State v Daniel [2022] PGNC 219; N9688 (3 June 2022)

N9688

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) 301, 302, 303 & 304 OF 2015

THE STATE

V

BOB DANIEL

Wewak: Miviri J
2022: 31^st May, 3^rd June

CRIMINAL LAW – PRACTICE AND PROCEDURE – Misappropriation – trial – K 1, 141, 443. 39 – Applied to Own Use – Contract Agreement for K 223, 340. 70 paid in full – Additional Claims Submitted K 337, 916. 00 & K 803, 577. 39. 00 – Breaches of Public Finance Management Act 1995 as amended – No Tender – False Work Agreement – Payment In Breach of Law – Cheating Section 406 (1) (b) (ii) CCA x 2 Counts – Certificate of Completion Not in Jurisdiction of Officer Signing – Major Projects Not Minor – Authority In Law not there to issue Certificate of Completion – False Documents – Variance of Initial Contract – Non Compliance Public Finance Management Act 1995 – Credibility Unimpressive – Burden of Proof Discharged – Guilty of 2 Counts of Cheating – Guilty of Misappropriation – Bail Refunded – remanded.

Fact
Accused lodged two additional claims K337, 916.00 and K803, 527. 39 which had false contract of Agreement specifying both sums. There was no variation in the original contract sum of K223, 340. 70 that was paid. False certificate of completion were prepared beyond the authority of the certifying officer. Accused received a total sum of K 1, 141, 443. 39 that was deposited into his Company Account that he used.

Held
Public Finance Management Act 1995 amended breached.
No Contract for subject payments.
Falsified certificate of Completion.
K 1, 141, 443. 39 used by the Accused.
No variation in original contract.
Cheating.
Mala fide not bona fide.
Dishonesty.
Application to own use.
Burden discharged.
Guilty as Indicted x 3 Counts.
Bail Refunded
Remanded.

Cases Cited:
Tolulu v Tobing [1964] PNGLR 248
John Jaminan v The State [1983] PNGLR 318
Kandakason v The State [1998] PGSC 20; SC558
Waranaka v Dusava [2009] PGSC 11; SC980
Lawi v The State [1987] PNGLR 183
The State v Francis Natuwohala Laumadava [1994] PNGLR 291
Yaip Avini v The State [1997] PNGLR 212

Counsel:

F. K. Popeu, for the State
S. Parihau, for the Defendant

VERDICT

03^rd June, 2022

1. MIVIRI J: This is the verdict after trial of Bob Daniel of Namuk Angoram East Sepik Province who was indicted with two counts of cheating and a count of misappropriation pursuant to the Criminal Code.
   
2. In the first Count he was charged that he between the 15^th day of September 2014 and the 30^th day of December 2014 in Wewak by fraudulent devise induced the East Sepik Provincial Treasury to pay a sum of K337, 916. 00 to Pins Construction Limited contrary to section 406 (1) (b) (ii) of the Criminal Code.
   
3. In the second count he was charged that he between the 15^th day of September 2014 and the 22^nd day of January 2015 in Wewak by fraudulent devise induced the East Sepik Provincial Treasury to pay a sum of K803, 527. 39 to Pins Construction Limited contrary to section 406 (1) (b) (ii) of the Criminal Code.
   
4. In the third Count he was charged that he between the 08^th day of January 2015 and the 22^nd day of February 2015 in Wewak dishonestly applied to his own use K 1, 141, 443. 39 money belonging to the Wewak General Hospital thereby contravening section 383A (1) (a) (2) (d) of the Criminal Code.
   
5. He was the sole owner of a company Pins Construction involved in building plumbing and Electrical works. In January 2014, it was awarded a contract to do and carry out maintenance work at the Wewak General Hospital. It was paid for the completion of the works in the sum of K223, 340.70 in full payment for the contract completed on or around August 2014. The accused submitted yet another claim on invoice number 022 dated the 15^th September 2014 for a further amount of K337, 916.00 claiming payment for outstanding work and new work done at the hospital. He submitted yet another claim for K803, 527. 39 claiming this as payment for work on four (4) ablution blocks at the hospital. This raised the total payment paid out to K1, 141, 443. 39 paid off by the East Sepik Provincial Treasury to Pins Construction Limited between the 11^th December 2014 and the 22^nd January 2015, deposited into the Company account operated at the Westpac Bank. And this was paid out from K2, 000,000.00 that was allocated by the National Government for the Wewak General Hospital kept at the East Sepik Provincial Treasury. In so doing, he cheated and dishonestly applied that money to his own use. He therefore had breached section 406 (1) (b) (ii) of the Criminal Code of the offence of cheating. And further he breached section 383A (1) (a) (2) (d) also of the Criminal Code.
   
6. The charge of Cheating is in the following:
   

“(1) A person who, by means of any fraudulent trick or device–

(a) obtains from any other person anything capable of being stolen; or
(b) induces any other person–

(i) to deliver to any person anything capable of being stolen; or
(ii) to pay or deliver to any person any money or goods, or any greater sum of money or greater quantity of goods than he would have paid or delivered but for the trick or device,

is guilty of a misdemeanour.

Penalty: Imprisonment for a term not exceeding two years.”

7. The State invokes subsection 1 (b) (ii) against the conduct of the accused. Essentially saying, he induced the State to pay him firstly K337, 916.00. And then K803, 527. 39 which were without any justification. He led the State to believe it was paying for goods and services rendered by the accused through his company Pins Construction Limited in each case. Here the Accused actions were mala fide as opposed to bona fide. He cheated the State in the payment of the two lots of money alleged in the first and second Counts and therefore had breached that section: Tolulu v Tobing [1964] PNGLR 248.
   
8. Count number three on the indictment was pursuant to section 383A misappropriation of the Criminal Code which reads; “(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 five years except in any of the following cases when he is liable to imprisonment for ten years-
(a) where the offender is a director of a company and the property dishonestly applied is company property;
(b) where the offender is an employee and the property dishonestly applied is the property of his employer;
(c) where the property dishonestly applied was subject to a trust. Direction or condition;
(d) where the property dishonestly applied is of a value of K2000 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;
(b) a person’s application of property may be dishonest even although he is willing to pay for the property or he intends to restore the property afterwards or to make restitution thereof to the person to whom it belongs or to fulfil his obligations afterwards in respect of the property;
(c) a person’s application of property shall be taken not to be dishonest, except where the property came into possession or control as trustee or personal representative, if when he applies the property he does not know to whom the property belongs and believes on reasonable grounds that such person cannot be discovered by taking reasonable steps;
(d) persons to whom property belongs to include the owner, any part owner, any person having a legal or equitable interest in or claim to the property and any person who immediately before the offender’s application of the property, had control of it. “

9. Upon arraignment the accused entered not guilty pleas in respect of all counts charged. This was through counsel after initially admitting. It became clear in the course of the trial that, there was no issue as to the payment of K337, 916.00 and K803, 527. 39 to Pins Construction. He was its sole owner and signatory to the account maintained at the Westpac bank. He received and used as the sole owner of the company. His argument as it uncovered was that he had earned them, and they were paid by processing through administration and in compliance with the law. He did not cheat in getting both sums of money. He did not misappropriate K1, 141, 443. 39. He was not dishonest because he had followed the process of the government accounting system to get it for work, he had discharged to the Hospital. He had not committed any offence as charged in the three counts levelled against him in the Indictment presented.
   
10. The State case opened with the tender of all evidence by consent of both parties marked as Exhibits in the case. Exhibit P1 was the record of interview of the Accused dated the 09^th June 2015 conducted in pidgin. P1(a) was the English translation of that record of interview. He admitted that he did receive the subject amounts of money the subject of the charges. But that he had not cheated, they were due to him for the work that he had discharged as contracted. That the approval to pay him was made in a letter written by one Garry Gule who was then Finance Manager authorizing his payment of the subject moneys. And the payment were acknowledgment of the services that he discharged at the hospital in the hands of the hospital management. And both payments were as a result of work agreements that were entered into between himself and the hospital Authorities. Therefore, he committed no offence as alleged by the state. Because he as a result deposited the subject money into the Westpac Account of the Company Pin Construction held in that bank. And he admitted using that money to purchase two Isuzu dump trucks valued each at K167,000.00 each both for the use of his company Pins Constructions. He made large withdrawals of that money in the sum of K200, 000.00 on the 02^nd February 2015 and again on the 23^rd February 2015 in the sum of K104, 000.00. Which he says were used for the wages and material cost from Lae to Wewak and for completion of the work at the maternity ward of the hospital.
    
11. Exhibit P2 is the statement of Walter Sim fraud Investigator who was alerted the complaint by Board Chairman of the hospital Honourable Allan Bird. He compiled the investigation filed on the matter leading to the formal charging of the accused after a record of interview conducted set out above.
    
12. Exhibit P3 is the statement of Honourable Allan Bird, chairman of the Wewak General Hospital Board dated the 20^th May 2015. That the board is established by law pursuant to section 6 of the Hospital Act 1994, exhibit P3 (b). Under which the main function is to be accountable to the community and to provide services to all in the public plan and make decisions for the hospital. It was discussed in the board the allocation of K2 million by the National Government. And in that meeting the board was made aware of the payment of K1.14 million drawn and paid to a contractor. And it was resolved by the Board that the matter be reported to the police for action against those who were implicated. And the meeting minutes confirming that fact is exhibit P3(a). Which resolution was evidenced by complaint letter dated the 25^th February 2015 made to the police on the subject.
    
13. Exhibit P4 is the statement dated the 25^th May 2015 of the witness John Kami Provincial Health Office Admin Officer. His role as the East Sepik Provincial admin officer was that he was in charge of health office support staff. He also looked after health facilities which included cars, furniture, staffing, and buildings. He raised the divisional claims. That the procurement process is that there are several requisition officers under the various programs within including admin and management, Family Health Services, Malaria, Environmental health, and others. His authority in the process was limited to signing off on claims to the balance of K10,000.00 not K 300, 000.00 which was appropriately to be signed by the Senior Health Advisor. And the process is that quotations are obtained. The claims are raised. Requisition is made of the same which is usually signed by officer who is requisitioning. And then it is referred to the Senior Health Advisor or Provincial Health Advisor for endorsement. After which they are returned to accounts clerk for finance.
    
14. And which processes were not followed by the accused Daniel Bob of Pins Construction, because he held on to the claims after they were signed by the witness despite being advised to bring them to the Provincial Health advisor for his endorsement. And he received the Accused who asked that he be paid part of his moneys owing. He was queried by the witness for supporting documents and he produced completion report written by Garry Gule Finance and Admin officer of the Wewak General Hospital. Including photographs allegedly done of the works at the Maternity ward of the hospital. He also signed a green FF3 and FF4 claim also on that day. It was in mid-year last year.
    
15. And he brought both forms stating that he needed part payment for the work done. The amount were K337, 916.00 and K803, 527.39. The witness signed committing under item 284/1101/3221/226 under the recurrent budget. As to how they were paid is not within his knowledge. But he advised accused to have the Provincial Health Advisor Albert Bunat endorse the claims. This was never done and the signatures are not really accurate to mine as he understands.
    
16. The next exhibit is P5 Statement of the witness Olive Whippy dated the 20^th July 2015. He is employed with the Westpac Bank as Manager Risk & Compliance. That a Search warrant was served by the Police upon the Bank which was relating to the account 6000800434 held in the name of Pins Construction for the period 01^st August 2014 to 01^st March 2015 that vouchers, cheque number 565969 in the sum of K167, 000.00 dated the 29^th January 2015, and cheque in the sum again of K167, 000.00 dated the 08^th January 2015, and any other documents related to the deposit of K304, 124. 40 dated the 18^th December 2014, and K723, 174. 65 dated the 30^th December 2014, including several transactions that emanated thereafter. And he provided these documents now exhibit P5 (a) contained in the brief of evidence. Including Exhibit P5(b).
    
17. Materially his evidence establishes the dealings in that account maintained conducted by the accused for the Pins Construction. Primarily the subject moneys of this proceedings were deposited into that account and used, evidenced by the various records of the bank set out above. It is application to the company that the accused was the owner of. He is the sole signatory to that account, so what money was obtained that the accused has not denied was deposited here on behalf of the company. And he used them as evidenced by the bank documents. He was the sole signatory to that account. Which the banks authority form details out. It is clear substantial amounts of money moved out from that account into the possession of and disposal by the accused. This is strong evidence of the application of the subject moneys to the use of the accused and to that of Pins Construction to whom he had direct authority over. This is evident from the various cheques set out by the evidence of this witness including the bank statements that the bank produced on the operation of the account.
    
18. Exhibit P6 is the statement of the witness Simon Tomba acting Provincial Treasurer East Sepik Provincial Treasury Office. And also, he was working as the Corporate Service Manager with the supply and tenders Board which position, he left in 2014. He was later appointed to the current position in Wewak. At the time of the statement, he would have been in the position for five weeks. And his duties included that of keeping custody of public moneys. He also provided advice on financial matters to the Provincial Government and other departments on finance and annual budget implementation.
    
19. He was served a search warrant at about 9.20am of the 19^th of May 2015 at his office to provide; (1) Payment voucher for K304, 124.00 raised on the 25^th November 2014. Further payment voucher for K33 791. 00 raised on the 10^th December 2014. And further payment voucher for K723, 174. 65 which was raised on the 25^th November 2014, and further payment voucher for K80352.74 raised on the 19^th December 2014. Also including cheques raised from these payment vouchers. And the trust deed and the instrument for the K2,000, 000.00 given by the Prime Minister Honourable Peter O’Neil to the Wewak General Hospital. Additionally, any other documents or correspondence that may relate to the payment vouchers. And which documents he handed over to the Police.
    
20. Exhibit P6(a) is the table of all these documents that he gave from the records maintained to the Police. There is abundant evidence established that moneys that are the subject of the allegation were paid and receipted by the accused through his company. The payment vouchers evidence which is not disputed by the accused that he received those moneys as evidenced by these documents contained in Exhibit P6 (a). That is corroborated by the evidence of Olive Whippy set out above. There is no contract agreement of the subject works set out awarded to Pins Construction in the sum of K304, 124. 40, or K337, 916.00. The scope of works referred is not tied to the Contract of Agreement varying the original terms of the subject Agreement. Because this document is not in this witness account given to police.
    
21. And this view is cemented out by this witness’s evidence that:
    

“By looking at the documents I have given you, I as the current acting East Sepik Provincial Treasurer would have rejected all the claims as the decision to contract the State would have come from the Hospital Board or from the normal procurement process which through the tendering process of the PSTB or CSTB.

From what I have now, there is no hospital board decision on the expansion of the funds and besides the chief executive officer (CEO) of the General Hospital executes the board’s decision if they were to expand the funds. The Wewak General Hospital comes under the National Functions of the Department of Health in which the Chief Executive Officer (CEO) of the hospital has a threshold limit to K500, 000.00 likewise, the Provincial Administrator any amount more than K500, 000.00 is determined by the PSTB procurement process.”

22. Exhibit P7 is the Statement of Mark Mauludu the Acting Chief Executive Officer of the Wewak General Hospital dated the 20^th May 2015. He is the administrative head of the Hospital. He is responsible to the Hospital Board on the general operation of the hospital. Including responsible for the financial matters of the hospital and responsible also for the human resources including discipline of Staff. Previously he worked with the Department of Health before his appointment as the Acting Chief Executive Officer Wewak General Hospital. He states that Pins Construction carried out maintenance work at the Labour ward and urgent maintenance at the Theatre. There was no other rehabilitation work at the hospital after the initial arrangement. Upon checking Treasury Trust Account, he found that Pins Construction was paid by cheque number 169729 on the 10^th December 2014 for maintenance of the hospital the sum of K304, 124.40. A further cheque of 10% by Pins Construction in the sum of K 33, 791. 60 was paid to IRC. Yet a further cheque 169818 in the sum of K723, 174. 65 was paid to Pins Construction for maintenance of Toilet Block Boram Hospital. And again 10 % K 80, 352. 74 was paid to IRC dated the 24^th December 2014. Exhibit P7 (a) is the attachments in respect of the assertion he makes in his Statement verifying.
    
23. Fundamentally after that finding he submitted a letter to the Provincial Administrator informing that there was no maintenance work done at the hospital during the months of November and December 2014. As well there was no maintenance work on the toilet block and making payment to the Internal Revenue Commission was the responsibility of the Company Contractor. He too recommended that the Police investigate the matter. It begs the question if there were no works completed as contracted why was there payment made to Pins Constructions?
    
24. The other evidence in the State case comprised Exhibits P8 statement dated the 28^th May 2015 made by then Chief Executive Officer Doctor Lawrence Warangi. In that position he was responsible to the hospital Board on general operation of the hospital. He was also responsible for all the financial matters of the hospital. Because he was the financial officer section 32 for the hospital only. He was also responsible for the human resources including discipline of staff. And his contract expired on the 10^th October 2014 and he was replaced when he was away on duty travel. His understanding was that Pins Construction was given contract to do maintenance at the Maternity ward only. Contractors were invited by the Board so that was the only way Pins Construction was allocated. And all payment for Pins Construction was made from the hospital funds totalling K223, 340. 70 and urgent maintenance work at the theatre was paid K5, 505. 48. Apart from these payments as I can recall Pins Construction does not have any outstanding with the hospital.
    
25. As to the payment of K304, 124. 40 work agreement dated 05^th February 2014 I was on duty travel when it was signed by Christopher Kabaru, Exhibit P8 (a) so I had no knowledge of it. A copy of the letter from Pins Construction to the Chief Executive Officer for scoping work dated the 19^th August 2014 I did not sight nor did I sign it. And this is the same for the invoice dated 15^th September 2014 issued to the Chief Executive Officer which I did not sight nor did I sign it. And for the payment of K723, 174. 65 the tax invoice dated the 03^rd November 2014 to the Chief Executive Officer I did not sight nor did I sign it. I have no knowledge of the document. And the copy of the letter from Pins Construction to the Chief Executive Officer for the scoping work dated the 03^rd November 2014, I did not sight nor did I sign it. And the letter from the office of the Chief Executive Officer dated the 29^th January 2014 is an acknowledgement notice I did sign after the board allocated work at the maternity ward.
    
26. The next Exhibits in the State case is Exhibit P9 statement of the Accountant of the Wewak General Hospital dated the 22^nd May 2015. He confirms the evidence of Doctor Lawrence Warangi Chief Executive Officer then that there were payments made 13^th February 2014, in cheque number 009037 in the sum of K50, 000.00 made to Pins Construction. Again, on the 04^th March 2014 cheque number 009128 in the sum of K50, 000. 00 was paid to Pins Construction. And yet again on the 04^th April 2014 cheque Number 009237 in the sum of K50, 000. 00 was paid to Pins Construction. Then on the 18^th June 2014 a cheque number 32019 in the sum of K70, 722.90 out of the East Sepik Provincial Treasury was paid also to Pins Construction. And yet again another cheque dated the 18^th August 2014 was paid to Pins Construction in the sum of K2, 617.80 bringing the total to K 223, 340.70. And there was another cheque of K 5, 505. 48 that was paid for urgent maintenance work at the theatre to Pins Construction. And so, there was no records outstanding of payments for any maintenance work because the last balance outstanding was paid out on the 18^th August 2014 and nothing else left. He attaches the documents verifying from his record exhibit P9(a) detailing these payments made.
    
27. Exhibit P10 is the statement dated 22^nd May 2015 of Linus Tondrih who is the Provincial Treasury Accountant. It is his duty to making bank reconciliation, doing up the annual financial statements, keeping records of all accounts held at the provincial treasury. He also assists the provincial treasury in providing the management report. And he ensures that all revenue collected are recorded into the Papua New Guinea Government accounting system (PGAS). And conversely to ensure that all expenditures are checked and recorded into the Papua New Guinea Government Accounting system.
    
28. And he has knowledge of the two claims the subject of this proceedings of firstly, K337, 916.00 and secondly, K803, 527. 39 paid to Pins Construction. The first claim was signed for by Richard Kambo as the section 32 Officer who is the Deputy Provincial Administrator Corporate Services and was later signed by the Financial Delegate Mr. Dennis Api who was Provincial Treasurer at that time. And the subject cheque was raised on the 10^th December 2014 paid to the said Pins Construction.
    
29. The second was for maintenance for four toilet blocks for Wewak General Hospital and was signed by section 32 Officer Otto Ganaii who was at that time the Acting Provincial Administrator. And it was then signed by the Financial Delegate Mr. Dennis Apis the Provincial Treasurer then. And the cheque was raised and paid to Pins Construction.
    
30. The next exhibit P11 for the State was the statement of James Baloiloi dated the 20^th May 2015, he was employed by the East Sepik Provincial Administration as Senior Advisor Works and Transport. He was a graduate of the University of Technology as a Surveyor. His basic duties were to oversee the overall administration and operation on the Division which included supervision, inspection, and monitoring of infrastructure projects both engineering and Architectural. Police produced to him three copies of the Completion Certificates that bore his signatures on them. Two of them had the amounts of K650, 000.00 and K1, 200, 000.00. His first glance at both of them was that he did not sign them, nor did he issue them. But in respect of the Wewak General Hospital Maternity Ward, he verified that sometime in April or June 2014, he did recall signing a Completion Certificate for the amount of K150,000.00 for its maintenance. Which was also the only Certificate of Completion that he issued. And maintained the other Certificate of Completion were fraudulent and not of his doing nor signature.
    
31. Here it is important to set out as to why the witness believes that the subject Certificate of Completion are fraud.
    

“I wish to outline these anomalies starting with my assessment of the two completion certificates valued K650, 000.00. These two certificates appeared to be copies of the same document. The only difference between the two certificate is that the amount K 650, 000.00 of one was circled whilst the other is not. The certification for these two certificates stated that I inspected the work on 11/10/2014 which is not right because I never inspected any hospital maintenance project on or around that date. The dates of signing the certificates are usually handwritten and not typed as in this case. The font style and font size varies in some parts of the content and are not consistent throughout. Eg, the date 11/10/2014 on the last part of the certification appeared that the day (11) and the month (10) had a similar font size to the year- 2014. This indicates that the original day and month was erased and replaced with the new dates as it appears.”

“My close assessment on the completion certificate bearing amount of K 1,200, 000.00 are as follows; Firstly, the document resembles the general features and layout of the two documents with K 650, 000.00. My accession is that it is a reconvention of the prior document. The Standout difference is that the font on the right column (column 2) is different and smaller to what I normally use. That indicates that the initial information were erase and replaced with what is now on the paper. The date of inspection as stated is 27/11/2014. I did not do any inspections on that date or period for any Wewak hospital projects. Again, the original date was erased and this new date inserted using a smaller font. Under normal circumstances I hand-write the date to indicate the date to which I had issued the certificate. I do not type the date of issuance as indicated on this document. Information about this project refers to Improvement Maintenance Work Toilets & Shower Blocks for Wards. Again, I’m not aware of this particular job description for the hospital.

I conclude here with a very important note that the two amounts bearing K 650, 000.00 and K 1.2 million are over and above my delegated limits. Legally I am not authorized to deliberate and issued completion certificates on project value above K 500, 000.00. The authority to deliberate and issue completion certificates for amounts above K 500,000.00 will be vested on me through a Contract signed between the Contractor and Tenders Board on behalf of the employer. Projects of any value over K 500, 000.00 is handled by the Provincial Supply and Tenders Board. .......Given my assessment and the anomalies highlighted from the three documents and with my true knowledge and recollection, I declare again that the three purported completion certificates in question are definitely Not my making.”

32. This witness also gave sworn evidence in court which was for all purposes repeating this evidence. He maintained in cross-examination that the only completion certificate that he issued was for K 150, 000.00 as that was within his delegated authority. He could not issue the other two as they were beyond his delegated authority. He also confirmed that the maternity ward was completed and payment was made of K 223, 340. 70. He explained details that he could not have signed in the same place every time as was the case by this two certificates. And both were not of his making or signing. Because both were major projects and would be considered by the Provincial Supply and Tenders Board. There interested bidders would bid when the board called for tenders. After receipt of the tenders the board would sit and consider them. And I would be involved in the tender evaluation to assist the board to make its decision. Here it was the decision of the hospital board. That was in essence the evidence of this witnesses both by Exhibit P10 and on oath. He attached as exhibit P11(a) completion certificates in question bearing K 650, 000.00; K 650, 000.00 and K1, 200, 000.00.
    
33. Exhibit P12 is the statement dated 01^st June 2015 of Israel Yohogu Facilities Supervisor of the Wewak General Hospital. His responsibilities include maintaining all bio-Medical and non-bio–Medical Equipment and he reports to the operations Manager of the hospital. He is a graduate of the University of Technology with Building Engineering in 2013 and was employed by the Wewak General Hospital on the 13^th March 2014. The hospital board called him and asked him to do a scope of works for the emergency and accident department with the ablution block area. That is exhibit P12(a) in the brief of evidence running from pages 288 to 310 where he sets out the overall cost of the project as K 2, 526, 884.72. It is therefore a major project that would have to go through the Provincial Supply and tenders Board for allocation to the successful bidder.
    
34. The next Exhibit was P13 statement of one Julius Wangama dated the 15^th June 2015, employed as the System Administrator with the Wewak General Hospital. His duties are to ensure that all computer systems and peripheral of the organization are functional and operational. He denies any work relationship or affiliation of any sort with the Accused. He denies giving any claims to the Accused. Or facilitated any assistance in the misappropriation of the K 1.2 million of the Wewak General Hospital.
    
35. Exhibit P14 is the statement of the witness Luke Lilu, Principal Internal Auditor Investigations Department of Finance Waigani. He was directed to assist police with investigations into K 1.14 million payment made by the East Sepik Provincial Treasury Office as it was allegedly a bogus claim. The two claims related to K 337, 916.00 for work done on the Maternity Wing, and K 803, 527. 39 for four toilet blocks of the hospital. His findings were that there were gross breaches of established laws and misconduct by responsible officers. The payment was irregular. And the Provincial Treasurer Dennis Apis with the certifying officer Leah Yama grossly neglected the established claim processing procedures and had illegally signed the claim both as Provincial Treasurer and Certifying officer. Both had purposely breached the laws and had conducted themselves unlawfully. The subject contracts were executed without proper tendering and procurement procedures under the Public Finance Management Act. Both Officers neglected the established tendering and procurement processes and procedures knowingly signed as Financial Delegate and Certifying officer on the claims passing through the system despite the irregularities. Both officers were recommended to be referred to Police for their action against in law.
    
36. Exhibit P14(a) is the Letter written by Doctor Ken Ngangan dated the 11^th August 2015 to the Police Commissioner complaining about the alleged payment of K 1.14 million on maintenance of the Wewak General Hospital. He raises that the internal audit by his department uncovered officers at the Provincial Treasury had failed in their duties to ensure that payment was inline with relevant rules and regulations. And that appropriate procurement processes have been seriously compromised resulting in loss of public moneys.
    
37. Exhibit P15 is the Statement dated 12^th June 2015 of the Paul Edipau, Police corroborating officer in the record of interview of the Accused.
    
38. The oral evidence for the State, started with that of one Christopher Kabaru who was the Director Corporate Services. In 2014 the Chief Executive Officer Doctor Lawrence Warangi was on leave, so he was acting Chief Executive Officer. He was aware that Pins Construction was one of the seven companies that were engaged as a result of the tender that were called. The documents were not in place but the Board had made the decision so we moved to facilitate it. The contract was awarded for the maternity ward and the ablution block. And the agreement was for K223, 340.70 upon completion of the works. And Payment was done in several sequences from the Trust Account controlled by the Hospital Management. It was minor works. And the company was not paid again as it was no longer engaged. Exhibit P8(a) I signed it as the Acting Chief Executive Officer. It was a resolution of the Board relating to the K223, 340. 70 for the maternity ward. I was not aware of the two separate claims until called up in court. Justice Kirriwom had heard this case earlier. I have no idea of the other payments. Here the contractor had moved into without authority and I had to make a decision. There were no other contracts that were awarded to Pins Construction. There was no board resolution. It should not have been paid. This witness was followed by James Baloiloi whose evidence is set out above. And this closed the state case.
    
39. Accused gave evidence in defence on oath. He was a 57-year-old self-employed with Building maintenance plumbing and Electrical Works including civil maintenance work. He was the owner of the company Pins Construction. He had secured the subject contract after it was advertised by the hospital board and posted on the hospital notice board, the post office, and stores around the town. He tendered amongst 6 others and was one of the four who were successful in their tender. And that had notified him in Exhibit D1 letter under hand of the Chief Executive Officer Doctor Lawrence Warangi. He was shown the three wards from which he did scope of works that went up to K1.4 million for the labour ward. And the 16 wards toilet and shower went up to K 3.8 million and the sister’s quarters went up to K 1.6 million. He finished with the K 1.4million and went on to the K3.8 million from which he made out the K803, 527. 39 -part payment from the East Sepik Treasury. And was yet to start with the Sisters Quarters.
    
40. He did not need a completion certificate for mobilization of the materials to the work site. And he did this from Lae, Madang here to Wewak. He brought the materials police witnessed at the yard that he rented for storage. He was helped by Garry Gule to raise the invoice for the K 337, 916.00, it was for emergency. And the K 803, 527. 39 was for the 16 wards Toilets and showers. Upon receipt of both amounts he finished the labour ward for K 1.4million and was paid K 337, 916.00 and so had the balance yet to have paid to him. He also purchased two Isuzu dump trucks valued each at K167,000.00 each both for the use of his company Pins Constructions which were both taken by Police and are no longer working.
    
41. In cross-examination he was shown exhibit P9 letter dated 29^th January 2014 under hand of Doctor Lawrence Warangi Chief Executive Officer of the Wewak General Hospital. That was to inform that Pins Construction had been accepted by the Board and the Management of the Wewak General Hospital to carry out maintenance work at the hospital. And that he was to meet with the Director Corporate Services and Manager Finance and Administration for further discussion on the specific areas of work. And he was also shown the work Agreement dated the 05^th February 2014. Which agreement specifically bore out that he agreed to work on the maternity wing including the labour wards, bathrooms and toilet facilities and was to be paid K223, 340. 70 on completion. He signed that agreement together with the finance manager Garry Gule and the Caretaker Chief Executive Officer Christopher Kabaru. And the date on the document was 05^th February 2014. There were no agreements of the like in respect of the other payments that he received. He was shown the work and he based his work on the scope of work that he had prepared.
    
42. Defence Counsel urged by written submissions filed that the State had not discharged the onus in proving all three counts laid against the accused. He was entitled to be discharged of all counts with not guilty verdict returned in all. Because the variation of the initial payment of K223, 340. 70 was approved by a variation letter that was written by Garry Gule of the 23^rd October 2014 addressed to the Provincial finance Manager and the Acting Provincial Administrator subjected Wewak General hospital Maternity Wing Variation Work. Therefore, the variation to K337, 916.00 was not cheating it was following due process in the securing of funds for the invoice in that sum dated the 15^th September 2014, which was lawfully due for the work discharged variation approved.
    
43. Similarly, K 803, 527. 39 was not the subject of being cheating because it was upon invoice 036 dated the 03^rd November 2014 issued the Wewak General Hospital for work mobilization of materials and equipment to commence work on the 16 wards.
    
44. And there was no misappropriation as the funds were lawfully acquired and disposed of to secure the work contracted. They were paid into the company account at Westpac Bank operated by the accused for the company as sole signatory to ensure work contracted progressed. This was evident with the purchase of two Isuzu dump trucks valued each at K 167,000.00 each for the use of his company Pins Constructions. There was no dishonesty nor was the application to any other person other than what it was contracted for. Accordingly, the State had not discharged the burden in all three counts and the defendant was entitled to be discharged from all. He was not guilty and that was the verdict in all.
    
45. The State submitted the contrary that defendant was guilty of all three counts preferred on the indictment. Because there is no decision by the Wewak General Hospital Board awarding a contract for the amount to the company of the Accused. His reliance on the letter under hand of Chief Executive Officer Doctor Lawrence Warangi related to minor works to the Maternity and the labour wards and nothing else. Extra Job he did was on the Theater and was paid K 5, 500.00 for it. Work agreement signed by Christopher Kabaru is dated 05^th February 2014. It was not put to him that there also was a work agreement of the 22^nd May 2014 which related to the payment of K 803, 527. 39. And it is a duplicate of the 05^th February 2014 work agreement, which lends credibility to the evidence of James Baloiloi. There was no public tender and procurement process as it was K1million. The Public Finance and Management Act was not followed. And the accused admits that there was no works done apart from the initial for which he was paid.
    
46. It is undisputed fact from all the evidence that I have set out above, that the Accused company Pins Construction was awarded a minor works contract valued at K 223, 340. 70 by the Wewak General Hospital on the 05^th February 2014 for minor works to the Maternity and the Labour wards and nothing else. And it is further settled fact that he agreed that Pins Construction would be paid K 223, 340. 70 upon completion of that agreement. And this was affected settling on or around August 2014. There did not remain anything outstanding thereafter from that settlement against Pins Construction. But on the 15^th September 2014 accused produced invoice number 022 in the sum of K 337, 916.00 claiming payment for outstanding and new work done for the hospitals Maternity Wing and Labour ward, bathroom, and toilets. It was addressed to the Chief Executive Officer of Wewak General Hospital. Again, on the 23^rd November 2014, Accused produced an invoice 036 in the sum of K803, 527. 39 also addressed to the Chief Executive Officer of the Wewak General Hospital claiming work on the Toilet Blocks. These moneys were paid in full to the total value of K 1, 141, 443. 39 between the 2014 and the 22^nd January 2015. And were drawn from the K 2million that was in trust at the East Sepik Provincial Treasury. Inclusive also was the tax component paid for by and from this money all into the Westpac account number 6000800434 held in the name of Pins Construction, whose sole signatory was the Accused. And accused applied the money to different purposes including purchase of two Isuzu dump trucks valued each at K167,000.00 both for the use of his company Pins Constructions. There are also other major withdrawals from that account made by him. And the evidence of which are set out in that of the Westpac Bank officer above.
    
47. But it remains disputed that despite the lapse of the earlier work agreement of K 223, 340. 70, a new work agreement in the sum of K337, 916.00 and K803, 527. 39 respectively were entered into by Pins Construction with the Wewak General Hospital giving rise to the total sum of K 1, 141, 443.39 that was paid. And accused was justified through his company Pins Construction to have had that money deposited to his account 6000800434 held in the name of Pins Construction at the Westpac Bank.
    
48. The issue posed is firstly, whether or not there was another work agreement entered into between Pins Construction and Wewak General Hospital for the amount of K337, 916.00 for outstanding and new work done for the hospitals Maternity Wing and labour ward, bathroom, and toilets?
    
49. And secondly whether or not there was another work agreement entered into between Pins Construction and Wewak General Hospital for the amount of K803, 527. 39 claiming work on toilet Blocks?
    
50. Given these facts has the Accused by the production of invoice number 022 in the sum of K 337, 916.00 claiming payment for outstanding and new work done for the hospitals Maternity Wing and labour ward, bathroom, and toilets cheated the Wewak General Hospital to get that money?
    
51. And similarly has the Accused by the production of invoice number 036 in the sum of K803, 527. 39 claiming work on toilet Blocks cheated the Wewak General Hospital to get that money?
    
52. And overall has the Accused dishonestly applied K 1, 141, 443.39 belonging to the Wewak General Hospital and the State to his own use?
    
53. Part IV of the Public Finance Management Act as amended 1995, is headed National Budget and Part V is Budgetary Control. And from there starting from sections 22 to 33 is an intricate web that is set in place, firstly for the creation of a budget every fiscal year by an Act of Parliament. That is primarily the reason why the Budget is debated by both sides of the parliament and then passed as an Act of Parliament every year. It is law and will only be varied by an amendment to that law. It will not be tampered nor taken apart without due process of law complied and heeded. Non-compliance will not give any life to what is raised in breach. That is why it is complied by authorities designated out by law, the Public Finance Management Act 1995 as amended, and its application, appropriation is by officers designated, section 26 with delegation authority, and there are warrants section 29 to 31 of the Act detailing out who is appropriate officer in law, and by the warrant that is given for a particular expenditure. There is under section 32 Approval of requisitions and designated officers who are such appointed without which the requisition raised is without force in law. Because section 33 makes it clear that no payment will be made without that compliance.
    
54. This is for all intent and purposes read with Part VII- State Tenders and Contracts. Here the Central Supply and Tenders Board is established. Its functions and powers in contracting are set out including inviting of tenders for any amount and of entering into contract for any amount up to K10, 000, 000.00, for and on behalf of the State. Its composition and its procedures in its meeting is also set out under that part. Further under it there are also specialized Tenders Boards that maybe set up by the Minister including the Provincial Supply and tenders Board under section 39B of the Act. Like the Central Supply and Tenders Board, it too has its composition specifically set out including its powers to call tenders and contract for and on behalf of the State. The designated authority to contract is K3,000, 000.00 for purchase and disposal of property and stores. And also, in the case of supply of works and services. Section 40 sets out as to how tenders are called, 41 preference of tenders, section 42 consideration of tenders. Including form and recommendation of board of the tender section 45 notice of successful tender.
    
55. Section 47 execution of State Contracts concludes this very important process of law that ties the State to a Contract in law with a person natural or in law with the State as is the case here. This includes any variation in the Contract initially agreed to by a work agreement as is the case here. The Head of State is the overall person authorized who may draw the State into a contract binding at Law with any other person on the other side. In the case of a Minister the delegated authority to tie the State down is that the consideration in the Contract does not exceed K5, 000, 000.00. Even Chairmans of Tender Boards cannot simply tie down the State without specific authority to section 47 (1) (c) of the Act. And variations to the original Contract are not simply taken but are subject to the process of law section 47 (2) (3) of the Act governs.
    
56. And it is an offence not to follow procedures section 47A offences sets out:
    

“A Departmental Head, Provincial Administrator, head of a public body or other officer who authorizes or permits a breach of procedures relating to the–

(a) calling, consideration and awarding of tenders; or
(b) the execution of a state contract,

is for the purposes of the Public Services (Management) Act 1995 or any contract entered into under that Act, guilty of a serious disciplinary offence.”

57. There is no commitment without an authority to pre-commit committee set out by Public Finances (Management) (Amendment) Act 2018. When read with the National Procurement Commission set up by that Act 2018, it is indeed a very stringent sphere set out, so that contracts are not entered drawing the State to obligations without following the intricate web set out to arrive at a commitment binding in law with the State and the other person on the other side of the agreement. And if read with the Public Finance Management Act provisions set out above, it is a barrier that is sealed so that the State is not drawn into payment commitments by Contract without exhaustion of the process and procedures set out therein. Because the budget and Appropriation Act is an Act of Parliament which will not be by passed in the haste to provide services and works.
    
58. Therefore, it follows that under section 59 of the Act, Contract for Works and Services are publicly called by public tender. The Contract is by a public body here the Wewak General Hospital Board. It is not a private matter between the Chief Executive Officer of the hospital and the Accused. Or an official within, here Garry Gule and the Accused. That process is not defeated even as here with the Signature of the Provincial Treasurer then, Dennis Apis, counter signed by the certifying Officer, Leah Yama. Nor is it further defeated that there is a work agreement each for the K 337, 916.00 claiming payment for outstanding and new work done for the hospitals Maternity Wing and Labour ward, bathroom, and toilets. And K803, 527. 39 claiming work on toilet Blocks. In both cases they do not stand without heed, compliance of the originating process, the open tender inviting the public at large to bid in accordance with the Public Finance Management Act sections set out above. It is a process of law designated by law and ought and must be followed. It has been seriously failed out here so the work agreement in each case for the amounts set out above are not binding. They were never binding and were void ab initio. There were no commitments in law against the State to pay in each case. And cannot draw the State to pay them as did here into the hands of Pins Construction owned and operated by the accused. He has not lawfully got that money and is not entitled in law to both sums.
    
59. The application of the Public Finance Management Act 1995 as amended set out above to the facts of the case here, in my view show complete and defiant breaches that give no life to what came out into the hands of the Accused. In law there was no tender of the K337, 916.00 claiming payment for outstanding and new work done for the hospitals Maternity Wing and labour ward, bathroom, and toilets. Or that of the K803, 527. 39 claiming work on toilet Blocks. That breaches section 59 of the Act set out above in both cases. If reliance is placed by the defendant on Exhibit P6(a) page 103 to 104, Letter dated 23^rd October 2014 for the variation in the sum of K337, 916.00 by the provision of the Public Finance Management Act set out above, that is not lawful and does not bear fruit lawfully to give the Accused lawfulness in the acquisition of that money. It would be similar in the case of the K803, 527. 39. He has not come by way of an open tender fulfilling section 59 amongst others, and he has not drawn lawful to exit with the money. Rather he has breached the law and is therefore not entitled to the proceeds that he has reaped. What he has done has been to bypass the process under the Public Finance Management Act 1995 as amended. In so doing his conduct is criminal in the sense that he has cheated in both instances drawing both amounts depicted out by count 1 and 2 on the Indictment.
    
60. Because to cheat is the converse of being honest and upright. He simply with his cohorts in the Provincial Treasury have by passed the process of law under that Act. They have acted dishonestly or unfairly in order to gain an advantage. Their actions have been without the quality or fact of being honest, which in my view is to be upright and sincere, frank without deceit or fraud. Because the evidence is clear the initial work agreement came to an end on the completion of the payment of K 223, 340. 70 settled in full around August 2014.
    
61. If it was genuine the Wewak General Hospital board would have called for tenders for the K 337, 916.00 work and the K803, 527. 39 works. Bids would have been made by the Accused with his company and any others. And in similar vein as the previous awarded by the Board because of the amount involved not by a Staff within the Provincial Treasury or the Administration as was the case here by the evidence. A Work agreement drawn up a completion certificate issued in each case because of the value involved by the Hospital Board in each case. Alternatively, by the Provincial Supply and Tenders Board. Certainly not by James Baloiloi he as he testified did not have the delegated authority to seal out with the completion certificate. It was beyond his financial authority in law. His evidence is clearly set out above. Any credence to the evidence of the Accused withers into oblivion when considered that the amounts in the completion certificate are not the same as the work agreement that he is stringently pursued in his case. The completion certificate does not correspond to the work agreement. The completion certificate is K650, 000.00 twice and K1,200, 000.00 a total figure of K2, 500, 000.00, where is the truth in these figures. How does it par out with the initial figures set of K337, 916.00 and K803, 527.39? Why have differing completion certificates with different amounts competing one against the other disproportionate and unequal to the initial contract sums set out above? There is no fibre of truth common to all in favour of the Accused cause. If canvased in the light of the evidence of James Baloiloi read together with provisions of the Public Finance Management Act 1995 as amended, relevant sections of the provision, I have set out above, accused evidence is seriously without merit. He has told lies that have seriously weakened his defence. And the lies are concocted out of a conscious sense of guilt, the effect is that they gave corroborated account of the State: John Jaminan v The State [1983] PNGLR 318. Because James Baloiloi a seasoned public servant who has told the truth to its finest details. I hold his evidence out from the Accused. There are very material and fundamental inconsistencies that I have pointed out above which weaken the case of the Accused from its roots, assessment of logic and common sense and consistency in evidence are important tests for credibility of witnesses and their testimony. Any serious unexplained inconsistency in evidence and evidence not in keeping with logic and common sense are basis for rejection of such evidence: Kandakason v The State [1998] PGSC 20; SC558 (7 July 1998); Waranaka v Dusava [ 2009] PGSC 11; SC980 (8 July 2009). That is not the case against witnesses of the State but is the case for the defence as I have set out above. His evidence suffers that fate.
    
62. I find the Accused to be a lying and deceiving witness whose evidence falls by the wayside after having secured a contract in the open market by tender paid in full, he wants the court to believe that the process and procedure under the Public Finance Management Act could simply be bended to suit his cause. There is no tender for both subsequent payments in question the subject of the first and second counts on the Indictment. And even then, the evidence of Both Chief Executive Officers Doctor Lawrence Warangi, 2014, and Acting Chief Executive Officer Mark Mauludu of the Wewak General Hospital dated the 20^th May 2015, is there was no other rehabilitation work at the hospital after the initial arrangement. Both echo Christopher Kabaru when he too was in the seat. All Chief Executives Officers deny his contentions. They all were in that office at different times and periods. All say the same thing there was no further works as contended to the amount the accused pushes. And this is sealed by the evidence of statement of the witness Simon Tomba acting Provincial Treasurer East Sepik Provincial Treasury Office, that by looking at all the documents presented it was quite evident that, “I would have rejected all the claims as the decision to contract the State would have come from the Hospital Board or from the normal procurement process which through the tendering process of the PSTB or CSTB.”
    
63. This evidence is consistent with the auditor’s report Exhibit P 14 and P14 (a) of Luke Lilu that the subject payment in total of K1.14 in breach of all accounting procedures under the Public Finance Management Act 1995 (as amended). The then Provincial Treasurer Dennis Apis and counter signing officer Leah Yama were clearly intent on defrauding the State of that money. And he recommended that both be referred to the Police for further investigation under the criminal law. The aggregate is that dishonesty is a question of fact and would depend on the status of mind of the accused: Lawi v The State [1987] PNGLR 183; The court is entitled in law to so consider and these are set out succinctly by the Chief Justice Sir Salamo Injia in the following:
    

“And when a Judge considers the facts on how the property was applied, he uses the ‘ordinary’ standards of reasonable and honest people’ test to determine whether or not the property so applied...Dishonest is defined in the Oxford Advanced Learners Dictionary of Current English as, “intended to cheat, deceive or mislead, The State v Francis Natuwohala Laumadava [1994] PNGLR 291 at 293.”

64. I find as a fact that the actions of the Accused compounded a very elaborate and detailed mode to extort profit illegally off the State, the Wewak General Hospital. This is evident in the way he had set out to create false documents to entice payment. No doubt he was helped from the inside with the signatures of then Provincial Treasurer Dennis Apis and counter signing officer Leah Yama. They were part of the scheme that drew out the K337, 916.00 and K803, 527.39. total sum of K 1, 141, 443. 39. The situation of the Accused is likened to Yaip Avini v The State [1997] PNGLR 212 the appellant got K100,000.00 for road in Hapohandong – Makini Road which was never built and the appellant used the money personally.
    
65. In the aggregate I am satisfied beyond all reasonable doubt that Daniel Bob of Namuk is guilty of the first and second counts of cheating pursuant to section 406 (1) (b) (ii) of the Criminal Code set out in the Indictment particulars set out above.
    
66. I further find him guilty as charged of the third and final count of misappropriation pursuant to section 383A (1) (a) (2) (d) of the Criminal Code particulars which I set out above.
    
67. The Verdict is guilty on all three counts and I convict him accordingly. Because he is now a convicted prisoner of the State, I order that his bail moneys are refunded forthwith. And he is remanded in custody at Boram Corrective Institution to await sentence. Remand Warrant will issue forthwith.
    

Ordered Accordingly

__________________________________________________________________

Public Prosecutor: Lawyer for the State

Julius Javapro Lawyers: Lawyer for the Defendant