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State v Kuri [1994] PGNC 66; N1269 (9 September 1994)

N1269

PAPUA NEW GUINEA
[In the National Court of Justice]

CR 524 OF 1994

THE STATE

V

NAPILYE KURI

Mount Hagen: Woods J.
5, 6, 7, 9 September 1994

Criminal Law - Misappropriation - Provincial Government Minister - use of a discretionary vote - mismanagement of public monies amounting to criminal misappropriation.

Cases cited:
Lawi v The State [1987] PNGLR 183
The State v Yuants Kaman [1994] Unreported N1177

M. Unagui for the State.
P Kunai for the Defendant

9 September 1994

WOODS, J. The accused Napilye Kuri is charged with two counts of misappropriation contrary to Criminal Code S. 383A. They both relate to applications and dealings with monies from certain Funds available to Ministers and Members of the Provincial Assembly and at the time the accused was the Minister for Finance in the Western Highlands Provincial Government. The matters occurred in 1992 before the Provincial Government was suspended.

The first count is that on the 24th November 1992 he dishonestly applied to his own use the sum of K2,000 the property of the State.

The second count is that on the 2nd December 1992 he dishonestly applied to his own use the sum of K2,431.62 the property of the State.

On the first count the evidence is that a Jack Karali who holds the position of Assistant Secretary in the Department of the Western Highlands went to the accused and requested some financial help from him as a friend. Apparently Mr Karali was going on a holiday overseas at the time. The accused did not help him before he went on the holiday but after he returned the accused gave him a cheque for K2,000 as the result of some application to the Western Highlands Economic Development Fund Committee. So there is a suggestion that Mr Karali had applied to the Fund for assistance for the development of a chicken project. Mr Karali then went and cashed the cheque but after cashing the cheque he was approached by the accused and another person whose claim was stated to be in the same cheque so Mr Karali handed over K1,000 to the other person a Mr Kopa Mara. There is evidence of an earlier statement to the police in which Mr Karali seemed to say that the request for financial assistance was to help with his holiday overseas in Singapore but after he came back the accused gave him the cheque and asked him to cash it and give K1,000 back to him which he did. In the statement Mr Karali says that he did not apply for a Grant but the money was given to him as a friend and was not related to any specific project.

There is a Minutes of the WHEDF meeting held on 26 October 1992 which notes an application by Jack Karali for K2,000 for a building. The accused himself in his evidence states that the application by Jack Karali was for money for the building for a chicken project, although in the same breath he suggests that the original request was as a friend to help him on his trip to Singapore. But when he came back and repeated a request he wanted it from the Economic Development Fund and the accused got the grant for him. However when the cheque was being cashed the accused admitted that the cheque was to cover a number of applications as it was often normal policy to raise one cheque for different applications and then the money has to be distributed. The accused did not really answer the obvious question that as the Committee had approved the whole amount for the applicant Jack Karali how could it be properly acquitted if it went to different persons. And how could there be a record of payments which differed from the official grant approval. The accused continuously referred to the Ministers discretion to apply the funds where it would assist the most people. He gave no explanation for the absence of any formal application from either Mr Karali or Mr Mara other than the suggestion they would have asked him orally as they were village people who could not write.

It is clear from the end of the all the evidence and from the contradictions between the accused and Mr Karali that he had originally made a request to help him go to Singapore on a holiday. Then the accused arranged for an approval for Mr Karali when he got back from his trip for a grant for a chicken project without any formal application being made. I notice that in the minutes of the meeting Mr Karali’s application is worded for a building, not a poultry project as were many others. Then at the end of it all the accused’s friend who had just got back from a holiday in Singapore was given some money without having formally applied for it and the cheque was used to give some money to another friend of the accused who was not the subject of any application to the Committee of the Fund. And then there has been no evidence of any progressive project reports as required under the Guidelines for the Western Highlands Economic Development Fund.

This all sounds like a very casual and dishonest way of looking after monies meant to be for the benefit of people who wished to honestly start some economic project and had insufficient funds themselves to start up. Is this just gross financial mismanagement or is it criminal misappropriation. There is a Fund set up by the Government for the purpose of Economic Development and there are strict guidelines. And we have two people making vague requests for financial assistance without any proper proposals prepared or submitted. And then we have the accused as Minister for Finance arranging for a grant and in some unregulated discretion arranging for the cheque to be issued and being present at the cashing and handing out of the proceeds of the cheque to two people.

The second count starts with a person called Mark Kamjua making a written request to the accused as Finance Minister for financial help in paying of a housing loan. Mr Kamjua was a bank officer with the PNGBC in Mount Hagen. Then the letter of request is altered by the accused and Kamjua’s name is crossed out and another name put in its place namely Kaulasi. There is other evidence to confirm that the original request for the money was to help with the applicant’s housing. In due course a cheque was issued in favour of Mark Kaulas for K2,431.62. However to get it cashed the accused had to go along to the bank with Mark Kaulas to help identify him so that the cheque could be cashed.. There is a note on the back of the cheque from the accused. However then when the cheque was cashed the monies had to be shared between 4 people, as the accused stated this was an exercise of his discretion to ensure the money went to the most deserving people. He referred to the fact that 4 other people had applied for money from the Fund but without written applications and this cheque was, unknown even to Mr Kaulas, to be available for 4 people altogether. The money was then distributed in the presence of the accused. What happened here is again highly irregular, it is not just a minor matter of bad administration of money but a serious discrepancy in the handling of monies belonging to the people of this country. It is as if people just wander up to the accused as Minister and ask for some money without any proper proposals setting out the proper cost and viability of any project. And the money is then obtained under one name for a specific purpose and the name then changed for another but for the same purpose but then given to others for other purposes. And then there is no evidence of any progressive reports on the application of those funds. Although it must be noted here that this grant came from what was called the Grants and Subsidies Fund which was an appropriation for Members to use to give grants to anyone who asked for it without any guidelines.

The people are entitled to expect the exercise of responsibility by persons delegated or voted in to handle the nation’s money. Special Funds available for Members and Ministers to assist people in their electorates is still public monies to be used for the benefit of the country and the people and must still be applied wisely and through appropriate guidelines. The manner in which the accused here used what he called his Ministerial discretion to change recipients of money from whom had applied or to arrange for grants to personal friends can be none other than questionable management of the nations resources.

There have been many cases of misappropriation charges being laid but at the end of all the evidence the Court has found only bad financial management, For example in the case State V Yuants Kaman 1994 Unreported N1177 which was about the application of monies from the Western Highlands Grants and Subsidies Appropriation, the subject of one of the charges here, I was satisfied that the whole scheme showed very poor administration of Government money and on the facts of that case I found that the application of a sum of K5,000 was not necessarily criminal misappropriation. In that case it appeared that the monies was used to purchase certain building materials which were then distributed to various church organisations. My comments in that case suggested that there was a fine line between gross mismanagement and misappropriation however features of the case before me now take the gross mismanagement further. Firstly it is not just the Grants and Subsidies Fund but it is also the Economic Development Fund where there are a clearly laid out set of guidelines which on the evidence were not followed such as the fact that there did not seem to have been a proper application made by Mr Karali, the purpose for the application of funds was changed, there is no evidence of any follow-up reports to the Committee on the use of the Funds, and the money was also split between two people yet the fund clearly needed records to ensure that according to the guidelines a recipient did not receive a further grant within the following 3 years.

Then even with the monies from the Grants and Subsidies Fund we have the deliberate falsification of the original application by the changing of the name of the applicant, yet the subject matter stayed the same even though the matter was peculiarly only referable to the original applicant. Namely a loan over a house at Sect.41 Lot 108. Whilst the pretence of the application being for a housing matter was continued as per the letter of 19/10/92 but then when the cheque was cashed with the personal assistance of the accused it was spread around some friends or constituents of the accused with stories of chicken projects. This all clearly could suggest to any normal person that the Minister was using these funds to give money to his friends for any reason or even no reason.

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

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 their support or help their friends. So if people in control or leadership create schemes for such an indiscriminate use of public monies they are leaving themselves open to such charges 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.

The counts here are that the accused dishonestly applied the money to his own use. I have already referred to the fact that he seemed to be using his position to give money to his friends, there is reference in the evidence to recipients saying they were friends of the accused and had asked him as a friend. I find and any jury would be entitled to find that the use of his position as Minister to obtain these grants and to distribute the monies at his discretion to these recipients was to his own use, namely to his own use to give money to friends and supporters.

There is no dispute that these funds were Government monies.

I am satisfied on the evidence that the counts of misappropriation have been proved and I find the accused Napilye Kuri guilty of two counts of misappropriation contrary to section 383A of the Criminal Code.

JUDGEMENT ON SENTENCE

Napili Kuri I have found you guilty on two counts of misappropriation of monies belonging to the State. This offence by leaders like yourself is regarded very seriously by the people of Papua New Guinea and the Courts and the people say that if you misappropriate government money you should go to jail. Just like when a boy steals a packet of biscuits from a trade store and often has to go to jail. However on the evidence in this case it is clear that you did not use the money yourself personally for example to go on a holiday or to buy property or things but what you did was you distributed the money to members of your electorate namely your constituents who came to you with requests for help. In your evidence you say you thought you had a discretion to give money to your constituents out of these two government funds in other words there was a system which allowed you to do this. However I have found that whilst there were these two funds that you have abused the system and not applied the monies in the form and manner they were required to be applied. There was a suggestion at one stage in the evidence that you complained that the public servants did not stop you doing this sort of thing. For example they signed the vouchers and they issued the cheques however it is likely they were probably too frightened for their jobs. You were the Minister and you insisted that you had this discretion and you thought these funds were for the absolute discretion for yourself and the other Members. As I said in the Judgement on Conviction you were in a situation where the government has set up funds without proper controls and where guidelines were not followed and it was very easy for you and perhaps other people to go too far and mismanage these funds. And in this case I have found that you did go too far.

However I distinguish this case from other cases where leaders like yourself have been found guilty of misappropriation for example in the case of Kindi Lawi, the case of Roy Yaki, the case of Wellington Belawa and the case of Elijah Titus, in those cases the misuse of money was clearly for the personal benefit of those accused; for example they used the money to put into their own bank accounts and to help purchase property like houses etc. However in this case before me today it is suggested that you thought you were doing what the system allowed and it is quite clear in the evidence of this case that there was no deliberate deception in presenting the evidence of this case, you were saying that you had the discretion of doing what you wanted and that is what you did. However I have found that that attitude to Government money is not correct and in this case because of all the changes in names and applications of the money from the original applicants this did amount to such gross mismanagement and dishonesty as to be criminal misappropriation.

However I feel that because you were using this money to give to your constituents and friends instead of using it directly personally for yourself perhaps I can give the option of an alternative to imprisonment. Also I note that last year in Wewak a number of provincial politicians were also convicted of similar offences and were given suspended sentences on the basis that they repaid the money.

In this case I don’t think that in this type of situation it is simply a matter of repaying the money namely the sum of K4,431 involved. Whilst I realise that this money was distributed amongst your constituents in reality the money was disposed of by you for your own purposes. You were the person who had complete control over these monies so it is not just a matter of repaying these monies to the State. I must consider a form of punishment which covers the misuse of these monies plus a punishment for the criminal mismanagement of government money. I am therefore going to consider a fine which will make up for the amount misused plus extra for a form of punishment and I note that there are situations in the law that if you cheat or deceive the authorities for example in tax situations as well as having to pay the money which was the subject of the deceit or fraud you may be fined a equivalent amount as the penalty. So in this case now it is not simply a matter of a fine for the amount of the money lost but a fine to cover that plus a punishment.

I fine you K7,000.00 and in default of paying that fine you will be imprisoned for two years. Normally the Court would expect the fine to be paid immediately however I am satisfied that you are a prominent person from your area so I am quite prepared to give some time to pay I therefore order that you have till the 30th of September 1994. If the fine is not paid by the 30th of September 1994 a warrant will be issued for your imprisonment for two years.

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Lawyer for the State: Public Prosecutor
Lawyer for the Defendant: P. Kunai