N8042

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) 103 of 2019

THE STATE

V

KOANI LOHIA

Waigani: Berrigan J
2019: 12, 13 August and 17 September and 8 October

CRIMINAL LAW – Sentence – S. 383A(1)(a)(2)(d) of the Criminal Code – Misappropriation - K1,008,314.07 – Sentence of 8 years of imprisonment imposed.

Cases Cited:
Papua New Guinea Cases

Goli Golu v The State [1979] PNGLR 653
Lawrence Simbe v The State [1994] PNGLR 38
The State v Daniel Mapiria, unreported, CR1118/2000
The State v David Poholi (2016) N6214
The State v Janet Oba (2016), unreported, 
The State v Jimmy Kendi (No. 2)(2007) N3131
The State v Moko Essi Kom (2009) N6199
The State v Nancy Uviri (2008) N6039
The State v Niso (No 2) (2005) N2930
The State v Peter Tokunai (2015) N6039
The State v Solomon Junt Warur (2018) N7545
The State v Stanley Haru (2014) N5660
The State v Tardrew [1986] PNGLR 91 
The State v Tiensten (2014) N5563  
Wellington Belawa v The State [1988-1989] PNGLR 496 

References cited

Section 383A (1)(a)(2)(d), 383A(1A)(a) of the Criminal Code (Ch. 262) (the Criminal Code).

Counsel

Ms. L. Jack, for the State 
Mr. B. Koke, for Offender 

DECISION ON SENTENCE

8 October, 2019  

1.	BERRIGAN J:  The offender pleaded guilty to one count of misappropriation such that he dishonestly applied to his own use and the use of others monies in the sum of K1,008,314.07, the property of Australia and New Zealand Banking Group (PNG) Limited (ANZ), contrary to section 383A (1)(a)(2)(d) of the Criminal Code (Ch. 262) (the Criminal Code).

Facts

2.	The offender was employed by ANZ in Port Moresby as an Asset Finance Officer. 

3.	Over a period of 22 months between 27 May 2013 and 30 March 2015 the offender used his unique bank teller identification number on 194 occasions to falsely credit amounts to the bank’s system, recording them either as refunds, reimbursements or lease payments in its “DFR Account – Asset Finance”, or as “unposted items in suspense”.  On a few occasions the credits were posted to customer accounts held with the bank.  The offender then transferred equivalent amounts to his own personal bank account or that of his associates, namely Sarah T Kaleh, Sarah T Kaleh and Louis Oa (a joint account), or Seri M Baru, from which he accessed the monies, either directly, together with his associates, or via his associates’ bank cards.  In total the offender misappropriated K1,008,314.07. 

4.	The issue to be determined today is an appropriate sentence. 

Sentencing Principles and Comparative Case s

5.	The offender has been convicted of misappropriation contrary to s.383A(1)(a)(2)(d) of the Criminal Code, for which the maximum penalty is 10 years’ imprisonment.  In 2013 the Criminal Code was amended by the Criminal Code (Amendment Act), 2013, to include s. 383A(1A)(a) which provides that “Notwithstanding subsection (2), an offender guilty of the crime of misappropriation shall be sentenced to imprisonment for a term of 50 years without remission and without parole if the property misappropriated is of a value of K1 million or upwards, but does not exceed K10 million”.

6.	In this case nine (9) of the transactions conducted by the offender occurred prior to the certification of the above amendment on 18 September 2013.  When these transactions, totalling K70,589.57, are deducted from the total amount misappropriated, the amount misappropriated by the offender following the amendment to s. 383A of the Criminal Code is K948,879.40. In the circumstances the maximum penalty applicable in this case is 10 years of imprisonment, notwithstanding the total amount involved. 

7.	In Wellington Belawa v The State [1988-1989] PNGLR 496 the Supreme Court identified a number of factors that should be taken into account on sentence for an offence involving dishonesty, including: 

(a)	the amount taken; 
(b)	the quality and degree of trust reposed in the offender; 
(c)	the period over which the offence was perpetrated; 
(d)	the impact of the offence on the public and public confidence; 
(e)	the use to which the money was put; 
(f)	the effect upon the victim; 
(g)	whether any restitution has been made; 
(h)	remorse; 
(i)	the nature of the plea; 
(j)	any prior record; 
(k)	the effect on the offender; and 
(l)	any matters of mitigation special to the accused such as ill health, young or old age, being placed under great strain, or perhaps a long delay in being brought to trial.

8.	In addition, the Supreme Court suggested that the following scale of sentences may provide a useful base, to be adjusted upwards or downwards according to the factors identified above, such that where the amount involved is between:

(a)	K1 and K1000, a gaol term should rarely be imposed;
(b)	K1000 and K10,000 a gaol term of up to two years is appropriate;
(c)	K10,000 and K40,000, two to three years’ imprisonment is appropriate; and
(d)	K40,000 and K150,000, three to five years’ imprisonment is appropriate.

9.	Given the amount involved, this case falls outside the categories contained in Wellington Belawa.  It is also generally accepted that the ranges suggested in that case are now outdated because of the frequency and prevalence of misappropriation and related offences: see The State v Niso (No 2) (2005) N2930; and The State v Tiensten (2014) N5563.  Nevertheless the principles to be applied when determining sentence remain relevant and applicable.

10.	Both parties referred me to cases in support of their respective submissions.   

11.	Defence counsel submitted that a sentence in the “range” of three years would be appropriate, wholly suspended on conditions, including restitution.  In support of his submission he referred to the following cases:

(a)	The State v Daniel Mapiria, unreported, CR1118/2000, Mogish J, in which the offender was found guilty following trial of misappropriating K3.188m from the State, whilst Chairman of the National Gaming and Control Board, by countersigning 41 cheques drawn payable to cash over 10 months, and applying them to the benefit of another, namely the Registrar of the Board, rather than for the purposes of health, welfare and community as directed by the National Executive Council. He was sentenced to 9 years’ imprisonment wholly suspended having regard, in particular, to the fact that the offender’s medical condition would have caused him an excessive degree of suffering in prison;

(b)	The State v Jimmy Kendi (No. 2) (2007) N3131, Lenalia J, in which the prisoner was found guilty following trial of one count of obtaining by false pretence, and one of misappropriating, K4,298,037.33 from the State, with the assistance of corrupt officers from the Department of Finance & Treasury and the Department of Defence.  At the time the offender was the owner of an earth moving company in Bougainville, and the monies were obtained in payment of a false claim that the Defence Force had unlawfully confiscated the machinery and equipment belonging to his company during the crisis between 1993 and 1997.  He was sentenced to imprisonment of 4 and 9 years’ on the false pretence and misappropriation counts, respectively, to be served consecutively, i.e. a total sentence of 13 years of imprisonment;

(c)	The State v Stanley Haru (2014) N5660, Salika DCJ (as he then was) in which the prisoner was found guilty following trial of one  count of obtaining by false pretence, and one of misappropriating K2,628,825.18 the property of the Kone Tigers Rugby Football League Club, which he sold without authority and in breach of trust.  He was sentenced to 4 years and 8 years, respectively on each of the counts, to be served concurrently.   The sentence was wholly suspended on condition of restitution; and

(d)	The State v Paul Tiensten (2014) N5563, Salika DCJ (as he then was)  in which the prisoner was convicted following trial of misappropriating K10m as the Minister for National Planning and Monitoring, by dishonestly approving payment to an airline company. He was sentenced to 8 years’ imprisonment of which 4 years was suspended on condition of full restitution.

12.	The State submitted that a sentence in the range of seven (7) to nine (9) years of imprisonment would be appropriate.  In support of its submissions it also referred to Tiensten (supra) and Haru (supra), together with the following:

(a)	The State v Peter Tokunai (2015) N6039, Salika DCJ (as he then was) in which the prisoner was convicted following trial of one count of misappropriating K1.5 million from the State, over a period of 6 months, received for the purpose of rebuilding the Malaguna Catholic Church.  The prisoner was sentenced to 7 years’ imprisonment; and

(b)	The State v Nancy Uviri (2008) N5468 in which the prisoner was sentenced to 7 years of imprisonment for misappropriating K300,000 from her employer over an 18 month period through a scheme of bogus invoices.  She pleaded guilty.

13.	I also have regard to the following cases:

a.	The State v Niso (No 2) (2005) N2930, Gavara-Nanu J, in which the prisoner was found guilty following trial of four counts relating to conspiracy, fraudulently uttering a false document and misappropriation of a sum of K500,000.00 belonging to  his employer, the Bank of Papua New Guinea.  The offences took place over a period of about 3 weeks.  At the time he was the Senior Clerk and Supervisor in the General Ledgers Section.  The prisoner was sentenced to an effective term of 7 years’ 6 months’ imprisonment (from which 8 months spent in custody was deducted);

b.	The State v Moko Essi Kom (2009) N6199, David, J, in which the prisoner pleaded guilty to misappropriating K3.78m belonging to the State, over a period of 14 months, in concert with public officials and a banker by making false claims to the Department of Finance and Treasury.  The claims were paid by way of bank cheque which were paid to the credit of a bank account to which he had access in a false name. He was sentenced to 8 years’ imprisonment, from which time spent in custody (3 years, 4 months) was deducted; 

c.	The State v David Poholi (2016) N6214, Salika DCJ, in which the prisoner pleaded guilty to one count of conspiracy to defraud and one count of misappropriation of K688,000.00 from BSP, his employer, whilst a Human Resource Benefits and Remuneration Officer, over a period of 18 months and involving 134 transactions.  He was sentenced to 3 and 5 years’ respectively on each count, to be served concurrently;

d.	The State v Janet Oba (2016), (refer to N6301 for decision on verdict), unreported, Salika DCJ, in which the prisoner was sentenced to 5 years’ imprisonment following trial.  The prisoner, an Inspector of Police, uttered a forged court order directing BSP to release the sum of K1.2m to her company which she then misappropriated; and

e.	The State v Solomon Junt Warur (2018) N7545, Berrigan J, in which the prisoner pleaded guilty to one count of misappropriating K811,969.53 belonging to the State.  Over a period of more than 3 and half years the prisoner, a Communications Officer in the Information and Communication Technology (ICT) Section of Correctional Services (CS), issued 66 false orders and invoices on behalf of CS, payable to his own company, Merc-Tech, for which no goods or 

services were ever supplied.  He was sentenced to 7 years imprisonment. 

14.	The sentence in this matter will be determined having regard to its own facts and circumstances: Lawrence Simbe v The State [1994] PNGLR 38.  

Considerations on Sentence  

15.	Having regard to Wellington Belawa, the following matters have been taken into account.   

16.	It is well settled with respect to offences concerning dishonesty that, in general terms, the greater the amount of money involved the more serious the offence.  This case concerns a very substantial amount of money in the sum of K1,008,314.07. 

17.	The offence involved a serious breach of trust by an employee, who abused his access to, and knowledge of, the bank’s system for dishonest gain. 

18.	Moreover, the offence was committed over an extended period of 22 months.  Whilst not a highly complex scheme, it nevertheless involved ongoing planning and calculated efforts through no less than 194 transactions, demonstrating persistent and high levels of dishonesty.  The offender saw a weakness in the bank’s system and exploited it, moving monies in smaller amounts, between K500 and K17,000, on a regular basis during the period.   

19.	The offence was clearly conducted for financial gain and it is not in dispute that the monies were applied for the offender’s own use.  According to the offender this included sharing the proceeds with his associates. Some monies were spent by him on (three) houses in the village, and on wedding, funeral, medical and other village expenses or commitments, but overwhelmingly the monies were applied to support his lifestyle.

20.	The impact on the victim has been significant in terms of financial loss. 

21.	The State has submitted that the offence will have a serious effect on the public and public confidence in ANZ.  The Group Investigations Manager and Chief Risk Officer were careful to make clear that they were not in a position to speak on behalf of the bank. 

22.	I think it is important here to distinguish between the impact of an offence on a victim on one hand and its broader impact on the public and public confidence on the other.  
23.	As above, the Supreme Court in Wellington Belawa (supra) identified the principles to be applied when determining an appropriate sentence in a case involving dishonesty. In doing so Barnett J said:   
“The public can sometimes suffer from the loss of the actual property taken. For example, if large amounts are taken from a superannuation fund. But the public can also suffer from loss of confidence if the offender was a high and trusted public employee. This is an aggravating factor calling for a heavier sentence.
The appellant was the Secretary of the Department of West New Britain when he committed the offence and Secretary of the Department of Milne Bay when he endeavoured to cover up his offence and when it was uncovered. In those positions he was responsible for the administration of those provinces and he was in charge of, and a model for, all provincial public servants. It was his job to ensure that those public servants gave honest and efficient public service to the government and the public. 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, the Secretary himself, must have had a most serious effect upon public confidence in the whole system of government administration. It is a serious circumstance of aggravation which obviously, and properly, influenced the mind of the trial judge.”
24.	It is usually in this context that the effect on public confidence is considered in cases of misappropriation.  As explained by Barnett J, the government is entrusted with delivering public services, through the effective management of the State’s, or the public’s, scarce resources, including those generated through its internal revenue system.  The public is rightfully entitled to have confidence in the administration of government services and monies.  As such, an abuse of public monies by an offender within the public service may well have an effect on the public’s confidence in the administration of government services as a whole.  In general terms, the more senior the position, the greater the impact on public confidence. 

25.	I do agree that it is also important that the public has confidence in the banking and financial industry generally.  It is the case that some offences, given their nature, size or prevalence, may have an impact on public confidence in this regard, and that this may have a detrimental effect on the economy more broadly.  It is for this reason that banks are governed by strict legislative requirements, and overseen by independent supervisory agencies.  

26.	In my view, however, that is different from the public’s confidence in any one particular bank.  ANZ is a large, profit making corporation.  It has a responsibility to ensure that it complies with government regulations and requirements and that it has adequate controls in place to protect its customers’ money against dishonesty within its operations.  

27.	Whilst I accept that given its size and duration, the offence in this case by one of its employees may have had some impact on the victim in terms of the confidence of its client base, in my view that is likely to be limited in the broader scheme of things.  The bank is a large one and the offence, whilst conducted over a period of time, was ultimately detected by the bank and prosecuted.  

28.	Similarly, whilst I agree that an offence of this type has the potential to affect the public confidence in the banking or financial industry generally – and that this must be reflected in a deterrent sentence - I am not satisfied that it has had any significant impact in this particular case.     

29.	The offender is 34 years old and is married with one child who is about 3 months old.  At the time of the offence the offender was about 28 years old.  He comes from Pore Bada Village in Central Province. He completed his secondary education in Port Moresby and was offered a place at the University of Papua New Guinea to study law, which he was unable to complete for financial reasons.  He started work as a loan officer with 2K Management & Consultant Limited before joining ANZ in January 2009 as an Assets Finance Officer until the offence was detected in 2015. He held employment as a finance officer with Resource & Investment Finance Limited until mid-2018 but is currently unemployed.

30.	In mitigation this is the offender’s first offence.   He is previously of good character.  The Chairman of his village, describes him as a good community member, who never causes any trouble.  According to his pastor, the offender is an active member of the Pore Bada Emmanuel United Church.  He says that he is highly regarded by his community as a deacon in the congregation, and plays an important role in his clan, the church, and the community at large.

31.	In addition, the offender cooperated with both his employer and police at a very early stage and admitted the offence.  He pleaded guilty before this Court and saved the State the cost and inconvenience of a trial.  

32.	I also take this into account as indicative of his remorse, which he expressed on allocutus, and which I accept as genuine.  He fully accepted responsibility for the offence and apologised to the Court.  He apologised to the bank, and to his own family, including his parents who raised him well.  He also apologised to the State for breaking the laws of this nation.  He seeks mercy and a suspended sentence so that he may make restitution. 

33.	I accept that the offence will have a very serious impact on the offender.  It will cause shame and a loss of standing to himself and his family.  It will be very difficult for him to obtain employment in the future, particularly in the banking industry.  Any term of imprisonment will have a very significant effect on his wife and three month old son, both of whom are dependent on him as the sole breadwinner.  His young son will be without his father during his formative years.

34.	There are no matters of mitigation special to the offender. I do, however, take into account that despite his early cooperation with his employer in March 2016, he was not interviewed by police until July 2018 and in total it has taken some 3 ½ years for the matter to reach its conclusion.  

Sentence

35.	The offender has been convicted of one count of misappropriation of K1,008,314.07, contrary to s. 383A (1) (a) (2) (d) of the Criminal Code.  For the reasons outlined at [5] above, having regard to the age of the transactions underpinning the offence, the maximum penalty available in this case is 10 years’ imprisonment.  

36.	Section 19 of the Criminal Code provides the Court with broad discretion on sentence.  It is well established that the maximum penalty is reserved for the most serious instances of the offence:  Goli Golu v The State [1979] PNGLR 653.  Although this case does not fall within that category, the offence remains a very serious one. I have taken the mitigating factors into account, including his early cooperation with his employer and authorities, his guilty plea, lack of previous conviction, prior good character, and sincere expression of remorse. I also note the delay occasioned to date. These are significant factors in his favour but they are far outweighed by the aggravating factors in this case, namely the nature and quantum of the offence, the substantial period over which it was conducted, the position of trust held by the offender, the use to which the monies were put and the financial impact on the victim.  Dishonesty offences are prevalent and this case calls for both general and specific deterrence. 

37.	Having considered all of the above matters, I sentence the offender to 8 years’ imprisonment in hard labour.  

38.	The offender has pleaded for his sentence to be suspended so that he may make restitution.  This call is supported by the offender’s family and community.  

39.	In The State v Tardrew [1986] PNGLR 91 the Supreme Court set out three broad, but not exhaustive, categories in which it may be appropriate to suspend a sentence, namely: where it will promote the general deterrence or rehabilitation of the offender; where it will promote the repayment or restitution of stolen money or goods; or where imprisonment would cause an excessive degree of suffering to the particular offender, for example because of bad physical or mental health. 

40.	Whilst the pre-sentence report confirms that in general terms the candidate is suitable for probation, I am not satisfied that suspension is warranted in this case.

41.	On the information provided in the means assessment report the offender does not have the means to restitute.  He is currently unemployed, and supports himself through a small canteen.  The offender has savings of K15,000 in a personal bank account.  Despite his intention to set up a trade store, he has no assets through which to generate monies for restitution.  His brother-in-law has pledged to pay the sum of K10,000 in January 2020.  Two of the offender’s brothers have also pledged to pay K100 a fortnight towards restitution.  For obvious reasons, the offender was unable to provide a proposed payment schedule to Probation Services other than to promise his intention to restitute.  His lawyer has suggested that he might do so within 4 years but there is no basis for that in my view. 

42.	In the circumstances it would not be appropriate for me to order restitution and I decline to do so.  Nor would it be in the interests of the offender or his family.  The monies in this case are very substantial on any objective view but particularly in view of their current financial circumstances.  As I have said it will be difficult for the offender to obtain employment and his family will need what money he is able to provide from his savings to maintain themselves. 

43.	There is nothing to suggest that imprisonment will cause an excessive degree of suffering to the offender.  Whilst I have great sympathy for the offender’s wife and child, the impact of his incarceration on them is a regrettable but inevitable consequence of the offender’s conduct.  

44.	Nor is suspension appropriate in view of the very serious nature of the offence.  The need for both specific and general deterrence in this case calls for the sentence to be served in custody.

45.	Any bail monies are to be immediately refunded.

Orders accordingly.

__________________________________________________
Public Prosecutor:   	Lawyer for the State		
Public Solicitor:    	Lawyer for the Prisoner