State v Kombuk [2023] PGNC 165; N10284 (5 June 2023)

N10284

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) NO. 117 OF 2022

THE STATE

V

DANIEL KOMBUK

Waigani: Berrigan, J
2023: 14^th, 17^th, 18^th October, 14^th, 18^th November and 5^th June

CRIMINAL LAW – S. 92(1)(2) of the Criminal Code – Abuse of Office –- Elements of Offence – Arbitrary act – Prejudicial to the rights of another person - Abuse – The conduct must involve a wilful abuse of the authority of office and must be worthy of criminal punishment – No wilful abuse of the authority of office - Not guilty.

The accused was the Secretary for the Department of Agriculture and Livestock (DAL). It was alleged that the accused authorised a payment of K112,800 in abuse of his office, for gain. The payment was for the repayment of a loan to PNG Hybrid Citrus Nursery Ltd (HCN). HCN is solely owned by the accused’s wife, Stephanie Petrus. The principal amount borrowed was K75,200 to cover expenses following the loss of a chequebook. The accused approved the payment of K112,800.

Held:

(1) To establish the offence of abuse of office contrary to s. 92(1) of the Criminal Code the State must prove beyond reasonable doubt that the accused:

1. Whilst employed in the Public Service;
2. In abuse of the authority of his or her office;

100. Did or directed to be done any arbitrary act;

4. Prejudicial to the rights of another.
   

State v Luma (2021) N8798, affirmed Luma v State (2022) SC2249

(2) It is not necessary for the purposes of s 92(1) of the Criminal Code to prove that the abuse is conducted for the purposes of gain, or dishonestly, or in conflict of interest. Gain is a matter to be established in aggravation for the purposes of s 92(2) of the Criminal Code: State v Luma; affirmed Luma v State.

(3) An arbitrary act is one that is not based on a reason, system, or plan, or is unfair, or using power without restriction or without considering other people: State v Luma; affirmed Luma v State; State v O’Neill (2022).

(4) An act is prejudicial to the rights of another person if it is detrimental, harmful or likely to harm the rights of another person.

(5) The abuse of the authority of office must be wilful. It must be so serious that it is worthy of condemnation and criminal punishment having regard to the responsibilities of the office and the officeholder, the importance of the public objects which they serve and the nature and extent of the departure from those objects. The conduct must fall so far below acceptable standards as to amount to an abuse of the public’s trust in the officer holder: Luma at [161], adopting R v Quach (2010) 201 A Crime R 522; Attorney General’s Reference No 3 of 2003; R v Chapman [2004] UKHL 3; [2015] 2 Cr App R 10; R v Boulanger [2006] 2 SCR 49; and considering Potape v State (2015) SC1613, affirmed Luma v State.

(6) The approval of the repayment of the loan was arbitrary. The loan was not made in accordance with the PFMA, which required Ministerial approval. It was made with a private company, not a registered financial institution, which was fully owned and controlled by the accused’s wife. It approved payment of interest in the sum of K37,600, the basis of which was not documented in the correspondence governing the loan, and which on the face of it was exorbitant.

(7) The approval committed scare financial resources belonging to the State to the repayment of a loan which was not approved in accordance with proper procurement processes under the PFMA, to a private company, at an exorbitant rate of interest, and was therefore prejudicial to the rights of the State.

(8) The evidence failed to establish beyond reasonable doubt that the accused wilfully abused his authority as Secretary for the Department of Agriculture and Livestock in approving the repayment of the loan. The evidence did not exclude the possibility that the accused honestly believed that it was appropriate for him to approve the repayment of the loan in all the circumstances.

Not guilty.

Cases Cited:

State v Luma (2021) N8798
Luma v State (2022) SC2249
Reference by the Attorney General of Papua New Guinea and Principal Legal Adviser to the National Executive Council (2021) SC2112
State v O’Neill (2022) N9213
The State v Raphael Kuandande [1994] PNGLR 512
Ikalom v State (2019) SC1888

References Cited

Section 83A, 92(1) and (2) of the Criminal Code

Counsel

Mr N. Needham, for the State
Mr S. Olewale, for the Accused

DECISION ON VERDICT

5^th June, 2023

1. BERRIGAN J: The accused, Daniel Kombuk, is charged with one count of abuse of office, for gain, contrary to s 92(1) and (2) of the Criminal Code (Ch. 262) (the Criminal Code). At the relevant time he was the Secretary of the Department of Agriculture and Livestock (DAL).

2. It is alleged that on 19 January 2021 the accused authorised a payment of K112,800 in abuse of his office, for gain. The payment was for the repayment of a loan to PNG Hybrid Citrus Nursery Ltd (HCN). HCN is solely owned by the accused’s wife, Stephanie Petrus. The principal amount borrowed was K75,200 to cover expenses following the loss of a chequebook. Ultimately, the accused approved the payment of K112,800.
   

UNDISPUTED FACTS

3. A number of facts are not in dispute.
   
4. The accused was an experienced public servant with a career spanning almost thirty years during which he held several senior positions. At the time of the alleged offence he was the Secretary of DAL. He was acting in that position from March 2019, and was confirmed in November 2019. He was the officer within DAL who held the delegated authority to approve payments above K100,000 pursuant to s 32 of the Public Finance Management Act. He was familiar with his roles and responsibilities under the Public Finances (Management) Act (PFMA).
   
5. The Price Support Program (PSP) was established in November 2020. K50m was granted to DAL for the program. The purpose of the PSP was to support farmers across the country who produced coffee, cocoa and other cash crops with funding to be allocated through commodity boards.
   
6. Otto Wangillen, the First Secretary to the Office of the Minister for Agriculture and Livestock, was the PSP Team Leader. Brian Wapi, Director, DAL, Policy and Planning, since deceased, was the Deputy Coordinator or Deputy Team Leader, PSP.
   
7. The PSP was to be launched by the Prime Minister and Minister for Agriculture and Livestock during the Christmas and New Year period at the end of 2020/beginning of 2021 in Maprik, East Sepik Province.
   
8. In December 2020 DAL transferred about K1.4m in funds to the Spice Industry Board (SIB)’s operational account for administrative purposes. The SIB is a separate legal entity with the sector for which DAL is the lead agency.
   
9. According to a letter dated 23 December 2020 from the accused to the Director of the Spice Board, Mr Waisime, the funds transferred constituted the “Price Support Administration Fund”. Expenditure of the funds was only to be approved by the accused himself. Requisitions were to be made by the A/Director, Policy and Deputy Coordinator for the PSP, Brian Wapi, and supported by a cover letter from Minister’s First Secretary, Otto Wangillen, verifying the claim. Claims were to be settled by Ms Margaret Seareka, the Administration Officer.
   
10. On 24 December 2020 the cheque book for the SIB’s operating account, among other items, was stolen from Mr Waisime during a robbery of his vehicle.
    
11. On 29 December 2020 Mr Waisime and Tommy Molean, the Acting Deputy Secretary, Corporate Services, DAL, both of whom were signatories to the SIB’s account, wrote to BSP asking it to put an immediate stop to the account. On 31 December they wrote to BSP seeking that a new cheque book be issued. The cheque book was not available for use by the SIB until 15 January 2021 and the account did not resume operation until 18 January 2021.
    
12. In the meantime, on 14 January 2021 the rollout of the PSP commenced with the launch of the K10m PNG Cocoa Price Support and Intervention Program in Maprik, East Sepik Province. The program was launched by the Prime Minister and the Minister for Agriculture and Livestock, senior Cabinet Ministers, and senior leaders from the industry, as well as the accused. The program was run by the PSP Team who attended.
    
13. On 19 January 2021 the accused approved the payment of K112,800 to HCN. His wife, Mrs Stephanie Petrus, was the sole director and shareholder of HCN, which was registered with the Investment Promotion Authority on 8 May 2020. HCN operated one bank account, held with BSP, 7019958789.
    

ELEMENTS OF THE OFFENCE

14. To establish the offence of abuse of office contrary to s 92(1) the State must establish beyond reasonable doubt that the accused:
    
    1. Whilst employed in the Public Service;
    2. In abuse of the authority of his or her office;
    100. Did or directed to be done any arbitrary act;
    4. Prejudicial to the rights of another.
       

State v Luma (2021) N8798 at [144]; affirmed Luma v State (2022) SC2249.

15. It is not necessary for the State to establish dishonesty or a conflict of interest to establish the offence under s 92(1), although those matters may well be relevant to establishing the offence: State v Luma at [230]; affirmed Luma v State (2022) SC2249 at [35] to [38].
    
16. Similarly, it is not necessary for the State to prove gain for the purposes of s 92(1). Gain is a matter to be established in aggravation for the purposes of s92(2): State v Luma at [230]; affirmed Luma v State (2022) SC2249 at [36].
    
17. The State must establish, however, that the accused wilfully abused the authority of his office. Furthermore, the abuse must be so serious that it is worthy of condemnation and criminal punishment having regard to the responsibilities of the office and the officeholder, the importance of the public objects which they serve and the nature and extent of the departure from those objects. It must fall so far below acceptable standards as to amount to an abuse of the public’s trust in the officer holder: State v Luma, supra at [154] to [161] applying R v Quach (2010) 201 A Crime R 522; Attorney General’s Reference No 3 of 2003; R v Chapman [2004] UKHL 3; [2015] 2 Cr App R 10 adopted; R v Boulanger [2006] 2 SCR 49; and Potape v State (2015) SC1613 considered; affirmed Luma v S at [31]; adopted S v O’Neill (2022) at [28].
    

EMPLOYED IN THE PUBLIC SERVICE

18. Returning to the present case, the accused does not dispute and I am satisfied beyond reasonable doubt that he was employed in the Public Service at the relevant time. He was the Secretary for the Department of Works and as such a member of a body established by statute for the purposes of s 83A of the Criminal Code, which defines a “person employed in the Public Service”, which is, in any event, an inclusive definition: Reference by the Attorney General of Papua New Guinea and Principal Legal Adviser to the National Executive Council (2021) SC2112.
    

DID OR DIRECTED TO BE DONE ANY ARBITRARY ACT

19. An arbitrary act is one that is not based on a reason, system, or plan, or is unfair or done using power without restriction or without considering other people: State v Luma, at [171]; State v O’Neill (2022) at [38].
    
20. I am satisfied beyond reasonable doubt that the approval was arbitrary. The accused approved the repayment of a loan which was not made in accordance with the PFMA, which required ministerial approval. Moreover, it was made with a private company, not a registered financial institution, which was wholly owned and controlled by the accused’s wife. The approval was also arbitrary in that it approved payment of interest in the sum of K37,600, the basis of which was not documented in the exchange of correspondence between the officer or officers from DAL and HCN, and which on the face of it was exorbitant. As a matter of common sense, government departments do not obtain loans from private companies.
    

PREJUDICIAL TO THE RIGHTS OF THE STATE

21. For similar reasons I am also satisfied beyond reasonable doubt that the approval of the payment was prejudicial to the rights of the State.
    
22. “Prejudicial” is not defined. Its ordinary meaning is harmful or detrimental or harmful or likely to harm: Oxford Learner’s Dictionary.
    
23. An act is prejudicial to the rights of another person if it is detrimental, harmful or likely to harm those rights.
    
24. Prejudicial to the rights of another person means that it is harmful or detrimental to the rights of another person.
    
25. The approval committed scare financial resources belonging to the State to the repayment of a loan which was not approved in accordance with proper procurement processes under the PFMA, to a private company, at an exorbitant rate of interest.
    

IN ABUSE OF THE AUTHORITY OF HIS OFFICE

26. There is no dispute and I am satisfied beyond reasonable doubt that the accused approved the payment in the exercise of his authority as the Secretary of the Department. The essential questions are whether he did so in a wilful abuse of that authority, and, if so, whether the abuse was so serious it warrants criminal punishment?
    
27. It is well established that intention at the time of an alleged offence is a question of fact to be determined by the trial judge. It may be inferred by examining the accused’s conduct prior to, at the time and subsequent to the act constituting the offence: The State v Raphael Kuandande [1994] PNGLR 512; Ikalom v State (2019) SC1888.
    
28. It is the State’s case that the accused cannot honestly have approved the payment in line with his duties as Secretary. It concerned monies which were held improperly in the SIB fund. The loan was not with a regulated financial institution and the interest was exorbitant. It was relatively straightforward for the accused to remove himself from the transaction. The loan was improper from its inception, whether he initiated it or not and was not compliant with the PFMA. The true purpose of the loan was to benefit himself and his wife through a gross overpayment to HCN of K37,600, in open defiance of the PFMA.
    

CONSIDERATION

29. A failure to comply with procurement and other statutory requirements may well support an inference that a person acted in a wilful abuse of office but such failings do not establish wilful abuse on their own.
    
30. Much is made by the State of the fact that the PSP funds were held in the SIB’s account. On the evidence of all concerned, including the State witnesses, however, this was done with the approval of both the Ministry and DAL to ensure that the monies would be available over the Christmas shutdown period for the planned launch of the PSP in Maprik, rather than returned to Consolidated Revenue. It was irregular and I would have thought that there were other ways the funds could have been set aside, or committed, but the arrangement was documented and there were procedures in place governing the release of the funds, involving a number of different persons.
    
31. There is also no dispute that the SIB cheque book was stolen. The State’s witness, Mr Waisime, establishes that fact, and the documentary evidence shows that the account with BSP was immediately stopped. The State’s evidence also establishes that the cheque book did not become available until after the event at Maprik.
    
32. Mr Wangillen was an unimpressive witness.
    
33. In examination-in-chief he said that the moneys for the trip to Maprik came from the main operational account at DAL. Furthermore, that there were no issues with funding other than the usual delays associated with raising cheques. Furthermore, that he was not aware of a missing cheque book. He recanted from all of this in cross-examination.
    
34. He agreed that the funds were parked with SIB, that the chequebook did go missing or was stolen by rascals, and that this created a crisis. In his words, it: “affected a lot of things and especially the Price Support Program because we were drawing funds from that account because our operational funds were kept in the Spice Board Account. So yes, we were having issues of delayed funds and around that time the Maprik trip came up that was in the middle of the crisis where we didn’t have the cheque book to draw the money from”.
    
35. Furthermore, other than the interest component, the State does not suggest that the monies the subject of the loan were applied other than for the launch of the PSP.
    
36. Similarly, it is not alleged, nor at least it has not been established, that the accused was aware of the loan until he was asked to approve its repayment.
    
37. In addition, according to the accused’s testimony and the detailed statement made by him pursuant to s 96 of the District Court Act, which was tendered by consent by the State as part of its case, the accused advised the Minister at the beginning of January 2021 that the launch should be deferred because the SIB’s cheque book had been lost. A few days later, on 11 January 2021 Mr Wangillen came to his office and told him that the launch would go ahead and that they were leaving the next day. Mr Wangillen gave him K10,000 in cash for accommodation and travel allowance. His personal assistant booked his flight and he travelled on 13 January 2021. Mr Wangillen did not give any evidence in this regard and the accused was not challenged about it in cross-examination.
    
38. The accused returned to Port Moresby on 17 January 2021. He says that on 19 January 2021 Brian Wapi brought him a minute dated 12 January 2021 which sought his approval to refund monies which were borrowed to meet the costs of officers who travelled to Maprik to launch the PSP. His approval was required because the amount to be approved, K112,000, was more than K100,000. The minute was signed by Mr Wapi on behalf of Mr Wangillen. The requisition forms attached to the minute were also signed by Mr Wapi. The forms named HCN as the payee.
    
39. Upon seeing the name of his wife’s company, the accused says that he refused to sign, and asked Mr Wapi who had the authorised the loan and to provide full details of the claim. Mr Wapi returned with three documents:
    
    • A letter dated 4 January 2021 from Mr Wapi to Mrs Petrus, HCN, on official DAL letterhead on behalf of DAL requesting a loan of K70,000 for the launch to be repaid with interest.
    • A letter dated 6 January 2021 from Mrs Petrus, HCN, to the Deputy Coordinator, PSP, agreeing to lend K67,000, which was all she had available, upon condition that she received a letter from both Mr Wapi and Mr Wangillen confirming that the request was from both of them and clearly stating the purpose of the loan and the time frame for repayment.
    • A document addressed “to whom it may concern” dated 11 January 2021 confirming that K67,000 was borrowed from HCN to fund the PSP’s travel to Maprik. The letter is purportedly signed by both Mr Wangillen and Mr Wapi.
      
40. The accused says that his wife did not inform him of the loan. She is a businesswoman who runs her own company. Whilst he lives with her at Kennedy Estate, at the time of the alleged offence he was staying in Gerehu where he stays when he is busy with work. Mr Wapi told him that he was under pressure to fund Maprik and did not inform him about the loan because they knew he would say no. The accused was aware that Mr Wapi had borrowed money from his wife on a personal basis before and repaid it at market rates.
    
41. The accused also says, and the evidence shows, that the payment was not the only payment that the accused authorised that day from the PSP funds held in the SIB account. It was one of many totalling K312,000 to cover the cost of travel, accommodation, hire car, travel allowances, and other costs, which had been incurred for the launch of the PSP in Maprik but which had yet to be paid.
    
42. Mr Wangillen’s evidence was again unclear. He initially confirmed signing some documents, then was not sure if he signed them, and later was adamant that Mr Wapi had manufactured the documentation and he was not aware of it.
    
43. Upon being shown the document dated 11 January 2021 in evidence in chief Mr Wangillen immediately confirmed that the signature was his. He then said that the signature looked like his but could not “really recall” signing the document and that he was not aware of a debt incurred with HCN.
    
44. According to a letter dated 22 January 2021 from Mrs Petrus to Mr Wangillen, a further K8200 was borrowed by the Minister’s Second Secretary for “decorations and other contingencies” in Maprik. Mr Wangillen’s evidence about this was also unclear.
    
45. Ultimately it does not matter whether Mr Wangillen was involved in obtaining the monies, except to the extent that on the face of the documentation shown to the accused in justifying the loan it appears that he was involved, as the Team Leader of the PSP, in obtaining the monies.
    
46. Nevertheless, it is the case that there was a conflict of interest. The accused was aware of that conflict. He himself said that he would never have approved the loan in the first place given that conflict and yet he proceeded to approve the repayment of the loan despite that conflict.
    
47. The accused’s evidence, was that whilst he did not approve of the loan, upon seeing the documentation “it was straightforward”. He was satisfied that the officers responsible for leading the PSP had borrowed the monies from his wife’s company, to meet the costs of the Maprik launch, because the cheque book had been lost. The loan was documented, the monies had been used for the launch, the launch was a success and the monies had to be repaid. The officers had committed DAL, he was the only person with the authority to approve an amount over K100,000, and he was obliged to approve the repayment, failing which DAL could be sued.
    
48. I have to say I found the possibility that his own wife’s company would sue DAL rather implausible until Mrs Petrus gave evidence. Of course, HCN would struggle to enforce the loan in court. The officers who entered the loan had no authority to do so on behalf of DAL and HCN is not a licenced financial institution. But I am not satisfied that the accused was aware of that at the time, nor even now having heard him in evidence.
    
49. The interest involved was exorbitant. The payment comprised the principal of K67,000, borrowed by Mr Wapi, with the concurrence of Mr Wangillen, at least on the face of the documentation, together with a further K8200 borrowed at some later stage, by the Minister’s Second Secretary, Jack Akike, together with interest of K37,600. It is also the case that the terms of interest are not specifically stated in the loan documentation. Again, however, it did not appear to me that the accused appreciated the significance of that at the time he approved the payment.
    
50. He was the only person with authority to approve the amount involved. He could have removed or distanced himself by referring the matter to his legal department for advice or to the Minister’s office given its joint management of the PSP and the apparent involvement of Mr Wangillen but it does not appear to me that either of those things occurred to him.
    
51. In summary, the effect of the accused’s evidence is that he would not have approved the loan in advance because of the conflict of interest, but at the time that he approved repayment of the loan there was effectively no conflict. As far as he was concerned, he was not involved in obtaining the loan, senior officers had borrowed the monies and committed DAL, the loan was documented, the monies had already been expended on the launch, and had to be repaid. In his mind “everything was in order”, and he was obliged to approve the loan.
    
52. The State’s evidence does not exclude the possibility, and my impression of the accused having heard and observed him give evidence is, that he honestly believes this.
    
53. The State has failed to establish beyond reasonable doubt that the accused wilfully abused his position. His conduct showed poor judgement for a person occupying the position of Secretary but it was not criminal.
    

Verdict: The accused is found not guilty of abuse of office contrary to s. 92(1)(2) of the Criminal Code.
________________________________________________________________
Public Prosecutor: Lawyers for the State
Sannel Lawyers: Lawyers for the Accused