N3129

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR NO. 1274 OF 2003

THE STATE

v

JIMMY KENDI

Kokopo: Lenalia, J.
2006: 13 – 17, 23 March
4 July

CRIMINAL LAW – Obtaining goods by false pretence – 
Misappropriation – Criminal Code Sections 383A (1) (a) & 404, Ch.No. 262.

CRIMINAL LAW – Particular offence - False Pretence – Plea of not 
guilty – Trial – Evidence – Monies allegedly obtained by fraudulent means – False pretence in relation to existing facts – Trial – Evidence. Criminal Code s.404, Ch.No.262.

CRIMINAL LAW – Misappropriation – Plea of not guilty – Trial – 
Evidence - Proceeds of false pretence – Misappropriation – Meaning of – Evidence – Obtaining monies by fraudulent means – Criminal Code s.383A (1) (a). 

Cases cited

Papua New Guinea Cases

Public Prosecutor’s Request N0.4 Of 1974 [1975] PNGLR.365
Albert Alexander Age v The State [1979] PNGLR.589 
Paulus Pawa v The State [1981] PNGLR.498
The State v Tom Morris [1981] PNGLR.493
The State v Gabriel Ramoi [1993] PNGLR.390
The State v Napilye Kuri [1994] PNGLR.371
The State v Francis Natowohala Laumadawa [1994] PNGLR.291
The State v Garitau Bonu & Rossana Bonu [1996] PNGLR.48
Garitau Bony & Rossana Bonu v The State (1997) SC 528

Overseas Cases 

R v Williams (1836) 173 E.R. 158
Salomon v Salomon & Co. Ltd. (1879) A.C. 22
Peacock v The King (1911) 13 C.L.R 619
Thomas v The Queen (1960) 102 C.L.R. 102
Plomp v The Queen (1963) 110 C.L.R.324

Counsels:
Mr. C. Sambua, for the State
Mr. D. Lidgett, for the Accused

4 July, 2006.

1. LENALIA, J: The accused is charged with two counts. One for obtaining monies by false pretence pursuant to s.404 and in the second count, the State say he misappropriated the proceeds of the above crime, involving the sum of four million, two hundred and ninety – eight thousand, thirty-seven kina and thirty-three toea, (K4, 298, 037. 33). The State allege that the above amount was the property of the State acquired by false pretence and misapplied contrary to s.383A (1) (a) of the Criminal Code.

Summary of Facts.

2. The accused in these two cases Jimmy Kendi operated an Earth Moving company in Arawa, North Solomons Province between 1983 and 1987. The name of the earth moving company was JIMENDI Enterprises Limited. That company leased a number of heavy machinery and equipment from Credit Corporation (PNG) Ltd for purposes of road construction. The accused operated those machines between the above years involved in road maintenance in 1987, the accused’s company was awarded a contract on a road project by the then North Solomons Provincial Government. 

3. In the month of July that same year, due to the company’s inability and failure to comply with its commitments to make monthly re-payments for the hire of the equipments leased, Credit Corporation (PNG.) Ltd. repossessed all equipments and left them on site. In order to complete the road project, North Solomons Provincial Government requested Credit Corporation to complete the uncompleted work left by the accused’s company.

4. In the mean time, Credit Corporation appointed a Receiver Manager to manage the affairs of the machinery and after completion of the road project, all machinery and equipments were shipped to Port Moresby where the machines were refurbished and sold.

5. The State’s allegations are that, the only time the accused was ever engaged on road construction was before July 1987. That thereafter, the accused company never operated or engaged in any further road construction until the Bougainville crisis began in about 1987 or 1988. The State’s case also alleges that after Credit Corporation shipped its machinery to Moresby, the accused was left in Arawa unemployed and thereafter he came to Rabaul to reside in his wife’s village somewhere in this Province.

6. Then on 14 December 1999, the accused wrote a letter to the then Acting Defence Force Secretary claiming that the Defence Force maritime and infantry elements which were present on Bougainville during the crisis period had unlawfully used his machinery and equipment on Loloho and Torauto Island during the Bougainville crisis from 1993 to 1997.

7. On his letter to the Defence Secretary the accused said, defence force personal had used two of his machines during the operation in Bougainville. He referred to those two machines as 1 Caterpillar D6C Bulldozer, Serial No. 10K 11209, engine No.3306. 

8. The second machine referred to was a Komatsu W180 Bucket Loader, Serial No.50120 and the model number was KWA05-8. The accused calculated the amount owing to him to be two million, three hundred and eighty-four thousand, eight hundred and eighty-three kina and ninety-five toea (K2, 384, 883. 95), including all accumulated interests. According to the State’s case, the total amount paid to the accused was four million, two hundred and ninety-eight thousand, and thirty seven kina, thirty three toea (K4, 298, 037.33).

9. It is the State’s case now that having submitted his false claim, with the assistance of some corrupt officers of the Department of Finance & Treasury and Department of Defence pushed the claim through all authorities concern, it was processed by Finance & Treasury Department and a cheque was made payable to Bakanovi Transport Pty Ltd in the sum of K4, 298, 037. 33 on Cheque No.632311 dated 14 November 2000. It is alleged that Mr. Kendi and his wife Norma Kendi were the proprietors of the said Bakanovi Transport Pty Ltd when in fact the said company never owned any machinery or equipment during the period which the accused had claimed for.

Evidence.

10. Five witnesses were called by the State to testify orally. The State evidence from the five witnesses and all the documents tendered is this. Between 1986 and 1988, the accused operated a construction company in Arawa, North Solomons Province. That company whose proprietor was the accused operated under its business name "JIMENDI ENTERPRISES LIMITED" (herein under referred to as JEL). In 1986, the accused company was awarded a contract by the North Solomons Province to carry out work on the Pitpit Bridge on the Inus area in Bougainville. 

11. Two of the five witnesses called were Bougainvilleans. They are John Felix and Tony Busu. Both John and Tony had been employed by the accused company at some stages during 1986 to 1988. In case of John, he was a trainee mechanic then with the Bougainville Copper Limited. Whenever he took days off, he would work with JEL to gain more experience. After John completed his training in 1987, he got engaged by JEL management as a company mechanic. 

12. John said he was there at the time when the accused’s company was doing road construction and road maintenance more particularly on the Pitpit bridge. It is not clear from the State’s evidence whether reference to the bridge here means the accused company was engaged in the building of a new bridge or merely road maintenance done to the portion of road around the aforementioned bridge. However in the middle of 1988, John was told that JEL was to cease operation due to non payment of the lease agreement between the management of that company and Credit Corporation (PNG) Ltd.

13. John recalls that at the time when the accused’s company was a going concern, he had machinery and equipments but when Credit Corporation repossessed the equipments, there were no other machines left on site by JEL. It is his evidence that when the crisis began the accused was no longer operating on Bougainville. 

14. After repossession of the machinery by Credit Corporation, John said, after he had shipped the two machines to Rabaul, he came over to Rabaul and he worked with the accused’s company carrying out construction work around Gunanba and Kenabot here in East New Britain Province. At some stages during the crisis, John said he fixed certain machineries including a D6 C caterpillar bulldozer, a Nissan Heavy Duty Prime Mover and a truck. In relation to the D6 C caterpillar and other machines, the witness said as far as he can recall, those machines were never belonging to the accused or his company JEL by which time, such company had been wounded up. 

15. As to how and where he got that equipment, John said when he was working with the Defence Force in 1997, he fixed a number of heavy duty machineries for purposes of building a helicopter landing pad for the Defence Force helicopters. The witness was asked in chief whose machines did he fixed. John said, the machines were belonging to Mr. Peter Goodenough. Asked further as to where he did fix those machines the witness said, he fixed them within the company premises of a company he named as "TORU TORU TRANSPORT LIMITED" which was originally known as "TORU TORU TRANSPORT PTY. LIMITED". 

16. After fixing such machineries he then drove them to Loloho. He gave the distance from Loloho to Mr.Goodenough’s premises as from the Kokopo Court House to Ulaveo Plantation. 

17. There is something sinister about John Felix evidence. I will accept for purposes of this trial the fact that, witness John Felix knew the accused prior to the Bougainville crisis despite the defence evidence which will later show that the accused never conducted any business with either John Felix or Tony Busu who is also a Bougainvillean. The question that the Court will ask at this stage is why witness John Felix had to ship the D6 C caterpillar bulldozer a Front End Loader and a Nissan Heavy Duty Dump Truck. What connection existed between the two Bougainville witnesses and the accused? 

18. There could be some hidden motives between John and the accused because after John had fixed the two machines, he shipped them to Rabaul in the Defence Force boat the MV.Buna. Then after the machines arrived in Rabaul, John came over from Bougainville to Rabaul and he got engaged by the accused in road maintenance at Gunanba and the Kenabot projects in Kokopo, E.N.B.Province as already alluded to. After John went back to the North Solomons Province in 1997 or 1998, officers from the National Fraud Squad came to interview him in relation to the fraud on trial now. 

19. In cross examination, this witness was asked a series of questions as to how he was able to arrange with the Defence Force hierarchy on Bougainville to ship the two machines to Rabaul. In a question put to the witness in which the name of Lieutenant Colonel Falaniki was mentioned to the witness, he said he arranged with such officer to have the machines shipped to Rabaul. He was asked if he knew a person by the name of Peter Siune. The witness said though he knew him, he did not go through him. 

20. I thought, the defence was anticipating calling Peter Siune to rebut what this witness said but as it turned out, he was never called. In the later part of the cross-examination, he was asked where he got the machines from. The witness confirmed that he got them from Mr. Goodenough’s premises.

21. It was further put to the witness if he had been paid any money to attend to Court to testify against the accused suggesting bribery. The witness brushed aside the question and said, no one paid him any money, but he had fixed the two machines and was to use them as his own when the accused asked him to bring them to Rabaul since there was immediate need for the machines at Rabaul to be used for road maintenance. John was asked if he knew Robert Rujimari and Tony Busu. The witness said he knows them well as they assisted him to fix the machines on Loloho. 

22. John was asked if the machines were engaged by the Defence Force for five months at Loloho and a further two months at Torato Island. The witness answered that that was not true as the two machines were only used for two months. 

23. Tony Busu was called as the third witness. He comes from Barora village on Buka Island on the North Solomons Province. Some parts of Tony’s evidence are similar to that of John Felix. Tony testified that he knows the accused well. He was asked in chief how did he come to know the accused well. Tony said, in 1986 and 1987, he worked for the accused’s company JEL. The scope of his work responsibility was he was employed as a welder and the accused’s company was sub-contracted to Downer Construction Pty Ltd which built a bridge and road work around the Pitpit bridge. 

24. Tony recalls that in 1987, JEL wounded up its operations because it could not meet its commitments with the Credit Corporation (PNG) Ltd in relation to the lease agreement with the accused. The result of that was that Credit Corporation repossessed all machinery which were leased to the accused and were taken back to Port Moresby. Documentary evidence Exhibits 16A to 16H on pages 51 to 89 of the file confirm that, there was a Hire Purchase Agreement entered into between the accused and Credit Corporation.

25. Asked in chief which machines were repossessed from the accused’s company, Tony said all the machines that were engaged on construction site at Pitpit Bridge were taken away after the Credit Corporation completed work on the bridge. Tony confirmed John’s evidence that he was aware that Tony had fixed several half-burnt machines destroyed during the crisis and that those machines were belonging to a Mr. Peter Goodenough. Tony however said that he did not know that John Felix had shipped two machines to Rabaul. He also said, he did not know what agreement was entered into between the accused and John Felix. 

26. It would seem to the Court that, even witness Tony Busu had an interest in the two machines which were shipped to Rabaul. He said in chief that, when he found out that the machines had been taken to Rabaul, he wanted to get them back to Buka to carry out restoration work on Bougainville. It is clear from this witness evidence that, after the D6 C caterpillar bulldozer had been fixed, it was used for three months together with the Nissan prime mover truck before being shipped to Rabaul. 

27. Tony was vigorously cross-examined about his affidavit. In the defence cross-examination, the witness was asked if he had travelled to Moresby in the later part of the month of January 2002. He was asked if the witness had attended to any court case in the District Court in Boroko in the Nation’s Capital. The witness identified his signature on the affidavit said he signed it however he said he never signed it in Moresby. In answer to all those questions, the witness answered in the negative. He later said, he signed such affidavit in Buka and not in Port Moresby. This witness affidavit was tendered as a previous inconsistent statement. (See Ex.142).

28. John Felix and Tony Busu’s evidence complement sworn testimony by Lieutenant Colonel Varave Mae whom the State called as the first witness. Lieutenant Colonel Mae’s evidence was brief and to the point. He said he was engaged on two to three occasions on Bougainville during the crisis. On the first occasion, his rank then was a Major and he was in Bougainville for six months. He was an Engineering Liaison Officer maintaining dialogue between the Defence Force Headquarters and all the Tactical Commanders operating in Bougainville during the crisis. The period of his first engagement was between 1991 and 1992. 

29. On the second time the witness went there, he commanded the Engineering battalion to prepare a landing base for the Defence Force to land on Nissan Island. It was during that time that the peace process was being implemented. This witness was there for eight months. He recalls that during the period of the army being engaged on Bougainville, the army used its own machinery. Asked in chief if any civilian machineries were used during the period of engagement, the witness said, there were no other machines used. Lt. Colonel Mae’s statement dated 1 August 2002 was tendered by consent and is marked Ex.1 for the State. (See page 32).

30. In cross-examination, the witness was asked where Torato Island is situated. Lt. Colonel Mae said, it is located on the Southern end of the mainland of Bougainville and Nissan Island is on the far Northern side of Buka Island. That Nissan Island is between Buka and Rabaul in East New Britain. He explained earlier on in chief that Torato Island was only used by the army on the basis of "Public Investment Program" for surveillance and security purposes.

31. Witness Eruel Pital is an employee of Hastings Deering (PNG) Ltd (hereinafter referred to as Hastings Deering). He has been employed with the company for thirty-one (31) years now. His evidence is that, Hastings Deering conduct business mainly dealing with sale of heavy machinery equipment and spare parts. He said the company deals with big machines like bulldozers, caterpillars, graders, excavators and selling of spare parts to their customers.

32. Mr. Pital testified that Hastings Deering keeps records of sale of its equipment. He recalls that sometime back a machine namely a D6 C Caterpillar Bulldozer was sold to a company in North Solomons called ITAKARA Plant Hire. Exhibits ‘140,’ ‘140A,’ ‘140B’ were tendered with consent. Although Mr. Lidgett expressed some reservations against their tender, he later submitted, did not seriously object to tendering those documents and were accepted as part of the State’s evidence.

33. Annexed to Eruel’s affidavit is a series of correspondences. Annexure ‘140A’ is a copy of the letter to the General Manager of Hastings Deering date 10 October 2001. That letter was written by Mr. Matatia Saroa, the First Assistant Secretary of the Department of Finance & Treasury in the Financial Inspection Services Division. In that letter, Mr. Saroa requested the manager of Hastings Deering to check their records and confirm to him which company did Hastings Deering sell the machine D6 C caterpillar bulldozer Serial No.10K 11209, Engine No.3306 to between the years 1991 to 1997. 

34. In answer to the above correspondence, one Japheth Kol of Hastings Deering (PNG) Ltd sent a fax to Department of Finance and Treasury attention to Mr. Alanito Gabua advising that the registered owner of the above machine was ITAKARA Plant Hire of P. O. Box 498, ARAWA. North Solomons Province. The defence case will show later that, the same machine with the same serial and engine numbers is claimed by the defence saying that its owner was the accused. 

35. The final witness called was Semi Maela. Mr. Maela is also one of the Assistant Secretaries in the Department of Finance and Treasury based in Port Moresby. He has been working in the department for over thirty-one years. He started with the department as a departmental clerk then has worked his way up to his current post. He has carried out many investigations in relation to fraudulent claims made against the State and the Department of Finance and Treasury. 

36. Mr. Maela’s evidence is that a man by the name of Tien Topidik had complained to the Secretary of the Department of Finance and Treasury that the claim made by the management of BAKANOVI Transport Limited was fraudulent and the department should investigate further. On receipt of such information, this witness and another officer from the department whom Mr. Maela named as Alanito Gabuya were tasked to mount an extensive investigation in relation to the claim of K4, 298, 037.00 made by the accused on behalf of JEL.

37. Semi’s evidence is that, some officers in the Finance and Treasury Department and some from the Department of Defence involved in the process of expediting the fraudulent claim have been dealt with either by administrative action or otherwise. That was the reason why the matter was referred to the National Fraud Squad to further investigate. 

38. In cross-examination, the witness was asked who was the person whom the witness referred to as Tien Topidik. The witness said, when the investigation commenced, it was found that there might not be such a person however, Mr. Maela said he could not speak for and on behalf of the police investigating officers. It was suggested to this witness if the person who wrote to the Department of Finance and Treasury may have substantial knowledge of the whole scheme and operation of the bogus claims made against the State. The witness said, it was possible that someone of such calibre would have written as well as giving information to the police. 

39. Apart from the five (5) witnesses called to testify, a great volume of documentary evidence was tendered by consent. I have referred to some of them. For purposes of the records, the following exhibits were tendered and accepted by the Court as part of the evidence for the prosecution:

Exhibit "1" statement by Bevan Anthony Webb – General Manager Credit Corporation (PNG) Limited date 25.4.02 at page 12.

Exhibit "2" statement by Colonel Jeffrey L Wiri dated 24.4.03 at page 33.

Exhibit "3" statement by Lt. Colonel Verave Mae date 1.8.02 at page 32.

Exhibit "4" affidavit by Donald Vavatang dated 9.5.03 at page 14

Exhibit "5" affidavit by B.A. Wasnatha Kumarasiri – the Financial Controller of Ela Motors dated 4.6.02 at page 37.

Exhibit "6" statement by Japheth Kol dated 2.10.02 at page 38.

Exhibit "7" affidavit by Ravu Paku – Assistant Secretary Department of Finance & Treasury – Waigani dated 5.5.o3.

Exhibit "8" statement by Pauline Issimel – Customer Services Manageress – Bank of South Pacific – Kokopo dated 24.1.03 at page 40.

Exhibit "9" statement by Martha Bual – Branch Manager of the above bank at Kokopo East New Britain Province date 25.7.02 at page 41.

Exhibit "10" statement by Vincentia Maumau – employee of BSP Kokopo dated 25.7.02 at page 42

Exhibit "11" statement by Mary Popeliau – Customer Services Manageress – BSP. Kokopo at page 42.

Exhibit "12" statement of Susan Naura – employee of BSP. Kokopo date 25.7.02 at pages 44 to 45.

Exhibit "13" affidavit by Sergeant Wadele Samilo – National Fraud & Anti-Corruption Squad Badili N.C.D. Port Moresby undated at pages 49 to 50.

Exhibit "14" affidavit by Chief Sergeant Thomas Navua – National Fraud & Anti-Corruption Squad – Badili Police Station Port Moresby dated 7.5.03.

Exhibit "15" the record of interview in English dated 14.3.03 at pages 320 to 346.

40. The next groups of exhibits are contained from paged 51 to 89 of the file and each of those exhibits contains bundles of papers which have been marked as follows:

Exhibits "16 A" to Exhibit "16 H" at pages 51 to 89, they include a Certificate of Incorporation of a company called ‘NEISENAL No.53 Pty Limited and other documents, (see pages 51 to 57). That is followed by a Certificate of Change of Incorporation of Change of a Company named as Neisenal No.53 Pty. Limited to ‘JIMENDI ENTERPRISES PTY. LTD. (see pages 58 to 64). The next lot of documents includes the Lease Agreement entered into between Credit Corporation (PNG) Ltd and the accused on certain machinery and equipment from pages 65 to 89.

Exhibit "17" a letter dated 10th May 1996 from the Registrar of Companies to the Secretary of Jimendi Enterprises Pty. Ltd at P.O.Box 358 ARAWA – North Solomons Province. That was a letter of notification by the Registrar on his belief that JEL was not in operation at page 125.

Exhibit "17A" a follow up letter from the same writer as above to the same addressee notifying the same that the company would be struck out from the register and was given 3 months notice unless cause was shown to the contrary at page 126.

Exhibit "18A" Certificate of Incorporation of a company called ‘TORU TORU TRANSPORT LIMITED (originally Toru Toru Transport Pty. Limited at pages 
132 to 133.

Exhibit "18B" a copy of summary of share capital and shares of above company at page 137.

Exhibit "18C" copy of Statutory Declaration by accused dated 2.4.97 in relation to certain machinery equipment supposedly owned by the accused at page 138.

Exhibit "18D" a copy of similar document by the accused as above dated 11.6.97 where accused declared receipt of three machines being a Komatsu Loader Model KWADS. – 8 Serial No. 50120, a Nisan UD Prime Mover, Model CWAS 3HTN Chassis No. CWAS 3HT – 00130, Engine No.R58 – 013303 and Cat, Model Dozer D6C, Serial No.10K 11209, Engine No.3306 at page 139.

41. The next series of exhibits consist of an Application for Registration of the company proposed name was BAKANOVI TRANSPORT Limited and related documents marked and identified as follows:

Exhibit "19" Form 1 – Application for Registration of a Company submitted by Mr. Donald Vavatang of Division of Commerce & Industry – Rabaul at page 142.

Exhibit "19A" Form 2 – Consent of Director of Proposed Company at page 143. 

Exhibit "19B" Form 4 – Consent of Shareholder of proposed Company at page 144.

Exhibit "19C" Certificate of Incorporation for BAKANOVI TRANSPORT LIMITED at page 145.

42. The next exhibit ("Exhibit 20") is an essential piece of evidence both for the prosecution and the defence. It is a letter dated 14 December 1999 in which the accused first lodged his claim with the Secretary of the Department of Defence in which the accused alleged that between 1993 and 1997 the Defence Force personals operating in Bougainville during the crisis and thereafter had unlawfully used his two pieces of heavy machineries. The Accused named those machineries as a Caterpillar D6C Bulldozer used on Loloho on the main land and a Komatsu WA 180 Bucket Loader used at Torato Island off the coast of Southern Bougainville. Since "Exhibit 20" forms the basis of this case, I quote that letter appearing in the following words:

"Dear Sir,

RE: CLAIM AGAINST UNAUTHORISED USE OF HEAVY EQUIPMENT AT LOLOHO AND TORATO ISLAND NORTH SOLOMON BY THE DEFENCE FORCE.

I draw your attention relative to the above matter with the following, which is self explanatory for your deliberation and appropriate actions. 

The Papua New Guinea Defence Force during its operations on Bougainville between 1993 and 1997 without authority used two (2) Heavy Equipments at Loloho and on Torato Island belonging to my Company (Jimendi ENT. Ltd.) as specified below.

1.	Caterpillar D6C Bulldozer – used at Loloho
Serial No. – 10K 11209
Engine No. 3306.

The Caterpillar Bulldozer was used approximately from 1993 to 1997 and subsequently brought back to me in Rabaul by the PNG Defence Force Landing Craft MV Buna in 1997.

On arrival in Rabaul of the Caterpillar Bulldozer it was found to have been unprofessionally used (abused) causing major rebuilding at great cost to enable the machinery to be operational. A complete replacement of the Bulldozer plate including undercarriage and idlers were under taken.

The Bulldozer showed all and identical signs of usage at see to built craft landing areas and removal of coral reefs.

2.	Komatsu WA 180 Bucket Loader – used on Torato Island
Serial No. – 50120 Model – KWAOS – 8 

The Komatsu Bucket Loader was taken from Loloho to Torato Island for usage by the Special Boat Team to build Campsites between 1993 and 1997. The Loader was subsequently returned to Loloho, unfortunately at the time of writing (this letter) I have not received this Loader nor do I know its present whereabouts.

I have now (through this letter) decided to cost the usage of the above machinery by the Defence Force based on enquiries made with people on the ground in Bougainville and discussions had with my staff on Bougainville who were involved with the Defence Force. Some Officers of the Force also volunteered information, which is highly appreciated.

In my possession I have correspondence from the PNG Defence Force identifying my equipment and the extent of usage and damages through wear and tear caused to the machinery.

I therefore claim cost from the PNG Defence Force for the usage of my machinery for Two Million Three Hundred Eighty Four Thousand and Eighty Three Kina and Ninety Five Toea, (K2, 384, 883.95) including accumulated interests as per annex: a an the following calculation.

3.	Caterpillar D6C Bulldozer

Time used: 4 years 
Daily Rate: K700.00 per day.
Weekly Rate (5 days): K3, 500.00 per week
Yearly Rate (52 weeks): K182, 000.00.

4.	Komatsu WA180 Bucket Loader.

Time used: 4 years.
Daily Rate: K550.00 per day.
Weekly Rate (5 days): K2, 750.00 per week.
Yearly Rate (52 weeks): K143, 000.00

With the above I sincerely request through this letter that you endeavour to comply and settle this claim within thirty (30) calendar days including return of outstanding equipment to avoid legal action which can be avoided including further accumulation of economic interest. 

In conclusion YOU ARE TO PLEASE ACCEPT THIS AS OUR OFFICIAL CLAIM and we look forward to you favourable response soon.

Yours faithfully,

JIMMY W. KENDI. (Signed)
Managing Director".

43. Following the above letter, the accused wrote two other follow-up letters in which he included Time Sheets for the years he claimed for. On the first of those two letters, the accused wrote to the Secretary of the Department of Defence on 2 May 2000. In that letter the accused followed up on his earlier letter of 14 October 1999. The wording of the second letter which is Exhibit "21" reads:

"Dear Sir,

RE: CLAIM FOR USE OF EQUIPMENT AT LOLOHO & TORATO ISLAND – NORTH SOLOMON PROVINCE.

Please refer to my previous letter dated 14th October 1999 to you outlining the above claim and wish to update that claim.

I have included the May interest and the new outstanding amount now stands at K3, 729, 571.39. Please understand that, I have only included interest on the first years actual cost and have not added the cost of the use for that year. If the correct calculation is applied the PNGDF will owe me for example K143, 000 per year plus accumulated costs for every preceding years. This also applies true for Caterpillar Bulldozer. 

I look forward to your urgent response and settlement of this claim.

Yours faithfully,

Jimendi Enterprises Limited
Jim Kendi. (Signed).
MANAGING DIRECTOR."

44. The above letter was copied to the Acting State Solicitor and Dr. Lawrence Kalinoe at Harricknen Lawyers in Boroko, Port Moresby. I note that in the accused Time Sheet made out for his claim he diverted substantially claiming for interest for the time period from 1991 to 1999. If the accused was truthful in his claim as stated by himself in that letter dated 14 October 1999, no interests would have been claimed for 1991 and 1992. I consider that piece of evidence to be crucial for the State’s case. I will quote the accused calculation on what I will refer to as the ‘time sheet’ the term which I have used above which is now marked for identification as Exhibit "21A" appearing at page 149 in the following words and figures:

"CALCULATION OF CLAIM BY JIMENDI ENTERPRISES LTD AGAINST UNLAWFUL USE OF HEAVY EQUIPMENT BY PNG DEFENCE FORCE.

A Caterpillar D6C Bulldozer K182, 000 Principal

Rate: K700/day 8% Interest Rate

YEAR	AMOUNT	TOTAL	
1991	182, 000.00		
1992	196, 560.00		
1993	212, 284.80		
1994	229, 267.58		
1995	247, 608.99		
1996	267, 417.71		
1997	278, 114.42		
1998	222, 249.15		
1999	240, 029.09		
YTD 2000	108, 130.09		
TOTAL		1, 670, 344. 83	

B Komatsu WA 180 Loader K143, 000 Principal
Rate: K550/day 8% Interest Rate

YEAR	AMOUNT	TOTAL	
1991	143, 000.00		
1992	154, 440.00		
1993	166, 795.20		
1994	180, 138.82		
1995	194, 549.92		
1996	210, 113.91		
1997	226, 923.03		
1998	245, 076.87		
1999	264, 682. 02		
YTD 2000	273, 505. 79		
TOTAL	2,059, 226.56	K2, 059, 571.39	

NOTE: May Interest Included Total Outstanding…K3, 729, 571. 39. Monthly Increase 24, 863.81 on total outstanding amount Dated 27.04.00".

45. I have noted that on the first table on the accused time sheet for the claim for the caterpillar bulldozer for the year 1998, 1999 and the year 2000 is incorrect if the yearly interest rate was added to the 1997 figure of K278, 114.42 would have been much higher than the amount claimed for 1998 and the subsequent years.

46. The next document Exhibit "22A", the accused wrote another letter to the Secretary of the Department of Defence. That letter was undated. In that letter, the accused advised the Secretary that, his company had updated the interest rate for the month of August, but the year was not mentioned. In that same letter signed by the accused, he claimed a total sum of K4, 298, 037.33. He also appended to that letter a yearly time sheet for the interests claimed (see pages 150 and 151). This amount is charged on the body of the indictment.

47. Other exhibits are identified as follows:

Exhibit "23" copy of Requisition For Expenditure for the amount claimed by the accused page 152.

Exhibit "24" copy of a Finance General Expenses Form 4 at page 153

Exhibit "25" copy of short letter from the accused to Secretary of Defence advising that the amount claim could be paid in favour of Bakanovi Transport Limited of P.O.Box 2213 – RABAUL at page 154.

Exhibit "26" Requisition for Expenditure form dated 18.10.00 at page 155

Exhibit "27" another General Expenses form dated 14.11.00 at page 156

Exhibit "28" copy of Bank Cheque – Bank of Papua New Guinea for the amount contained in the indictment – Cheque No. 632311 at page 157

Exhibit "29" copy of deposits and withdrawals print out from PNGBC dated 28.11.00 at page 158

Exhibit "30" copy of company cheque for withdrawal of an amount of K1, 275, 769.99 in cash dated 17.11.00 at page 159.

Exhibit "31" copy of PNGBC Bank cheque for a sum of K250, 000.00 made payable to one Michael Kendi on same date as above at page 160.

Exhibit "32" copy of another cheque signed by accused made payable to Nelson Wahune dated 17.11.00 a sum of K3000, 000.00 at page 161.

Exhibit "33" copy of BSP Waigani Deposit Slip for the above amount deposited in favour of same person at page 162.

Exhibit "34" copy of print out deposits and withdrawals on the account of Nelson Mahune at page 163.

Exhibit "35" at page 164 – a copy of BSP. Waigani Withdrawal Form by Nelson Mahune dated 23.11.00 for the sum of K198, 012.00.

Exhibit "36" a copy of BSP Bank cheque Boroko Branch made to the credit of one Ambrose Vakinap for the sum of K183, 000.00 dated 23.11.00 at page 165

Exhibit "37" copy of BSP Bank Cheque for above amount at page 166.

Exhibit "38" copy of BSP cheque paid to the credit of Bakanovi Transport for a sum of K15, 000.00. It was deposited by Nelson Wahune on 23.11.00 at page 167.

Exhibit "39" copy of above cheque at page 168.

Exhibit "40" copy of BSP print out of an account operated by Nelson Wahune at page 169.

48. The next last two Exhibits "41" & "41A" consist of another large volume of documents which I do not think I can mention them one by one as I have tried to do with the last volume of documentary evidence. For convenience sake, those documents can be found from pages 170 to 279 of the criminal file CR.1274 of 2003. This was the end of the State’s case.

Defence case.

49. At the end of the prosecution case, Mr. Lidgett of counsel for the accused submitted that, they wanted to go into evidence. Two witnesses were called. Henry Hanimo is the uncle of the accused. He was the first witness. Henry is a mechanic not by profession but by experience as he was trained by missionaries. He does not have a trade certificate. He is now a block holder in East New Britain. Henry said, he recalls that in 1985, he started working as a mechanic for the accused’s company on the Toniva Road in Tinputs in the North Solomon Province. 

50. Henry was mostly engaged as a mechanic to service the accused’s heavy equipment including dump trucks, bulldozers, excavators and front –end loaders. Asked in chief if this witness can recall how many pieces of machinery were owned by the accused’s company. The witness said, it would have been roughly about thirty (30) machines. He was further asked if he can recall as to where the accused had acquired such machinery, the witness said, the machines were purchased from Bougainville Copper Limited through various auctions organized by that company. Some of the machines were acquired through the same process from Works Department at Kieta and others were purchased from Dillingham Corporation in Goroka, Eastern Highlands Province.

51. It is clear from Henry’s evidence that, the accused company was engaged in road construction, bridging contract, feeder – road up-grading and general road maintenance work. Part of his evidence is that, when Credit Corporation repossessed machineries leased to the accused’s company, he was not on site as he was away in Siwai District on the South of Bougainville. Asked in chief what he was doing in Siwai, the witness said he was running a logging company called Bakanovi Hauliers Limited whose proprietor was the accused. According to this witness, on the logging site at Siwai there was a fork-loader, 2 trucks, a bulldozer and 2 4x4 Toyota Hilux vehicles. 

52. Henry returned to Rabaul in 1991 and he said, he never knew what happened back in Bougainville from 1994 to 1997. It is not clear from this witness evidence as to what then occurred to the accused own machinery to which this witness testified to apart from the machines repossessed by Credit Corporation. One would have thought that after repossession of the heavy machinery by the lessor, the accused’s own machinery would have been engaged to complete the contract awarded to the accused’s company at Pipit Bridge. This witness was asked in chief if he can recall what happened to the remaining machines after others were repossessed. Henry said the machines were left idle where they were.

53. In cross – examination, the witness was asked if the company he referred to as ‘Bakanovi Hauliers" was registered or was it the same as Bakanovi Transport Limited. Henry said, he did not know anything about registration, but what he knew was that the former was a logging company which operated on the Southern tip of Bougainville while the later company was operating in Rabaul, East New Britain.

54. Henry admitted in cross-examination that he received an amount of K12, 000.00 from the accused. He did not specify why the accused gave him such money. It was put to this witness that he had an interest in the case because the accused is his uncle. The witness answered in the negative and said he was not lying and that what he knew is that after the accused company completed the project, all the machines were locked away into Jimendi Enterprises Limited Workshop. He did not name the location where the workshop was located. There is no logic in Henry’s evidence because if the accused’s company had machines on the island, then those machines could have been engaged to complete the road project at Pitpit.

55. The accused was the last defence witness. His evidence was centred on a number of letters. On the first document which is Exhibit "D1" (letter D stands for Defence) as it is Exhibit No.1 for the Defence. The above document was produced to the accused to identify. He was asked in chief what was his reaction when he received that letter from TAMUSIO & ASSOCIATES (LAWYERS). The accused said, he was "shocked and surprised" about such a claim and that he never did anything about such demand. 

56. In the above exhibit, Mr. Thomas Tamusio wrote a letter of demand to the accused claiming on behalf of Robert Runjimari and Tony Busu for the release of K200, 000.00. Exhibit "D1" reads and I quote: 

"30th of April 2002

Mr. Jim Kendi
P. O. Box
KOKOPO.
East New Britain Province.

Dear Sir,

RE: RELEASE OF K200, 000.00 TO ROBERT RUNJIMORA & TONY BUSU.

We refer to the above matter and advised that, we are acting for Robert Runjimora and Tony Busu. We understand that, Mr. Tony Busu has talked to you regarding this matter.

We further confirm that, the two gentlemen are potential witnesses to this matter and it’s really up to you to release the payment for the job that they have done. Especially Mr. Robert Runjimora used his equipment/machines to do the grading at Loloho and Tourato during the restoration period.

We can resolve this matter upon you settling our clients with the amount we have requested. If, you do, you can release the amount via our Trust Account Number 305-6155050, Kokopo Branch PNGBC.

For your information.

Yours faithfully,
T.R. TAMUSIO & ASSOCIATES

Per: THOMAS TAMUSIO (Signed)".

57. Before I discuss the next piece of evidence, I will set out the profile of the defence documentary evidence tendered by consent. They appear as follows:

Exhibit "D2" a copy of a letter written by the Principal of Latu Lawyers dated 5th November 2002 to the Managing Director of Bakanovi Transport Limited.

Exhibit "D3" copy of an undated letter written by the accused in his capacity as Managing Director of Jimendi Enterprises (Trading as Bakanovi Transport).

Exhibit "D4" copy of a letter from the accused dated 8th of June 2001 to Tau Rei Lawyers about a letter of demand by one Chris Ningis regarding an amount of K280, 000.00.

Exhibit "D5" a copy of a Certificate of Incorporation for the company BAKANOVI HAULIERS PTY LIMITED.

58. On Exhibit "D2" (above), Mr. Kevin Stevens Latu, the Principal of Latu Lawyers wrote a letter on 5 November to the Managing Director of Bakanovi Transport Limited on a claim by the same complainants who engaged Tamusio Lawyers. Mr. Latu wrote on behalf of Mssrs. Tony Busu and Robert Runjimari. I quote that letter in the following terms:

"05th November, 2002
The Managing Director
Bakanovi Transport Limited
P. O. Box 2213, 
RABAUL.
East New Britain Province.

Dear Sir,

RE: CLAIM BY TONY BOSU & ROBERT RUNJIMARI AGAINST BAKANOVI TRANSPORT LIMITED.

I act for the above named Claimants.

My clients advise that they and in particular Robert Runjimari had two heavy equipment machines namely a D6 Caterpillar Dozer and a Komatsu Front-End Loader which they have engaged a Defence Force Clearance and maintenance works at Loloho and Torauto Island respectively on Bougainville between 1995 and 1997 and the said equipments were later shipped to you in the MV BUNA by John Felix without Robert Runjimari’s knowledge and thereafter you had used the said equipments to make a claim against the Defence Force and the State for the sum of K4, 298, 037.33 being payments of Heavy Equipments used by PNG Defence Force from 1991 – 1997 on Bougainville. They advise that you hah used their equipments and the jobs they did for the PNG. Defence Force to make the claim from which your company was paid the sum of K4, 298, 037.33 by way of Bank of Papua New Guinea Cheque No. 632311 a copy of which my clients have in their possessions.

I am instructed by my clients to demand you to pay them the sum of K991, 000.00 which is compensation for the use of their heavy equipments for five (5) months at Loloho and two (2) months at Torauto Island respectively by the PNG Defence Force which claim they content you had incorporated in the claim you had falsely and by misrepresentation and fraud made against the State and for which you were paid by the State as per details set out above.

They further instruct that if a payment is not made to them by close of business on Friday, 1rth November, 2002, they will commence legal action against you and your Company to recover the said amount without further notice to you.

Yours faithfully 
LATU LAWYERS.

KEVIN STEVENS LATU (Singed).

Cc. Robert Runjimari & Tony Busu."

59. As it appears clear from the defence case, the accused never replied to correspondences in exhibits "D1" and "D2". In answer to questions put to the accused in examination in chief, whilst on the witness-stand, the accused said, he was shocked and left the matter there as he thought, the complainants should have raised a claim against the Defence Force and the State. The witness was further asked how he knew if the Defence Force in fact used his heavy equipment machineries. The answer he gave was, "they" told him as he "heard" that his machines were used by the Defence Force.

60. Realizing the answer was too general, Mr. Lidgett further asked who in particular told him about his machines being used by the Defence Force. The witness named two persons as Lucas Ikutu and Gregory Lesri. 

61. Asked if he obtained any statements from the two persons he had named, the witness answered in the negative and further said, because he thought he sent them there to first find out and check if the machines were actually being used. The witness further said in answer to questions by counsel that he got a Statutory Declaration from Henry who identified the correct machines used by the army on Bougainville.

62. It is clear from the accused’s evidence in chief that the reason why he wanted to make a claim against the State was, because he received information that his machine was being used by the Defence Force and so he wanted to sue the Defence Force. He said in answer to a question asked by his lawyer as to why he wanted to claim from something he never saw. He said, when he heard that his machines were being used, his men in Bougainville arranged for shipment of the machines via MV Buna to be shipped to Rabaul. In fact by then, he had no men left on the island of Bougainville. 

63. Further asked in chief as to whether there were other machines shipped together with the Caterpillar Dozer, the witness answered that there was a second machine a UD Prime Mover. He received the machines in Rabaul in either 1997 or beginning of 1998. The witness was further asked in chief whether, he thought it was proper to put the claim to the Defence Force. The accused answered that it is because that is where the Defence Force Headquarters is he had to do his claim up to the higher hierarchy. 

64. It is clear from the accused evidence in chief that, he has been in business for some 17 to 18 years. He had won 6 to 7 contracts with the State previously and so one would assume that ignorance of law would not be anticipated. The accused’s answer to the next series of questions puts accused’s case high and makes the Court wonder, how an elite professional businessman of such caliber, a long standing and reputable person in the community would have gone about his claim particularly when the accused knew that the value of his claim ran into several million kina. 

65. The next series of questions in chief related to the large sums of money the accused withdrew from his company account and then to individual persons and the reasons why he had paid large sums of money to certain individuals. In his evidence, the accused said that he appointed an agent in Moresby to pursue his claim. The person he named was Chris Ningis. Chris Ningis was the one who received part of the proceeds in the sum K420, 000.00 (see Exhibit "D3"). The accused wrote an undated letter to Chris whereby the accused confirmed that, the management fees payable to Chris Ningis was to be fifteen percent (15%) of the amount claimed by the accused. The letter is worded in the following terms:

"Mr. Chris H Ningis
P. O. Box 118
SNS WAIGANI
National Capital District.

Dear Sir,

RE: MANAGEMENT SERVICES PER JIMENDI ENTERPRISES CLAIM AGAINST PNG DEFENCE FORCE.

I refer to our telephone conversation at 7. 30 am on 12th October 2000 and hereby confirm that you will be paid a management fee of fifteen percent (15%) on the final amount claim against the PNG Defence Force.

The total and final amount claim is K4, 298, o37.33. I believe that the above management fee should enable you to settle all expenses/ commitments incurred whilst pursuing the above claim.

Thank you for your assistance and I look forward to our continued association.

Yours faithfully

Jim Kendi (signed)
Managing Director
Jimendi Enterprise (Trading as Bakanovi Transport)."

66. When the accused was examined about the above latter, he said, after he had paid the fee to Chris, the same did not accept the figure because, he wanted more than the K420, 000.00. In fact if fifteen percent was calculated on the amount of K4, 298, 037.33 would turn out to be in the vicinity of K644, 705.00. That may have been the reason why Chris was not happy about the offer put in that letter.

67. The accused was asked in chief if he had a copy of the letter written by Chris to him (the accused). He answered that he had lost it, but he can recall that Mr. Ningis threatened to sue the accused and his company for not honoring the promise.

68. A part from the amount advanced to Mr. Chris Ningis, eleven other individuals and five companies received monies from the accused company. I will set out hereunder the names of those individuals and the companies with the amounts appearing on the right column.

1.	 Thomas Ningiga	K145, 000.00	
2.	Ambrose Vakinap	K183, 000.00	
3.	Michael Kendi	K250, 000.00	
4.	Nelson Vahune	K300, 000.00	
5.	Philip Polewara	K 20, 000.00	
6.	Frank Pomoso	K 5, 000.00	
7.	David Nelson	K 20, 000.00	
8.	Henry Hanimo	K 12, 000.00	
9.	Robert Naris	K 60, 000.00	
10	Jason Naris	K102, 000.00	
11.	Rolly Omoso	K 25, 000.00	
1	Koseng PNG) Limited	K500, 000.00	
2.	PNG. Balsa Company	K165, 000.00	
3.	Toba Motors Limited	K 78, 555.00	
4.	Andersons Foodland	K 61, 085.70	
5.	Ela Motors Limited	K 43, 949.99	

69. In chief, the accused was asked why did he in his capacity as the Managing Director of both Jimendi Enterprises Pty Limited and Bakanovi Transport Limited paid out substantial sums of money to various individuals and companies as shown above. In case of Mr. Ningis, the accused said, though he paid him that much, the man was not satisfied with the sum of K420, 000.00 as he wanted the accused to pay him K700, 000.00. The accused did not give a satisfactory answer as to why he advanced such a large sum of money, but said, when he learned of such demand, he though it was quite unreasonable.

70. The accused was asked if he recalls or did he know the reasons why the said Chris Ningis was sent to goal in Bomana prison. The accused said, he did not know. He was asked why choose Hanks Management to facilitate his claim. In answer, the accused said, it was because Chris Ningis had some educational background managing the Hanks Management and the accused thought, it would be good to engage Chris so he could give him some money. The Accused was further asked, how did Chris know or was he involved in the preparation of the claim. The accused answered that, he did not know as well as he did not know when Chris was involved with the Defence Force.

71. Obviously, there must have been something quite significant going on between the accused and Chris Ningis other than just a wantok of the accused and a one time adviser to the Minister for Works. As well as that, to pay a huge sum of money just to engage someone to check up with the claim put through the Secretary for the Department of Defence does not appear to be logical to the mind of Court. Certainly, there might have been something going on between the accused and the people whom he advanced large sums of money to.

72. In relation to the amount that was paid to Nelson Vahune, the accused was asked who was that person in terms of business or personal relationship with the accused. The accused said, Nelson is a businessman who helped the accused by advancing money to set up the accused’s company Bakanovi Hauliers. Unfortunately, the accused did not produce documentary evidence of such business association. A reputed businessman with years of experience in business must keep records of all business transactions between his companies and his business associates. The accused is an educated person but he did not keep any records whatsoever.

73. According to the accused evidence in chief, he also gave K20, 000.00 to Philip Polewara. Philip is a Naval Officer who was the Captain of a navy boat. It is established by the defence case, that the accused and Captain Polewara are brothers through their paternal genealogies. Accused said, Philip was the one who sat by the accused’s mother’s bedside when she passed away. To Henry Hanimo, the accused gave him K12, 000.00 because the same was the accused’s uncle and a former employee of the accused’s company operating in Bougainville before the crisis. Frank Pomoso received K5, 000.00 to buy a second-hand vehicle in Murray Barracks. He was a soldier by then. David Nelson also received K20, 000.00 because he wanted to set up a service station in 4 mile in Port Moresby. 

74. That David Nelson was sacked from the Personal Officers Superannuation Fund and at the time of the offence or thereafter, he was working as Chief Executive of the Forestry Authority. Then to Robert Naris, the accused credited to him a sum of K60, 000.00. To Rolly Moso, the accused advanced him an amount of K75, 000.00 for selling a Mazda Truck to the accused. There were no documents showing if such vehicle was transferred from the said Moso to the accused. 

75. Then there was another big amount of K500, 000.00 paid to a company called Koseng (PNG) Limited. That amount was paid as a loan to that logging company which did not pay the amount back to the accused as the manager of such company escaped and the company was taken to Court. The result of that action was not revealed to the Court. That is to say the accused never confirmed if he recovered the money at all or not. 

76. In cross – examination the accused was asked why was he shocked when he received the letter from TR. Tamusio & Associates (Lawyers). The accused said, the reason he was shocked and surprised was because those people who wanted the money were not known to the accused before. He was asked if Tony Busu and another had demanded a sum of K200, 000.00. The accused answered that he just told them straightaway that, he was not prepared to discuss their claim with them. 

77. A part from that, the accused denied knowing Tony Busu and John Felix in cross-examination saying that he did not know the two men and it could have been that the two men had been engaged by his companies operating on Bougainville. In case of Tony Busu, the accused said he only knew him when he received the letter from Mr. Tamusio of Tamusio Lawyers in April of 2002. This is despite the fact that, Tony Busu said in evidence that the accused company employed him as a mechanic between 1986 to when the Bougainville crisis began.

78. The accused further said that, when he first received and saw the figures of the letter of demand, he was shocked. And not long afterwards, he received another claim for a sum of K991, 000.00. The accused further said that instead of putting their claims to him, the two men should have put their claim to the Defence Force. The accused confirmed in cross-examination that though he did not file a statement with the Defence Force Secretary about how his machines were being used by the Defence Force, he had sent Henry Hanimo to Bougainville to do a fact-finding mission for him. The result of such private investigation resulted in him putting his claim to the Defence Force Headquarters. 

79. Asked as to whether did he not think it was proper to file documents in relation to a claim of such magnitude. The accused answered by saying that, he thought that the army should check first but his agent Henry Hanimo submitted a Statutory Declaration in relation to what the said Henry Hanimo had found out on the mission he was sent for and so he did not think it was necessary to do any other things other than to write and give notice to the Defence Department for the claim and expenses his company had incurred during the crisis period. Quite obviously, a claim of such magnitude required more than mere writing to the Defence Force Headquarters about the figures on the letters written by the accused. 

80. The accused was further asked in cross-examination if he could provide proof of ownership by providing receipts and information on the dates of purchase and the sources from whom and where the machinery had come from for which the accused had claimed for. The accused’s answer was that, all registration and purchase documents were destroyed by fire in a company garage near Arawa in Bougainville at the time of the crisis. 

81. I noted that the accused did not provide any reasonable answers to the line of questioning in relation to the ownership of the machinery he had claimed for. I come to that conclusion because evidence by both John Felix and Tony Busu is that, they each had known the accused since 1987 when they were working with Bougainville Copper Limited. In case of John Felix, he said he was an apprentice with the above company and whenever he had days off or during holidays, he would work with the accused to gain experience. Both John and Tony said, when Credit Corporation repossessed its machinery from the accused’s company, the accused had no other machines left on Bougainville.

82. Asked in cross-examination if he knew John Felix and Tony Busu, the accused said he did not know them and they could have been employed by his company. He was further pressed as to why the two men had claimed so much money from him and the accused said, he was shocked when the pair claimed K200, 000.00. In another latter question, he was asked if he never knew John and Tony, the accused said he did not know them until he received the letters first from Tamusio & Associates and later from Latu Lawyers and that prior to that, he never knew of their existence. 

83. The next series of questions in cross-examination and their answers really amaze the court. The accused was asked how he knew if his machines were actually used by the Defence Force. He said in answer that, since he had sent Lucas Ikutu, Gregory Lesri and Henry Hanimo to find out, they reported back to him saying they identified the accused machines to have been used by the army and so he put up the claim. Obvious as it was, when Henry Hanimo signed the Statutory Declaration, on 27th of May in 1997, no where does he mention if the accused’s machines were used. The Court will not accept that part of the defence case for two reasons. First, Lucas and Gregory were not called by the defence to testify to what they saw if ever they were sent to Bougainville to find out if the accused’s heavy duty machineries were being in fact used at all. Secondly, the first defence witness never said anything in the Statutory Declaration about the accused machines being used by the Defence Force or any body in Bougainville, (see pages 141 and 142).

Submissions.

84. I am thankful to both counsels for your written submissions. For and on behalf of the accused, Mr. Lidgett submitted that, the State had the onus to prove the elements of the two charges beyond reasonable doubt. He submitted rightly that, the question for the court to consider at this stage of this trial is whether in each charge the element of "dishonest intent" has been established as required by the criminal standard of proof namely "proof beyond reasonable doubt." 

85. At page 2 of his written submissions, Mr. Lidgett set out four factors which the court should consider to which I agree. They include:

1.	Ownership of the two heavy machineries alleged in the charges,
2.	The purpose and period such machines were used and by whom,
3.	The claim against the PNG. Defence Force and its nature and,
4.	The use to which the money was applied after the accused had received it.

86. In the defence final submission, they say a particular aspect of the State case is the allegations in relation to those persons involved in the processing of the claim and the way large amounts of money were given to those particular persons as shown by the State’s evidence and whether such "paying offs" for whatever assistance given by those persons named in the State’s evidence was lawful or not. They submit that while some essential elements of the charges are not in dispute, the "dishonest intent" has not been established to the required criminal standard.

87. Mr. Sambua of counsel for the State submitted in reply that, the State has proven its case beyond reasonable doubt. He said when the accused wrote to the Acting Secretary of the Defence Force, Mr. Vari Fore, lodging his claim for the use of a caterpillar D6C Bulldozer and a Komatsu WA180 Bucket Loader, the accused had a malicious intent well-knowing that what he was claiming for was false because the machines were not belonging to the accused. He further submitted that according to the State evidence, the case of the accused was a clear fraud by definition because when the financial investigation was carried out, witness Mr. Semi Maela found that, proper financial procedures were not followed since the claim was over K4 million. 

88. Mr. Sambua further submitted that, the court ought to consider the accused’s action in the way he distributed monies to the people revealed by the evidence for the prosecution. He further submitted that, during the record of interview, the accused gave evasive answers or straightforward ‘No comments’ to the interviewing team. I suppose that is a right allowable by the Constitution which is reflected by the caution given before a person is interviewed which in fact requires that, before the record of interview commences, an accused person is asked if he or she wants to say anything, it will be recorded and tendered to court as evidence. 

89. In any event the accused chose to speak during the record of interview and therefore if he said anything in his testimony in court contradicting what he said in the record of interview, it was open to challenge by the prosecution. Mr. Sambua further submitted that, the court should find that, the State’s witnesses were more credible than the accused and his sole witness and that the court should find the calculation of the timing for the claim between 1991 and 2000 which is about 10 years was sheer cheating and amounted to dishonesty and that the court should find the accused guilty as charged.

90. Both counsels cited some authorities in their submissions. I shall refer to some of those cases a little later.

Law.

91. The accused is charged with two counts. The first one was laid pursuant to s.404 of the Criminal Code. The appropriate section is Subsection (1) (a) and (b) which states: 

"404. Obtaining goods or credit by false pretence or wilfully false promise.

(1)	A person who by a false pretence or wilfully false promise, or partly by a false pretence and partly by a wilfully false promise, and with intent to defraud- 

(a)	obtains from any other person any chattel, money or valuable security; or

(b)	induces any other person to deliver to any other person any chattel, money or valuable security,

is guilty of a crime.

Penalty: Imprisonment for a term not exceeding five years."

92. The second charge is one of misappropriation contrary to s.383A (1) (2) and (3) of the Code. I set out this section in the following terms:	

"383A. Misappropriation of property.

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 on account of any other person,

is guilty of the crime of misappropriation of property.

(2)	An offender is 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 K2, 000 or upwards.

(3)	For the purpose 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 his 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 of reasonable grounds that such person cannot be discovered by taking reasonable steps;

(d)	persons to whom property belongs 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."

93. In consideration of the evidence before the court, the State has the onus of proving the elements of the two charges beyond reasonable doubt. For the first count, the prosecution must prove that the accused obtained the sum alleged in the indictment by false pretence with the intention to defraud the State. As was stated by the pre-Independence Supreme Court in Public Prosecutor’s Request N0.4 Of 1974 [1975] PNGLR.365 which quoted a passage from the case of R v Williams (1836) 173 E.R. 158 where the court in that later case said, it is not sufficient that the accused knowingly stated that which was false and thereby obtained the property, the tribunal must be satisfied that at that time the accused intended to defraud the complainant. 

94. In a charge of false pretence, the prosecution must prove the representation made by the accused was made with the intention to defraud and such representation was made dishonestly. There must be intention to deceive and to induce the complainant in order to obtain the property fraudulently obtained: Albert Alexander Age v The State [1979] PNGLR.589.

95. How does the court find out if the action by the accused was dishonest with the "intent to defraud"? I answer that question by saying that, the prosecution must demonstrate the fraudulent intention to obtain property by means of false pretence and the State’s evidence must exhibit the intention to defraud.

Findings of false pretence with "intent to defraud" & misappropriation:

96. In the circumstances of the instant trial, did the accused do anything on his part by false pretence to obtain the sum alleged in count 1 on the indictment? The first aspect of fraudulent dealing may be deduced from the following pieces of evidence. Let me now turn to the accused’s second letter (see Ex.20 at page 146 of the file) to the Secretary of the Department of Defence dated 14th of December 1999 in which letter the accused referred to his earlier correspondence regarding his claim. In that letter (Ex.20) the accused informed the Secretary that, the Defence Force had used two of his heavy machineries between 1993 and 1997. To the court that should work out to be a time period of four (4) years.

97. However, when the accused worked out his time sheet on the calculation of his company’s claim as seen in Ex. "21A", the calculations made for the two pieces of machinery were made to commence from year 1991 to year 2000. The Amount claimed in that calculation was K3, 729, 571.39. In his another undated follow-up letter did yet another calculation (see. page 150 -151 dated 1st August 2000) the accused again pressed the Secretary for Defence to make payment including the interest for the month of August the year he wrote the letter. In the later calculation, the accused then claim a sum of K4, 298, 037.33 the amount for which the accused is now charged.

98. The second aspect of fraudulent dealing with the intention to defraud is the issue of ownership. To start with, the oral testimonies by State witnesses John Felix and Tony Busu clearly reveal to the court that, the accused did not own the two machines for which the accused claimed for. In examination in chief, John Felix said that when he was working for the Defence Force in 1997, he fixed a number of heavy duty machineries. One of those machines was a D6C Caterpillar Bulldozer Serial No.10K11209 and a Komatsu Bucket Loader Serial No.50120. According to John Felix, he was the one who shipped these machines to the accused in Rabaul.  John Felix in fact said, after he shipped those two machines to the accused in Rabaul, he came over to Rabaul and got engaged working with the accused’s company in the hope that the accused was to pay him some money. His hope did not eventuate.

99. In the same manner, witness Tony Busu testified that he too worked for the accused’s company JEL as a welder in 1986 to 1987. The nature of work was a contract awarded by the North Solomons Provincial Government to work on the Pitpit bridge in the Inus area on Bougainville. Tony recalls that when JEL went into receivership, all machineries leased by Credit Corporation to JEL were repossessed by the lessor.

100. Tony also said the two machines which the accused claimed to be his were the property of a company called Torutoru Pty Ltd whose proprietor was Mr. Peter Goodenough. That the same had left a lot of machinery on his company premises in 1994 during crisis. An interesting feature of the evidence by John and Tony is that, by the year 1989, the accused’s company had been wound up and the accused returned to Rabaul. 

101. The first defence witness Henry Hanimo said when the accused’s earthmoving company was wound up, he continued to work in a logging company Bakanovi Hauliers Limited which operated in the southern end of Bougainville and he returned to Rabaul in 1991. There is no other evidence from the defence to show if the accused company was still operating beyond 1991. On site where the logging company was operating, Henry Hanimo said in evidence that there was a fork loader, two (2) trucks one (1) bulldozer and two (2) 2x4 Toyota Hilux Utilities. 

102. Connecting the evidence by the two Bougainville witnesses (John & Tony), to that of Mr. Eruel Pital of Hastings Deering, Mr. Pital gave the same description of a caterpillar bulldozer Serial N0. 10K 11209 Engine N0.3N29121 sold by Hastings to one Itakara Plant Hire a company operating in Arawa that time. As the serial number of the D6C caterpillar bulldozer shows, there cannot be two separate persons being owners of such machine at any one time. The defence did not produce any evidence of ownership of the two machines. It may have been possible that the accused company owned one of the machines, but the issue is if that was the case, who managed the accused assets when the accused and Henry Hanimo had returned to Rabaul? Again I find here that there were some elements of fraudulent and dishonest intent in the way, the accused put up the claim for the two machines well knowing that, he was not physically on Bougainville to see if any of his machines were being used by the Defence Force. That is if the accused still had any remaining machines after Credit Corporation had repossessed its machinery.

103. The term "defraud" is defined in the Oxford Advanced Learner’s Dictionary to mean "to get money illegally from a person or an organization by tricking them". In law the intention to defraud may be inferred from the accused action and the circumstances surrounding the accused false pretences: Public Prosecutor’s Request No.4 of 1974 [1975] PNGLR.365 (see also The State v Gabriel Ramoi [1993] PNGLR.390 & The State v Francis Natuwohala Laumadawa [1994] PNGLR.291).

104. The defence evidence did not satisfactorily explain the reasons why large sums of monies were disbursed to certain individuals as revealed by the State’s evidence. I would accept the defence evidence that, payments made to companies like Koseng (PNG) Ltd a sum of K500, 000.00, PNG. Balsa Company a sum of K165, 000.00 and a few other companies for goods and services rendered to the accused either personally or by his companies. But where did the accused get the money to pay for the goods and services rendered to his companies. When however considering the sums of monies advanced to individuals such as Christopher Ningis who received an amount of K420, 000.00, Nelson Vahune a sum of K300, 000.00, Ambrose Vakinap a sum of K183, 000.00, Micheal Kendi a sum of K250, 000.00, Thomas Ningiga a sum of K145, 000.00, Jason Naris a sum of K102, 000.00, one wonders why pay such large sums of moneys to individuals who had no business at all with either Jimendi Enterprises Limited and Babanovi Transport Ltd or the logging company earlier mentioned. 

105. It is the defence evidence that, the accused is a professional businessman of some 17 to 18 years standing. One would assume from the fact that the accused had been in business for such a long time to be also well versed with the principle that, the liabilities and credits of the company are very much matters for the company alone as a legal entity by its own possessing the capacity to sue and to be sued in its own name: Salomon v Salomon & Co Ltd (1879) A.C. 22

106. There are two other legal issues I must address before I come to the conclusion. Those are first, the credibility of all evidence both for the prosecution and the defence and secondly the circumstantial nature of the evidence. On the later, the Supreme Court said in Paulus Pawa v The State [1981] PNGLR 498 that, in order for the court to be satisfied beyond reasonable doubt of the guilt of an accused, it is necessary not only that his guilt should be a rational inference but that it should be ‘the only rational inference that would enable’ the court to draw. Such principles were adopted and applied in this jurisdiction in the above case from the common law cases such as Peacock v The King (1911) 13 C.L.R.619, Plomp v The Queen (1963) 110 C.L.R.234 and Thomas v The Queen (1960) 102 C.L.R.102 and the Papua New Guinea case of The State v Tom Morris [1981]PNGLR.493. The principles go further to say that, in order for an inference ‘to be reasonable’ it ‘must rest upon something more than mere conjecture’. 

107. It is well settled law in the above cases that failure by the trial judge who sits alone as a jury to warn himself or herself of the dangers of convicting an accused upon circumstantial evidence could be fatal. I therefore warn myself of such danger and am reminded that in order for me to be satisfied beyond reasonable doubt about the guilt of the accused in the instant trial, the inference I must draw should be the only rational inference that the circumstances of the trial before me would enable me to draw.

108. On the issue of credibility of witnesses, it is settled law in this jurisdiction that the court can either accept or reject evidence both by the prosecution and the defence on the basis of whether such witness is credible or not: Paulus Pawa v The State [1981] PNGLR.498, see also Garitau Bonu & Rossana Bonu v The State (1997) SC.528 and The State v Garitau Bonu & Rossana Bonu [1996] PNGLR.48. Under this head, the court must observe the witnesses demeanour and use common sense and tell whether the witness was telling the truth or not. 

109. Observing the demeanour of the two Bougainville witnesses, John Felix and Tony Busu, and that of Lt. Colonel Varave Mai and Mr. Semi Maela, I found them to be truthful witnesses. I find there were no inconsistencies in the evidence by Tony Busu and John Felix. Despite vigorous cross-examinations by the defence counsel, they were unshaken and I must conclude that all the State witnesses were witnesses of truth.

110. Despite the accused’s evidence that he never knew of the two Bougainville witnesses, I find that it is very highly circumstantial on the part of the defence evidence to deny association with John Felix and Tony Busu. The accused did not satisfactorily explain why those two persons would have to go into the trouble of seeking instructions from separate counsels resulting in Latu Lawyers and Tamusio Lawyers writing and querying with the accused dealing with John and Tony. 

111. Coming to the above conclusion, I am unable to accept the defence evidence on the basis of the findings I mentioned earlier. Defence witness Henry Hanimo was a beneficiary of the scheme. By my observation of the two defence witnesses’ demeanour I am not satisfied with the evidence of the accused being the owner of the two machines. 

Conclusion

112. There is direct evidence by John Felix and Tony Busu that, the accused did not own the two machines. Lieutenant Colonel Mae in evidence said, between 1993 to 1997 he was not aware of any civilian heavy machinery being used by the PNG Defence Force. Therefore the court must conclude that the manner in which the accused went about writing to the Defence Force Secretary to press for his fraudulent claim was an action of deceit, fraudulent and dishonest well knowing that the representation he was making was false in terms of s.404 (1) (a) and (b) of the Criminal Code.

113. Putting the circumstantial nature of how the money was fraudulently obtained together with the credible and direct evidence given by the prosecution witnesses, particularly John Felix, Tony Busu and Colonel Mae which evidence is direct on the element of fraudulent behaviour of the accused and after getting the money and the application of such money, the court must infer in terms of cases such as Paulus Pawa v The State [1981] PNGLR.498, see also The State v Tom Morris [1981] PNGLR. 493 that the large sum of monies disbursed by the accused to the individuals revealed by the prosecution evidence was an action of deceit on the part of the accused and the whole enterprise might have been part of a conspiracy between the accused and those concerned. 

114. The court must also infer that the reason why just to mention a few people like Tony Busu and Robert Runjimari demanded for K200, 000.00 and Christopher Ningis was paid K420,000.00 short of his original claim for 15% of the K4,298,037.33 (would have been in the vicinity of between K600,000.00 and K700,000.00) was because in case of John Felix, Tony Busu and Robert Runjimari had fixed the machines which were partly burnt which property was that of Torutoru P/L owned by Mr. Peter Goodenough.

115. After the claim by the accused was processed, the accused then misappropriated the sum stated on the indictment to his use and the use of those revealed by the evidence. I find the accused guilty of both charges and must therefore convict him accordingly.

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Public Prosecutor: Lawyer for State
Warner Shand Lawyers: Lawyer for Accused