State v Peni [2013] PGNC 330; N5930 (5 December 2013)

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Wagani: Kawi-iu, AJ
2013: 23, 24, 25, 26, 27, 30 September
3, 4, 8, 16, 30, 29 October
29th November; 05th December

CRIMINAL LAW-Particular offences—Misappropriation of property Dishonestly applies property belonging to another—Subjective proof of dishonesty—money paid by Government for specific projects—no evidence of how money spent—Offence proved - Criminal Code Ch 262, s383A.

1. KAWI-IU, AJ: The accused Achilles James Peni of Korogu village, Wosera in East Sepik Province, stands charged that he between the 01st of December 2008 and 31st December 2009, dishonestly applied to his own use and to the use of others, monies in the sum of Two Million Seven Hundred Thousand Kina (K2, 700,000.00), property belonging to the Autonomous Region of Bougainville Government, contrary to s.383A (1) (a) (2) (d) of the Criminal Code Act.The allegations of facts put to the accused for purposes of arraignment were these.

2. Mr Laimo made submissions for 10 feeder roads for some K4.1 million kina approved for South Bougainville feeder roads. When he lost his parliament seat in 2007 General Election the Regional Member for Bougainville Mr. Fidelis Semoso learnt of this fact. He then sought approval for diversion of the funds to other projects.

3. So it was approved by Department of National Planning and a sum of K4.1 million kina was sent to Bougainville Treasury.

4. On the 1st August 2008, Mr Peni submitted a technical proposal on behalf of his company, Millennium Water Ltd to the Regional Member for Bougainville, showing his expression of interest for project to construct water treatment and supply for Buka General Hospital.

5. On the 13th December 2008, Millennium Water Ltd submitted an invoice number 164/08 for K2.7 million to Bougainville District Administration Treasury Office.

6. On the 30th December 2008, the cheque No. 172728 for K2.7 million kina was deposited into Millennium Water Ltd Account No. 1000876763, Bank South Pacific, Waigani Drive Branch, National Capital District.

7. On 2nd January 2009, Mr Peni wrote a cheque No. 858 for K470, 000.00 and made payable to Salonakori Cocoa Rehabilitation Limited which was engaged as a sub-contractor to Millennium Water Ltd.

8. On the 4th February 2009, Mr Peni deposited K500, 000.00 into an interest bearing deposit account with Kina Finance Ltd.

9. It is alleged accused wrote other cheques and issued to other companies which were not directly related to the Buka Hospital Water project. These companies are: Ela Motors, LG Construction, Brian Bell, Noval Water Pty Ltd, PNG Sports Foundation, Air Niugini and Hertz Rent a Car.

10. It is further alleged accused wrote a further 32 "pay cash" cheques to individuals, in the like of Roger Token and Joseph Retsi.

11. For other cheques it is alleged he cashed them and used for his personal use and not for Buka Water Project.

12. Between the 01/12/2008 and 31/12/2009 it is also alleged that the monies were used for purposes not related to Water Project for Buka General Hospital.

13. Thus it is alleged that the accused used money for his own use or the use of other person.

14. It is alleged that no proper tender process was followed. The project was given to the accused on mere expression of interest. This interest was revealed in a letter of 15/12/08.

15. On presentation of indictment on 23rd September 2013 accused pleads Not Guilty.

(1) A person who dishonestly applies to his own use or to the use of another person—

(2) An offender guilty of the crime of misappropriation of property is liable to imprisonment for a term not exceeding five years except in any of the following cases when he is liable to imprisonment for a term not exceeding 10 years:—

(d) where the property dishonestly applied is of a value of K2, 000.00 or upwards.

17. For purposes of this charge the applicable provisions are s.383A (1) (a) (2). The elements of the charge requiring proof by the prosecution by virtue of this provision of the Code are that the accused:

18. Much of the State witnesses' evidence was collated from the Police File Tendered to Court at the Committal Proceeding, referred to as the Hand UP Brief (HUB).

19. He is the Chief Executive Officer of Buka General Hospital since November 2005. In late 2006 he heard that certain monies will be given to Buka General Hospital. About January 2009 he had an appointment with a gentleman who wanted to see him in his office. He enquired what the meeting was for. His secretary informed him it is about water supply for Buka Hospital. In the afternoon of the same day a gentleman from Millennium Water Ltd, Mr Achilles introduced himself to him, and informed him of his involvement with Buka General Hospital water project.

20. Buka General Hospital use underground water and he informed him that he will do the purification of the underground water to World Health Standard.

21. He asked him if he had any tender documents, but he did not show him any. He was disturbed because of his insistence of him producing documents and blamed a third party for failing to provide the documentations for the management viewing.

22. On the 23/01/2009 he received two gentlemen from the Office of the Honourable Regional Member for Bougainville paid a visit to the Hospital CEO who enquired whether he would still like the "Water Supply Project" to go ahead at the hospital. At this meeting he made it clear to the gentlemen that he did not have any problem with the quality of hospital bore water improved. He also reminded the two gentlemen that the procedural matters pertaining to the scoping, tendering, bidding, awarding of contracts, the construction, and the completion of the project must be strictly in adherence to the accepted norms and practices. The gentlemen assured him that these will be taken care of and he would be given copies of all such documents.

23. After the 23rd January 2009 the "boys" from the Office of the Honourable Member for Bougainville visited him on two more occasions enquiring whether he as a hospital CEO would still want the "Water Supply Project" constructed at the Hospital.

24. On the last occasion of these visits (Wednesday 25th February 2009) three gentlemen Mr Joel Banam, Mr Justin Helele and Mr Nick Ganats came and enquired whether he still wanted the project to proceed at the hospital.

25. They mentioned that if he does not want the project to proceed the MP had the prerogative to channel the project to Hutjena Secondary School. On all of these occasions he still maintained that the project was earmarked for Buka General Hospital and informed the "boys" that the point of contention for this particular project was the production of original documents such as the Central or Provincial Tenders Board approval, or contract agreements to award the contract to Millennium Water Limited or documents regarding scope of work for the project which were never sighted by him or any member of the Hospital Management Committee.

26. All communication between the Hospital, the Regional Member's Office and the Millennium Water Limited ceased after 25th February 2009.

27. First page of police statement was shown to witness who identified it as his (HUB pp 23-25) tendered and marked Exhibit "A". He wrote a two and a half page letter in 2009 to Ombudsman Commission which was tendered and marked as Exhibit "B" (p. 117 HUB).

28. He is a former Member of Parliament for South Bougainville. He did a submission for 10 feeder roads in Bougainville to Minister for Works. The submission was for K4.1 million. The funds were received by Fidelis Semoso who succeeded him in the 2007 General Election. Part of the money was paid to Millennium Water Limited for the construction of Buka General Hospital Water Project. He then complained to the Ombudsman Commission. It was suggested in cross-examination that Fidelis Semoso as member for South Bougainville has right to divert funds to other project. He responded by saying that this fund was for specific purposes, that is road projects.

29. He further states that when the funds (K4.1 million) were about to be released Honourable Fidelis Semoso MP, Member for Bougainville Regional wrote to Finance Minister Hon. Patrick Pruaitch MP to seek approval for diversion of the funds to fund other impact projects. He did the break-up and K2.7 million went to Buka General Hospital Water Treatment & Supply and K1.4 million to Bougainville Road Construction Plants.

30. He believed that by 15th December 2008 when the financial year was about to end Fidelis Semoso MP directed Bougainville District Treasurer to pay K2.7 million to a contractor known as Millennium Water Ltd to construct the Buka General Hospital Water Supply and treatment project.

31. There were no proper tender procedure and processes followed and also the CEO of Buka General Hospital did not request for such project.

32. The Provincial Treasurer was verbally threatened by Member for Bougainville Regional to pay the K2.7 million to Millennium Water Ltd when he refused to pay.

33. Written Statement of Mr Laimo tendered as Exhibit "C". Documents comprising "Submissions for Funding of Feeder Roads – South Bougainville Electorate" were tendered as Exhibit "D" (pp. 58 -79 HUB).

34. He is a Senior Constable, attached to Fraud & Anti Corruption Unit. He was the investigating officer in charge of this case after receiving a file in 2010. His evidence is largely collated from the Record of Interview (ROI). The ROI was not contested and tendered as Exhibit "E".

35. After referring to questions 18 and 19 of the ROI in respect to extracts of company details, and after accused identified the same, it was tendered as Exhibit "F" (pp 190-194 HUB).

36. Accused was shown copies of letter he wrote to Regional Member for Bougainville, together with Expression of Interest and support documents, all tendered as Exhibit "G" (pp 88-107 HUB).

37. Accused showed copy of an Invoice for K2.7 million issued by Millennium Water Ltd, tendered marked Exhibit "H" (p 112 HUB).

38. Copy of BSP cheque showed to accused, tendered marked Exhibit "I" (p 114 HUB).

39. Copy of cheque for payment to Ela Motors shown to accused tendered marked Exhibit "J" (p159 HUB). Payment was for the purchase of motor vehicle from Ela Motors Badili.

40. A sum of K470, 000.00 was paid to Salonakori Cocoa Rehabilitation Project a company owned by the wife of Fidelis Semoso according to records held at the Office of the Registrar of Companies. This money according to the accused was paid to engage Salonakori Cocoa Rehabilitation Project as a sub-contractor for the Buka General Hospital water project. A copy of the cheque was tendered marked Exhibit "K" (p.158 HUB).

41. Question 56 of the ROI revealed that accused drew four cheques to LG Construction Ltd for equipments and located at accused 5 Mile office, but were not seen on visit to the office. (Copies of the 4 cheques tendered marked Exhibits "L", "L1", "L2" and "L3" (pp 165, 168, 174 and 176 HUB).

42. In response to ROI Question 60 accused states that he bought equipment from Australia for the water project, but equipment had not yet arrived, even after two years. (why not arrived, if arrived diverted to other project? ) Copy of cheque for K137, 609.94 identified by accused, tendered marked Exhibit "M" (p. 172 HUB). Copy of a cheque for amount of K74, 000.00 tendered marked as Exhibit "N" (p.160 HUB).

43. Another cheque drawn to Southern Cross Pump for K64, 379.15 was for payment of materials for water project. Accused informed arresting officer that the materials were on Buka Island. After the ROI arresting officer visited the Island several times but could not see the materials or sign of work carried out. Copy of cheque tendered marked Exhibit "O". (p. 160 HUB).

44. Question 71 in the ROI relates to a cheque for K500, 000.00 paid to Kina Finance for deposit to an Interest bearing deposit account in the name of Millennium Water Ltd. He viewed this as a normal business practice. Copy of the cheque and other documentations were tendered and marked as Exhibits "P", "P1", "P2" and "P3" (pp 134 – 140 in HUB).

45. In the ROI Q.55 accused admitted paying Joseph Ritsi K30, 000.00 for helping him with the contract. Copy of cheque tendered marked Exhibit "Q".

46. Other records of cheque payments were obtained by the investigator following searches of the Bank South Pacific. These were mostly "pay cash" cheques. Copies of the cheques were tendered as Exhibits "R", "R1 to "R14".

47. Documents pertaining to ownership of Salonakori Cocoa Coconut Seed Garden were obtained and marked as Exhibit "Za, (p 128 HUB).

48. Copies of cheques obtained from the bank for payments to various persons and tendered as exhibits:

49. Investigating Officer Senior Constable Derrick Tangua states that when he questioned the accused during the interview as to requirements of Tender and other processes accused responded that these are "internal matters" for the various agencies to sort out for example, Questions 79 to 82 of the ROI.

Q. Mr. Archilles James Peni, I am convinced by the evidences that you were paid K2.7 million by Bougainville Provincial Government to construct the Buka General Hospital Water Supply project. Since you got the money you never constructed the water supply project as designated. What do you say about this?"

A. I got the money I carry out technical ground works purchased all the equipments but Ombudsmen Commission stopped the project.

51. Questions were put to the witness as to the certainty of the bank account in which the cheques were drawn from. He answered confidently that the account in which all the cheques were drawn from is that of Millennium Water Ltd, the same account the K2.7 million was deposited into.
52. Further questions were asked as to the means whereby copies of cheque payments were obtained, where such documents are not readily available. In responses witness states that they were obtained by means of Search Warrants.

53. The affidavit of service of the search warrants was tendered and marked Exhibit "Zj". Upon the defence insistence to have copies of the search warrants produced, the witness subsequently made available copies for the perusal of counsel for the defence.

54. In all there were no significant questions asked during Cross-examination to shatter the evidence of this witness.

55. He is the Chief Executive Officer with Finance in the ARB and also the Executive Officer for the Provincial Supply and Tenders Board.

56. According to his knowledge of the processes in obtaining approval and granting of contracts for work, he has nothing for Millennium Water Ltd.

57. As far as awarding of contracts are concern any work in excess of K300, 000.00 had to go through the Provincial Supply & Tenders Board, which was not adhered to in this case.

58. In this case all processes regarding tender were not followed.
Written Statement of this witness was tendered and marked as Exhibit "S".

59. He visited the site of the water project and could only see a big hole near the hospital morgue and no machineries.

61. He was a Member of the Provincial Tenders Board and not aware of any Tender Processes followed, nor was the project ever deliberated by the Provincial Executive Council.

62. He was a Section 32 Finance Officer and refused to sign the payment voucher; however, on persuasion from the Office of the Member he did.
63. Further he states that he was threatened to be harmed if he did not sign. Other officers were also threatened so they too like me facilitated the process of payment of the cheque.

64. He recognised a form when shown to him, "Requisition for Tender" for K2.7 million. Tendered and marked as Exhibit "T".

65. Another document he recognised was the "General Expenses" for payment to Millennium Water Ltd which was tendered and marked as Exhibit "U".

66. His written statement was tendered and marked as Exhibit "V". In his written statement he states that he was under extreme pressure from the Regional member for Bougainville Hon. Fidelis Semoso, MP to have the payment made to the contractor. He was also told by Mr Tony Ropa that he had also received threats of harassment from the named leader to facilitate the payment.

67. The funding came from the Department of National Planning and was held by the Treasury Office in Buka when it was accessed.

68. He states that tender process had been by-passed. And further says that even though the funding was made available to the contractor in December 2008 no work on the hospital water supply has been carried out.

69. The written statement of the witness was tendered by consent and marked as Exhibit "W" (p.19 HUB).

70. The cheque for the K2.7 million was paid to Millennium Water Ltd on the 30/12/2008. It was paid under pressure from the Regional Member for Bougainville.

71. He states that this money if not budgeted for 2009; it would have to go through a supplementary budget. And further says that he did not see any urgency in the payment.

72. The payment to Millennium Water Ltd for K2.7 million is part of the K4.1 million approved initially for the 10 feeder roads. The balance of K1.4 million was paid to other impact projects.

73. The K2.7 million was drawn by the National Planning Office and paid into North Bougainville District Administration Treasury Operating Account, later drawn and paid to Millennium Water Ltd outside of the normal processes.

74. Documents tendered as exhibits are – copy of cheque marked Exhibit "1" and copy of computer printout Exhibit "2".

75. He is the Provincial Treasurer. His main role in this case was for the provision of statements and other forms of evidence as requested by the police, which are contained in his Statement which was tendered by consent.

76. He further received a letter from the Regional Member for Bougainville dated 15 December 2008, the same is tendered and marked Exhibit "X" (p. 109 HUB). A copy of an invoice was tendered and marked as Exhibit "Y" (p.112HUB). Another copy of cheque tendered and marked as Exhibit "Z".

77. He is an Investigator with the Ombudsman Commission since 13 December 1999. He gave oral evidence.

78. His evidence was that, he became aware of the matter through a request from Michael Laimo for an investigation on the use of K4.1 million which were earmarked to fund 10 feeder roads in South Bougainville. These funds were diverted by his successor Fidelis Semoso and used on other projects.

79. The K2.7 million paid to Millennium Water Ltd for Buka General Hospital water project came out from the K4.1 million.

80. Soon after the complaint was received several directions were issued to various organisations in respect to the use of these funds.

81. One such direction pursuant to section 27(4) of the Constitution was issued to Bank South Pacific, purposely to stop payment or transactions by any person, organization or authority of any money from the Millennium Water Project Account No. 1001520997 and Millennium Water Limited Account 100876763 at BSP Wagani Drive Branch until and unless cleared by the Commission. Copy of the Direction is tendered and marked as Exhibit "Zl".

82. Another Direction was issued to Salonakori Cocoa Coconut Seed Garden Account No. 1001406101 and Salonakori Cocoa Rehabilitation Account No. 1001476014 at Bank South Pacific, Buka Branch. Copy of this Direction is tendered and marked as Exhibit "Zm".

83. Further Direction was issued to the Managing Director of Bank South Pacific and the Bank South Pacific Limited to take all necessary steps to temporarily freeze the Accounts of Millennium Water Limited No. 100876763 and Millennium Water Limited Project Account No. 1001520997. Copy of Direction is tendered and marked as Exhibit "Zn".

84. On the 3rd April 2009 further Direction was issued to Mr Syd Yates, Managing Director of Kina Finance Limited to stop payment from the account of Millennium Waters Limited or further transact from such account until and unless the OC completes its investigation or gives notice in writing clearing further transaction on the account. Copy of Direction titled "Private and Confidential" is tendered and marked as Exhibit "Zo".

86. Another Direction issued on the 2nd April titled "Constitution Section 27(4) to the Managing Director Kina Finance Limited and Kina Finance Limited (the Company), is tendered and marked as Exhibit "Zp".

87. From the information received, it became apparent that within a short space of time a considerable amount of the fund for the water project had been expended.

88. Millennium Water Limited was paid K2.7 million on the 30/12/2008 and by 29/02/2009 K1.4 million had been used up with no sign of work on the Buka General Hospital water project.

89. Any spending by the accused after the 29/02/09 to 3/4/09 can be explained by the bank or investigating officer.

90. The State then applied to have a list of all payments made from 30.12. 2008 to 29/2/09 tendered, however it was objected by Defence. The list is nothing more than tabulated details of all the cheques paid to individuals and "pay cash" cheques drawn from Millennium Water Ltd Account. All facts concerning these payments are not disputed and have been referred to in both State and Defence witnesses' evidence. There is no prejudice or detriment to either of the parties' case. As a matter of court's discretion I will allow the document for convenience of the parties and the court, which is tabulated below.

Date		Chq NO		Amount (K)		Beneficiary
30.12.08		852		K96,900.00		Ela Motors
30.12.08		853		K5,795.19		Brian Bell
30.12.08		854		K16,000.00		Cash
02.01.09		857		K15,000.00		LG Construction
02.01.09		858		K470,000.00		Cash (Salonakori Cocoa Rehabilitation Ltd)
02.01.09		859		K30,000.00		Cash (Joseph Ritsi)
02.01.09		862		K2,000.00		Cash
06.01.09		863		K3,000.00		Kina Finance Ltd
07.02.09		866		K18,000.00		Roger Token
07.01.09		867		K3,000.00		Cash
08.01.09		869		K1,500.00		Cash
08.01.09		870		K11,700.00		LG Construction
09.01.09		872		K7,500.00		Cash
09.01.09		873		K1,700.00		Cash
14.01.09		876		K2,300.00		Cash
16.01.09		879		K2,400.00		Cash
16.01.09		880		K1,800.00		Cash
19.01.09		881		K1,000.00		Cash
19.01.09		882		K2,500.00		Cash
20.01.09		883		K4,500.00		LG Construction
20.01.09		884		K4,000.00		Cash
21.01.09		885		K3,000.00		Cash
21.01.09		886		K 600.00		Cash
21.01.09		887		K1,000.00		Cash
22.01.09		888		K1,270.00		Cash
29.01.09	899		K1,000.00		Cash
26.01.09	892		K3,500.00		Cash
27.01.09	893		K1,500.00		Cash
27.01.09	894		K4,500.00		LG Construction
28.01.09	895		K1,639.23		Cash
28.01.09	896		K137,609.94		Noble Waters Pty Ltd
29.01.09	897		K74,389.15		Southern Cross Pumps & Irrigation
29.01.09	898		K2,800.00		Cash
29.01.09	900		K2,660.40		Air Niugini
02.02.09	908		K 500.00		Cash
02.02.09	909		K 900.00		Cash
04.02.09	913		K1,697.50		Air Niugini
04.02.09	914		K26,519.99		Brian Bell
04.02.09	915		K500,000.00		Kina Finance Ltd
04.02.09	916		K1,000.00		Cash
05.02.09	917		K4,000.00		Cash
05.02.09	918		K1,230.00		Moses Peni
05.02.09	919		K1,000.00		Cash
09.02.09	920		K2,200.00		Cash
11.02.09	924		K1,000.00		Cash
Total K1,476,111.40

91. His investigation revealed that the K2.7 million paid to the accused did not go through the normal procurement process, so steps were taken to safeguard public money.

92. Ombudsman Commission did not stop work, but freeze all further drawings on the fund. If money was in the account the accused could use the money to complete the project.

93. At this juncture Defence submits that the accused has "no case to answer" and cannot be convicted as a matter of law based on the authority of the case Paul Kundi Rape v The State [1976] PNGLR 96.

94. The accused is charged with one count of Misappropriation s.383A (1) of the Criminal Code Act. There is no particular defence pleaded by the accused in this charge. The element of "dishonesty" appears to be the obvious one.

95. State called 7 witnesses and tendered Exhibits "A to Zj". It is submitted that the State is preoccupied with the evidence concerning procurement of tender processes which were not followed.

96. However, to show that the accused was transparent in his approach in securing the project reliance was placed on several factors.

97. Accused had a meeting with the CEO of Buka General Hospital sometime in January 2009.
98. In cross-examination he states that he saw nothing but a hole. Other witnesses said they also saw a hole.

99. As to question of facts evidence showed accused continued to improve on the project. There was evidence of genuine payments made to refutable suppliers such as Southern Cross Ltd and others for legitimate work on the project.

100. Michael Laimo has lost his seat; as a result he was trying to interfere with the project. It was around April when the work of the accused on the project was frustrated, apparently by the Ombudsman Commission.

101. For these reasons it is submitted that there is no evidence to show the accused had misappropriated the K2.7 million intended for the project.

102. The State countered by saying that the question to be asked at this stage is that posed in the case of Paul Kundi Rape (supra). It is whether there is established evidence on each of the essential element of the charge.

102. There is evidence before the court that no proper procurement processes followed. Further evidence is shown that accused went on a spending spree soon after the money had been received, and wrote "pay cash" cheques to people unrelated to the project.

103. Therefore it is submitted that there is overwhelming evidence touching each of the element of the charge, thus requiring the accused to be called to answer to his charge.

104. Without venturing into the merits of the case, it is sufficient at this stage of the proceeding to give my ruling on the short oral submissions of counsels respecting the "no case to answer submission".

105. At the end of the State's case counsel for the accused made a submission of "no case to answer" on the basis of the first leg of the principles in The State v Paul Kundi Rape [1976] PNGLR. 96, there is no case for his clients to answer.

106. The case of The State -v- Roka Pep (No.2) [1983] PNGLR. 287 and Paul Kundi Rape (supra) and many others establish that at the end of the prosecution case where there is a no case submission being made, the issue to be determined there and then is whether on the evidence as it stands the accused could lawfully be convicted.

107. The Law is settled in this jurisdiction on no-case-to answer submissions as set out in Roka Pep v- The State (No.2) [1983] PNGLR 287 and Paul Kundi Rape v- The State [1976] PNGLR 96. The headnote of the case as taken from the majority judgment settles as follows:

"(By Kidu CJ Kapi DCJ Andrew and Kaputin JJ) Where in criminal proceedings at the close of the case for the prosecution, there is a submission of no case to answer, the matter is a question of law for the judge as a tribunal of law; the test is whether the evidence supports the essential elements of the offence".

108. It is clear from the authorities cited that the question of guilt of the accused does not arise at this stage of the proceedings. Nor does it involve the question of proof beyond reasonable doubt, which is determined at the end of all the evidence both for the State and the accused.

109. At the close of the State's case, I heard and observed seven witnesses. I heard counsels on "no case to answer submission". It is the view of the court that the sum total of all the evidence on the requisite elements to prove the charge for the State had been made out. The accused therefore has a case to answer and to be called upon to answer to the charge.

110. He commenced his evidence by presenting a colourful history of his personal antecedents and achievements both scholastically and as a successful entrepreneur.

111. He became aware of the project from two gentlemen, Roger Token and James Ritsi.

112. As a business minded person, he states that business is about profit and not reluctant to accept the deal in the first place. But on request as project is important he sent his proposal. It was approved under the term COI.

113. The amount of the project was for K2.7 million which was later paid into his account. As the fund came from National Planning Office, it was given to him by the Governor's Office.

114. Out of the K4.1 million three organisations benefitted. He was given a dummy cheque for K2.7 million. The money was later paid into his account in or about the month of December.

115. Upon receipt of the money he went into process of buying materials from Southern Cross and others.

116. He employed technical staff for the project. The duration of the project was for a period of 1 year 6 months.

117. He, together with his engineer and project officer had a meeting with the Chief Executive Officer of Buka General Hospital to discuss about the quality of water at the hospital and the project. Because of the quality of the water at the hospital which is undrinkable, he was tasked to make the water to a quality level which is drinkable.

119. The desalination system in Australia had not come to PNG because Ombudsman Commission stopped the project.

120. The K470,000.00 paid to Salonakori was for assistance for security for the company to assist him in the project.

121. He entered into a contract with Salonakori Cocoa Rehabilitation Limited (see pp. 123,124 HUB). This document was tendered and marked as Exhibit "3" (this is not the actual agreement; it is a letter advising Salonakori Cocoa Rehabilitation Limited of the Award of Sub-contract for the Buka General Hospital Water Treatment & Supply).

122. Another document which comprised the agreement was signed by the accused company Millennium Water Limited and Salonakori Cocoa Rehabilitation Limited. This is the Memorandum of Agreement, a copy of which was tendered and admitted as Exhibit "4".

123. He made a payment of K74, 389.15 to Southern Cross for tank, stand, pressure pump and automatic control for regulating pumps. A letter of acceptance by the accused was sent to Southern Cross Pumps & Irrigation Ltd, Port Moresby. Copy of letter is tendered as Exhibit "5" (p. 145 HUB). All these equipment are located at the premises of Salonakori at Buka.

124. He paid some money to LG Construction (K35, 700.00 in total) for work done to his Buka logistic office.

125. He paid K96,000.00 to Ela Motors for vehicle to assist him in facilitating the work from Port Moresby office.

126. Payment was made to Joseph Ritsi for K30,000.00 and Roger Token K18,000.00. These two gentlemen assisted him for various services and for their introduction to Salonakori.

127. The K500, 000.00 deposited into an interest bearing deposit account (IBD) with Kina Finance Limited was a normal business transaction to generate income while waiting for materials to arrive from Australia. It was for only 2 months.

128. The cheque for K5, 791.50 paid to Brian Bell was for additional tool for his construction work in Buka, which are still in Buka now.

129. Cash payment of K1, 230.00 was paid to Moses as he did a number of jobs for him here in Port Moresby.

130. The water treatment plant never arrived from Australia because the Ombudsman Commission ceased my account including the K500, 000.00. This happened in or about the month of March.

131. He deposited the K500, 000.00 for the purpose of securing staff to assist him in the commissioning of the project.

132. He says that he is the only PNG Company that deals with water supply and water quality control in PNG and had been in the business for 20 years. This is a good business accolade however the outcome of this statement is yet to be realised.

133. During cross-examination a series of questions were asked as to the involvement of Joe Ritsi and Roger Token. He introduced them as private or freelance personal who assisted him and acted as medium in the securing of project fund and subsequent payment into his account. He was asked the following questions:

Q. Your counsel asked you how long work to finish, you told court 1 year 6 months.

Q. I put to you that you would not have completed the project in 1 year 6 months because of the fact that K1.4 million was already spent in the first two months after payment was made?

A. I purchased quickly so that the materials to arrive quickly so work to start quickly to complete the project.

Q. You paid cash cheques to various people; does this help you finish the project?

A. I paid cash as Buka had a tiny BSP Bank and difficult to do payment in Buka so I carry cash to pay people quickly. [no details supplied]

Q. You heard the evidence from the Ombudsman Commission saying that they did not stop you from completing the project?

Q. In the Record of Interview you told the interviewing officer that you had not done any work at Buka.

A. The major work had begun K1.4 million had been used for materials. Only when OC stopped me, so I did not complete the work.

Q. I refer you to question 3 and 4, I put to you it's used as a cover up. What do you say?

Q. You agree the K500,000.00 paid to Kina Finance Ltd is a personal business not project related?

Q. The car you bought for K96, 900.00 from Ela Motors was purchased immediately soon after fund was paid?

A. Yes to assist me with logistics, in the business of the project so it will not interfere with other project.

134. This witness claimed to have been short listed to conduct engineering work on the Millennium Water Project.

135. His duty statement was to supervise the excavation and installation of the 20 foot container and the reticulation plant to be brought from Australia.

136. In January 2009 he attended a meeting with the CEO of Buka General Hospital with Achillis Peni and one other person to discuss water project for Buka General Hospital.

137. He says that he was aware of the equipments purchased such as the booster pump, Southern Cross water tank and stand bought from Southern Cross Company. These equipments are located near Salonakori's office in Buka.

138. From the 10 April onwards the second phase of the project had to stop because the fund was frozen by Ombudsman Commission. As a result work did not complete.

140. The equipments from Southern Cross were transported from Port Moresby to Buka where he took delivery of them. He was aware of the documentation of the equipments received from Southern Cross.

141. Defence through this witness attempted to tender certain documents as proof of what was said in respect to the equipments bought from Southern Cross. These documents include nine photographs, one copy of delivery docket and one copy of payment receipt.

146. The State objected to all these documents as some had not been produced and shown to the State earlier while others were sourced from third parties that would require verification, thus all the documents were marked for identification only, (being MFI, 1 to 11), which were never tendered and admitted as part of the defence evidence.

147. The ROI was tendered at trial through the arresting officer Derrick Tangua. It contain the Questions and Answers which pertains to all aspect of the alleged misapplication of funds paid to the accused for public purpose, that is to construct water supply to Buka General Hospital. Many questions were asked but the more pertinent ones for the State seem to be these:

Q.23 I have information that on the 01st August 2008, you wrote a letter on behalf of your company, Millennium Waters Limited to Hon. F. Semoso MP, expressing your interest to construct a water treatment and supply project for Buka General Hospital. (Document showed to the defendant). What do you say?

A. Yes I did submission to construct for a water supply project for Buka General Hospital.

Q.29 I put to you that on the 13th December 2008 you submitted an invoice number 164/08 for K2.7 million to North Bougainville District Treasury office for the construction of water treatment and supply and project for Buka General Hospital. Is this true?

Q.31 In that invoice you stated that the invoice is for water treatment and supply for Buka General Hospital. It includes feasibility study, design, supply, installation and commission, desalination brackish system and further caters for 12 months training of operators, 12 months' supply of chemicals and backup maintenance. Is that true?

Q.32 I put to you that according to your invoice you have not done any of the job descriptions which you have stated in your invoice. What do you say about this?

Q.42 Have a look at this cheque No.852 dated 30.12.08 for the sum of K96, 900.00(documents produced to the accused). The cheque was drawn in favour of Ela Motors as a bank cheque number 591327. Please explain why this amount was paid to Ela Motors

Q.71 I put to you that on the 4th February 2009 you wrote a cheque number 915 for K500, 000.00 payable to Kina Finance Ltd (document shown to the accused). Is that true?

A. Simple business reason while waiting for equipment to come from Australia. I put it for a 52 days interest bearing deposit.

Q.79 I put to you that the CEO for Buka General Hospital told you that, as the custodian of the hospital he was never consulted about the so called water purification or treatment project. He further told you that he had never sighted any documents regarding the feasibility studies or scoping done on the project. What do you have to say to this?

A. That is an internal issue between the hospital and Autonomous Region of Bougainville Administration and Governor's Office.

148. Questions 80 to 84 relates to the requirements of the need for proper processes of tender and awarding of contracts. His answers seem to suggest that those matters are not his concern as they are best managed by his sponsor. They are internal or administrative concerns of the Governor's office and others.

Questions 85 to 88 are questions directed to the accused to state reasons why despite receiving full payment the water supply had not been completed. His respond was that he was not able to complete the work due to the freeze of his account by Ombudsman Commission. He was asked further:

Q.90 The bank records/statements indicate that you have exhausted all the money. You have no money to construct the water supply. What do you say about this?

A. Not true the K500, 000.00 is with Kina Finance and my operating account has K200, 000.00 which have been frozen by Ombudsman Commission.

150. Exhibits tendered to the court showed how money that was deposited into his account was spent.

151. He gave evidence that he hired technical officers to assist him with the project.

152. He wrote to Water Board to have project undertaken. He wrote to Department of Works. He also informed other authorities about the project. He stated that had about 24 years experience in such project. He further stated that he had overseas training and expertise in the project.

153. He said he awarded several contracts to others who assisted in the project.

154. Accused acted as consultant for 8 months, to supervise erection of Sir Donald Cleland Swimming Pool.

155. Because of the Bougainville Crisis accused got assistance from others on the ground. The accused said he was able to account for all the money spent. The accused said the vehicle bought from Ela Motors was for the assistance of administration. He said all materials bought are on ground in Buka.

156. Accused paid K470,000.00 for purpose of subcontracting for Millennium Waters Ltd. A memorandum of the contract and a letter was exchanged between Salonakori Cocoa Rehabilitation Ltd.

157. Payments were made to other persons who are familiar with situation on the ground. Other cheques were also paid to people who assisted him one way or another in Buka. Accused told court moneys were paid to proper suppliers for the water project.

158. It is therefore submitted for the accused that all payments were made in accordance with normal course of business.

159. There is evidence in support of the accused from CEO Dr Cyril Imako of Buka General Hospital who had discussion on water project for the hospital. In this meeting accused informed the CEO that he will bring the state of the art machinery to Buka. This meeting was for duration of two hours. During the time he was able to see a hole dug but no pump. This line of submission was to suggest that a proper consultation was made.

160. It is submitted the second witness in Mr Michael Laimo's evidence was politically motivated. He was previously Member of Parliament who made a submission to government for funding in 2006.

161. He lost his seat in the 2007 General Election. His successor Mr Fidelis Semoso then took charge of the approved funding of K4.1 million for impact projects. The K2.1 million out of the fund was diverted to fund the Buka General Hospital water project.

162. Other State witnesses Derrick Tagua, John Karai, Patrick Koles, and Anthony Ropa's evidences mainly dwell on the processes of procurement and payments of the fund by the accused.

163. It is submitted for the defence that evidence given by the State is not sufficient to ground a conviction.

164. The last witness Richard Pagan is the officer from Ombudsman Commission whose evidence tends to imply that the accused was corrupt. His evidence also touched on matters concerning Mr Fidelis Semoso in respect to Leadership Code breaches. As the Leadership Code breaches deal with public office the evidence is not relevant to the charge against the accused.

165. It was urged by defence counsel that work on the Buka General Hospital Water Project not been progressed was due to the OC freezing the project fund.

166. Finally it is submitted that the court as tribunal of fact after hearing both submissions would obviously find the accused had acted properly. Money had been used according to the purpose.

167. Most of the State witnesses' testify to seeing a big hole dug at the project site which is proof that work was in progress but for the freezing of project fund by the Ombudsman Commission.

168. It is submitted that the State had failed to prove the elements of the charge beyond reasonable doubt to ground a conviction.

169. Counsel for the State in response to the defence submission in respect to accused qualification states that, professionalism of an accused in a specialised field does not mean him or her should be given favourable consideration.

170. The subcontractor of Salonakori Cocoa Rehabilitation Ltd is a cover up, so as the contract signed to engage Salonakori as subcontractor is a cover up. No witness was called to confirm accused evidence.

171. Payment of K500,000.00 to Kina Finance Ltd is a personal matter nothing to do with the project.

172. By January 19 2009 some of the money had been used up but construction had not yet started.

173. Mr Laimo's evidence is not political. He is concerned about use of public funds.

174. It is submitted that the payment of K2.7 million to the accused and deposited into his account number 10001006783 on 30.12.2008 is not disputed.

175. All the payments made out of this account and paid to various suppliers, individuals, and cash withdrawals were not in dispute.

176. State called seven witnesses who gave sworn oral evidence. Statements and documentary evidences were also tendered as exhibits.

177. It is submitted by the State that the issue is whether or not the accused was dishonest in the use of K2.7 million.

178. The K2.7 million paid to Millennium Waters Ltd is part of the K4.1 million budgeted for the 10 Feeder Roads funding secured by Michael Laimo. When he lost his seat in the 2007 General Election Fidelis Semoso the new Member learnt of the existence of the fund.

179. As a result of Mr Semoso's request National Planning Department made payment of K2.7 million to Millennium Waters Ltd, through the District Treasury.

180. Accused expression of interest was not submitted to the proper authority but to Fidelis Semoso. Copies of the expression of interest were not given to Bougainville Administration or Provincial Supply &Tenders Board. Public tendering and procurement process were not complied with. This, it is submitted; was a clear breach of the law and what follows is illegal.

181. Two Administration officers Messrs Patrick Koles and Anthony Ropa were under pressure to facilitate and process payment.

182. The motor vehicle bought from Ela Motors for K96, 900.00 we submit is not Buka General Hospital project related.

183. We submit that the K500,000.00 paid to Kina Finance Ltd was for personal gain and not directly related to the project.

184. All dealings with Salonakori Cocoa Rehabilitation Ltd cannot be supported as no one from Salonakori was called to corroborate accused assertion. It is submitted that court should not accept accused evidence.

185. Accused "expression of interest" was not submitted to the Provincial Supply & Tenders Board, instead it was submitted to Fidelis Semoso.

186. A covering letter of contract between Salonakori and Millennium Waters Ltd is only a cover up.

187. Payment of K137, 609.94 to Noble Waters Pty Ltd for materials is also questionable as no materials could be seen on site.

188. Materials alleged to have been bought from Southern Cross Pumps & Irrigation could not be confirmed as no materials were seen on site.

189. Accused own evidence that all equipments were been kept at the premises of Salonakori cannot be proven. How do we know they were there?

190. It is submitted that the accused should be found guilty. They have not tendered any documents or photographs. The photographs (MFI. 1 -11) were taken eleven months after arrest of the accused, and not shown to the State until the trial when they were introduced by the defence witness.

191. Payments made by the accused were made within a space of 2 months. Accused says that the period of completion of the project is 1 year 6 months-the question is where were all the money gone in the space of 2 months. Much of the money paid within the two months would clearly show that they are not project related.

192. In the ROI accused was asked as to how much work he had completed. He responded that ¾ of the work had been completed. This was not true it is submitted, as all money had been exhausted in the first 2 months January and February of 2009.

193. Reference was made to the case Brian Kindi Lawi v The State [1987] PNGLR 182 which deals with the issue of "dishonesty" in respect to use of public fund, where it was held:

(1) There was evidence that the moneys were given to the appellant for specific public purposes and this evidence sufficiently proved that the moneys were the property of another, namely, the Government of Papua New Guinea and remained the property of the Government until they were expended on the purposes for which they were granted.

(2) As the word "dishonestly" in s 383A only relates to the state of mind of the person who does the act which amounts to misappropriation, whether an accused has a particular state of mind in relation to the application of property which is dishonest is a question of fact for the trial judge to consider on all of the facts of the case before him and (per Amet J) according to the ordinary standards of reasonable and honest people.

194. The State v Francis Natuwohala Laumadava [1994] PNGLR 291 at 293 Injia AJ (as he then was) said:

"At the same time, it is also a subjective one. The court must look into the mind of the accused and determined whether, given his intelligence and experience, he would have appreciated, as right-minded people would have done, that what he was doing was dishonest."

195. We submit accused had shown acts of dishonesty. For example, no tender process was followed and he was dealing directly with political leader in securing fund.

196. It is submitted the accused had shown acts of dishonesty, such as ignoring the process of tender and securing fund directly from political leader.

197. It is further submitted that cheques paid to people and suppliers of services were not related to the Buka General Hospital water project.
198. The fact that the Buka General Hospital water project had not been completed is reason to speculate that funds allocated for the project had been misapplied.

199. Accused pleaded not guilty to one count of Misappropriation contrary to s.383A (1) (a) (2) (d) Criminal Code Act Chapter 262. The elements of the charge requiring proof by the prosecution by virtue of this provision of the Code are that the accused:

200. From the outset Counsels had not taken serious issue in respect to the elements of the charge. It may have been assumed from the factual presentation of the evidence is such that the elements to be proved are obvious. Contrary to what counsel may perceive it is fundamental law in criminal cases that the prosecution bears the burden to prove all elements of the charge to the requisite standard that is beyond reasonable doubt. The element of the charge which appears to be focused by counsels is that of dishonesty which will be discussed a little later.

201. There is overwhelming evidence that the accused bought a motor vehicle from Ela Motors for the sum of K96, 900.00 from money designated for the Buka General Hospital Water Project. This vehicle was not sent to Buka but kept in Port Moresby.

202. A deposit accused made with Kina Finance Ltd in the sum of K500, 000.00 in an interest bearing deposit (IBD) account was not for the purpose for which the fund was designated.

204. Payments were made to Joe Ritsi and Roger Token for K30,000.00 and K18,000.00 respectively.

205. Various other "pay cash" cheques were made to persons without proper explanation of what payments were for.

206. In the case The State v James Makario [1990] N862, it establishes that the application of property to the use of another person named in the indictment is an essential element and it must be strictly proved. However the present charge is not framed in that way and therefore it is not necessary to strictly prove that specific named persons benefited from the deal.

207. On the facts as presented which was accepted by defence and State and in the absence of clear explanation by the accused as to the genuineness of the payments for the specific purpose for which the fund was appropriated, I am satisfied that this element of the charge had been proven.

208. The indictment alleged that the property (the cheque) belongs to the Autonomous Region of Bougainville Government. No issue was raised in respect to this element from counsels. Unless the ownership of this property (cheque) is disputed evidence may be judicially noticed. Some form of evidence is required to prove this element of ownership.

209. The cheque for K2.7 million was drawn by the National Planning Department/Office to the Department of Autonomous Region of Bougainville and paid into North Bougainville District Administration Treasury Operating Account, later drawn and paid to Millennium Water Ltd outside of the normal processes. This element of the charge is not contested, I find this element proved.

210. The prosecution must prove this element beyond reasonable doubt in order to find the accused guilty. The cases of Brian Kindi Lawi v The State [1987] PNGLR 582, The State v Gabriel Ramoi [1993] PNGLR 390, and The State v James Makario (1990) N862, amongst many others, emphasize these principles.

211. In the present case, as I understood the submissions of counsel for the accused, he only took issue with the element of dishonesty and not the others. He argued that the State had failed to present evidence of dishonesty, that is, the evidence presented so far, could not tie the accused down on the charge of misappropriation.

212. This is because it is argued monies paid to people and suppliers could be easily accounted and ascertained. All payments were made to genuine suppliers and according to the purpose for which the money was given for.

213. Further the State witnesses' confirm that they saw a hole at the site which is evidence of commencement of the water project.

214. The State has not proven that money expended by the accused was for services not directly related to the water project.

215. Defence submits that there is no evidence to establish that the accused paid the monies to himself for his own use or to the use of other persons. As no such evidence had been led, there is no evidence of dishonesty.

216. This is a misappropriation charge laid pursuant to s. 383A (1) (a) and (2) (d) of the Code. Since the decision in the case Kindi Lawi v The State, The State v Yuants Kaman [1993] PNGLR 488 and Wellington Belawa v The State [1988-89] PNGLR, 496, the National and Supreme Court have consistently held that the act of "dishonesty" or misappropriation relate to the state of mind of a person who is alleged to have misapplied the property in question and such acts must be strictly proved.

217. The term "dishonestly" as appearing in s. 383A of the Criminal Code relates to the state of mind of the person who misappropriates, or misapplies whatever property is the subject of the charge under consideration. It is a question of fact for the judge or tribunal to decide upon the evidence being put before it: see Kindi Lawi v The State (supra) and The State v Gabriel Ramoi [1993] PNGLR. 390.

218. The case of The State v Francis Natuwohala Laumodava [1994] PNGLR 291 establishes that in order for the Court to determine dishonesty, it must look into the mind of the accused person and determine whether given the accused intelligence he would have appreciated if what he was doing was or amounted to dishonesty.

219. The element of dishonesty is a question of fact as it is related to the state of mind of a person. But how does the court determine the person's mind in order to determine his dishonesty? A person's state of mind can be revealed only by mortal men by examining the entire facts of the case and according to the ordinary standard of reasonable and honest person.

"One of the necessary elements to find a charge of misappropriation under section 383A proved is there must be a finding of dishonesty. This was carefully considered in the case of Brian Tindi Lawi -v- The State [1987] PNGLR 183 where the Supreme Court held that as the word dishonestly in the Section only relates to the state of mind of the person who does the act which amounts to misappropriation, whether the accused has a particular state of mind in relation to the application of property which is dishonest is a question of fact for the trial judge to consider on all the facts of the case before him and according to the ordinary standards of reasonable and honest people. I am satisfied that for a number of reasons which includes the changing of the names of persons in the application, the preference of the applications being for certain purposes, but then being used for other purposes, the giving out of money in cash form to persons other than the original applicants, could all lead a reasonable and honest person to consider that there has been dishonesty in the way these funds have been obtained and applied. The facts surrounding these two grants and cheques are such that it is open to me and I am satisfied that there was dishonesty involved."

221. The evidence as presented by the State in the present case had clearly shown that the accused used State funds for his own use and to the use of others which were dishonest in nature. The accused is a man of intellectual attributes in many aspects of water management who at sundry times contracted to provide services at the highest level to others.

222. The following factors will demonstrate the state of mind of the accused given his intelligence to determine whether the actions he displayed appears dishonest according to the ordinary standard of reasonable and honest person.

223. The following factors or acts of the accused will demonstrate or could all lead a reasonable and honest person to consider that there has been dishonesty in the way these funds have been obtained and applied:

Q. Why did you pay K470, 000.00 to Salonakori Cocoa Rehabilitation? A. Urgent subcontract work for the quick implementation of the project.

224. Under the Memorandum of Agreement the subcontractor is to provide skilled and unskilled labour, equipment, materials, office and administration services and logistic to Millennium Water Limited at the agreed price. The agreement binds the parties until completion of the project (see Defence Exhibits 3 & 4).

225. Despite receiving the payment and obligated by the subcontract to perform specific services for the accused there is no evidence of any work performed by Salonakori. This could only suggest one thing, that the payment to Salonakori for subcontracting work may be just another cover-up of some sort. Purported subcontracting agreement with Salonakori was a sham as terms of the agreement were not honoured.

226. Payment of K500,000.00 to Kina Finance Ltd into IBD was for personal interest and not Buka General Hospital Water Project related. No evidence that interest gained from such investment was for the benefit of the hospital. Purpose of the fund was for specific project and not for reinvestment.

227. Payment to gentlemen, Joseph Ritsi (K30,000.00)and Roger Token (K18,000.00) does not relate to genuine assistance to the work of upgrading Buka General Hospital water supply. Evidence revealed they are persons who acted as go between Fidelis Semoso and the accused. Evidence does not favour the accused, as the nature of the payments were of a private nature and not business related. These payments were one-off and for services the gentlemen performed in introducing the accused to Mr Fidelis Semoso and acted as facilitators to speed up the process of securing the fund for payment of K2.7 million to the accused.

228. Much of the money had been spent in buying equipments, that was what accused seem to suggest, however almost the entire State witnesses deny seeing such equipments at the project site. If they are stored at Salonakori premises no evidence was given to verify that. It would be futile to accept that they are stored at Salonakori's premises because similar equipments may be owned by Salonakori.

229. Accused states in evidence that three quarter (3/4) of the project was completed. When he was further pressed to explain what he meant, he states that work mainly involved purchases of equipments. How can this be when all witnesses' evidences could only see a "big hole?" How close to completion of the project and commissioning when ¾ of the job done could only produce a hole? Logic and common sense dictate that ¾ completion would be some kind of development beyond the creation of a hole on the ground. This statement is ludicrous and at best unbelievable.

230. Almost all correspondences by the accused from initial stage to payment of funds went through the Office of the Governor. Authorities concern with tender and other processes should have been consulted. Other Authorities concerned in the project had never been consulted. Does this show some sinister motive?

231. Accused has ignored all processes of tendering, although aware of the requirements.

232. Accused claimed that he could not complete the project because Ombudsmen Commission froze his bank account. This was refuted by OC. Ombudsman Commission was concerned with misuse of public funds, but did not stop the water project. Ombudsman Commission investigation and direction to freeze account was for period up to the end of February 2009. By end of February K1.4 million (more or less) had already been exhausted and work not completed. If as claimed by the accused that ¾ of work completed then the remaining balance of K1.3 million (more or less) would have been used to complete the project. However, no explanation by the accused of where K1.3 million went to, thus in total K2.7 million would have been spent and only a hole could be seen. The stoppage of fund by OC provide an opportune time to cast blame for the non-completion of the project. This cannot be believed for the stoppage of fund does not involve redirection or conversion of the fund. The money was in accused account and he still had control over it and still had 1 year 4 months to complete the project after the temporary freeze of fund by OC. When O.C. froze the fund some two months after the accused received the K2.7 million, out from which K1.4 million was exhausted.

233. The balance of K1.3 million (more or less) remaining fund could have been used to complete the project. The fact that the project had not commenced and no explanation of how this money went to begs explanation from the accused, which he failed to do.

234. Accused acknowledged in cross examination that public funds are subject to acquittal, but he does not feel obliged and neglect to submit the same.

239. Accused has been in business for more than 20 years and the only PNG professional dealing with water project at a commercial level. His expertise and professional attributes would have meant proper observance of the processes of soliciting funds and expending following accepted practices which was lacking in this case.

240. No tender processes were followed –either Central Supply Tender Board or Provincial Supply &Tender Board although he was aware of such requirements.

241. Any contract in access of K300, 000.00 and K3,000,000.00 is to go through tender process. However, this was not followed and may be a breach of the Public Finance Management Act.

242. It has been an accepted practice or regulated procedure that funds are not to be disbursed for full value of the project but paid in instalment against invoice submitted for work done. This process was not observed. Accused was paid 100% up front with assistance from Fidelis Semoso.

243. There have been many instances of persons being charged for misappropriation, but by the end of evidence what it established is gross mismanagement of financial accounting procedures. An example of this trend is the case of The State vYuants Kaman [1993] PNGLR. 488.

244. In that case the judge found that application of a sum of K5, 000.00 was not necessarily criminal misappropriation because the monies were used to purchase certain building materials which were distributed to various church organizations.

245. This is not the case in the present charge against the accused. In this case the accused was paid K2.7 million purposely to build and commission Buka General Hospital Water Supply.

246. He spend a sum of some K1.4 million in a space of two months on materials and equipment which were not seen or proven to be stored at the premises of Salonakori or Buka or at the project site.

247. As a result of this haste spending with no work done apart from the excavation of a hole intended for the installation of water tank and its components to supply water for the hospital, work had not progressed beyond this stage.

248. No explanation was heard from the accused as to what has come about on the remaining balance of about K1.3 million.

249. Had this fund been utilised wisely the project would have been completed as the accused assured that three quarter (3/4) of the work had been completed prior to the freezing of fund by the OC.

250. It is ironic to think of a better reason for expending K2.7 million on a project that had never been completed beyond the excavation of a big hole.

251. The period for completion of the Buka Hospital Water Supply Project is 1 year, six months or 18 months. It took about two months to expend K1.4 million and the only visible sign of work done is excavation of a big hole. If all materials had been purchased and ¾ of the project had been completed, then the balance of K1.3 million could have been used to complete the project within the next 16 months.

252. After the 18th month (1 yr 6 months) the Buka Water Supply Project had not been completed and what could be seen of the project is a big hole all at the cost of K2.7 million.

253. I am satisfied on the finding of facts alluded to above that the accused had the requisite intent to dishonestly deal with the fund as he did.

254. Thus all three (3) elements of the charge (a) Dishonestly, (b) Applied to his own use or use of another and (c) Property belonging to another to a charge of Misappropriation had been proven by the prosecution beyond reasonable doubt.

255. The accused is found guilty and convicted of the charge of Misappropriation under s.383A of the Criminal Code Act.

Verdict Accordingly.
____________________________________________________________

Public Prosecutor: Lawyer for the State
Public Solicitor: Lawyer for the Accused

National Court of Papua New Guinea

State v Peni [2013] PGNC 330; N5930 (5 December 2013)