N5808

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CR 592 OF 2013

BETWEEN:

THE STATE

AND:

CLAYTON TANNER AND ALEX SOLON

Waigani: Salika, DCJ
2013: 18 November, 03 December,
2014: 04, 11, 25 & 26 June; 17 July; 02 September; 31 October

PRACTICE AND PROCEDURE – Criminal Law – Conviction on a charge of misappropriation – what is the appropriate sentence

Cases cited:

Belawa v The State (1988-89) PNGLR 596
The State v Alois Kintau and Isaac Tom (2014) N5761
The State v Lawrence Pukali (2014) N5695 
Doreen Liprin v The State (2001) PNGLR 6
The State v Zachery Pasliu (2014) N5696

Counsel:

Mr N Appo, for the State
Miss M Ainui, for Clayton Tanner
Miss A Hombunaka, for Alex Solon

SENTENCE

31st October, 2014

1.	SALIKA DCJ: After a full trial I convicted the prisoners Clayton and Alex Solon with one count of misappropriation of K292,663.50, the property of Post PNG Ltd.

2.	The trial started on 10 June 2014 and ended on 26 June 2014. The State called 7 witnesses and the two prisoners to gave evidence on t heir own behalf.

Circumstances of the Offence

3.	The following are the circumstances of the offence and are the facts upon which they were arraigned:

4.	The prisoner Clayton Tanner was employed by Post PNG as a technical manager for financial services within the financial services division. The prisoner Alex Solon was unemployed at t hat time and is a friend of Clayton Tanner.

5.	Post PNG introduced a new product, mobile Salim Moni Kwik (SMK) Service in the year 2011. Through this program Post PNG uses the mobile money system known as Telepin and the accounting system Pronto. Both were intergrated such that once a cash in is done on Pronto it automatically is recorded in Telepin. When the money is cashed out, the cash out is recorded on the Telepin and then recorded also on Pronto before the cash is handed to the customer. Clayton Tanner knew the working of the system very well because he was one of those who installed it.

7.	Between, the 01st of January 2012 and the 31st August 2012, the prisoners conspired with each other and fraudulently obtained from Post PNG an amount of K292,663.50. This they obtained using the mobile SMK (Salim Moni Kwik) system. Clayton Tanner manipulated the system by entering false cash entries on Telepin which is the mobile money system purporting to be monies sent from another province and then it was cashed out in Port Moresby. To anyone it would seem as if someone was sending some money from another part of the country to someone in Port Moresby, when in fact no names were sent. But the money was cashed out to whoever Clayton Tanner used. In this case he used Alex Solon to cash out once he sent messages to Alex Solon.

8.	Between the 01st day of January 2012 and 31st of August 2012 Clayton Tanner and Alex Solon fraudulently obtained from Post PNG an amount of K292,663.50

9.	Alex Solon was caught attempting to cash out when he was caught by Police and Post PNG Officials at the Boroko Post Office.

10.	Reconciliation of cash ins and cashouts using the system showed huge variances in that the telepin figures and the pronto figures did not balance off. The cash in of the money were purportedly done by Post PNG customer service officers in other named centres but there were no real cash ins. The respective branch officers were investigated but there was no evidence of cash ins from those service centres.

11.	The investigations revealed that the system was manipulated from Post PNG Head Office by someone who knew the system well. The prisoner Clayton Tanner was identified as the one who was involved in this fraud. He was therefore arrested and charged after the arrest of Alex Solon and after their connections were established. The State charged the accused under section 404(1) and 408(1) of the Criminal Code Act (Code). The State also invoked s.7 of the Code. After the trial the court convicted the accused.

Personal Particulars

CLAYTON TANNER

12.	Clayton is 32 years old and resides at the Hanuabada village with his wife's relatives. He is from Ussil village in the New Ireland Province. He is married with 3 children and the wife is now expecting a 4th child. The children are 10, 9 and 4 years old and the first two are in Grades 4 and 3 respectively.

13.	Clayton Tanner is a graduate from the University of Technology with a degree in Information Technology. He is now employed by PNG Forest Products and has been so far the last 7 months now. The prisoner has offered restitution.

ALEX SOLON

14.	Alex Solon is 32 years old and comes from Sohu village in the Manus Province. He lives at Gerehu Stage 6 in a house owned by his parents. His parents are both alive. His father was Vice Chancellor of the University of Goroka and is now serving as a lecturer at the same University. His mother is employed by the Department of Education as a Schools Inspector.

15.	Alex Solon is the only son in the family and has 3 sisters. His parents and sisters have all pledged to support him in whatever way they can to help him in his restitution efforts.

16.	Alex Solon is in a de facto relationship with his partner and have 3 children. His partner is employed by Pro Support HIV/Aids, a non government organization.

17.	Alex has a Diploma in Accounting from the Divine Word University and has been employed with a number of private organizations. He is currently employed by Cyber Space Accountants Ltd as Operations Manager for the firm.

18.	Alex has made a restitution of K61,000 into the National Court Trust Account. This will be used to pay back Post PNG. His father has agreed to mortgage his house to secure a loan to repay the balance of K89,000.00. Alex has no prior convictions.

19.	The prisoner denied their involvement in the commission of the crime. After the conviction Alex blames Clayton for using him and his business to steal the Post PNG money. To me that is an admission by Alex to the commission of the offence.

20.	In any case I have found the two men guilty of the charges laid against them.

Issue

21.	The only issue in this matter is the appropriate sentence to impose on the prisoners.

22.	The maximum penalty under s.383A(2) for misappropriation is 5 years imprisonment. In cases where the offender is an employee and the property dishonestly applied is the property of his employer the imprisonment term is 10 years (s.383A(2)(b)). Section 383A(2)(d) of the Code says that where the property dishonestly applied is of a value of K2,000 or more the maximum imprisonment term is also 10 y ears. In this case Clayton Tanner is caught under both subsections (2) (b) and (d) while Alex Solon is caught under subsection (2)(d). Both are therefore liable to 10 years imprisonment.

WHAT IS THE APPROPRIATE SENTENCE IN THIS CASE.

23.	 There is no established formula in arriving at a sentence on any one case, and this for the reason that the judge has a discretion on the type of punishment to impose as he or she sees fit and appropriate. The Supreme Court has tried to provide some guide for the National Court to use as guide to sentence. One such case is the case of Belawa v The State (1988-89) PNGR 498.

THE BELAWA GUIDE

24.	The Supreme Court in Belawa v The State (supra) formulated guide for sentencing in misappropriation cases. The Court there said that where:

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

25.	In this case the prisoners misappropriated K292,663.50. Under the Belawa formula prisoners would be looking at jail terms of between 7 to 9 years. The Belawa formula is no longer appropriate. I do not think the Belawa formula is relevant now. Times have changed, more money is now being misappropriated.

26.	However the following Belawa guide is still relevant when considering the imposition of sentences:

-	amounts taken
-	quality and degree of trust reposed on the prisoner
-	period over which the fraud or misappropriation was committed.
-	use for which the amount was put to.
-	effect upon the victim
-	restitution

27.	The prisoners stole K292,663.50 the property of Post PNG Limited. The relevance of this factor is that the larger the amount the higher or greater the punishment. It is also relevant for purposes of restitution. Smaller amounts are easily capable of being repaid while larger amounts are harder to repay.

28.	Alex Solon was not in any position of trust as he was not an employee of Post PNG. Clayton Tanner was however an employee of Post PNG. He was the Technical Services Manager of Post PNG. He was the only one who was fully conversant with the Mobile SMK system. He was one of those who set up the system and knew the workings of the system inside out. He was therefore in a position of trust.

29.	As the Technical Services Manager and one of those that set up the Mobile SMK System he bore a heavy duty to ensure the system worked well and succeeded. The Mobile SMK product was a very new product then and its operational success depended on Clayton Tanner. There was therefore a higher degree and level of trust placed on Clayton Tanner. He abused that trust. The higher the trust the higher the penalty.

30.	The offences were committed between the period from 1 January 2012 and 31 August 2012 which is a period of 8 months. 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. This offence was well thought out and planned and well executed as well over a period of 8 months. Fortunately, for the prisoners, they were detected before their crime reached into the million Kina racket.

31.	The money in this case would have been used to support their respective families in buying everyday food for them. For Clayton Tanner he was said to buy a motor vehicle, a lap top computer and other top range mobile phones and ipads.

32.	The victim in this matter is Post PNG Limited. The victim is a large corporate entity and was able to withstand the theft. Some adverse effect may have been felt but not enough to bring the company to its knees. The company has survived from the theft. Criminal activities such as these make companies to increase the cost of their services which then ultimately falls on the consumers who are the public at large.

33.	Clayton Tanner has not made any restitution so far but has offered it. A means assessment report suggests he may be able to restitute the money over a period of time. His friends and associates have pledged to assist him into paying the entire restitution. The total they stole is K292,663.50. Each prisoner will be responsible for the restitution of K146,331.75. At this stage, I do not know who benefited the most from these thefts but the State invoked s.7 of the Criminal Code.

34.	On the other hand Alex Solon has so far paid K61,000 towards restitution. He has offered to restitute the balance some other way. His means assessment report says he is capable of restituting the full amount of his share. I have no doubt both men are capable of full restitution.

SENTENCING TREND

35.	Recently this court sentenced Stanley Haru in the matter of The State v Stanley Haru (2013) to 8 years imprisonment for the misappropriation of K2.6 million kina. Four years of that sentence was suspended if he repays the full amount within 4 years. Even more recently I sentenced Mark Mauludu for misappropriation of K32,895.00. Mauludu reimbursed all the money and I sentenced him to 2 years imprisonment but suspended it all.

36.	In the State v Lawrence Pukali (2014) N5695, I convicted him after a full trial and sentenced him to 4 years imprisonment for misappropriating K405,600.00 part of it suspended if the whole sum was repaid. In The State v Alois Kintau and Issac Tom N5761, in that case I sentenced them to 4 years imprisonment for misappropriating K87,500. In that case both prisoners paid up the whole amount before sentence was passed. In the case of the State v Zachery Pasliu (2014) N5696, a police officer stole K4,200 which was a court exhibit. I sentenced him to 2 years imprisonment.

37.	Each case has its own peculiar circumstances when considering a sentence. In Doreen Liprin v The State (2001) PNGLR 6, the Supreme Court per 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.

38.	The prisoner in that case misused K6,000. In the distant past maybe some 30 years ago K6,000 was a lot of money and difficult to repay. In 2001 K6,000 was an amount that could be easily restituted. That is why Amet CJ said he did not consider it appropriate to sentence the offender to a custodial term for stealing onlyK6,000.

39.	The amount misappropriated in this case is K292,663.00 which is a lot of money. It will take some time for the prisoners to restitute that kind of money. 

Mitigating factors

40.	The prisoners are first time offenders. They both have young families to look after. They are both now gainfully employed in other organisations. Alex Solon appears to be regretful for what has happened and for allowing himself to be a part of this crime. Alex Solon was not in a position of trust although generally as an honest person he ought to have refused to be part of the scheme.

Aggravating Factors

41.	Clayton Tanner was in a position of high trust. He abused that trust. The prisoner tested the State to its fullest. They were convicted after a full trial. Clayton Tanner found a clever way to defraud Post PNG. Alex Solon agreed to be part of the scheme and no doubt got his share of the bounty.

Sentence

42.	The sentencing trend now is that the Courts are imposing stiff and tough sentences with conditions for restitution. I take into account the two prisoners antecedents. The two set out to benefit from a scheme designed no doubt by Clayton Tanner. Clayton Tanner was the major instigator of this crime in my respectful opinion and Alex Solon gladly agreed to be a partner in the crime with no complaint or second thoughts. The sentence will reflect this factor. In the circumstances and departing from the Belawa formula or equation, I sentenced Clayton Tanner to 4 years imprisonment with hard labour. Two years of that will be suspended upon payment of his share of the restitution of K146,331.75. The other two years he will serve. If no restitution is made within 2 years from todays date he will serve the full 4 years.

43.	In relation to Alex Solon he would have been drafted into the scheme by his good childhood friend Clayton Tanner. He could not resist and played his part well in cashing out the monies until he was caught. They have put the State to a lot of expenses and time. Alex Solon is sentenced to 3 years imprisonment with hard labour. Two years of that is suspended upon payment of his share of the K146,331.75 within two years. The other 12 months he will serve. If no full restitution is made within two years he will serve the full 3 years.

______________________________________________
Public Prosecutor: Lawyer for the State
Public Solicitor: Lawyer for the Prisoners