Regina v Gagahe [2012] SBMC 5; Criminal Case 874 of 2009 (28 September 2012)

IN THE CENTRAL MAGISTRATES COURT

Criminal Case No. 874/2009

REGINA

V

LONSDALE GAGAHE

Dates of Hearings:
23rd Aug 2011, 6, 12, 13, 19, 20 &24 Oct 2011, 10 &11 Nov 2011,14 Dec 2011,
14 & 15 Feb 2012, 1, 2, 3, 15, 16, 19, 22, 23, 24 & 31 May 2012, 5 June2012,
16, 19 & 25 July 2012, 14, 18, 28 & 29 Aug 2012, 3, 6, 7, 11 & 13 September 2012

Date of Submissions: 21/9/12

Date of Judgment: 28/9/2012

Pros: Ms Rachel Olutimayin & Nelson Dhite
Def: Mr Sevuloni Valenitabua

JUDGMENT

(1) The defendant was originally charged with 1 count of larceny by servant. The charge read as follows:

Statement of Offence

Larceny by Servant contrary to section 273 (a) (a (i) of the Penal Code.

Particulars of Offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province between 27th September 2007 to January 2008, being a servant employed as a Sales and Marketing Manager did steal a chattel to wit 675 tonnes of rice valued at approximately $3.5 million belonging to his employer namely Solrice Ltd.

(2) That charge was withdrawn on the 23/8/12 and instead 6 separate counts were filed which reads as follows:

Count1

Statement of offence

Larceny by servant contrary to section 273(a)(i) of the Penal Code

Particulars of offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province on or about 27th September 2007, being a servant employed as Sales and Marketing Manager did steal a chattel to wit 44 tons of rice property of his employer namely Solrice Limited.

Count2

Statement of offence

Larceny by Servant contrary to section 273(a)(i) of the Penal Code.

Particulars of the offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province on or about 1st October 2007, being a servant employed as Sales and Marketing Manager did steal a chattel to wit 17 tons of rice property of his employer namely Solrice Limited.

Count 3

Statement of Offence

Larceny by servant contrary to section 273 (a)(i) of Penal Code

Particulars of offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province between 22nd October 2007 and 14th January 2008 being a servant employed as Sales and Marketing Manager did steal a chattel to wit 88 tons of rice property of his employer namely Solrice Limited.

Count 4

:Statement of offence

Larceny by servant c/s 273 (a)(i) of the Penal Code.

Particulars of offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province between 23rd November 2007 and 10th January 2008, being a servant employed as Sales and Marketing Manager did steal a chattel to wit 7 tons and a bale of one kilogram of rice property of his employer namely Solrice Limited.

Count5

Statement of offence

Larceny by servant c/s 273(a) (i) of Penal Code

Particulars of offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province between 17th November and 19th December 2007, being a servant employed as Sales and Marketing Manager did steal a chattel to wit 55 tons and 40 bales of one kilogram of rice property of his employer namely Solrice Limited.

Count 6

Statement of offence

Larceny by servant

Particulars of offence

That Lonsdale Gagahe of Sepi village, Isabel Province in Honiara in the Guadalcanal Province between 26th October 2007 and 10th January 2008, being a servant employed as Sales and Marketing Manager did steal a chattel to wit 151 tons of rice property of his employer namely Solrice Limited.

(3) On the 7/9/12 prosecution withdrew count 4 as 7 tonnes of rice which was subject of that charge was included in count 6 and the defendant was discharged on count 4 under S190 (2)(b)(ii) of the CPC and so effectively the defendant only faced 5 counts.

(4) (i) The elements of the offence are:

• (a) any person
• (b) Who is a servant
• (c) Who is employed by another
• (d) Who steals a chattel
• (e) Which belongs to his employer
  

(ii) Section 258(i) of the Penal Code defines stealing which are

1. without the consent of the owner
2. fraudulently
3. without a claim of right made in good faith
4. takes and carries away
5. anything capable of being stolen
6. with intent, at the time of such taking
7. permanently to deprive the owner thereof
   

(5) At the time of the offence the defendant was employed by Solrice Limited (Solrice) as its sales and marketing manager. Solrice is in the business of selling rice. The defendant commenced employment with Solrice in 1985 and from 1988 until February 2008 he was its sales and marketing manager when his employment was terminated.

(6) The General Manager of Solrice was Brian Hutchinson (Brian) and the defendant was the second in charge and he worked alongside Jennifer Ausuta (Jeniffer) who was the payroll officer and Daisy Laufo'oa (Daisy) who was a receptionist and also worked in the sales department alongside Jenifer and the defendant who was their immediate boss.

(7) Solrice is a wholesaler and only sells rice to its distributors who then sell it to the public as retailers. Between September 2007 to January 2008 Solrice had the following distributors:

1. Aba Corporation;
2. Ex- cellent;
3. George Wu company;
4. Fair Trade Ltd (ChaCha);
5. Sweetie Kwan Wing/Leung Ltd;
6. YTL;
7. Place Makers Hardware;
8. Sir Baddley Devesi;
9. Victory Ltd;
10. Tina Enterprises.
    

(8) The rice is packed in 1 kg, 5kg, 10kg & 20kg packages and the container yard for Solrice is at Ranandi and each container holds 22 metric tonnes (MT) of rice.

(9) The sales process at Solrice is as follows:

• - The distributors issue an order form.
  
• - The sales clerk takes the order form from the distributors and fills in all the details in the dispatch advice book (DAN) which is issued by Solrice and in particular the truck registration number which is to collect the rice.
  
• - The clerk signs the DAN and the driver signs it as well and the top 2 copies are given to the driver.
  
• - The driver gives the duplicate to Solrice security officer and he retains the original which he later gives it to the distributor.
  
• - The security officer organises the delivery of the rice on to the truck and he asks the fork lift driver to load the truck.
  
• - Once loaded the sale process is completed and the truck leaves the Solrice depot.
  

(10) The remaining sales process was described in detail by Brian. He stated as follows in his evidence.

"All rice that is taken out of the depot that day is recorded by the sales clerk on a form entitled daily record of tonnes taken out of the depot. This is a running summary sheet where all sales are recorded for each distributor – at the end of the day this sheet is totalled and then it is put aside for later references. The sales clerk then records in detail daily sale to each distributor as a daily sales analysis form.

"Each sale to the distributor is subtotalled – so that we know exactly how much went out to each distributor. Then each individual distributor is totalled to give us a total sale for the day. The daily sales analysis form with the individual sales for each distributor is used as a posting medium to invoice each distributor into the ARROW accounting programme. When this is being completed the clerk then prints out from the Arrow programme a transaction list for that day – which shows a summary of all sales to each distributor for the day. The clerk then prints out a stock movement report which shows us the amount of stock on hand after the posting of the invoicing for that day. These two forms are then given to the stock taking officer who uses a transaction report to input the total of invoiced into our Excel report summary total sale for the day. That report is then used to input the total sales figures into the daily stock reconciliation which is also an Excel file. This file has at the start of day an opening stock figures – less sale for that day plus any stock that might have been received for that day and that gives the total stock figures as of the close of business on that particular trading day. The stock taking officer then proceeds to the warehouse to conduct a stock take. He counts all the stock in the warehouse and records it all on the stock taking sheet. The stock that is held in containers is taken in bulk as the containers don't open so that in effect you have in the stock take sheet a total of containers in the yard that have not been opened – then you have the stock actually in the warehouse which are then added to each other to give you a total stock that should be in the warehouse and the yard. The total amount of stock from each size product is then input into the daily stock reconciliation Excel file and if there is a difference in the 2 amount then it is the stock takers responsibility to investigate any difference and that is the daily process"

(11) Being the sales and marketing manager the defendant was responsible to allocate the daily tasks to his staff Jennifer and Daisy and he was solely responsible to do the stock taking each day to ensure that stock in the yard reconciled with the sale – and between the period September 2007 to January 2008 he had the sole responsibility to do the stock take.

(12) The defendant and his nephew set up a company called D & L and Brian allowed D & L to become a distributor of Solrice. All other distributors had a credit account and once they were invoiced they had 15 days within which to pay their accounts. The defendant's company D & L was to buy rice on a strictly cash basis and no credit facilities unlike distributors were afforded to it.

(13) The defendant being the employee of Solrice was not allowed to prepare the orders for D & L and all orders were prepared by Ela Gasedia and Joseph Tige.

(14) Staff members and other private individuals bought rice through D & L on a cash basis and all that was required to fill in was the despatch advice notice (DAN).

(15) Whilst the defendant was still employed by Solrice his company name was changed from D & L to N & L.

(16) The defendant went on leave on 12/1/08, which was a Saturday according to him he did a stock take before he left his duties as sales and marketing manager was assumed by Brian the general manager.

(17) Brian said that on 14/1/08 he became aware that things were not right when he carried out a stock take. He noticed that 32 containers of rice x 22 MT were missing a total of 704MT. At first he thought he was making a mistake and he then asked Lee Laejama the warehouse manager for assistance and they did a another check and came to the same figure of 704 MT.

(18) Brian upon finding that 704 MT of rice was missing contacted Marc Donovan (Marc) his superior who advised him to contact their auditors Morris Sojnocki and they carried out an internal audit and also found that 704 T of rice was missing.

(19) As a result of the discrepancies in the stock take Marc came over to Honiara on 3/2/08 and met Brian and the auditors. He perused the audit report and his initial reaction was that the perpetrator was somebody who had effective control of the various business processes and his main focus was the defendant who was undertaking the daily stock take. He felt that the defendant knew about the stock take but he did not raise it with the general manager. Marc suggested that they should meet the defendant and seek his assistance.

(20) Marc and Brian drove to the defendant's house on 6/2/08 and both asked the defendant if he knew anything about the shortages in the stock take. According to Marc he was very nervous and dropped his gaze and was unable to help them with the missing stock and they then asked him to come to office on 8/2/08 which he did.

(21) The defendant elected to talk to Marc alone and he did not want Brian to be present. The defendant was again asked by Marc as to what he knew about the stock shortage and he said he knew nothing. He was asked if all the stock that was missing had in fact come into the yard and he said it did. He was then asked if any stock had gone out without paper work and the defendant told him that on a number of occasions he had given stock to the customers after the invoicing had closed for the day and that they were invoiced the following day.

(22) The defendant was further questioned as to whether he had paid other customers/distributors accounts with N & L cheques and again he was very nervous and said that he had some complaints from Aba Corporation and Cha Cha and he paid their accounts as they complained that they did not receive the stock for which they were charged. The defendant also told Marc that having paid the distributors account he took rice to the value of the cheques. When Marc questioned him and told him that it was double dipping the defendant was unable to provide any explanations. At that point Marc suspended the interview and went and briefed Brian and asked him to join him and the defendant.

(23) Marc asked the defendant in the presence of the Brian as to which distributors account he had interfered with and the defendant gave 4 names namely:

(a) Aba Corporation

(b) YTL

(c) Ex cellent

(d) Sweetie Kwan

(24) The defendant was further asked as to how he interfered with the distributors' accounts and he said that he had charged Aba Corporation for 2 containers of 20kg and 10kg rice and he had removed Aba from those containers and took the stock himself. He also admitted to doing the same with another 4 containers. When Marc started showing him more details of how stock was taken out the defendant stopped talking. Brian also confirmed that the defendant agreed to taking 2 containers of 20 kg 22MT and 10kg each 22MT each and paid Aba account for 44T and having paid Aba account he took another set 22MT x 20kg and 22MT x 10 kg. He further confirmed that he took another 4 containers totalling 88T and after that he stopped talking.

(25) At that point the interview was suspended and the defendant was suspended from his normal duties and he was issued with a letter dated 8/2/08 (ExP6 T1 P12) wherein it was stated that he had admitted to obtaining rice by fraudulent means and had tampered with the distributors' accounts and taken rice by fraudulent means and he was required to report to work on 11/2/08 and he failed to do so and on 13/2/08 he was formally terminated (Ex P6 T1 P13)

(26) Brian reported the matter to police on 12/2/08 and the investigation was carried out by Lisa Strutton (PPF) (Lisa) and Marc Ofu on 15/2/08 the defendant was interviewed and he refused to participate in the record of interview. Lisa conducted a separate audit and her audit revealed that 675M T or rice was unaccounted for.

(27) Lisa obtained N & L Trading bank statements (Ex P6T5 P204-207) and she did a comparison of debits and credits from the period 24/10/05 to 31/1/06 as opposed to Oct 2007 to January 2008 and found a huge difference in the deposit. In 2006 for the period of October to 31/1/06 a sum of $375400 was deposited whilst for period of October 2007 to January 2008 the deposit was $3,929,202.00 and she commented that this was a huge difference.

(28) The defendant agreed in his cross examination that when he went on leave the management found that there was something wrong with Solrice's record. He further agreed that a lot of stock was missing, although he later retracted that admission. The defendant's own admission is that a lot of stock was missing and the auditors Morris & Sojnocki audit reveals that 32 containers were missing (32 x 22MT = 704MT) which is also the finding of Lisa in her audit and as well as Brian's initial stock take. The defence did not challenge the audit reports.

(29) The defendant was originally charged with one count of stealing 675 MT of rice which was approximately valued at $3.5 million and with 704 MT of rice missing the sum of $3.5m will obviously increase. He had a deposit of $3,929,202 of which a sum of $1,986,527 was by way of cash. Although Lisa made this observation but was not questioned on this issue by the defence and nor was the defendant cross-examined on this issue by the prosecution. I pose the position whether the amount of the deposit of $3,929,202 corresponds to the amount of stock missing. Is this a sheer coincidence? I don't think it was a coincidence and in the circumstances on the basis of the material placed before I draw the inference that the sum of $3,929,202 was obtained by the defendant by disposing off the missing stock for which he had the sole control and responsibility.

(30) With regards to the admissions made by the defendant to Marc it was suggested to him in cross-examination that the defendant did not make any admissions whatsoever and Marc was not questioned at all about the defendant's admission to paying distributors accounts. But when Brian was cross-examined the questioning went as follows regarding payment of the distributors accounts:

Q: My instruction is that the defendant told you he had indeed paid for the rice which he had mistakenly charged Aba Corporation with.

A: He did not say that to me – he said he had taken the rice.

Q: Did he tell you that he used N & L cheque to settle Aba?

A: He said he had used a cheque to settle Aba's account for rice that they did not receive. 44 metric tonnes was paid for on behalf of Aba's account. He did not say that he paid a cheque for Ex cellent.

Q: Did he say that due to his mistake he also have to settle the account for George Wu, Fair Trade, YTL and Sir Baddley.

A: There was no mention of a mistake being made by him – The distributors a/c is that he said he was involved with were Sweetie Kwan, YTL, Excellent, and Aba and apart from cheque issued for Aba he did not mention reimbursing any other distributor a/c.

Q: My instruction is that he did not tell you or Marc Denovan that he was double dipping.

A: I dispute that on my previous evidence.

Q: My instruction is that he paid for the settlement of Aba Corporation a/c, and Excellent, but he did not take rice for himself.

A: He admitted paying for Aba for 44 metric tonnes and that is only time he mentioned during the interview that he needed a client a/c and he took the 44 metric tonne for himself and charged the account of Aba Corporation. He did admit to taking another 44 metric tonnes of rice and his excuse that as he paid for the rice it was his and this is double dipping."

(31) The defence line of questioning referred to above suggests that the distributors were mistakenly charged and if that was the case then what was the need for the defendant to pay their accounts? All that the account section had to do to correct the situation was to do an account reversal as being mistakenly charged. The defendant's act of paying those distributors' accounts is an acknowledgement by him that stock was removed against those distributors' names. He further acknowledged that having paid those accounts he took out rice to the value of the cheques which is double dipping.

(32) I think it is agreed between both counsels that Counts1, 2 and 3 relate to the admissions made by the defendant.

(33) Count5:

Count 5 originally contained an amount of 55MT and 40 bales of rice and during the course of the trial the amount was reduced to 51MT 40 bales by the prosecution. Count 5 relates to stock not invoiced to D & L (13T) and Sweetie Kwan (44.04T) and the defendant processed the entire sales process.

(34) The defendant in his explanation in Ex D4 acknowledged that D & L were not invoiced for 30.1MT and Sweetie Kwan was not invoiced for 21 T which was replacement orders.

(35) He further stated that the value of 30.1T was $163 544-85 and it was paid off by the 7 cheques (I shall discuss this later)

(36) Count 6

The prosecution alleges that the defendant stole 151T of rice and the defendant concedes that D & L took 144.76T of rice which was not invoiced and he further stated that the value of 144.76T of rice was $741,006.20.

(37) For both Count5 and 6 the defendant maintains that the amount of rice was paid off from the 7 cheques totalling $810,009.36 and an over payment in the sum of $279122.86 making a total of $1,089,132.22.

(38) The details of the 7 cheques are as follows:

17/9/07	$374,409
16/10/07	$117 117
20/11/07	$72313-50
14/11/07	$88172-61
19/11/07	$117 117
24/11/07	119301.00
30/11/07	30121.85
	========
	810,009.36

(39) The prosecution disputes the defendant's suggestion that he used the 7 cheques to pay for the rice involved in Count5 & 6 and it further says that the 7 cheques were paid by the defendant in respect of overcharging of other distributors' accounts which are separate from the amount of rice involved in Counts 5 & 6.

(40) So the only issue for determination is whether the defendant indeed paid the rice in Counts5 & 6 by the 7 cheques or whether the 7 cheques were used to pay other specific overcharges.

(41) (a) cheque for the sum of $374,409 was paid on 17/9/07 for CDL in the sum of $271,299 for invoice number 72673 and X-cellent in the sum of $103,110 for invoice number. 72677

(b) Cheque for the sum of $117,117 was paid on 16/10/07 in respect of George Wu's account

(c) Cheque $72313-50 dated 20/11/07 Ex P6T5 P144 was used to YTL's account

(d) Cheque $88172-61 dated 14/11/07 was used to pay B. Devesi $1258.22 George Wu $25359.22 and D & L $61555.10

(e) Cheque for $117,117 dated 19/11/07 was used to pay X-cellent's account

(f) Cheque $119 301-50 was used to pay YTL $72313-50 & D & L $46987-50.

(g) Cheque $30121-85 was used to pay Sweetie Kwan's account.

The defendant agreed in cross-examination that some of the cheques mentioned paragraph 40 (c) to (g) were not used to pay the 30.1T as he earlier claimed.

(42) I find as a matter of fact that none of the 7 cheques were used to pay for the rice taken by the defendant on Counts 5 & 6 and it is abundantly clear that the 7 cheques were used to pay for distributors specific accounts which were overcharged by the defendant.

(43) The defendant had admitted that every time he paid a cheque to settle a distributors account he took rice to the corresponding value. I refer to my earlier observations that whenever the defendant paid a distributor's overcharged account it meant that he had taken out the rice and by taking another lot of rice upon payment of the accounts means that he was double dipping.

(44) The defendant says that there was over payment in the sum of $279,122.86. He said that he used that sum of $279,122.86 for payments of the rice which he had taken earlier so how can it be overpayment and I therefore reject the defendant's assertion I hold that there were no overpayments.

CONCLUSION

(45) I find that the prosecution has proved its case beyond all reasonable doubt in respect of Counts 1, 2, 3, 5 and 6 and in arriving at that conclusion I rely on my findings and inferences that I made in paragraph 29 hereof and I therefore find the defendant guilty of Counts1, 2, 3, 5 and 6 and he is convicted on those counts.

Shafi Khan
Principal magistrate