N5563

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR 402 of 2012
CR 403 of 2012

THE STATE

V

PAUL TIENSTEN

Waigani: Salika, DCJ
2013: 10, 11, 12, 17, 18 & 25 September, 22 November
2014: 19 & 28 March

CRIMINAL LAW – Section 383A of the Criminal Code – Misappropriation of K10 million – consideration as to what should be the appropriate sentence
CRIMINAL LAW – sentencing principles and guidelines

Cases Cited:

Belawa v The State (1988-89) PNGLR 496
Liprin v The State (2001) PNGLR 6
Tom Amaiu v The State (1979) PNGLR 576
Brian Kindi Lawi v The State (1987) PNGLR 183
Yaip Avini v The State SC 523
The State v Bae (2010) N4076
The State v Amonea (2012) N4688
The State v Nakikus Konga (2002) Unreported and Unnumbered National Court decision.
The State v Andrew Posai N2624
The State v Gabriel Ramoi (1993) PNGLR 390

Counsel

Mr A Kupmain, for the State
Mr G J Sheppard with Mr P Tabuchi, for the Defense

28th March, 2014

1. SALIKA DCJ: BACKGROUND: The prisoner was found guilty to one count of dishonestly applying to the use of another namely Travel Air K10 million the property of the State. The common language to describe the offence is misappropriation. He was convicted with one count of misappropriation under s.383A of the Criminal Code. He was convicted on 22 November, 2013.

2. The brief background information is that the prisoner who was then the Minister for National Planning and Monitoring issued a directive to his Department Secretary to facilitate the release of K10 million. The K10 million was approved to be paid to Travel Air and collected by Eremas Wartoto. The Court in convicting the prisoner was of the view that the prisoner began the facilitation process by giving the direction to his then Department Secretary. In convicting him I said:

"The direction from him and causing the department officers to bypass the proper appraisal process under the guidelines and by bypassing the Public Finance Management Act and the deliberate lies in the way appraisal process and the speed in which the facilitation of the release of the funds were orchestrated, I conclude that the accused and his officers in the department dishonestly applied K10 million to the use of Travel Air thereby contravening s.383A(1)(a) of the Criminal Code."

BACKGROUND OF PRISONER

3. I adopt verbatim the personal information of the prisoner as outlined by his counsel. They are:

Family & Marital Status

Paul Tiensten was born in Wawas, Pomio District, ENBP, Papua New Guinea, on 26 July 1966. He is married to Julie, whom he married in 2005, in the Catholic Church in Kinabot in Kokopo, ENBP. They have three young children, a son and twin girls. The children are aged 8 and 4 years old respectively.

Educational background

He started his education at Sampun Community School then to Palmalmal Provincial High School and later to Aiyura National High School prior to successfully completing and graduating with a Bachelor's Degree in Business Studies at the University of PNG (UPNG).

Employment History

Mr Tiensten joined the Department of Mining and Petroleum in 1989 as a Policy Officer after graduating from UPNG.
In the reorganizing of the Department in 1993 he joined the Policy Branch of the newly formed Policy Division. After completing a Degree of Master of Laws in Resource Law and policy specializing in Petroleum Law (LLM) at the centre for Energy, Petroleum, Mineral Law and Policy, University of Dundee, Scotland, UK in 1997, he became the first national head of the Petroleum Policy Branch. In 1998, he was subsequently promoted to director of the Petroleum division where he was as responsible as Project Manager for the World Bank – funded Gas Development and Utilization Technical Assistance Project. By virtue of his position, he was a Deputy Chairman Petroleum Advisory Board.
Mr Tiensten is also a keen and well known rugby player. He was the captain of the national team, the PNG Pukpuks in many international and domestic fixtures.

ISSUE

4. Having now gone through his personal particulars I now turn my focus on to the issue that is before the court. The issue is what is the appropriate sentence to impose on the prisoner.

MATTERS TAKEN INTO ACCOUNT WHEN ADDRESSING THE ISSUE

5. The offence of misappropriation carries a penalty of imprisonment for a term of 5 years except in circumstances provided under subsection 2 of s.383A which is a term of imprisonment of not exceeding 10 years. In this case therefore, the maximum penalty the court can impose is 10 years imprisonment but that is subject to s.19 of the Criminal Code which says inter alia that the court may impose a lesser term of imprisonment.

WHAT IS THE PROPER STARTING POINT

6. There is no mathematical or scientific formula used by the courts in arriving at a particular sentence. In the absence of any such formula (and I am not advocating for a formula for the obvious reason that the formula will take away the courts sentencing discretion in considering an appropriate sentence) the responsibility for determining the appropriate sentence in a case remains a discretion of the court.

7. In considering the appropriate sentence the court will be assisted by case precedents which in this case the court has been ably assisted. I am mindful of the statutory maximum penalty provision of 10 years for this case. The courts in this country have stated that misappropriation of public funds by public officials in positions of trust is a serious crime, however the statutory maximum of 10 years does not appear to support the courts pronouncements. It is in these types of cases where the maximum penalty is low that the principle that the maximum term be reserved for the worst of its kind is difficult to adhere to. This is because in this case there is not much room to maneuver from the lower level penalty to the maximum level. The maximum penalty is 10 years and the National Court is already imposing terms ranging from 4 to 8 years for misappropriation of public and private funds for thefts of much lesser amounts.

8. This in my respectful opinion has happened because of the tariff formula or guide suggested by the court in the celebrated cases of Belawa v The State (1988-89) PNGLR 496, in this area of the law, where it said:

(a) K1 – K1,000, a jail term should rarely be imposed.
(b) K1,000 and K10,000, a jail term of up to 2 years' is appropriate.
(c) K10,000 and K40,000, 2 to 3 years imprisonment is appropriate.
(d) K40,000 and K150,000, 3 to 5 years imprisonment is appropriate.

It is this type of formula or guide in my respectful opinion that "snuffs out" any room for maneuvering. Going by the above Belawa guide the question is what then should the sentence be for those who are convicted for misappropriation of amounts between:

- K150,000 to K200,000? 5 to 7 years? using that formula
- K200,000 to K300,000? 7 to 9 years? Using that formula
- K300,000 to K400,000? 9 to 10 years? Using that formula
- K400,000 to K500,000? 

By the time one comes to amounts of K400,000 to K500,000 there is no room to maneuver. You have reached your maximum - Perhaps it now is overdue to revisit the Belawa formula. What about misappropriation of more than K10,000,000.00 using the Belawa formula; what should be the sentence range there?

9. After this discussion the question arises as to whether or not it is a good idea to have a sentencing formula or guide for the courts to use and whether or not to ask what the starting point should be in considering an appropriate sentence. With respect, it is my view that it may not be a good idea to have a sentencing formula nor is it a good idea to discuss or ask the question: what the starting point should be: what in my respectful view should be discussed is, what the range of sentences are or should be, the sentencing patterns and the trends in sentencing using the case precedents. Mitigating factors and aggravating factors come into the mix at some point when considering the appropriate sentence.

10. Factors such as:

-	The amounts taken
-	The quality and degree of trust reposed on the prisoner
-	The period over which the fraud or misappropriation was committed.
-	The use for which the amount was put to.
-	The effect upon the victim
-	The effect upon the public and upon public confidence
-	The effect on the offender.
-	Restitution
-	Prisoner history
Matters of mitigation special to the offender are all relevant and should be considered when determining an appropriate sentence.

WHAT SENTENCES HAVE BEEN IMPOSED FOR EQUIVALENT OFFENCE

11. Counsel for the State in his submissions made useful reference to certain case precedents. I adopt that schedule of comparable sentences and list them here as follows:

SCHEDULE OF COMPARABLE SENTENCES

MISAPPROPRIATION 
S 383A CRIMINAL CODE 
SUPREME COURT
CASE	OFFENCE	SENTENCE AT FIRST INSTANCE	PARTICULARS	SENTENCE ON APPEAL	
Tom Amaiu v S [1979] PNGLR 576

Prentice CJ, Andrew J, Raine DCJ	Stealing (nb max 7 years)	5 years' imprisonment	Not guilty plea. Member of parliament stole cheque payable to another person in the sum of K10,120. No restitution.

"The offence constitutes an instance of the educated and well placed preying on the uneducated and less well placed; and it is the duty of the court to impose such penalties in such cases as will be seen as fitting by the community, and which will act as a deterrence to other likeminded persons, particularly at this stage of the country's development when opportunities for exploitation of the kind involved in this case tend to abound, and stealing of money is such a serious and widespread problem." 	5 years' imprisonment	
Brian Kindi Lawi v S [1987] PNGLR 183

Kidu CJ, Amet, Cory JJ	Misappropriation x 2 	2 years; 5 years, to be served concurrently	Not guilty plea. Member of parliament received 2 cheques from the National Government in the sums of K6000 and K10,000 for a specific road and an agricultural project respectively. Cheques were deposited to his account and subsequently withdrawn by him. No evidence as to how he spent the money.

Sentence reviewed as trial judge took into account irrelevant considerations on sentence, namely matters for which there was no evidence and the exercise by BL of his right to silence during ROI. 	18 months; 3 years, to be served concurrently, of which 18 months to be suspended on condition BL enter into recog in the sum of K3000 to be of good behaviour for 5 years; and repay Dept of Finance K10,000 within 7 days.	
S v Yaip Joshua Avini & Anor, 

SC 523

Kapi DCJ, Los J, Salika J	Misappropriation x 1	8 years' imprisonment	Not guilty pleas. Parliamentarian and company director convicted of misappropriating K100,000, from the State, for their own use. The money was intended for road projects and directed to the director's company. No restitution. 

Aggravating features: breach of trust, large amount; damage to the victim, namely the people of the electorate who did not receive their road. 

Breach of trust by parliamentarian higher than that of departmental head: "…unless drastic steps such as imposition of stiff penalties are taken against such persons, the ordinary people of this country will continue to be manipulated and will continue to suffer at the hand of the very people they appointed or elected to assist them." Applying Tom Amaiu v S [1979] PNGLR 576; Belawa; S v Napilye Kuri.	Appeal dismissed sentence of the court of first instance confirmed 	

SCHEDULE OF COMPARABLE SENTENCES
MISAPPROPRIATION
S 383A CRIMINAL CODE
NATIONAL COURT

CASE	OFFENCE	SENTENCE AT FIRST INSTANCE	PARTICULARS		
S v Napilye Kuri, unreported, 9 September 1994

N1269

Woods J	Misappropriation x 2	2 years' wholly suspended on condition fine of K7000 paid within 21 days	Not guilty plea. Minister for Finance, Western Highlands Province, misappropriated to his own use the sums of K2000 and K2431.62. Funds distributed to constituents who requested help and not for his own use. No restitution.

"The people of Papua New Guinea are entitled to expect some responsibility with the administration and spending of Government resources and money. Public accountability of public monies demands proper appropriations and control of such monies."

		
S v Paroa Kaia, unreported, 6 September 1995 

CR 340/1995, N1401

Sawong J	Misappropriation x 1	4 years' imprisonment	Guilty plea. Account supervisor misappropriated to his own use and to the use of others the sum of K94, 478.31 from ANZ Banking Corporation over 2 year period. No restitution.

As accounts supervisor, high degree of trust. Severe sentence required to act as deterrent and restore public confidence in banking institutions.

S v Bygonnes Tuse Nae, unreported, 18 September 1996

CR1217/1995, N1474

Sawong J	Misappropriation x 19	Counts 1 to 6, 8 to 10, 12 to 19: 2 years
Count 7: 2 years
Count 11: 4 years
To be served concurrently	Guilty plea. 19 counts of misappropriation ranging between K1200 and K4555.37 and totalling K103, 587.71 over 18 months from Eastern Highlands Rural Housing Scheme Incorporated, a scheme which the prisoner had established and ran. 

Aggravating features: amount taken; high degree of trust; period of offences; money applied for personal benefit; effect on victims.

Principle: Restitution orders should only be made where there is no doubt of the rights of respective parties. Proper evidence must be called to establish ownership and state of properties before the Court should be invited to make restitution orders and take it into account on sentence.

S v Yaip Joshua Avini & Anor, unreported, 14 November 1996

CR 1576/95

Jalina J	Misappropriation x 1	8 years' imprisonment	Not guilty pleas. Parliamentarian and company director convicted of misappropriating K100, 000, from the State, for their own use. The money was intended for road projects and directed to the director's company. No restitution. 

Aggravating features: breach of trust, large amount; damage to the victim, namely the people of the electorate who did not receive their road. 

Breach of trust by parliamentarian higher than that of departmental head: "…unless drastic steps such as imposition of stiff penalties are taken against such persons, the ordinary people of this country will continue to be manipulated and will continue to suffer at the hand of the very people they appointed or elected to assist them." Applying Tom Amaiu v S [1979] PNGLR 576; Belawa; S v Napilye Kuri.		
St v Tova

Unreported 17 March 1997

N1522

Batari AJ	Misappropriation x 1	Three years Imprisonment, suspended on the condition of repayment	Guilty plea. Accused dishonestly applied to his own use, money in the sum of K22, 100.00 the property of Allens Arthur Robinson Lawyers. In the course of his employment, he gained access to the firm's cheque book and uplifted blank cheque forms which he filled out and forged the signatures of Office Manageress and Principal Lawyer. 
Principle: Wellington Belawa v. The State [1988-89] PNGLR, 496 which suggests imprisonment term of 2 to 3 years where the amount misappropriated is between K10, 000.00 and K40, 000.00. 
Belawa's case was decided six years ago and in the meantime, the Courts have sounded warnings that the sentence will go up in line with the increasing number of misappropriation cases since that Supreme Court decision. 

S v Nakikus Konga, unreported, 24 May 2002

Lenalia J

CR 32/2001	
Misappropriation x 1	
5 years', wholly suspended on condition:
•	Enter into recog to keep peace and be of good behaviour for 3 years
•	Pay a fine of K2000 within 7 days
•	Restitute to the State the sum of K50,000 within 3 months	
Not guilty plea. Member of parliament misappropriated K50,000 intended for community projects. 

Aggravating features:
•	Amount involved high.
•	Member of Parliament, high level of trust.

However, court noted that funds used by prisoner to up-grade 2 houses, which while owned by the prisoner, were used by the Police Department since the time of the renovations rent-free. Case should be distinguished from those where money spent on personal indebtedness or otherwise squandered. In the circumstances sentence suspended. 

S v Sylvanus Siembo & 2 Ors, unreported, 30 May 2002 

CR 1220 of 2000

Sevua J
	Misappropriation x 1

 	6 years' hard labour, of which 3 years to be suspended on condition that prisoner enters into a recog in the sum of K5000, surety (not cash) to keep the peace and be of good behaviour for 2 years following discharge from prison.	Not guilty pleas. 3 accused misappropriated K100,000 from the State, which was intended for the construction of a road by Momboro Business Group (MBG) and was instead directed to the account of a private company, where it was intended the money would earn interest. 

Court noted that the accused were first time offenders, had large families, did not benefit personally from the use of the money and that the money, with interest, was repaid to MBG.

However, the offence involved misapplication of public funds. "This is a mockery of the Public Finance Management Act, especially the Financial Instructions made thereunder. I am of the view that this case is serious, not only because it involves public trust and confidence, but also the blatant disregard of strict Financial Instructions and legal tendering processes…The fact that Sylvanus Siembo is a Parliamentarian, a law maker, and a national leader and the two co-accused are senior public officials make this offence very serious. In my view, this factor alone calls for a heavier punishment as a deterrence to stop such top people", applying Tom Amaiu v S [1979] PNGLR 576 at 581; Belawa at 503; S v Napilye Kuri N1269, 9 September 1994 at 6. Public funds must be put to the purpose intended.

Aggravating factors:
•	Amount involved substantial.
•	Degree of trust substantial.
•	Offence committed over 1 month.
•	Money not used for purpose intended. 
•	Impact on public confidence.

Custodial sentence partially suspended on the basis that the money was not used personally.

St v Dennis Vela

June 24th 2004

Cr: 430 of 2004

Mogish J	1 x False pretence
1x Misappropriation	2 years imprisonment for false pretence
4 years for misappropriation to serve concurrently
	Pleaded guilty to both charges, a police officer misappropriated K28, 000 from his employer, the State
Mogish J: "…When it comes to sentencing a policeman who has been convicted of a dishonesty offence, the sentence should not only reflect the amount stolen but a high degree of trust ordinary citizens expect from police officers. Convicted and corrupt police officers have no place in the Constabulary. They are a disgrace to the uniform they wear and should be weeded out as a form of deterrence either through dismissal or imprisonment….Police officers must be expected to be punished severely than ordinary citizens because of the office they hold and the greater responsibility, accountability they have." 
		
S v Daniel Mapiria, unreported, 7 September 2004
 
CR 1118/2000

Mogish J	Misappropriation x 1

	9 years' wholly suspended on condition, including:
•	Restitution to State of K1m within 18 months
•	Upon payment sentence suspended
•	5 years community service
•	5 year good behaviour bond
•	6 monthly PS report
	Not guilty plea. Chairman of National Gaming and Control Board misappropriated K3.188m from the State by counter-signing 41 cheques drawn payable to cash over 10 months and applied to the benefit of another, namely the Registrar of the Board, Mr Aisa, rather than for the purposes of health, welfare, community etc as directed by the National Executive Council. Aisa was acquitted by another trial judge.

Aggravating features:
•	Amount of money involved
•	Quality and degree of trust reposed as chairman of multimillion kina statutory corporation
•	Eroding of public confidence in those appointed to high office.

Court noted that:
•	Misappropriation of monies irrespective of the amount may have devastating consequences for the victims.
•	Like politicians and senior bureaucrats, senior executives of statutory organisations must be warned that if they manipulate the system to benefit themselves at public expense, they will be severely punished, that imprisonment is almost inevitable. 
•	Prior good character carries little weight in such sentences, per Belawa, Siembo 
•	Family hardship, alone, cannot excuse a custodial sentence.

Offence one of worst cases of misappropriation and of such grave magnitude that the maximum sentence should be imposed. However Court prepared to suspend the sentence given:
•	Level of culpability, ie prisoner did not personally benefit from fraud. Per S v Siembo & Ors, CR 1220/2000.
•	Desire to make restitution, even though this was not indicative of remorse.
•	Personal mitigating factors including lack of sophistication, age (54), and particularly his poor medical condition, ie severe complications known to be associated with prisoner's 3 diseases likely to arise if not properly managed. In the circumstances imprisonment would cause an excessive degree of suffering. 

Court expressed view that applying other cases of breach of trust, in case of plea of guilty:
•	Where amount misappropriated b/w K100,000 and K210,000, imprisonment for b/w 6 to 8 years appropriate.
•	Where amount exceeds K210,000 8 to 10 years' imprisonment appropriate.

		
S v Imoi Maino, unreported, 1 October 2004

CR 340/2003, N 2773

David AJ

	Misappropriation x 1	4 years' imprisonment in hard labour, of which 2 years' suspended on condition:
•	Report to PS upon release from prison, as and when required.
•	To be of good behaviour during suspension
•	Not to change residential address without reasonable notice
•	To allow PS to enter home during reasonable hours during suspended sentence
•	Community service 2 days per week during period of suspension

	Guilty plea. Payroll clerk with Department of Education misappropriated K106,355.02 by drawing 16 cheques, 15 in favour of various others (teachers) and 1 in favour of herself, benefiting herself in the sum of K23,773.76.

Aggravating features:
•	Large amount 
•	Breach of trust
•	Offence committed over 14 months

Court partly suspended sentence in having considered following matters:
•	Unemployed. Wife, child and aged mother to care for.
•	Unable to make restitution, but termination entitlements and POSF contributions forfeited to Department of Education
•	No prior convictions, plea and co-operation with police

		

S v Iori Veraga, unreported, 17 June 2005

CR 389/2004, N2849

Sakora J	
Conspiracy x 2/ Misappropriation x 4 	
4 years' on each conspiracy count to be served concurrently; 2 years' on each misappropriation count, to be served concurrently. Misappropriation sentences cumulative on conspiracy sentences, ie 6 years' to serve.	
Not guilty plea. Valuer conspired with others, including senior executives of NPF, to defraud NPF of K60,300 and K175,000, by charging valuation fees that were excessive. Valuer then applied K20,300 and K7155 of that money to his own use, and K30,000 and K87,500 to the use of another, namely Jimmy Maladina. 

Court found that the prisoner played secondary role to that of co-conspirators. And noted that the prisoner had to that point been a productive member of the community. However, the crime was a well planned scheme designed to defraud a public institution specifically established to provide a "safety net" for the future of ordinary workers, who do not have a welfare system in PNG. The prisoner showed no remorse for the ordinary workers of the private sector, whose life savings were raided by him and his co-conspirators. No restitution. 		
St v Niso (No 2) [2005] PGNC 26; N2930

GAVARA-NANU J	-1x conspiracy, 
-1x forgery, 
-1x fraudulently uttering a false document and 
-1x misappropriation	•	3 yrs 6 months IHL for conspiracy.
•	1 yr 3 months IHL for forgery.
•	1 yr 3 months IHL for fraudulently uttering a false document.
•	7 years 6 months IHL for misappropriation.

(sentences for first, second and third counts be served concurrently with the sentence for the fourth count)

- Effective term of imprisonment 7 years 6 months IHL minus period spent in custody which is 8 months. Balance of effective sentence at 6 years 10 months IHL. 	Not Guilty Plea- The Prisoner conspired with one Soni Harvies and other unknown persons to defraud the Bank of Papua New Guinea of K500, 000.00. He then forged a Westpac Bank (PNG) Ltd cheque account application form in the name of one Raymond Mell. The prisoner knowingly and fraudulently uttered a false document purporting to be a Westpac Bank (PNG) Ltd cheque account application form in the name of Raymond Mell. He then applied to his own use and to the use of others K500, 000. 00.
Aggravating Factors
•	Substantial amount of money
•	Offender a senior clerk in the central bank
•	Duties involving handling of large investment cheque amounts
•	Holding responsible position 
•	Duty to the bank and to the customer investors 
•	 Breach of trust 
•	Effects of the crimes on the bank.
•	No Remorse & still denies committing the offence after guilty verdict
Mitigating Factors
•	First time offender
•	22 years of unblemished record with the bank
•	Offender not in the same category as a director or a manager of a company or a leader entrusted with control of funds
•	Opportunity crimes; not premeditated
•	No plans or schemes involved in the commission of crimes 
•	Substantial amount has been accounted for (K193,911.71)
•	Accomplice must share the blame		

St v Ari Inatiah

Unreported 10 August 2006

Cr: 1333 of 2003

Mogish J

1 x False pretence 

1x Misappropriation
	
4 years for False pretence
5 years for Misappropriation to be served concurrently
Of which 6 months suspended upon condition offender repay K5000.00 within 6 months.	
Not guilty plea -that he in collaboration with another policeman filled an accident report which was false and fraudulent. Using the report he instituted 3 false claims with MVIL who issued cheques to him totaling up to K5000.00. He cashed them and applied the money to his own use.

Aggravating features:

•	Breach of trust/Position as OIC Highway patrol.
•	Offence committed over a period of 10 months
Restitution was offered by the accused however his Honor established that "the mere fact that an offender is willing to make full restitution is no guarantee to a wholly suspended non-custodial sentence. Such a perception misconceives the underlying principle where there is a breach of trust involving senior executive. In those cases deterrence should be the prime consideration. This consideration must take precedence over the considerations of rehabilitation of the offender. Breach of trust by employees involves a situation where, in the public interest, sentences must be imposed with the object of stern general deterrence."

St v Jimmy Kendi (No. 2)
(2007) N3131

	1x False Pretence

1x Misappropriation
	-4 years for false pretence; and 
-9 years for misappropriation 

(to be served concurrently thus total of 13 years imprisonment)	Not guilty Plea- The prisoner fraudulently obtained K4,298,037.33 from the State, with assistance of corrupt officers, from the Department of Finance & Treasury and the Department of Defence, in payment of a claim that the Defence Force present on Bougainville during the crisis had unlawfully used machinery and equipment belonging to his company between 1993 and 1997. Evidence proved that the prisoner's company never owned any machinery or equipment during the claim period.
Factors taken into account
•	Large amount of money (Biggest amount involved in any fraudulent cases in the history of PNG since Independence)
•	Money belonged to the state (could have been used for services to the public)
•	No restitution 
•	No remorse 
•	Guilty plea
•	First time offender
•	No co-operation with the police and prosecution authorities. 
•	No undertaking either by the prisoner or the pre-sentence report on how the prisoner should make restitution if he was ordered to and how quickly		
St v Moko Essi Kom
(2009)
CR. No. 114 2008

David. J

	Misappropriation	8years imprisonment IHL

(Minus time spent in custody, 3yrs 4 months; thus serve remainder of 4yrs 8 months) 	Guilty Plea – Prisoner was approached by others to use the name Simon Wapo so that he and others would embezzle funds from the Department of Finance & Treasury. Claims were made and payments made to the prisoner totaling K3, 780, 000.00, which funds were used by the prisoner and others for their own use. 
Factors taken into account
•	 Large amount of money taken (2nd worst case behind Jimmy Kendi (No.2))
•	Pre-meditated scam taking place over 14 months
•	Money was used for the benefit of the prisoner and the others
•	State's money; Thus State had less to spend on services for the public
•	No restitution
•	This type of offence becoming prevalent
•	Guilty plea 
•	First time offender
•	Co-operated with police investigations; furnished information that has led to the arrest of others involved
•	No prior convictions
•	Showed remorse

Stanley Haru

Misappropriation	
8 years 	
Misappropriated K2.6 million. Pleaded not guilty. In a position of trust.

	
8 Yrs
4 Yrs suspended
4 Yrs to serve	

WHAT IS THE SENTENCING RANGE FOR THESE TYPES OF CASES

12. In considering what the sentence should be is again the discretion of the court. As discussed earlier there is no mathematical or scientific formula as to what the sentence should be. The mitigating factors and aggravating factors are taken into account in considering a sentence.

13. In this case the mitigating factors are:

(a)	The prisoner has no prior convictions.
(b)	The prisoner could suffer from loss of his seat as an elected Member of Parliament for the Pomio Open Seat.
(c)	The prisoner did not personally benefit from the crime.
(d)	The K10 million was put to a greater good use by Travel Air to open up new air routes throughout PNG and the people of PNG have benefited and are benefiting from lower airfares offered to the people of PNG, instead of a smaller number of people in Pomio, Kandrian and Bialla.
(e)	The prisoner has suffered and will suffer personal and public shame and disgrace as a result of this conviction and sentence.

14. The aggravating factors are:

a.	Substantial amount of money was misappropriated.
b.	The dishonest intent existed over a year period.
c.	Proper government procurement processes were not followed.
d.	The prisoner usurped the role of the Secretary, Department of National Planning and Monitoring.
e.	The prisoner played a key role in the commission of the offence by receiving the proposal from Travel Air and by issuing the direction on the proposal.
f.	The K10 million not used for the purpose it was intended for.
g.	The K10 million was to have been approved by the National Executive Council but was instead approved by a Departmental Head after direction from the prisoner which was in itself contrary to the Public Finance Management Act.
h.	The prisoner displayed a careless attitude when he said how the K10 million was used was none of his business.
i.	The prisoner's conduct brought disrepute to the office he occupied, namely Minister for National Planning and Monitoring.
j.	The prisoner held a position of trust.

15. The prisoner's counsel submitted that the misappropriation case here is not the worst type in its category in that the prisoner did not himself benefit from the crime. Instead it was submitted that the people of PNG have greatly benefited from this subsidized airfares of K10 million that was given to Travel Air.

16. It was also submitted on the prisoner' s behalf that he was a married man with young children to look after.

17. The prisoner also relies on character reference filed on his behalf by the Right Honourable Grand Chief Sir Michael Somare who described the prisoner as a "diligent hard working Minister in my government and a decent man. He is also honest, trustworthy person and a good family man."

18. Father Rudolf Palao, the Dean of the Catholic Church in Pomio also gave a glowing reference on the prisoner for the great work he was doing in his Pomio Electorate by funding health services, churches, law and order, youth and woman groups and infrastructure developments.

19. The Deputy Governor of East New Britain Province Herman Yareng also gave a good character reference on the prisoner saying the prisoner was working hard to bring development to his Pomio Electorate.

20. The Leader of the Opposition has also given a good report on the prisoner' s good character and a hard working man he is. He also says that the prisoner "is a decent and honest man and has a lot to offer and contribute to the growth and development of our country."

21. Counsel for the prisoner submitted that with that background it would be appropriate to impose a non custodial sentence with an order for restitution. He relied on the Supreme Court decision in Liprin v the State [2001] PNGLR 6 where Amet CJ said:

"I believe it is time to consider seriously whether offences of misappropriation of amounts of this kind warrants custodial sentences. I do not believe so. I believe the Court should be seriously designing alternatives to imprisonment that will achieve the purposes of retribution, restitution and rehabilitation in alternative ways than imprisonment. (underlining mine).

22. That case with respect involved a prisoner who misappropriated K6,000.00 belonging to her employer. This case involves misappropriation of K10 million, belonging to the State. The Liprin case decision was decided 2 – 1. The minority decision of Kapi DCJ (as he then was) is worth reading as well. The quote from Amet CJ as referred to must be read in its proper context. Amet CJ and Los J were talking about "misappropriation of amount of this kind" which was K6,000.00.

23. Counsel also relied on other unreported National Court decisions in The State v Bae (2010) N4076, The State v Amonea (2012) N4688 and the State v Nakikus Konga (2002) Unreported and Unnumbered National Court decision. In the Konga case, the prisoner there was a Member of Parliament for the Gazelle Open Seat and was found guilty of misappropriating K50,000.00, property of the National Gaming Control Board. The court sentenced him to 5 years imprisonment but suspended the entire 5 years with condition for restitution and imposed a fine of K2,000.00.

24. The prisoner on allocutus read from a prepared statement which he later handed a copy to the court with the consent of his lawyer. This is part of what he said.

"As a first time offender, I unreservedly apologise to the court, the people of PNG, Pomio people that I represent and my family for being convicted for misappropriation of K10 million to Travel Air.

I have never benefited from the K10 million and I understand that Travel Air has issued more than K39 million in subsidies from the K10 million transactions, that so many Papua New Guinea citizens have traveled and enjoyed cheaper air fares in 2012 and still continue to date.

I therefore beg the court for leniency due to the following reasons:

I have three young children who are attending school at the moment.

In my previous life, I served the Government of PNG with distinction as a public servant for thirteen (13) years in the Departments of Mining and Petroleum and energy from 1989 to 2002. Under my stewardship as the Director of Petroleum Division, Oil projects such as Kutubu, Gobe and Moran were developed and commenced contributing revenues to the State. By virtue of the position, I was the Deputy Chairman of the Petroleum Advisory Board and I was also responsible as Project Manager for the World Bank – funded Gas Development and Utilization Technical Assistance Project. This led to the formulation of the Gas White Paper which promoted the commercialization of gas in PNG.

Apart from work, I played rugby and became a national representative player. I was the captain of the national team, the PNG Pukpuks in many international and domestic fixtures.

In 2002 I resigned and ran for Pomio Open in the General Elections. In the 7th National Parliament, I became the newly elected Member for Pomio Open Electorate. I was consequently appointed Chairman of the Special Parliamentary Committee on Gas and Energy Development and my committee's priority was to fast track opportunities for gas and energy developments in Papua New Guinea.

I was later appointed the Trade and Industry Minister on the 12th November, 2003 in a minor reshuffle. I was the custodian of the Somare Government's Export Drive Economic Recovery Strategy and I was also responsible for Trade and Industrial matters.

In January 2004, I took over the Leadership of PPP from the previous Leader, and was recognized as the Parliamentary Leader of the People's Progress Party.

Towards the end of 2005, I was again appointed as Minister for Foreign Affairs and Trade due to another minor reshuffle. I held onto the portfolio till the 2007 General Election.

I was re-elected to the 8th National Parliament in 2007 under the National Alliance Party. The Coalition Government led by National Alliance under the stewardship of Grand Chief Sir Michael Somare provided another opportunity for me to be appointed the National Planning Minister until the change of Government on August 2, 2011. I was also elected as National Alliance Deputy Party leader for New Guinea Islands for four years.

Under my guidance, for the first time the Department of National Planning and Monitoring (DNP&M) formulated long to medium term plans for Papua New Guinea. The PNG Development Strategic Plan (PNG DSP) 2010-2030 and the Medium Term Development Plan (MTDP) 2011-2015. These were the overarching plans that integrated the entire government planning system into a long-term strategic action plan to guide our development into the future hence achieving our dreams in the PNG Vision 2050. The plan therefore sets out the broad framework, targets and strategies to achieve the vision of the Government.

The department also pursued other interventionist policies such as the Public Private Partnership Policy (PPP), State and Church Partnership and the Economic Corridor Development Concept to achieve effective service delivery to our people.

The 2011 National Budget was the first annual budget to implement the first Medium Term Development Plan 2011-2015. Under MTDP, funds were no longer held by the DNP&M, but were released to the respective agencies and provincial governments. In this way the DNP&M would strengthen its role in monitoring and planning the development of PNG.

As a professional mining and petroleum expert before becoming a politician, I advised the Somare Government in dealing with the technically complex matters associated with the industry.

As such, I was a leading member of the PNG LNG Ministerial negotiating team against Exxon Mobil and its partners in this multi-million project. PNG is therefore poised to benefit immensely in once in a lifetime transformational project. Revenues from this project will start flowing to the National coffers this year 2014.

In the 2012 General Election, I was re-elected for the 3rd time to the 9th National Parliament under People's United Assembly as Member for Pomio until present. I am currently the Deputy Leader of the party and my leader is Governor of Hela, Hon. Anderson Agiru.

Now turning to my electorate of Pomio, no doubt I have unfinished business in getting Pomio from back page to the front page of development.

Since 2002 to now, I have tried my best to deliver tangible economic projects to Pomio District with funding secured from PNG Government and foreign governments to realize such impact projects targeting socio-economic sectors of our economy in the District and Province as a whole."

25. The prisoner asked the court for compassion and forgiveness and asked for non custodial sentence and an order for restitution.

26. The State on the other hand submitted that the prisoner should not be accorded any benefit of a suspension of the head sentence. They relied on the Belawa case in urging for a custodial sentence. In the Belawa case Barnett J said:

"I consider the public interest in this case is paramount. The public need to deter people in high positions of trust from abusing and manipulating the system to benefit themselves at the public expense. The need for stern, retributive and punitive sanctions outweighs any personal factors… the higher the office one holds, the greater the responsibility and accountability, and if such a person abuses the position of that office then he can expect to be punished more severely than an ordinary citizen."

Barnett J went on to say:

"...where senior employees are guilty of breach of trust or dishonesty they will normally be people with an impressive employment record and previous good character, otherwise they would not hold the position in the first place. For such people the mere fact of conviction will bring about disgrace, dismissal, shame and the loss of future employment opportunities. The crime involved taking advantage of the position obtained as a result of the record of previous good character and faithful service to steal from the employer. Such factors standing alone should carry little weight in determining the appropriate sentence in cases such as this." 

27. The State has urged the court to apply those considerations in the Belawa case to this case and impose a custodial sentence as a means of deterrence. I note that submissions and agree in general what Barnett, J said in that case.

28. The state also relies on the National Court decision in the State v Andrew Posai N2624 Unreported National Court decision where Sevua, J said:

"A Member of Parliament who misappropriates public funds must be given immediate punitive custodial sentence to demonstrate the seriousness of the crime, which impact on the public and public confidence and also reflects the breach of trust reposed on him as a leader in managing public funds intended for specific purposes".

Again I agree in general Sevua J's point which is equally applicable in this case. These are relevant considerations in determining a sentence.

29. The State submitted that the prisoner's impressive history falls into insignificance in the light of the serious aggravating factors. On this point they rely again on the Belawa case where Barnett J said:

"The history of this offender… showed an impressive employment record and no evidence of previous convictions or acts of dishonesty. These factors must be taken into account but … this is almost always the case with offenders charged with breach of trust in positions of high office. If they did not have such a good employment record they would not have obtained their high position. It is their action of abusing that position of high trust which has resulted in the charge against them and for this reason weight given to the previous good service as a mitigating factor is reduced."

Again I agree with the statement of Barnett, J and I will apply that statement in this case. Indeed the prisoner in this case has an impressive history.

WHAT IS THE APPROPRIATE SENTENCE

30. I have already stated that it may not be a good idea to devise a sentencing formula based on amounts misappropriated as was done by the court in the Belawa case. However the guide in that case which provides for matters to be taken into account when considering sentences for offence involving dishonesty are in my respectful view still relevant and I will apply them in this case. They are:

a)	The amount taken
b)	The degree of trust held by the offender
c)	The period over which the money was committed
d)	The use of which the money was put to
e)	The effect on the victims
f)	The effect on the offender himself; and
g)	Whether restitution was made to the victim

THE AMOUNT TAKEN

31. The amount taken in this case was K10 million. The relevance of this factor is that the larger the amount the greater the punishment should be. It is also relevant in my view for restitution purposes. This is what Amet CJ was referring to in the Liprin case. He was referring to amounts taken by Liprin which did not warrant a custodial term in his view. The amount in the Liprin case was K6,000.00 which warranted penalties other than imprisonment. The amount here is K10 million which is a lot of money and so consideration of a custodial term in my view is in order. 
THE DEGREE OF TRUST HELD BY THE OFFENDER

32. The relevance of this factor is the greater the degree of trust, the more serious the offence and the heavier the sentence. In this case the prisoner was the Minister for National Planning and Monitoring. He was the political head of the department and as such held a very important position. The degree of trust bestowed on him first of all as a Member of Parliament by the people of the Pomio Open Electorate is high and the Prime Minister appointing him to hold that Ministerial portfolio is even higher in my view. I take judicial notice of the fact that he was elected into office of Member of Parliament by the people of the Pomio Open Electorate and that he was appointed as the Minister for National Planning and Monitoring by the Prime Minister. The people of Pomio Open Electorate entrusted the prisoner to represent their interest in Parliament with honesty while the then Prime Minister entrusted him to be Minister and with honesty as well. Sir Michael Somare considered the prisoner as a "diligent hardworking minister in my governments and a decent man. He is also honest, trustworthy person". So it can be safely concluded that the prisoner was in a high position of trust.

THE PERIOD OVER WHICH THE FRAUD OR MISAPPROPRATION WAS PERPETRATED.

33. The relevance of this factor is that a series of dishonest acts over a long period of time may indicate a more serious state of mind than that of a spur of the moment act. In this case there is evidence that a first submission was made earlier in 2010 which did not get through but a second submission went through. The offence was perpetrated over a period of time and that this was not a spur of the moment offence.

THE USE TO WHICH THE MONEY WAS PUT

34. The money was paid to initially benefit Travel Air a privately owned airline company which was not yet in operation. At the time Travel Air was not a Third Level Airline operator. It was just getting established. The money did not benefit the prisoner personally. The money was used to benefit another.

35. The charge under s.383A says that a person who dishonestly applies to his own use or to the use of another person property belonging to another is guilty of the crime of misappropriation. In other words he need not benefit personally from the use of the money. As long as he applied the money to the use of another person he is guilty of misappropriation. I however do take into account that he did not himself benefit from the use of the money.

36. I am also mindful of the impact of the money on Travel Air the beneficiary of the K10 million. Travel Air as a result of the K10 million offers cheaper airfares to many Papua New Guineans who fly on its routes, compared to Air Niugini, Airlines PNG and other Third Level Airline Operators. Travel Air is extending its routes to cover a good part of PNG. This is all good. However, the K10 million under the project proposal was to rehabilitate the closed down Palmalmal (Jacquinot Bay) Airstrip, Bialla and Kandrian airstrips. That did not happen.

37. Instead the prisoner on his allocutus informed the court that Tropic Air commenced flying to Palmalmal (Jacquinot Bay) Airstrip in 2013 after 10 years of aircraft absence. He said this came about as a result of a subsidy of K100,000.00 grant by the Pomio Joint District Project and Budget Priority Committee (JDP & BPC) towards provision of air services by Tropic Air. Similar funding support is expected this year. This is precisely what the K10 million was earmarked for in the first place. It was to be used as a subsidy to help fund the existing third level airline operators to fly to remote areas of PNG to provide much needed services.

THE EFFECT UPON THE VICTIMS

38. The first victims in this matter in my respectful view are the individual people of PNG. The second is the State or in other words, the people as a corporate body called the State or the government. The third victim in this case is the general public of PNG in my respectful view. The prisoner was a senior politician responsible for a very key department in the government. In the Belawa case Barnett J said: 

"At a time when scandal and corruption by public officers are being frequently exposed, the disclosure of this breach of trust by the "top man"… must have had a most serious effect upon public confidence in the whole system of government administration. It is a serious circumstances of aggravation."

39. In the instant case it is no secret that allegations of corrupt practices is rampant today. Public trust and confidence in their government and public officials is brought into question.
40. The fourth lot of victims are the prisoners family members and his constituents of the Pomio Electorate are the fifth lot of victims. They must suffer shame too. 

The effect on the Offender himself

41. Serious consequences follow where public office holders are convicted of such offences. Usually, they face termination of employment in serious cases. The prisoner has suffered humiliation, distress and shame and will continue to suffer those. This conviction will leave a black mark on his otherwise clean record.

Restitution

42. No restitution in full or in part has been made by the prisoner but he has offered restitution. Restitution is a relevant factor to take into account in sentencing.

THE SENTENCING TRENDS

43. From case precedents that the Court has been referred to, a number of cases where offenders were convicted for offences committed when they were serving as Members of Parliament. The list goes like this:

	PRISONER	CHARGE	SENTENCE	
1	Tom Amaiu	Stealing K10,120	5 yrs imprisonment	
2	Brian Kindi Lawi	Misappropriation of K16,000	3 yrs imprisonment	
3	Yaip Avini	Misappropriation of
K100,000	8 yrs imprisonment	
4	Nakikus Konga	Misappropriation of K50,000.00	5 years wholly suspended on conditions	
5	Sylvenius Siembo	Misappropriation of K100,000.00	6 yrs imprisonment 3 yrs suspended on conditions	
6	Andrew Posai	Misappropriation of K10,000.00	2 years all suspended on conditions.	
7	Gabriel Ramoi	Misappropriation	3 yrs imprisonment	
8	Robert Kaki Yabara	Misappropriation	?	
9	Esorom Burege	Misappropriation of K151,573.61	5 Years	
10	Nobert Makmop	Misappropriation of about K2,000.00	18 months imprisonment	
11	Roy Yaki	Misappropriation	?	

44. When one looks at the above table of cases, the trend appears to be that the Courts have been consistently imposing quite stern imprisonment terms where Members of Parliament had misapplied public funds for personal use. Only State v Nakikus Konga the sentence was wholly suspended. In Siembo's case the sentence of imprisonment was suspended in half. The other half he served in prison.

45. In this case the prisoner misappropriated K10 million to the use of Travel Air. He himself did not benefit personally. However, when a Member of Parliament and a Minister responsible for a Government Department gives a direction causing the department officers to bypass statutory requirements and proper appraisal processes in my view amounts to a serious breach of trust of the people of this country. Even when the money was used for the benefit of another and not himself personally is still a serious breach of trust.

46. I echo the statement by the Supreme Court in the case of Robert Kaki Yabara v The State [1984] PNGLR 378. This statement was made some 30 years ago but it is still very relevant today. The Supreme Court there said:

"Indeed we are dealing with someone who occupies a position which is called by many a "leader of the people". Perhaps nowhere else have politicians been so politely termed or naively described.
Whatever the term used it is undoubtedly a fact that he is a member of a body which makes laws…….
The responsibility of a Member of Parliament is a great one. It is certainly an equally great evil to trample on that responsibility."

In the case I consider the actions of the prisoner as having trampled on his great responsibility not only as a Member of Parliament but an even more higher and greater responsibility as a Minister in the National Executive Council.

47. It was the prisoner's duty and responsibility to ensure that government resources and money was properly controlled and accounted for. Those funds misapplied were in his department's care, custody and control. In that regard I restate what the National Court said in The State v Napilye Kuri N1269 Unreported decision from 1994 which is also very relevant today. Woods, J there said:

"The people of Papua New Guinea are entitled to expect some responsibility with the administration and spending of government resources and money. Public accountability of public monies demands proper appropriations and control of such monies. Public or government funds are not personal accounts into which those in control should have the right and power to dip into when they wished to ensure support or help their friends. So if people in control or leadership creates schemes for such an indiscriminate use of public monies, they are leaving themselves open to charges such as this one, misappropriation for their own ends, to help their friends rather than the proper management for the people as a whole and the nation."

48. The same degree of trust and honesty is expected of the prisoner, the other Members of Parliament, Departmental Secretaries and others by the people of this country to be responsible with government spending and be accountable. In this case the prisoner was found to be irresponsible and careless. He directed the Acting Secretary to facilitate the release of K10 million to Travel Air, an airline company owned by a political friend Eremas Wartoto who like the prisoner was a National Alliance party man. This was, in the circumstances a serious breach of trust.

Pre-Sentence Report

49. In his statement to the Probation Officer the prisoner still considers himself innocent. He further said because of this respect to the Court he says sorry for what he did. The prisoner has also asked the Court through the pre-sentence report if he could pay 50% of the K10 million and that the other half should be paid by Travel Air as the money benefitted that company.

50. On record the prisoner is the one who was charged for this offence and convicted. This court cannot make Travel Air to pay restitution because Travel Air was not charged and convicted. However the owner of Travel Air Eremas Wartoto and the prisoner were at the time members of the National Alliance Party (as shown by evidence at the trial and mention in paragraph 54 of the decision – page 16). The prisoner is at liberty to enter into private discussion with Mr Eremas Wartoto to help with the restitution.

51. The pre-sentence report makes the following assessment:

•	The offender is a first time offender without prior convictions, expressed remorse and said sorry for his actions and asked for court's leniency and consider non-custodial sentence.
•	He is willing to take responsibility and do restitution if ordered by the court.
•	A term of imprisonment may be a total loss to the state and may incur cost.
•	Also the young leader has more to give in terms of service delivery to the people of Pomio and the country as a whole.

The report then recommends or suggests that the court impose a non custodial term and order restitution and that he perform community work.

52. I have considered the options recommended by the probation report but in this case consider that sentencing option inappropriate and unsuitable as this is a serious case of misappropriation.

THE MEANS ASSESSMENT REPORT

53. This report recommends restitution orders as the prisoner has some cash savings and assets and properties which he can sell off to raise the monies for restitution. Furthermore he is likely to be assisted by relatives and "people he knows." It is indeed the court's intention to make orders for restitution.

WHAT SHOULD BE THE SENTENCE IN THIS CASE

54. Case precedents indicate that a stiff tough sentence be imposed with conditions for restitution. The maximum sentence is 10 years. The misappropriated amount is K10 million. Last month in the matter of The State v Stanley Haru, I sentenced Stanley Haru to 8 years imprisonment for misappropriation of K2.6 million. The K2.6 million was used for his own benefit. In this case the prisoner did not benefit personally. I will take into account that important factor. The amount in the Haru case is smaller than the amount in this matter; K2.6 million there and K10 million here. Haru misappropriated private property, in this case the prisoner misapplied public property. I take those distinguishing factors into account.

55. The case precedents of the Members of Parliament who were charged and convicted of misappropriation charges show that none of them misappropriated amounts of more than K150,000.00 yet they received very stiff sentences. This case stands alone on the large amount misapplied to the tune of K10 million. On one hand I do not consider this case to be in the worst category of these types of offences yet on the other hand I consider it to be a serious offence in that this was a serious breach of trust to commit this offence and a lot of money is involved.

56. I take into account what has been said in the past in the case precedents cited. Those statements made in those cases by the courts are significant and timely and they are relevant today as much as when they were made.

57. I take into account the prisoners personal background and his enormous contribution to the development of his electorate and to the development of Papua New Guinea. I take into account his sporting contributions as well as his antecedents.

58. In the circumstances taking into account all the mitigating factors in his favour and the aggravating factors I impose a sentence of 9 years imprisonment with hard labour which is one year less than the maximum. Four of those years will be suspended upon restitution of the K10,000,000.00 he was found guilty of misappropriating within 4 years from today. The balance that is 5 years will be served at the Bomana Jail in Port Moresby. The restitution must be paid while he is serving his time. His bail is to be refunded forthwith.
_____________________________________________________________
Public Prosecutor: Lawyer for the State
Young & Williams Lawyers: Lawyer for the Defense