State v Weleilakeba [2023] PGNC 310; N10475 (21 September 2023)

N10475

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) NO. 403 OF 2022

THE STATE

V

SITIVENI WELEILAKEBA

Waigani: Berrigan J
2023: 5^th, 6^th, 10^th, 12^th July and 21^st September

CRIMINAL LAW – S 383A, Criminal Code - Misappropriation – Honest Claim of Right without Intention to Defraud – Not Guilty.

Cases Cited:

Tiden v Tokavanamur-Topaparik [1967-1968] PNGLR 231
Sebulon Wat v Peter Kari [1975] PNGLR 325
Magr v R [1969-70] PNGLR 165
Francis Potape v The State (2015) SC1613
John Jaminan v The State (No 2) [1983] PNGLR 318
Wartoto v The State (2019) SC1834
David Kaya and Philip Kaman v The State (2020) SC2026
Ikalom & Anor v The State (2019) SC1888
The State v Felix Luke Simon (2020) N8183
State v Merimba (2022) N9481
Roland Tom v State (2019) SC1833
Brian Kindi Lawi v The State [1987] PNGLR 183

References Cited:

Section 383A(1)(a)(2)(d) of the Criminal Code.
Sections 59, 60, 61 and 62 of the Superannuation (General Provision) Act, 2000

Counsel

Ms T Aihi and Ms T Kamitan, for the State
Mr S Kaule, for the Accused

DECISION ON VERDICT

21^st September 2023

1. BERRIGAN J: The accused, Sitiveni Weleilakeba, of Qeleni, Cakaudrove, Fiji is charged with misappropriating K665,482.45 belonging to Comrade Trustee Services Limited, contrary to section 383A(1)(a)(2)(d) of the Criminal Code.
   
2. The State alleges that the accused was engaged by the Bank of Papua New Guinea (BPNG) as a statutory manager for a company called Comrade Trustee Services Limited (CTSL) pursuant to a Terms of Engagement dated 31 July 2019. The engagement was for 12 months from 31 July 2019 and extended on 6 July 2020 for a period of 6 months and again on 22 February 2021 for a further two years. Pursuant to the engagement the accused was to bring CTSL into compliance with the Superannuation (General Provisions) Act. He was to be paid AUD $30,000 in monthly fees. The fees were to be billed in arrears and paid without any deductions. The fees were invoiced to BPNG for approval and payment upon advice by CTSL. In July 2021 following an inquiry by the Fiji Inland Revenue and Customs Authority the accused instructed the Finance Manager of CTSL to draft a letter confirming his tax status. The letter stated that the accused was subject to tax in PNG but was edited by the accused to state that he was being charged and paying tax in PNG. In August 2021 the accused instructed the CTSL Finance Manager to create a document purporting to be a CTSL payslip dated 16 August 2021 which showed that CTSL paid a portion of his monthly fees to the PNG Internal Revenue Commission (IRC) as personal income tax at a rate of 42%. The information was false because CTSL had never paid the accused’s personal income tax to IRC. On 1 December 2021 the accused authorized the expenditure of K665,482.45 belonging to CTSL to the IRC as payment of his personal income tax for the months of January to December 2021. The payment of his personal income tax was improper as it was not part of the terms of agreement between him and BPNG.
   

UNCONTENTIOUS FACTS

3. There is no dispute and the State’s evidence establishes that the accused was engaged by BPNG as the Statutory Manager of CTSL pursuant to a terms of engagement dated 31 July 2019 signed by himself and Loi Bakani, the BPNG Governor at the time. He was extended on 6 July 2020 for seven months and then again on 22 February 2021 for a period of two years, again subject to a terms of engagement signed by himself and Mr Bakani. CTSL is the trustee for the Defence Force Retirement Benefit Fund, or in other words a superannuation fund for serving members of the PNG Defence Force.
   
4. The accused was appointed Statutory Manager of CTSL pursuant to s 59 of the Superannuation (General Provision) Act, 2000 which provides for such an appointment by BPNG where it considers that the superannuation licence holder, in this case CTSL, is unable to meet its obligations under the Act. His powers as Statutory Manager were prescribed under ss 60, 61 and 62 of the Act. Pursuant to the terms of engagement he was to bring the fund into compliance with the Act or preserve, to the extent possible, the interests of contributors to the Defence Force Retirement Benefit Fund.
   
5. The terms of engagement were drafted by Tom Milamala with assistance from one of BPNG’s lawyers. Mr Milamala is the Manager of Superannuation and Life Insurance Supervision Department. At the time he was Superannuation Unit Manager, a position he held since 2005.
   
6. Clause 6 of the terms of engagement provided for remuneration in the following terms (emphasis mine):
   

“Compensation. Fees for Mr. Sitiveni Weleilakeba will be payable at a monthly rate of AUD30,000 (Thirty Thousand Australian Dollars). The fees will be billed in arrears and paid without deductions by the Fund in Kina equivalent into a bank account nominated by Mr. Sitiveni Weleilakeba. Timesheets briefly describing activities undertaken must be provided with invoice to the Bank for approval before the fees can be paid. Suitable accommodation and transport will be provided by the Fund. Business expenses incurred by the Statutory Manager necessarily to fulfil the duties specified in paragraph 3 of this agreement may be reimbursed by the Fund after consultation with the Bank. Other expenses such as meals, insurance, private travels etc are the responsibilities of Mr. Sitiveni Weleilakeba.”

7. Whilst none were produced by the State, it appears that a monthly invoice was prepared by the accused in the sum of AUD30,000 and sent to BPNG for approval, following which it was sent to CTSL’s Finance Manager, Mathew Kamaka, by the accused for payment.
   
8. Again, whilst no records were produced, it also appears that between 2019 and January 2021 a monthly fee of AUD30,000 was paid directly by CTSL to the accused’s offshore bank account in Fiji. Sometime during 2021 pursuant to a change in BSP requirements a local account was established for the accused in PNG. It is unclear but according to Mr Kamaka the account was operated by CTSL’s finance team who transferred AUD30,000 every month from it to the accused’s account in Fiji.
   
9. In July 2021 the accused asked Mr Kamaka to draft a letter to the Fiji Inland Revenue & Customs Authority. The first draft by Mr Kamaka stated that “His source of income is solely derived from his services within PNG and is subject to local tax payable to the tax office of Papua New Guinea”. In his email to the accused attaching the draft Mr Kamaka suggested that the line be changed to read: “Mr Wele is paid a net of AUD30,000 per month after tax. The tax component is paid to the tax office in local PNG. See below a summary of the 2021 fees paid together with the tax component”. The attachment to the letter shows the net fee of AUD30,000, tax component of AUD21,724.14, and the gross AUD figure of AUD51,724.14, together with the corresponding figures in PGK at what must be the applicable exchange rate for each of the months January to June 2021.
   
10. The accused edited the letter to read: “His contract with BPNG stipulated that his monthly fees payable to him is AUD30,000 net of tax. CTSL under instructions from BPNG gross up this amount in local currency and pay the tax component to the Tax Department on monthly basis as required by Law. Please refer to the attachment enclosed. The balance of his fees monthly is then remitted to his personal bank account with ANZ Bank Suva, Fiji. ” The accused sent the revised letter to Mr Kamaka who signed and emailed it back to the accused.
    
11. In August 2021 Mr Kamaka prepared a payslip in response to the accused’s request for one. Mr Kamaka said that the accused was paid AUD30,000 net for his services so to get the gross figure Mr Kamaka divided AUD30,000 by .58 and then deducted the net figure from the gross figure, converted to PGK to arrive at the tax figure. According to Mr Kamaka the gross figure for the month of July was PGK138,819.48 for which the tax owing was PGK58,304.18. The tax was not paid, however, because the accused was not employed by CTSL but BPNG.
    
12. In November 2021 the accused approved the payment of PGK655,482.45 by CTSL to the IRC in payment of his tax for the period January to November 2021. Charlie Gilichibi, the CEO of CTSL, refused to sign the approval but instructed Mr Kamaka to go ahead with the payment once the accused approved it as “he was the big boss and had already approved it”. He was concerned about the payment, however, and so referred the matter to Mr Milamala at BPNG. Mr Milamala directed Mr Gilichibi to refer the matter to police.
    

DEFENCE CASE

13. The accused gave evidence and called Mr Bakani in his defence.
    
14. Sitiveni Weleilakeba is 66 years old. He obtained a Bachelor of Agriculture from University of South Pacific in 1980, postgraduate qualifications from Horton Business School, and an MBA from Harvard Business School in 2005. He has over 35 years’ experience in management. He was appointed Chief Executive Officer of Investment Company in Fiji in 1991 and has since gone on to manage or sit on the boards of numerous companies and organisations in Fiji, including Fiji Airlines and the Tourism Industry Board. He first came to PNG in December 2010 and became the Chief Executive Officer for Hardware Haus following which time the value of its shares increased from K35m to K135m. He was subsequently approached by Nasfund to be a change consultant, initially for one year but was extended for a period of five years during which time he strengthened the capacity of the fund to develop and implement a highly successful K5billion strategic plan and prepare a local Chief Executive Officer who took over from him.
    
15. The accused maintains that the fee agreed with BPNG for his engagement was free of tax. In June 2019 he was approached by BPNG to scope the position of Statutory Manager at CTSL, following which he was offered the position. During negotiations he identified the two conditions he regards as “deal breakers”. His fee must be paid in AUD to avoid uncertainty associated with exchange rate fluctuations and his fee must also be paid net of tax, i.e. tax is the responsibility of his employer. BPNG’s initial offer of AUD20,000 was rejected but following negotiations he agreed to a net fee of AUD30,000. He would never have accepted the position otherwise. He had previously been engaged in Japan for USD30,000 on similar terms. It was intended to be his last appointment before retirement. The role at CTSL was very demanding. It meant taking over all responsibilities from the board, reviewing and restructuring the organisation, creating job descriptions and recruitment. He reviewed the fund’s investments and land stocks. Within 6 months he turned a loss of $7m to a profit of $32m.
    
16. In both his record of interview and in evidence the accused maintained that the net nature of the fee was reflected in Clause 6 of the terms of engagement which provided that “The fees will be billed in arrears and paid without deductions by the Fund in Kina equivalent”. The payment of tax by CTSL was also one of the expenses referred to later in the same clause in the contract.
    
17. In addition, the work required him to be embedded in the organisation and he was therefore an employee rather than a contractor. He was engaged by BPNG but all of his costs were covered by CTSL.
    
18. He understood that tax was being paid in PNG by CTSL. The invoices he provided to the bank always stipulated in accordance with his contract that his fee was net. When the invoice was approved he remitted it to Mathew for payment. The suggestion that he did this to avoid tax in Fiji is false. Fiji and PNG have a double taxation agreement. He had no obligation to pay tax in Fiji. The purpose of the letter was to confirm that he was employed in PNG and paying tax in PNG, and to provide a summary of what he received in a year. The letter is a statement of fact. It was Mr Kamaka’s job to issue payslips and he was entitled to one. What triggered the payment of the monies to the IRC was that he could not remit money to Fiji. He could not get a tax clearance for amounts to be sent overseas above the K500,000 limit which he had reached because he discovered that his tax had not been paid. Tax was meant to be paid to IRC at the same time as his fee. That is the rule of IRC. He asked Mathew what was happening and told him it was his duty to pay the tax. Mathew worked out all the tax payable for the period January 2021 to August 2021. It was paid so that IRC could issue him a tax clearance, which he subsequently obtained.
    
19. There was never any doubt in his mind that he was doing the right thing. He was flabbergasted that he was accused of dishonestly using member funds to pay his tax because the tax should already have been paid by CSTL. He exercised his duty under the law to ensure that the tax was paid to the tax office.
    
20. Mr Loi Bakani is the former Governor of BPNG, a position he held for twelve years until his term expired on 21 December 2021. He has 36 years of experience with BPNG.
    
21. In 2019 BPNG identified the need to remove the board of CTSL and place it under a statutory manager following a report into CTSL’s poor performance by an external auditor. The bank conducted a recruitment exercise but was unable to identify anyone with appropriate experience. The bank invited the accused for an interview because of his experience as a statutory manager and in financial institutions in PNG, namely Nambawan Super and Nasfund. At the time the accused was in Fiji. The interview was led by the Assistant Governor, Mr Elison Pidik, and himself.
    
22. A statutory manager effectively takes over the role of the board and oversees all financial and operational matters. It is a fulltime role.
    
23. In his experience when attracting consultants with sufficient experience to PNG the fee is agreed in foreign currency to avoid fluctuations in the exchange rate and agreed at the rate net of tax. In this case the fee was agreed in AUD. Tax was payable by CTSL. In summary, the final fee that is received by the consultant, in this case the accused, was not subject to tax. A monthly report was required by the Bank together with his invoice and the entity that employs him or for whom he works is expected to pay all necessary expenses including remuneration.
    
24. The accused made significant improvements at CTSL and was extended due to ongoing needs and the pandemic. He was coming to the stage where he would put in a new board with the Chief Executive Officer and his term would end. He was to be extended until sometime this year when he could propose a board but that lapsed after he was terminated in relation to this matter.
    
25. The payment of taxes was the responsibility of the accused’s employer, CTSL.
    
26. Mr Bakani signed all three contracts with the accused. He was not aware of the tax issue before his departure in December 2021. If he had been made aware it would have been dealt with by the Bank. He understands that the payment was for outstanding tax to IRC. It was within the accused’s authority to direct the payment of tax. He was surprised that it had cumulated when previous tax was paid by CTSL upon approval of the BPNG invoice.
    

SUBMISSIONS

27. The State submitted that the entire scheme was dishonest. If the accused was entitled to have his tax paid then it would have been remitted from 2019. The accused was not an employee but an independent contractor and was therefore not entitled to salary and wages tax.
    
28. The defence submitted that the accused was entitled to a fee net of tax every month. Tax was payable by CTSL pursuant to s 68 of the Superannuation (General Provisions) Act which provides that “costs incurred by the Central Bank (including costs in the nature of remuneration and expenses) of appointing a statutory manager to control a licence holder are payable by the licence holder and are a debt due to the Central Bank”. The accused was not an independent contractor but an employee. He was employed in his personal capacity. He was given a vehicle and accommodation at the cost of CTSL. He operated full time at CTSL and payment of his fees were made to his personal bank account.
    
29. Alternatively, even if he was an independent contractor, he was to be treated as an employee pursuant to s 5 of the Income Tax (2021 Budget) (Amendment) Act, 2020, which came into force in January 2021, and the amounts paid to him treated as salary and wages and tax remitted to the Commissioner General by CTSL.
    

65K. COUNTERING ARRANGEMENTS TO CONVERT AN EMPLOYEE INTO AN INDEPENDENT CONTRACTOR.

(1) For the purposes of this division, an independent contractor providing a service or services to a person shall be treated as an employee of that person unless the following conditions are satisfied:

(a) the independent contractor is in business on their own account, and is responsible for the success or failure of the business and can make a loss or a profit; or

(b) the independent contractor can decide the work that is done, and when, where, and how the work is done; or

(c) the independent contractor can hire someone else to do the work; or

(d) the independent contractor is responsible for fixing any unsatisfactory work in their own time and on their own account; or

(e) a fixed remuneration is agreed for the work, which does not depend on how long the job takes to finish; or

(f) the total taxable income of the independent contractor does not consist of more than 80 percent of the total remuneration received for services rendered to one person; or

(g) the independent contractor finances the acquisition of business assets and the covering of their operating costs, and provides their own tools and equipment necessary for the work to be done; or

(h) the independent contractor can work for more than one person.

(2) Where an independent contractor is treated as an employee of a person under Subsection (l), the amounts paid by the person to the independent contractor, shall be treated as salary or wages and the person shall withhold salary or wages tax from the payments made and remit to the Commissioner General as required under the Act.

30. Furthermore, the accused acted in the exercise of an honest claim of right when he authorised the payment. As stated in the accused’s record of interview and in evidence he was aware that it was CTSL’s obligation as his employer to pay his tax. His fee of AUD30,000 was net of tax. It was Mr Kamaka’s responsibility to provide the letter requested to Fiji IRC. He demanded that Mr Kamaka prepare a payslip because that was his job. He was supposed to provide a payslip.
    

S 383A, CRIMINAL CODE

31. To establish the offence the prosecution must prove beyond reasonable doubt the following elements, such that the accused:
    
    • (a) applied;
    • (b) to his own use or to the use of another;
    • (c) property;
    • (d) belonging to another person;
    • (e) dishonestly.

Havila Kavo v The State (2015) SC1450.
HONEST CLAIM OF RIGHT WITHOUT INTENTION TO DEFRAUD

32. A person is not criminally responsible, as for an offence relating to property, for an act done or omitted to be done by him with respect to any property in the exercise of an honest claim of right and without intention to defraud: s 23(2) of the Criminal Code. The principles may be summarised as follows: see S v Paraka (2023) N xxx at 10273 at [234] to [239].
    
33. Whether or not an act was done under an honest claim of right and without intention to defraud is a question of fact to be determined by the trial judge when there is some evidence raising the issue. Once raised, a judge must be satisfied that the evidence excludes the possibility that the accused acted in the exercise of an honest claim of right and without intention to defraud before they can convict.
    
34. A claim of right only has to be honest, it does not have to be reasonable: Tiden v Tokavanamur-Topaparik [1967-1968] PNGLR 231, Sebulon Wat v Peter Kari [1975] PNGLR 325. It is not for the accused to prove that he had an honest claim of right. It is the duty of the State to prove that he did not have an honest claim of right: Magr v R [1969-70] PNGLR 165, Francis Potape v The State (2015) SC1613. The State must disprove (exclude) the defence beyond reasonable doubt: John Jaminan v The State (No 2) [1983] PNGLR 318. See Wartoto v The State (2019) SC1834.
    
35. The belief must be one of legal entitlement to the property and not simply moral entitlement: David Kaya and Philip Kaman v The State (2020) SC2026; Ikalom & Anor v The State (2019) SC1888 adopting MacLeod v R [2003] HCA 24; (2003) 214 CLR 230; and The State v Felix Luke Simon (2020) N8183 applying R v Pollard [1962] QWN 13, 29; R v Bernhard [1938] 2 KB 264, 270; and Harris v Harrison (1963) Crim LR 497. Whilst a claim need not be reasonable, one that is unreasonable may be less likely to be believed as being genuinely or honestly held: The State v Felix Luke Simon (supra) adopting Macleod v The Queen [2003] HCA 24; (2003) 214 CLR 230.
    
36. Section 23(2) requires both that an accused act in the exercise of an honest claim of right and without an intention to defraud: State v Merimba (2022) N9481 at [93].
    
37. An intention to defraud is an intention to deprive a person of property which is his or to which he might be entitled, or to put the property of that other person at risk, or to imperil some lawful right, interest, opportunity or advantage of another person; by using deceit, or fraudulent or dishonest means; knowing that he has no right to deprive that person of that property or to prejudice those rights or interests: Roland Tom v State (2019) SC1833 applying Scott v Metropolitan Police Commissioner [1974] UKHL 4; [1975] AC 819 and Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493.
    

CONSIDERATION

38. There is no dispute that the monies were applied by the accused or at his direction in payment of his outstanding taxes for the year 2021. The essential question is whether the accused acted dishonestly at the time he applied the monies.
    
39. The State’s case rests on the premise that the accused’s monthly fee of AUD30,000 was a gross fee inclusive of tax, that the accused knew this and furthermore, that he knew that he was obligated to pay tax on it to the IRC himself directly.
    
40. The State’s case is not borne out by the evidence.
    
41. The State’s case suffered from a lack of appropriate detail and documentary evidence. The State failed to produce any of the invoices submitted by the accused to, and approved by, BPNG. The evidence did establish that tax was not paid for the accused during 2021 but there is no dispute about that. I cannot make a definitive finding about whether the accused’s tax was paid by CTSL prior to 2021. The State failed to produce any documentary evidence from the IRC, CTSL or BPNG to establish whether the accused’s tax had been paid in the years prior to 2021. The accused openly conceded that whilst he understood that it had been paid he does not know for certain. Mr Bakani also understood that the tax had been paid in previous years. There is some suggestion in Mr Kamaka’s evidence that it was paid by BPNG and reimbursed by CSTL to it. It is also possible that it was never paid and that the issue only came to a head following the change in BSP account requirements. Those matters were not clarified by the State.
    
42. I understand why Mr Gilichibi was concerned about the large payment. He was not privy to the arrangements between the accused and the Bank and on the face of it the contract was unclear. Whilst he felt compelled to approve the payment once the accused had authorised it, he did not say that the accused instructed him to do so. Instead, he simply told Mr Kamaka to go ahead and make payment once the accused had approved it.
    
43. Mr Milamala said that the accused was employed by a company called SW Group of Companies and the Bank paid those companies and individuals and it was up to them to sort out tax and overheads but that is not reflected in the terms of engagement produced by the State, which is with the accused in his personal capacity. Whilst it was Mr Milamala’s view that AUD30,000 was the gross figure payable he conceded that it depended on how the terms of engagement was interpreted.
    
44. Mr Kamaka was asked on at least two occasions about the letter to the Fiji Inland Revenue and Customs Authority. He said that he had concerns about it and that he signed it because he was afraid he might otherwise lose his job but he did not say that he expressed those concerns to the accused or that the accused threatened him in respect of the letter. Similarly, Mr Kamaka said that the accused told him that the Fiji Authority needed to see his payslip, he understood the accused required it and he was afraid he would lose his job if he didn’t provide it. The accused does not deny that he demanded the payslip but there is no evidence that he threatened Mr Kamaka. In addition, Mr Kamaka did not give evidence that he told the accused that his income tax had not in fact been paid by CTSL to the IRC at that time.
    
45. Critically, Mr Kamaka’s evidence does not support the State’s case that the accused was obliged to pay tax out of the AUD30,000 monthly fee. On the contrary, Mr Kamaka’s objection was not to the amount of tax due on a net fee of AUD30,000 but only to payment of it by CTSL.
    
46. Mr Kamaka says that the accused’s tax was not paid at any time prior to 2021 by CTSL. He had never seen the accused’s contract. It was confidential between the accused and the Bank. Because the accused was not an employee of CTSL he was not entitled to a payslip. But he does not dispute that he prepared the payslip and that the figures contained in the payslip were correct. When asked on what basis he prepared the payslip he explained that “the accused was paid AUD30,000 net for his services ...his 30,000 is in the highest tax bracket of 42%, in order to get the gross, first of all divide 30,000 by .58 to get the gross sum, and then deduct gross by net to get the tax” and then apply the foreign exchange rate at the time to convert to PGK. He calculated the figures accurately according to real figures. As to why the tax was not paid to the IRC after he calculated the figure he said that the accused was not employed by CTSL and there was no instruction by BPNG to pay the tax. Whilst he agreed that the accused’s other expenses were paid by CTSL, like accommodation and the purchase of a vehicle, they were approved by the Bank. When asked again if it occurred to him that CTSL was required to pay the accused’s tax he said that for similar arrangements in the past the Bank took care of all costs and billed the fund as part of the annual license fee. Later in his evidence he said that in past experience the Bank charged CTSL for tax. He maintained, however, that the figures were correct.
    
47. In short Mr Kamaka’s objection was to the creation of the payslip not its content, and to the payment of the tax directly by CTSL rather than by reimbursement to BPNG but not to the accused’s claim that his AUD30,000 fee was net of tax and that the tax was to be paid either by BPNG or CTSL.
    
48. Moreover, I accept the evidence of the accused, which is supported by Mr Bakani that pursuant to his engagement with BPNG, the accused was to be paid a monthly fee of AUD30,000 after tax.
    
49. Mr Bakani was an impressive witness. He is the former Governor of BPNG. His evidence was clear and straightforward. There was no attempt to challenge his evidence by the State other than to suggest that the terms of engagement were not clear. That is abundantly obvious but that hardly assists the State.
    
50. I prefer Mr Bakani’s evidence to that of Mr Milamala that expatriate contractors engaged to work by BPNG often require their fee to be fixed at a rate after tax and to be paid overseas at an agreed amount in foreign currency to avoid exchange rate fluctuations. As he explained, the tax must still be paid on the gross fee but the contractor never receives the gross fee, only the net amount, which is fixed.
    
51. In addition, as the most senior person responsible for recruiting the accused and for signing his terms of engagement on each occasion he was extended I also accept that Mr Bakani had firsthand knowledge of the terms of the agreement reached with the accused.
    
52. As Mr Bakani’s evidence also makes clear the issue is not whether the accused was strictly an employee or an independent contractor. He was engaged by BPNG to manage the fund. All of his costs were to be met by CTSL and it follows that his tax was to be paid by CTSL upon approval of his invoice. As it happens this is consistent with s 65K of the Income Tax (2021 Budget) (Amendment Act).
    
53. It follows and I find that the accused was entitled to a monthly fee after tax of AUD30,000. It is a large figure but as Mr Bakani explained it was necessary to attract the accused to the position, which required particular expertise to manage a very large superannuation fund, and was intended to be relatively short term. I further find that tax on the accused’s fee was to be paid by CTSL.
    
54. In all the circumstances the State has failed to establish beyond reasonable doubt that the accused acted dishonestly by directing the payment of his outstanding tax by CTSL.
    
55. Dishonesty is a question of fact to be determined by the trial judge, based on the facts of the case and according to the ordinary standards of reasonable and honest people: Brian Kindi Lawi v The State [1987] PNGLR 183. A subjective test must be applied such that it must be proven beyond reasonable doubt that the accused in fact knew that he or she was acting dishonestly. However, in applying that test, an objective standard can be taken into account: it might reasonably be inferred that the accused must in fact have known that he or she was acting dishonestly: Wartoto adopting and applying Havila Kavo (supra).
    
56. The State has failed to establish beyond reasonable doubt that it was dishonest according to the standards of ordinary reasonable people for the accused to direct the payment of outstanding tax which he understood was owing by CTSL to the tax office, or that the accused believed that he was acting dishonestly in doing so. The accused understood that the tax was to be paid by CTSL and that he had the power and authority within the organisation to direct it to be done. It was not done for any improper purpose, gain or advantage. As far as he was concerned it should already have been paid by CSTL.
    
57. That is really the end of the matter. But for completeness I find that the State has also failed to exclude the possibility that the accused acted in the honest exercise of a claim of right. The conduct was not dishonest and nor was it done with an intention to defraud. It was not done with an intention to have CTSL do anything which the accused did not believe it was obligated to do. It was not done with an intention to defraud the IRC or cause it to do anything it would not otherwise have done. It might have been prudent for the accused to advise the Bank before directing payment given the large sum involved but it was not done with any intention to defraud it either.
    
58. The accused is therefore acquitted of the charge contained in the indictment.
    

Verdict accordingly.
___________________________________________________________
Public Prosecutor: Lawyers for the State
Kaule Legal: Lawyers for the Accused