hula in Rigo, Central Province. He lives with his wife, his mother and two older siblings and at least six others at Gerehu in Port Moresby.
    
73. The offender has been educated up to Grade 12. Despite being selected he was unable to further his education for family reasons. In 2012 he was employed by Westpac Bank, where he worked until his arrest this year.
    
74. The offender’s mother described the offender as a hardworking man who has always put family interest ahead of his own. Since the death of her husband, the offender has been the sole bread winner for the family. At the time of the offence the offender was responsible for meeting the costs of his family, including the school fees of his youngest sibling. The offender says that he used up his savings to support his family and was under pressure to meet his family’s costs.
    
75. His immediate supervisor at Westpac was shocked to learn of the offending. She spoke highly of his work ethic and his leadership qualities. The Assistant Chief Secretary for the Salvation Army describes the offender as a fine and respectful young man whom he has known since childhood.
    
76. I have no doubt that the prisoner and his family will suffer a loss of standing in the community as a result of his conviction for money laundering. It will be difficult for the prisoner to obtain employment in the future, particularly in the finance industry. Any term of imprisonment will have a significant effect on his wife and others who are dependent on him.
    
77. No restitution has been made to date. There are no matters of mitigation special to the prisoner. Whilst not excusing the conduct, I do accept that the offender was under some pressure to meet his family’s financial obligations at the time of the offence.
    
78. Taking into account all of the matters outlined above, I impose a sentence of four (4) years of imprisonment in hard labour.
    
79. The offender has called for the sentence to be suspended to allow him to make restitution. Courts in this jurisdiction have made it clear that suspension is not an act in leniency but a form of punishment that is to be served outside the prison system in the community interest to promote restitution or rehabilitation: The State v Tardrew [1986] PNGLR 91; The State v Frank Kagai [1987] PNGLR 320.
    
80. In Tardrew (supra) the Supreme Court set out three broad, but not exhaustive, categories in which it may be appropriate to suspend a sentence, namely: where it will promote the general deterrence or rehabilitation of the offender; where it will promote the repayment or restitution of stolen money or goods; or where imprisonment would cause an excessive degree of suffering to the particular offender, for example because of bad physical or mental health.
    
81. The Means Assessment Report recommends suspension to allow restitution. With respect, I can’t agree. On the information provided in that report the offender does not have the means to restitute within a reasonable time. He has no money in the bank and has already withdrawn all of his superannuation. He is willing to sell his father’s vehicle, which has been valued by Ela Motors at K18,000, and his wife is willing to meet the balance in instalments from her net fortnightly salary of K633.83. The offender’s family has also pledged support but there is no evidence of their capacity to do this and the offender was not able to provide a proposed payment schedule to Probation Services other than to promise his intention to restitute within 12 months. In the circumstances it would not be appropriate for me to order restitution despite the recommendation of Probation Services and I decline to do so. Nor would it be in the interests of the offender or his family. The monies are substantial, particularly in view of their current financial circumstances. As I have said it will be difficult for the offender to obtain employment and his family will need what money they have to maintain themselves.
    
82. The offender will serve his sentence in custody.
    
83. The offender’s bail monies are to be immediately refunded.
    

The Court orders accordingly.
________________________________________________________________
Public Prosecutor: Lawyer for the State
Public Solicitor: Lawyer for the Prisoner

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[1]https://www.bankpng.gov.pg/wp-content/uploads/2019/04/National-Anti-Money-Laundering-and-Counter-Terrorist-Financing-Strategic-Plan-2017-2022_-3.pdf
[2] Second Reading Speech by the Minister for Justice and the Attorney-General on the Package of Five Anti-Money Laundering and Counter Terrorist Financing Bills, August 2015.
[3] In Australia the Crimes Act (Cth) creates several offences differentiated by state of mind, ie. knowledge, recklessness and negligence, and has attempted itself to structure them to give some guidance as to the seriousness of the conduct by reference to the applicable maximum penalty for each offence. The scheme is that the greater the sum of money involved, the more serious the offence: Ansari v R (70) NSWLR 89 at [122]. For instance at ss. 400.3 to 400.8, the following maximum penalties apply where the person believes the property to be the proceeds of crime, i.e. in the case of property worth: AUD1m or more, imprisonment for 25 years or 1500 penalty units, or both (the value of a penalty unit as per s. 4AA of the Crimes Act (Cth) is AUD210 indexed for CPS); AUD100,000 or more, 20 years, or 1200 penalty units, or both; AUD50,000 or more, 15 years, or 900 penalty units, or both; AUD10,000 or more, 10 years, or 600 penalty units, or both; AUD1,000 or more, 5 years, or 300 penalty units, or both; or any value, 12 months, or 60 penalty units, or both.

[4] Similarly, in the UK, the Sentencing Council for England and Wales has set out detailed guidelines again based around the amount of money involved: https://www.sentencingcouncil.org.uk/offences/magistrates-court/item/money-laundering/. It should be noted, however, that the maximum penalty under each of ss. 327, 328 and 329 of the Proceeds of Crime Act, 2002 is 14 years’ imprisonment.
[5] See The Prosecution Police of the Office of the Public Prosecutor at [9.1].
[6] As above, the UK Sentencing Council have since issued detailed Sentencing Guidelines which are structured primarily according to the amount of money involved.
[7] The charge was brought pursuant to s. 192C of the NSW Crimes Act under which a person “obtains” property if they obtain possession, ownership or control of property for themselves or another, or induce a third person to do something that results in them or another person obtaining possession, ownership or control of the property.