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State v Konga [2014] PGNC 22; N5639 (20 June 2014)

N5639

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE
CR 167 OF 2010

STATE

V

JOHN KONGA

Daru: Manuhu, J 2014: 16, 17, 18, 19 & 20 June

CRIMINAL LAW – Particular offences – Abuse of office – Misappropriation – Accused is Chief Executive Officer of Daru General Hospital – Ghost employees salary payments paid into bank account owned by a company owned by the accused – Consideration of direct and circumstantial evidence.

Case cited:
Paulus Pawa v The State [1981] PNGLR 498

Counsel:
D. Kuvi, for the State, P. Yombon, for the Accused.

20th June, 1914

1. MANUHU, J.: The accused, Dr John Konga of Kami Village, Kudjip in Jiwaka Province was charged on indictment by State Prosecutor David Kuvi on one count of abuse of office under section 92 (2) of the Criminal Code and five counts of misappropriation of property under section 383A of the Criminal Code.

The allegations
2. It is alleged that the accused was the Chief Executive Officer of Daru General Hospital (the hospital) between 2003 and 2008. In August 2006, he incorporated a company called Bijinn Ltd where he was the sole shareholder and director. He was also the sole signatory to the company bank account with Bank South Pacific (BSP).

3. It is alleged that between January 2007 and July 2008, the accused caused the Human Resource Division of the hospital to create ghost names on the hospital's payroll. Salary payments for these ghost employees were caused to be remitted into his company bank account. A total of K69,197.81 was through the ghost employees paid into the accused company bank account.

The principle on circumstantial evidence
4. The prosecution is relying on both direct and circumstantial evidence against the accused. It is necessary therefore to restate the principle at this point. The principle is that the Court must acquit unless the facts proved in the evidence are inconsistent with any reasonable hypothesis other than the guilt of the accused: Paulus Pawa v The State [1981] PNGLR 498. There is no controversy about this principle.

Evidence by the prosecution
5. On 22nd November 2007, the accused, who was then the Chief Executive Officer of the hospital wrote an inter office minute to Personal Officer of the hospital, Mary Baea, to reinstate six former employees, namely, Tobias Tukai, Sakai Judith Tangura, Ogomer Faithfully, John Kaibia, Augi Kemere, and Amos Anikou.

6. Mary Baea, stated in her evidence that she received the minute, which is in evidence, and raised the respective Permanent Variation Advice (PVA). Mary Baea stated that Ogomer Faithfully, Augi Kemere and Amos Anikou did not work for the hospital in 2007 or 2008. Neither was the personal officer aware of any employee by the name of Anita Asuman or by the name of Amos Anikou in those years. She, however, proceeded to raise the PVAs as instructed by the accused. The PVAs were then returned to the accused.

7. On 28th February 2008, three months after the minute, Mary Baea stumbled upon pay slips of employees that were not working at the hospital. Out of curiosity, she opened the pay slips and discovered that large sums of money had been paid to employees that were not working, and all their salary payments were remitted into one account.

8. Mary Baea contacted the Daru branch of BSP and confirmed that the payments, as they appear in the pay slips, have been paid into the bank account. It was apparent to her that something was not right. The matter was then brought to the attention of Dr. Naomi Pomat, acting Director Medical Services at the hospital.

9. On 2nd of March 2008, Dr Naomi Pomat raised Mary Baea's discovery with Dr Clement Malau, who was Secretary for the Department of Health then. The subject of the letter reads: Suspicious Fraudulent Payments to Ghost Staff on Daru Hospital Payroll in February 2008. Attached to the letter were five pay slips of the five alleged ghost employees of the hospital. The doctor also noted that salaries of these five alleged ghost employees were being paid into one BSP bank account, namely account number 1001205680.

10. In or around April 2008, Dr. Malau issued instructions to the Internal Audit Division of the Health Department to verify the suspicious payments with BSP. Mrs Kega Tore, Manager Audit, Department of Health, who received the Secretary's instructions contacted OIC Salaries, Mrs Rita Geno to investigate and cease salaries of five employees, namely, Anita Asuman, Ogomer Faithfully, Kemari Augi, Amos Anikou and John Kabia. The Department's findings are contained in the Disbursement Audit Report of 5th June 2008 (Audit Report). The Audit Report shows that these five employees' salaries were being paid into one BSP Cheque Account No. 1001205680.

11. Anikai Amos gave evidence that he is not Amos Anikou and was not employed by the hospital in 2007 or 2008. Kemari Augi stated in his evidence that he worked for the hospital in 2004 for 11 months only. He has lived in the village as a subsistence farmer since then. Evidence from Mary Baea is that none of the five employees were working for the hospital in 2007 or 2008.

12. A search warrant was obtained by police investigating the alleged fraud. BSP then released documents relating to the company account in question. Documents retrieved from BSP against account number 1001205680 shows that the account was owned by Bijinn Ltd. Company documents show that Bijimm Ltd has Dr. John Konga, the accused, as the sole Director and sole Shareholder. He had used his driver's licence to open the account. He also used his passport to open the account. The account was opened on 10th August 2006. The sole signatory to the account was the accused.

13. Ronnie Woiwoi of BSP, who was the banks investigations officer at the relevant time, gave evidence that there were 33 payments from HLTDA into the company account. HLTDA is his short for Health Daru General Hospital. His evidence on the transactions in the company account corresponds with the 33 salary payments against the five alleged ghost employees in the Audit Report.

No case to answer submission
14. The defence, at the close of the prosecution's case, made a no case to answer submission which was rejected. The Court ruled that there was prima facie evidence that implicated the accused. The evidence showed that all 33 payments against the five employees were paid into a company account that the accused was the sole signatory to. The no case to answer submission was without merit and dismissed.

Defence evidence
15. The accused was the only witness for himself. He said he did write the minute of 22nd November 2007 which directed Mary Baea to process PVAs for re-engagement of employees named in the minute, including four of the five employees in question. He then wrote to the respective employees to resume duty. However, he was not able to ascertain whether these persons resumed duties at the hospital as he was prevented from entering the hospital premises by police. The accused did not state the date he was prevented from accessing the hospital premises.

16. The accused further stated in his sworn evidence that Bijinn Ltd is a company that he incorporated in 2006 and he is the company owner. The company had an account with BSP, Cheque Account no. 1001205680. He said in examination in chief and cross-examination that he did not know that salaries from the five employees in question were paid into his company account. He said he had his own money in the account and did not use the account often and was not aware of the alleged fraudulent salary payments.

Analysis of the evidence
17. From the evidence, the accused is not able to confirm or deny whether the five employees actually worked at the hospital or not. The evidence of Mary Baea and other prosecution witnesses, including Augi Kemere, is that the five employees in question were not employees of the hospital in 2007 and 2008.

18. In the circumstances, the Court is satisfied that the five employees in question, namely, Anita Asuman, Ogomer Faithfully, John Kaibia, Augi Kemere and Amos Anikou were not employees of the hospital in 2007 and 2008. From here on, the Court will refer to them as ghost employees.

19. In any event, it would not have made any difference if any or all of these ghost employees were actually working because their salaries were being paid into an account of a company that belongs to the accused and, thereby, implicates the accused. Their attendance or non attendance at work is important but it is a secondary issue. What is more important is that salaries processed against these five ghosts employees were being paid into one account, which account is the reason the accused is now before the Court.

20. Evidence of salary payments of the ghost employees into one account can be found in the Audit Report and as well as the statement of Ronnie Woiwoi. It is appropriate to set out this evidence in a table, as shown below.

21. The defence has submitted that Ronnie Woiwoi's evidence and documents obtained from the bank should be excluded because the prosecution has not produced the relevant search warrant. The bank account in question belongs to a company, a separate entity from the accused. The accused does not personally own the account to claim confidentiality. In any case, the Court accepts the evidence of Ronnie Woiwoi and the arresting officer that a search warrant was used to obtain documents from the bank. There is no evidence that there was no search warrant. Therefore, the documentary evidence produced by Ronnie Woiwoi are properly before the Court and will not be excluded.

22. There are some technical issues with seven transactions, as highlighted in the table above. These were brought to the attention of both counsel. The Audit Report is in order. It is the table in Ronnie Woiwoi's statement that contains what appears to be typing errors. The Audit Report is a primary document. The Court accepts it as it is. Ronnie Woiwoi's statement is not an electronically generated document. The table in his statement, which is in the usual police statement form, was typed, either by Ronnie Woiwoi himself or by the police, and as such was exposed to the possibility of errors in typing.

23. It is open to the Court to prefer one set of evidence and discard the other. Therefore, the Court has the option to disregard certain aspects of Ronnie Woiwoi's evidence and rely only on the Audit Report.

24. It is also open to the Court, having identified an error and based on other evidence, to correct that error. Therefore, the Court has the option of using the Audit Report to correct any apparent typing error in Ronnie Woiwoi's statement.

25. The Court will take the latter course because it is the most sensible option. The original table provided by Ronnie Woiwoi listed the transactions in chronological order, from one pay day to the next, and the same order is reproduced in the above table. The list began with 2007 payments to 2008.

26. However, down the list, there are seven payments that, while the amounts, the days and the months are consistent with the corresponding information in the Audit Report, only the year is different. The Audit Report has 2008 while Ronnie Woiwoi has the year at 2007. Otherwise, there is a consistent and coherent pattern in all the other information.

27. Individual salary payments are exactly the same as those in the Audit Report. The Audit Report has 33 salary payments against the five ghost employees. There are also 33 payments in Ronnie Woiwoi's statement. The amount of money involved, individually and in total, are the same.

28. The Court is satisfied, therefore, that there were typing errors in relation to the seven payments. Those errors are curable. Consistent with the Audit Report, references to 2007, as highlighted in the table above, are actually 2008 and should be read as 2008 –not 2007.

29. This means that all of the 33 salary payments against the five ghost employees as shown in the Audit Report have been accounted for by BSP. In other words, they were all paid into the company account in question.

30. The accused does not confirm nor deny that salary payments of the five ghost employees were paid into Bijinn Ltd bank account. The prosecution has not produced the bank statement of the company account. The absence of the bank statement is arguably fatal to the prosecution's case. However, Ronnie Woiwoi's evidence, before and after the correction, is corroborated independently by the Audit Report and vice versa. Together, they prove beyond reasonable doubt, and the Court so finds, that 33 salary payments, totaling K69,197.81, that were processed against the five ghosts employees were paid into the accused person's company's bank account.
31. The defence submitted that there is no evidence of the accused application or use of the payments that were paid into the company account. However, the company account was not a trust account or an account authorized by the Health Department or the hospital to keep salary payments for hospital employees. The Department of Health is deprived of the monies in question as soon as its account is debited and the company account is credited. Payments into the company account placed the funds in the full possession and control of the accused, who was sole director and shareholder of the company, and sole signatory to the company account. The Department of Health did not have any control over the funds in the company account. The defence submission is therefore rejected.

32. The Court is satisfied, therefore, that the element of application or use is proven when monies purporting to be salary payments were credited into the company account, which account was in the full control of the accused.

33. The evidentiary burden is upon the accused to explain how the 33 salary payments of five ghost employees ended up in his company account. His explanation is relevant to the element of dishonesty. The accused stated in his evidence that he does not know how the payments ended up in his company account.

34. There is evidence that details of the five ghost employees were entered into the payroll system by a payroll officer, namely, Gedion Paubali between 28th January and 25th February 2008. Data entry into the payroll system is done only by an authorized data entry officer. He accesses the system with a PIN number or code that no one is supposed to know. In this case, that person was Gedion Paubali.

35. His entry of data in relation to the five ghost employees, especially date of entry, into the payroll system does not correspond with the Audit Report and Ronnie Woiwoi's evidence on the transactions. For instance, while data in relation to Anita Asuman was entered by Gedion Paubali on 25th February 2008, Anita Asuman was already on the payroll in August 2007. Gedion Paubali is wanted for questioning in relation to the same allegations against the accused. He is still on the run. The Court is satisfied that Gedion Paubali corrupted the payroll system to facilitate payments into the company account.

36. The accused denies the suggestion that he colluded with Gedion Paubali to enter the ghost employees' details and channel funds into his company account. However, the explanation by the accused cannot be believed. He is implicated by his own minute of 22nd November 2007 when he instructed Mary Baea to process re-employment of six employees. Four of those six persons named in the minute, as we know now, are ghost employees. Ogomer Faithfully, John Kaibia, Augi Kemere, and Amos Anikou, whose names appear in the minute authored by the accused, are ghost employees.

37. The accused claims that the decision to recruit was made by a committee and he acted upon that decision. This explanation, which the Court considers to be untrue but even if it is true, does not change the fact that Ogomer Faithfully, John Kaibia, Augi Kemere, and Amos Anikou are ghost employees. The accused produced these names in his minute of 22nd November 2007. This is clear direct evidence against the accused involvement in the alleged fraud.

38. At the time the accused wrote this minute, Anita Asuman was already a ghost employee. His first salary payment, which was paid into the accused person's company's account was made on 29th August 2007. Following his minute of 22nd November 2007 to Mary Baea, the first salary payment against the new ghost employees was made on 13th February 2008, where Ogomer Faithfully's first pay was K5,987.23; Augi Kemere's first pay was K18,933.57 and Amos Anikou's first pay was also K18,933.57. Which ordinary public servant would receive such large sum as his first pay? This can only happen in fraudulent schemes.

39. Account details are personal and confidential. In this case, who else would have provided the account details to Gedion Paubali to enter into the payroll system against the ghost employees of the hospital the accused was head of? The accused was sole director and shareholder of the company. He was the sole signatory to his company's bank account. The accused is the only person that would have given his company's account number, the name of his bank, and his bank branch BSB number to Gedion Paubali to enter into the payroll system. There is no doubt that no one was in a position to provide his company's account details to Gedion Paubali but him and him alone. And he did so dishonestly. His denials cannot be believed.

40. It has to be said that the accused was not an impressive witness. He was evasive and tried to distance himself from his own company account. He tried in vain to convince the Court that payments in the company account were his entitlements when it was very clear that the payments were from the Health Department. The accused did not provide any documentary evidence to support his claims. He did not call anyone to support his defence. He has no explanation at all as to how his company account details ended up in the Health Department's payroll system. His evidence is a blatant lie.

Finding of facts
41. On the evidence, the Court is satisfied that the accused was the Chief Executive Officer of the hospital in the years in question, namely 2007 and 2008. He had earlier on in 2006 opened an account on behalf of Bijinn Ltd with BSP. The accused was sole director and shareholder of the company. He was sole signatory to the company bank account.

42. In collusion with Gedion Paubali, a data entry officer in the payroll section of the Department of Health in Port Moresby, the accused created his first ghost employee in the form of Anita Asuman in 2007. As chief executive officer of the hospital, the accused abused the administrative processes and with the assistance of Gedion Paubali successfully entered his ghost employee details with his company account details into the Health Department's payroll system.

43. Anita Asuman's engagement as a ghost employee in 2007 was a trial to test the system. She started on a salary of K462.11. Her seventh fortnight was on 21st November 2007. All of her salary payments ended up in the company account. Her status as a ghost employee had gone unnoticed and undetected. The accused was pleased with the administrative failure to detect the trial fraud. He decided to dig deeper into the Health Department pay roll.

44. On 22nd November 2007, in his minute to Mary Baea, the accused recruited four more ghost employees to increase the number of ghost employees to five. Then, in collusion with Gedion Paubali, the accused hit the jackpot. In their first pay day, three of the five ghost employees collected a total of K43,854.37, all of which ended up in the accused person's company account. By June 2008, a total of K69,197.81 had been remitted via the Health Department's payroll system to the accused person's company account.

45. The accused dishonestly set up the ghost employee scheme to swindle funds from the State. He created the ghost employees and supplied his account details to his associate Gedion Paubali to access the system and place his company account details against the ghost employees. It was a simple scheme with a high level of dishonesty by a chief executive officer. The accused had carefully planned and carried out the fraudulent scheme over a period of at least three years, from 2006 to 2008. Mary Baea should be commended for blowing the whistle against her chief executive officer.

The Court's Verdict
46. The Court is ultimately satisfied that all the elements of the six charges have been proved by the prosecution beyond reasonable doubt. Accordingly, the Court finds the accused guilty as charged in relation to the first count of abuse of office.

47. In relation to the remaining charges, the Court will convict the accused in relation to amounts within the period as stated in the indictment. Payments outside of the specified period will be discarded. Therefore, in relation to the second count, the Court finds the accused guilty for dishonestly applying to his own use and to the use of others the a sum of K8,712.03 through ghost employee Anita Asuman. In relation to the third count, the Court finds the accused guilty for dishonestly applying to his own use and to the use of others the sum of K6,562.09 through ghost employee Ogomer Faithfully.

48. In relation to the fourth count, the Court finds the accused guilty for dishonestly applying to his own use and to the use of others the sum of K19,508.96 through ghost employee Kemari Augi. In relation to the fifth count, the Court finds the accused guilty for dishonestly applying to his own use and to the use of others the sum of K19,535.69 through ghost employee Amos Anikou; and, in relation to the sixth count, the Court finds the accused guilty for dishonestly applying to his own use and to the use of others the sum of K12,489.26 through ghost employee John Kabia.

49. All of these monies belong to the State. Together, the accused abused his office and misappropriated a total of K66,808.03.

__________________________________________________________________
Pondros Kaluwin, Public Prosecutor: Lawyer for the State
Kumul Legal Lawyers: Lawyer for the Accused