State v Karnhick [2020] PGNC 142; N8341 (5 June 2020)

N8341

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) No. 197 of 2019

THE STATE

V

MOSES KARNHICK

Waigani: Berrigan J
2020: 5^th February, 4^th March & 5^th June

CRIMINAL LAW–SENTENCE –S 383A(1)(a)(2)(d) of the Criminal Code – Guilty plea - Misappropriation of K300,000 by bank officer from land owners association – Sentence of 5 years of imprisonment.

Cases Cited

Goli Golu v The State [1979] PNGLR 653
The State v Tardrew [1986] PNGLR 91
Wellington Belawa v The State [1988-1989] PNGLR 496
Lawrence Simbe v The State [1994] PNGLR 38.
The State v Paroa Kaia (1995) N1401
The State v Tova (1997) N1522
The State v Imoi Maino (2004) N2773
The State v Alice Wilmot (2005) N2857
The State v Niso (No 2) (2005) N2930
The State v Iori Veraga (2005) N2849
The State v Ludwina Tokiapron (2005), unreported
The State v Niso (No 2) (2005) N2930
The State v Nancy Uviri (2008) N5468
The State v Emba (2011) N5012
The State v Etami (2012) N4769
The State v Mathew Kana,CR No 843 of 2012, 11 June 2014, unreported
The State v Tiensten (2014) N5563
The State v Isaiah Guda (2015) N5955
The State v Tanner & Anor (2014) N5808
The State v Guda (2015) N5955
The State v David Poholi (2016) N6214
The State v Pohien (2016) N6564
The State v Paul Guli & Ors (2017) N6866
The State v Sarry Moere, CR (FC) 153 of 2017, 6 November 2017, unreported
The State v Tracy Tiran (2018) N7375
The State v Solomon Junt Warur (2018) N7545
The State v Ruth Tomande (2019) N8153

Legislation and other materials cited:

Sections 19, 383A(1)(a)(2)(d) of the Criminal Code.

Counsel

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

DECISION ON SENTENCE

5^th June, 2020

1. BERRIGAN J: The offender pleaded guilty to one count of misappropriating K300,000, contrary to s. 383A(1)(a)(2)(d) of the Criminal Code, on the basis of the following agreed facts, which were confirmed by the depositions.
   
2. The offender was employed as a Mortgage Specialist Officer with Australia and New Zealand Bank Limited (ANZ) at the Harbour City Branch, Konedobu, National Capital District. He was also the owner and director of Jehay Limited, which operated an account at the same bank.
   
3. In 2015 the offender assisted the complainants, Ponson Rombo (Chairman), Nick Angue (Secretary) and Wanpis Lea (Treasurer), to open an account for the Kuabini Land Owners Association Incorporated, of whom they were the executive officers. The offender became a trusted contact for the complainants when conducting the Association’s banking.
   
4. On 26 January 2018 the offender assisted the complainants deposit K800,000 belonging to the Kuabini Landowners Association into the bank account of his company, Jehay Limited, for safe keeping for and on behalf of the Association. Between 6 February and 9 February 2018 the complainants asked the complainant for the Association’s monies. On 9 February the offender withdrew K500,000 cash from the Jehay Limited account and gave it to the complainants. On the same day the offender gave the complainants an undated cheque for K300,000.
   
5. The cheque was dishonoured upon presentation by the complainants to the bank towards the end of that same month. The bank statement for the Jehay Limited account showed that the offender had withdrawn the funds on a continuous basis from his company’s account following deposit until there were no monies left in the account.
   

Sentencing Principles and Comparative Cases

6. 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 of misappropriation, 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.
       
7. 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 misappropriated 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.
      
8. It is generally accepted that whilst the principles to be applied when determining sentence remain relevant and applicable, 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.
   
9. Defence counsel submitted that a sentence in the range of three to five years of imprisonment would be appropriate. The State submitted that a sentence in the range of five to ten years would be appropriate. I note here, however, that the State concedes the case does not fall within the worst category. The State relied on the following cases:
   
   1. The State v Paroa Kaia (1995) N1401, Sawong J, in which the prisoner pleaded guilty to one count of misappropriating K94,478.31 belonging to ANZ Bank over a 2 month period. At the time he was an accounts supervisor with the bank. He was sentenced to 4 years’ imprisonment;
      
   2. The State v Tova (1997) N1522, Batari AJ (as he then was), in which the prisoner pleaded guilty to misappropriating K22,100, the property of Allens Arthur Robinson Lawyers, his employer. He was sentenced to 3 years’, wholly suspended on condition of restitution;
      
   100. The State v Imoi Maino (2004) N2773, David AJ (as he then was), in which the prisoner misappropriated K106,355.02 by drawing 16 cheques, 15 in favour of others, one in favour of himself, whilst a payroll clerk with the Department of Education. He was sentenced to 4 years’ imprisonment, of which 2 years was suspended on conditions;
        
   4. The State v Alice Wilmot (2005) N2857, Sevua J, in which the prisoner pleaded guilty to one count of misappropriating K19,960 systematically over a period of 17 months whilst a bank teller from her employer, ANZ. The prisoner failed to express remorse and was sentenced to 3 years’ imprisonment, 18 months of which was suspended upon full restitution. A further 6 months’ was suspended upon entering into her own recognizance with the balance of 12 months’ to serve; and
   5. The State v Nancy Uviri (2008) N5468, Cannings J. The offender was sentenced to 7 years of imprisonment for misappropriating K300,000 from her employer over an 18-month period through a scheme of bogus invoices.
      
10. I have also had regard to the following cases:
    
    1. State v Etami (2012) N4769, David J in which the prisoner pleaded guilty to one count of misappropriation of K165,086.18, the property of his employer, Oilmin Field Services. Whilst employed as a Taxation Officer and Accounts Payable Assistant he incorporated three bogus companies with similar names to those of his employer’s three main creditors, drew up false requisitions, altered the payee and deposited the cheques to the accounts of those companies. He was sentenced to 4 years of imprisonment, wholly suspended on conditions, including restitution;
       
    2. The State v Niso (No 2) (2005) N2930, Gavara-Nanu J, in which the prisoner was found guilty following trial of conspiracy, fraudulently uttering a false document, and the misappropriation of K500,000.00 belonging to his employer, the Bank of Papua New Guinea. The offences took place over a period of about 3 weeks. At the time he was the Senior Clerk and Supervisor in the General Ledgers Section. The prisoner was sentenced to an effective term of 7 years, 6 months of imprisonment (from which 8 months spent in custody was deducted);
       
    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. The prisoner was sentenced to 4 years on each conspiracy count to be served concurrently, and 2 years on each misappropriation count, to be served concurrently. The misappropriation sentences were made cumulative on the conspiracy sentences, with an effective sentence of 6 years of imprisonment;
         
    4. The State v Ludwina Tokiapron (2005), Salika DCJ (as he then was), unreported, in which the prisoner was sentenced to 6 years’ imprisonment after pleading guilty to misappropriating K200,000.00. The monies were obtained from the victims on the pretext that they would be invested in a pyramid scheme in Singapore but were used by the prisoner instead. He was sentenced to 6 years’ imprisonment;
       
    5. The State v Emba (2011) N5012, Kawi J, in which the prisoner pleaded guilty mid-trial to one count of misappropriating K286,491.71 in ticket sales. She was employed as a cashier with Air Niugini, based in Kimbe, and was responsible for collecting cash monies from the sale of airline tickets. To avoid detection the prisoner got the ticket coupons and destroyed them, and then applied the monies to her own use. She was sentenced to 6 years to be spent in light labour at the Lakiemata Prison. The sentence was wholly suspended on conditions including restitution;
       
    6. The State v Mathew Kana,CR No 843 of 2012, 11 June 2014, unreported, Sakora J, in which the prisoner pleaded guilty to one count of misappropriation and one count of conspiracy to defraud Twivey Lawyers of K164,570.30.He was sentenced to 5 years of imprisonment;
       
    7. The State v Isaiah Guda (2015) N5955, Salika DCJ, in which the prisoner pleaded guilty to misappropriating K436,000 the property of the Moga Incorporated Land Group over a period of about two months. The prisoner was assisted by his lawyers and produced false certificates authorising his access to the monies which he presented to the bank. He was sentenced to 6 years’ imprisonment with hard labour;
       
    8. The State v Tanner & Anor (2014) N5808, Salika DCJ (as he then was). The prisoners were convicted following trial of one count of misappropriation of K292,663.50, the property of Post PNG Limited. Between the 1st of January 2012 and the 31st August 2012, the prisoners conspired with each other and fraudulently obtained an amount of K292,663.50 using the mobile SMK (Salim Moni Kwik) system. Clayton Tanner manipulated the system by entering false cash entries on Telepin (the mobile money system) purporting to be monies sent from another province, which were then cashed out in Port Moresby by Alex Solon. Tanner was sentenced to 4 years’ imprisonment, 2 years of which was suspended upon payment of his share of restitution. Solon was sentenced to 3 years’ imprisonment, 2 years of which was suspended upon payment of his share of restitution of K146, 331.75;
       
    9. The State v Guda (2015) N5955, Salika DCJ (as he then was). The prisoner pleaded guilty to one count of dishonestly applying to his own use and the use of others K436,000, the property of Moga Incorporated Land Group. The prisoner and another withdrew K436,000 on different occasions from the Moga ILG account held at BSP. The prisoners were assisted by Karen Rema, an in-house lawyer with the bank. At the time of the offence, the prisoner was not authorized to withdraw or deal with the monies of the Moga ILG. He was sentenced to 6 years’ imprisonment;
       
    10. The State v David Poholi (2016) N6214, Salika DCJ (as he then was), in which the prisoner pleaded guilty to one count of conspiracy to defraud and one count of misappropriation of K688,000.00 from BSP, his employer, whilst a Human Resource Benefits and Remuneration Officer, over a period of 18 months and involving 134 transactions. He was sentenced to 3 and 5 years’ respectively on each count, to be served concurrently;
        
    11. The State v Pohien (2016) N6564, Liosi AJ (as he then was). The accused was convicted of one count of misappropriation of hardware materials valued at K462,864.00 the property of his employer, Sika Limited. The prisoner whilst employed in the company’s hardware section as the supervisor, misappropriated hardware materials worth K462, 864.00, over a period of 6 months. He was sentenced to 5 years’ imprisonment;
        
    50. The State v Paul Guli & Ors (2017) N6866, Salika DCJ (as he then was), in which three prisoners were each found guilty of one count of misappropriating K473,575.00 the property of the State following a trial. Two prisoners, the District Accountant and District Administrator of what was then Western Highlands Province (now Jiwaka), made fraudulent payments into the account of the third prisoner, a local businessman. They were sentenced to 5 years’, 5 years’ and 2 years’ respectively;
        
    13. The State v Sarry Moere, CR (FC) 153 of 2017, 6 November 2017, unreported, Salika DCJ (as he then was). 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. The offender was sentenced to 6 years’ imprisonment;
        
    14. The State v Tracy Tiran (2018) N7375, Miviri AJ, in which the prisoner was convicted and sentenced to 6 years’ imprisonment following trial on one count of misappropriating K500,000.00, the property of the State. The prisoner dishonestly obtained monies for the purpose of establishing a coconut project through the office of the Minister for National Planning and Monitoring, which project was never established;
        
    15. The State v Solomon Junt Warur (2018) N7545, Berrigan J, in which the prisoner pleaded guilty to one count of misappropriating K811,969.53 belonging to the State. Over a period of more than 3 ½ years the prisoner, a Communications Officer in the Information and Communication Technology (ICT) Section of Correctional Services (CS), issued 66 false orders and invoices on behalf of CS, payable to his own company, Merc-Tech, for which no goods or services were ever supplied. He was sentenced to 7 years’ imprisonment; and
        
    16. The State v Ruth Tomande (2019) N8153, Berrigan J. The offender pleaded guilty during trial to misappropriating K300,933.71 from her employer, BSP, of which K40,000 was recovered by the bank. At the relevant time the accused was employed as a Home Loan Officer with BSP. Between 30 April 2017 and 1 January 2018 the accused falsified 14 loan applications which had previously been declined by the bank and altered them to manipulate the system into approving the loans. The monies were then transferred by the offender to accounts belonging to her relatives and other bank customers. The monies were also credited back to the loan accounts to fund repayments and avoid detection. She was sentenced to 5 ½ years of imprisonment.
        
11. The sentence in this matter will be determined having regard to its own facts and circumstances: Lawrence Simbe v The State [1994] PNGLR 38.
    

Considerations on Sentence

12. Having regard to the principles outlined in Wellington Belawa, the following matters have been taken into account.
    
13. It is well settled with respect to offences concerning dishonesty that, in general terms, the greater the amount of money involved the more serious the offence. The offence in this case involves a substantial amount of K300,000.
    
14. The offence also involved a serious breach of trust. The offender used his longstanding relationship with the Association and his position as a trusted bank officer for personal gain.
    
15. The withdrawals commenced the day the monies were deposited to the company’s account and continued for over a month. This was a not a spur of the moment offence and clearly involved planning and ongoing dishonesty during the period. The monies were withdrawn in cash and it is not in dispute that the monies were applied for the offender’s own use.
    
16. The impact on the victim, the Kuabini Landowners Association and its members, has obviously been great. The monies were part of compensation paid by the State for the use of the Association’s land. The offence deprived the Association and its members of scarce and much needed resources for the community of Kuabini. I also accept that the reputations of the complainants have been tarnished as a result of the offence and their involvement with the offender, whom they trusted.
    
17. The offender himself is 41 years old. He is from Kerei Village in Kieta, in the Autonomous Region of Bougainville but is a long-term resident of Port Moresby. Since the offence two years ago he has been living with his brother and his family in the city. The offender is married with a 7 year-old son, who was previously studying at St Joseph’s International School but is no longer attending school due to financial constraints.
    
18. The offender is highly educated. He graduated from Port Moresby National High School in 1998 and went on to obtain a Bachelor of Economics from the University of Papua New Guinea in 2004. The following year he was employed by ANZ and at the time of the offending was a Mortgage Specialist Officer. He is currently unemployed and relies on his wife’s work in the informal sector, and his brother, for financial assistance.
    
19. In mitigation this is the offender’s first offence. I am satisfied that he is previously of good character. Probation Services spoke to his brother and his wife of 12 years, both of whom were shocked by the offending. They confirm that the offender is from a strong Christian family and that he is a quiet, humble, family man. He does not drink and has never consumed drugs. The pastor of the Konedobu Seventh Day Adventist Church also described the offender as a humble, quiet and peaceful community member. Similar comments were expressed by a former work colleague.
    
20. The offender expressed remorse on allocutus which I accept as genuine. He apologised for the offence and admitted again that misusing the Association’s funds was wrong but said that other people were also involved. He pleaded for the Court to suspend his sentence so that he could make restitution and continue to care for his seven year old son.
    
21. The offender cooperated from a very early stage with authorities and pleaded guilty at the first opportunity. He has not at any time tried to hide his involvement in the offending or that he used the money without the complainants’ consent and for his own use. Whilst that doesn’t excuse the offending it does speak to his genuine remorse.
    
22. The impact of the offence on the offender has been and will continue to be very significant. The offender held a long term and secure position in one of the country’s largest banks. I am sure that his offending will bring shame and a loss of standing to both himself, and his family. It will be very difficult for him to find employment in the future, particularly in the financial industry and in the area of his expertise. The loss of income and any time spent in custody will also have a significant effect upon his wife, very young son and extended family.
    
23. There are no matters of mitigation special to the offender.
    

Sentence

24. The offender has been convicted of one count of misappropriating K300,000 contrary to s. 383A(1)(a)(2)(d) of the Criminal Code. Section19 of the Criminal Code provides the Court with broad discretion on sentence. It is well established that the maximum penalty is reserved for the most serious instances of the offence: Goli Golu v The State [1979] PNGLR 653. Although this case does not fall within that category, the offence remains a serious one.
    
25. I have taken into account the offender’s personal circumstances. I have also taken into account his lack of previous conviction, prior good character, early cooperation and sincere remorse. These are factors in his favour but they are far outweighed by the aggravating factors in this case, namely the nature and quantum of the offence, the period over which it was conducted, the position of trust held by the offender, the use to which the monies were put, the planning involved and the impact on the victim. Dishonesty offences are prevalent and this case calls for both general and specific deterrence.
    
26. Having considered all of the above matters, including comparative cases, I sentence the offender to 5 years of imprisonment. I understand that to date the offender has not been spent in custody.
    
27. As mentioned, the offender has pleaded for his sentence to be suspended.
    
28. In The State v Tardrew [1986] PNGLR 91 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.
    
29. The offender’s family and his pastor support his plea for suspension. The complainants do not oppose suspension for the purposes of restitution. Probation Services have confirmed that the offender is suitable for probation. Probation Services have also made clear, however, that he does not have the means to repay the monies and on the material available I agree with that view. Nor would suspension be appropriate in the circumstances of this case given the nature and quantum of the offence. There is nothing to suggest that the offender would suffer excessively in prison. In the circumstances I refuse to suspend any part of the sentence and make the following orders.
    

Orders

(1) The offender is sentenced to 5 years of imprisonment in hard labour to be served at Bomana Correctional Institution.

(2) Any bail monies are to be immediately refunded.

(3) As a precautionary measure during the Coronavirus State of Emergency, the offender is to be held in the Isolation Facility at the Bomana Correctional Institution for at least two weeks before transfer to the main compound, subject to medical assessment.

________________________________________________________________
Public Prosecutor: Lawyer for the State
Public Solicitor: Lawyer for the Offender