N6596
PAPUA NEW GUINEA
 [IN THE NATIONAL COURT OF JUSTICE]

CR (FC) NO. 22 OF 2016

THE STATE

V

MAIKA BRUNO

Waigani: Cannings J
2016: 4, 5, 6, 9, 16, 19, 31 May,1 June, 18 & 22 July 
2017: 24 January 

CRIMINAL LAW –misappropriation, Criminal Code, Section 383A – elements of offence – circumstances in which State money ceases to be property of the State – whether State money has been applied to purposes to which it can lawfully be applied – meaning and proof of ‘dishonesty’. 

The accused was charged with two counts of misappropriation. He was the acting head of a governmental body. The State alleged that in the days after he was in fact told that his appointment was revoked and that he would be replaced, and before the date that his successor actually assumed office, the accused gave instructions for two cheques to be drawn against the governmental body’s bank account: a cheque for K55,000.00, drawn in favour of a law firm, which, on the accused’s instructions, commenced proceedings in the National Court challenging the revocation of his appointment; and a cheque for K36,000.00, paid in cash, which was given to the accused. It was alleged that the proceeds of each cheque were applied to purposes to which they could not lawfully be applied (to the use of the accused or other unauthorised recipients) and that the accused was guilty of misappropriation of State property. The accused pleaded not guilty and a trial was conducted. His defence was, in relation to the K55,000.00 cheque, that it fell within his discretionary powers to authorise that amount of expenditure, which was not for his personal use but proper expenditure in the interests of the body of which he was the head. As to the K36,000.00 cash cheque, the proceeds were applied to pay sources and other expenses in relation to a secret and official operation, but he was prevented by his successor from providing an acquittal of these funds. 

Held:

(1)	The elements of an offence under Section 383A(1)(a) are that a person:

(i)	applies;
(ii)	to his or her own use or to the use of another person;
(iii)	property;
(iv)	belonging to another person;
(v)	dishonestly.

(2)	Elements (i) and (iii) were, in both charges, non-contentious in that the accused “applied” (gave instructions for the use of) “property” (the State money, being the proceeds of each cheque).

(3)	Elements(ii), (iv) and (v) were contentious, and gave rise to two central issues in relation to each charge: (a) whether the money had been applied to proper, lawful purposes (elements (ii) and (iv)); and (b) whether the accused acted dishonestly (element v). 

(4)	If State money is applied to a lawful purpose, it ceases to be property of the State, thus element (iv) would be unproven. If it is applied to an unlawful purpose, it remains State property and its use by the accused or any other person would mean that elements (ii) and (iv) are satisfied (Brian Kindi Lawi v The State [1987] PNGLR 183). 

(5)	Element (v) requires the court to be satisfied that the accused applied the property “dishonestly” to his own (or another’s) use. It is a question of fact for the trial Judge to determine, based on the facts of the case and according to the ordinary standards of reasonable and honest people (Brian Kindi Lawi v The State [1987] PNGLR 183). 

(6)	As to count 1: (a) the K55,000.00 payment to the law firm was for the purpose of court proceedings aimed at protecting the personal position of the accused and made in breach of established protocols for engagement of private law firms by governmental bodies, it was therefore an unlawful and improper payment, which amounted to application of State money to the use of the accused and other persons, thus elements (ii) and (iv) were proven; and (b) it was proven that the accused should and would have known that it was an unlawful use of State money, thus he acted dishonestly and element (v) was proven. 

(7)	As to count 2: (a) obtaining State money in the form of K36,000.00 cash is inherently suspicious and it is incumbent on a person who obtains such a substantial sum of State money in cash to disclose proper purposes to which it has been applied, which the accused did not do, the consequence being that the cash was deemed to have been applied to unlawful purposes, thus elements (ii) and (iv) were proven; and (b) it was proven that the accused should and would have known that it was an unlawful use of State money, thus he acted dishonestly and element (v) was proven. 

(8)	The accused was accordingly found guilty of both counts.

Cases cited:

The following cases are cited in the judgment:

Brian Kindi Lawi v The State [1987] PNGLR 183
Havila Kavo v The State (2015) SC1450

Dates

The events referred to in this judgment occurred in 2013 unless otherwise indicated.

Abbreviations

The following abbreviations appear in the judgment:

Const – Constable
N – National Court judgment
NEC – National Executive Council 
NIO – National Intelligence Organization 
No – number
PNG – Papua New Guinea
PNGLR – Papua New Guinea Law Reports
OS – Originating Summons 
PSC – Public Services Commission
SC – Supreme Court judgment
Sgt – Sergeant
Snr – senior
Supt – Superintendent

Glossary

The following persons are referred to in the judgment.

Dr Lawrence Kalinoe – Secretary, Department of Attorney-General & Justice, State witness #9
Edward Wesley – Assistant Director, Counter-Intelligence Operations, NIO, State witness #6
Gari Baki – Commissioner of Police, State witness #7
Henry Leia – member, official personal staff, Office of Prime Minister 
Ignatius Yedu – Paymaster, NIO, State witness #5
Jennifer Kula – Acting Director, Finance & Administration, NIO, State witness #2
John Kioala – Snr Budgets Officer, NIO, State witness #3
John Ma’o Kali – Secretary, Department of Personnel Management, State witness #8
Maika Bruno – the accused, defence witness #1
Michael Newall Wilson – principal, Warner Shand Lawyers, State witness #1
Naraman Towaira – NIO, defence witness #3   
Odette Keme – Assistant Administrator, Accounts Office, NIO, State witness #4
Peter O’Neill – Prime Minister
Rupa Loi – NIO, defence witness #2
Sgt Philip Yongi – Investigating Officer, State witness #10
Sir Manasupe Zurenuoc – Chief Secretary to Government 

TRIAL

This was the trial of an accused charged with two counts of misappropriation. 

Counsel:
M Tamate, for the State
S Wanis, for the Accused

24th January, 2017

1.	CANNINGS J: The accused, Maika Bruno, is charged with two counts of misappropriation under Section 383A(1)(a) (misappropriation of property) of the Criminal Code. 

2.	He was the acting Director-General of the National Intelligence Organization. The NIO is a governmental body established by the National Intelligence Organization Act. Its primary functions are to collect, collate and process intelligence information and to provide to the National Executive Council timely, accurate and impartial assessments, forecasts and reports in respect of security matters affecting the nation.

3.	In late October 2013 the accused was notified that his appointment had been revoked and that he would be replaced by Mr Gari Baki. In the days after he was in fact told that his appointment was revoked and before the date that Mr Baki assumed office, the accused gave instructions for two cheques to be drawn against the NIO’s bank account. The first cheque is the subject of count 1. The second cheque is the subject of count 2.

Count 1 on the indictment states:

Maika Bruno … stands charged that he … between 1 November 2013 and 30 November 2013 … dishonestly applied to his own use and to the use of others … K55,000.00, the property of the Independent State of Papua New Guinea. 

Count 2 on the indictment states:

Maika Bruno … stands charged that he … between 1 November 2013 and 30 November 2013 … dishonestly applied to his own use and to the use of others … K36,000.00, the property of the Independent State of Papua New Guinea. 

4.	As to count 1: it is alleged that the accused instructed that a cheque in the sum of K55,000.00 be drawn in favour of a law firm, Warner Shand Lawyers, which, on the accused’s instructions, on 1 November 2013, commenced proceedings in the National Court, seeking declarations that the accused had been unlawfully removed and that Mr Baki had been unlawfully appointed. 

As to count 2, it is alleged that the accused instructed that a cheque be drawn for special operations purposes, payable in cash. 

It is alleged that the accused’s instructions were carried out and both cheques were drawn on 4 November 2013. It is alleged that the cheque for K55,000.00 payable to Warner Shand was presented on 5 November 2013 and the proceeds were credited to the firm’s account. It is alleged that the cash cheque for K36,000.00 was presented on 4 November 2013 and all the cash was obtained by the accused. 

5.	The State alleges that all the proceeds of each cheque were applied to purposes to which they could not lawfully be applied (to the use of the accused or others) and that this amounts to misappropriation of State property. 

6.	The accused pleaded not guilty and a trial was conducted. His defence was, in relation to the K55,000.00 cheque, that it fell within his discretionary powers to authorise that amount of expenditure, which was not for his personal use but proper expenditure in the interests of the NIO. As to the K36,000.00 cash cheque, the proceeds were applied to pay sources and other expenses in relation to a secret operation, but he was prevented by Mr Baki from providing an acquittal of these funds. 

UNDISPUTED FACTS

7.	A number of undisputed facts have emerged from the evidence:

•	In October 2013 the accused was Acting Director-General of the NIO, having held that position for approximately two years. Prior to his acting appointment the substantive position he held was Deputy Director-General of the NIO. He had been a senior officer of the NIO for ten years, having had a previous career in the PNG Defence Force in its intelligence unit and in the Department of Prime Minister’s Office of Security and Co-ordination. 

•	On 9 October 2013 the National Executive Council decided to advise the Governor-General to revoke the appointment of the accused and to appoint former Commissioner of Police, Mr Gari Baki, as Director-General of the NIO. No public announcement of the decision was made until later. 

•	On Tuesday 29 October 2013 Henry Leia, a member of the personal staff of the Prime Minister, came to NIO headquarters at Gordons, National Capital District, together with Mr Baki, and notified the accused that his appointment had been revoked and that he was replaced by Mr Baki. At that stage, no public announcement had been made.
	
•	Later that day, 29 October 2013, the accused went to the office of the Chief Secretary to Government, Sir Manasupe Zurenuoc, and had a meeting with the Chief Secretary and Mr Baki. The Chief Secretary confirmed that the National Executive Council had decided that the accused would be replaced by Mr Baki.

•	Also on that day, 29 October 2013, the accused went to the offices of Warner Shand Lawyers and met with the managing partner, Mr Michael Wilson, to seek advice regarding the revocation of his appointment and the appointment of Mr Baki. As a result of that meeting the accused gave instructions to Warner Shand Lawyers to commence court proceedings to challenge the legality of the revocation of his appointment and the appointment of Mr Baki. Approval of the Attorney-General for engaging Warner Shand Lawyers was not sought at any time.  

•	The revocation of the accused’s acting appointment and the substantive appointment of Mr Baki, for a term of four years, were published in National Gazette No G472, dated 29 October 2013, and expressed to take effect from 9 October 2013. However, that copy of the National Gazette was not physically published and distributed until later.

•	It was reported in the media on Thursday 30 October 2013 that Mr Baki had been appointed Director-General. (There is evidence of this in the accused’s letter to the Public Services Commission of 3 December 2013 [exhibit D11].)

•	On or about Friday 1 November 2013 Warner Shand Lawyers filed an originating summons in the National Court, OS No 573 of 2013, by which various orders and declarations were sought as to the revocation of the accused’s acting appointment and the substantive appointment of Mr Baki. The parties were described as: 

o	Bruno Maika, plaintiff; 
o	John Kali in his capacity as Secretary of the Department of Personnel Management, first defendant; 
o	Honourable Peter O’Neill CMG, MP in his capacity as the Minister responsible for the National Intelligence Organization, second defendant;
o	Sir Manasupe Zurenuoc in his capacity as the departmental head of the Department of Prime Minister and National Executive Council, third defendant;
o	Sir Michael Ogio in his capacity as the Head of State [sic], fourth defendant; and
o	Gari Baki, fifth defendant.

•	On the same day, 1 November 2013, the accused gave verbal instructions to the NIO’s Acting Director, Finance & Administration, Jennifer Kula, to raise two cheques: one for K55,000.00 in favour of Warner Shand Lawyers, the other for K36,000.00. 

•	On Sunday 3 November 2013 the originating summons in OS No 573 of 2013 and related court documents were served on Mr Baki at his home in Port Moresby.

•	On Monday 4 November 2013 two cheques were drawn against the NIO Drawing Account at the Bank of Papua New Guinea: one for K55,000.00 in favour of Warner Shand Lawyers, the other for K36,000.00 and stamped “PLEASE PAY CASH”.

•	On the morning of that day, 4 November 2013, the NIO Paymaster Ignatius Yedu went to the Bank of Papua New Guinea and cashed the cheque for K36,000.00 and gave the cash to the accused.

•	No acquittal of the K36,000.00 cash obtained by the accused has ever been presented by the accused or any other person.

•	Also on the morning of 4 November 2013, Mr Baki went to the offices of the NIO, called a meeting of staff in the conference room and explained that he was the new Director-General of the NIO. The accused did not attend the meeting. He was at or around that time outside the Bank of Papua New Guinea where he received the K36,000.00 cash.   

•	On Tuesday 5 November 2013 the court proceedings, OS No 573 of 2013, were mentioned for the first time in the National Court, before Justice Kandakasi, and adjourned to early December 2013. The matter never proceeded to trial. 

•	In May 2015 Mr Baki’s appointment as Director-General of the NIO was revoked and he was reappointed as Commissioner of Police, the position that he held at the time of the trial of this matter. Mr Benjamin Umba was appointed as Acting Director-General of the NIO.

LAW

8.	The offence with which the accused is charged is created by Section 383A (misappropriation of property) of the Criminal Code, which states:

(1)	A person who dishonestly applies to his own use or to the use of another person—

(a)	property belonging to another; or
(b)	property belonging to him which is in his possession or control (either solely or conjointly with another person) subject to a trust, direction or condition or on account of any other person,

is guilty of the crime of misappropriation of property.

(1A)	Notwithstanding Subsection (2), an offender guilty of the crime of misappropriation shall be sentenced —

(a)	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; and
(b)	to life imprisonment if the property misappropriated is of a value of K10 million or upwards.

(2)	An offender guilty of the crime of misappropriation of property is liable to imprisonment for a term not exceeding five years except in any of the following cases when he is liable to imprisonment for a term not exceeding 10 years:—

(a)	where the offender is a director of a company and the property dishonestly applied is company property; or
(b)	where the offender is an employee and the property dishonestly applied is the property of his employer; or
(c)	where the property dishonestly applied was subject to a trust, direction or condition; or
(d)	where the property dishonestly applied is of a value of K2,000.00 or upwards.

(3)	For the purposes of this section—

(a)	property includes money and all other property real or personal, legal or equitable, including things in action and other intangible property; and
(b)	a person's application of property may be dishonest even although he is willing to pay for the property or he intends to restore the property afterwards or to make restitution to the person to whom it belongs or to fulfil his obligations afterwards in respect of the property; and
(c)	a person's application of property shall be taken not to be dishonest, except where the property came into his possession or control as trustee or personal representative, if when he applies the property he does not know to whom the property belongs and believes on reasonable grounds that such person cannot be discovered by taking reasonable steps; and
(d)	persons to whom property belongs include the owner, any part owner, any person having a legal or equitable interest in or claim to the property and any person who, immediately before the offender's application of the property, had control of it.

9.	The accused was charged under Section 383A(1)(a), which provides:

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 of property.

10.	The elements of this offence, as stated by the Supreme Court in Havila Kavo v The State (2015) SC1450, are that the accused has:

(i)	applied;
(ii)	to his or her own use;
(iii)	property;
(iv)	belonging to another person;
(v)	dishonestly.

ISSUES

11.	Elements (i) and (iii) are, in both charges, non-contentious in that the accused “applied” (gave instructions for the use of) “property” (the State money, which was the proceeds of each cheque).Elements (ii), (iv) and (v) are contentious, and give rise to two central issues in relation to each charge: 

(a) whether the money was applied to proper, lawful purposes (elements (ii) and (iv)); and 

(b) whether the accused acted dishonestly (element v). 

12.	If State money is applied to a lawful purpose, it ceases to be property of the State, and element (iv) would be unproven. If it is applied to an unlawful purpose, it remains State property and its use by the accused or any other person would mean that elements (ii) and (iv) are satisfied (Brian Kindi Lawi v The State [1987] PNGLR 183). 

13.	Element (v) requires the court to be satisfied that the accused applied the property “dishonestly” to his own (or another’s) use. It is a question of fact for the trial Judge to determine, based on the facts of the case and according to the ordinary standards of reasonable and honest people (Brian Kindi Lawi v The State [1987] PNGLR 183). 

ISSUE (A): WAS THE MONEY APPLIED TO LAWFUL PURPOSES? 

14.	This issue will be addressed in relation to each of the two counts. Before doing so, it is necessary to set out the evidence, first in outline, then in detail, and to make findings of fact. 

Outline of evidence 

15.	The State’s case was based on the oral testimony of ten witnesses, plus documentary evidence consisting of exhibits marked P1 to P24.The defence case was based on the oral testimony of the accused and two other witnesses, plus documentary evidence consisting of exhibits marked D1 to D11. 

Evidence for the State

Oral testimony 

No	Witness	Description	
1	Michael N Wilson	Managing Partner, Warner Shand Lawyers	
Evidence	
On or about 29 October 2013 the accused came to his office for an urgent meeting – there were rumours that the accused was about to be replaced by Gari Baki – the accused was concerned that Mr Baki might not be a fit and proper person to be appointed Director-General of the NIO – the accused thought it necessary to challenge his (the accused’s) removal and the appointment of Mr Baki to protect the integrity of the NIO and in the best interests of the State – it was a real concern that the appointment of Mr Baki would be unlawful.

He (the witness) billed the accused the sum of K55,000.00 as that was his estimate of what the job was worth – he did not seek the approval of the Attorney-General or the 
Solicitor-General – it would have been inappropriate to do so – it was sensitive litigation involving matters of a spy organisation and national security – it was an emergency situation.

Difficulty was encountered in progressing the litigation due to the absence of a gazettal notice confirming the removal of the accused and the appointment of Mr Baki – the notice dated 29 October 2013 was not physically published until 3 December 2013, shortly afterwards, the court proceedings, OS No 573 of 2013, were discontinued.  
	
2	Jennifer Kula 	A/Director, Finance & Administration, NIO	
Evidence	
On Friday 1 November 2013 the accused instructed her to draw the two cheques – she understood that at that time he was still the Acting Director-General of the NIO – he therefore had the authority to give her those instructions – at that time, she and the accused were the authorised signatories to the NIO bank account, which was conducted at the Bank of Papua New Guinea.
	
3	John Koiala	Snr Budgets Officer, NIO	
Evidence	
He was instructed by Jennifer Kula to raise the requisitions for the two cheques, and did as he was instructed – his view is that the cheques were processed in accordance with normal procedures and there were no irregularities. 
	
4	Odette Keme	Assistant Administrator, Accounts Office, NIO	
Evidence	
She was instructed by Jennifer Kula on Monday 4 November 2013 to raise the two cheques, for K55,000.00 and K36,000.00 – her view is that the cheques were processed in accordance with normal procedures and there were no irregularities – Mr Baki came to the office on 4 November 2013 but, by the time he came, she had processed the two cheques in accordance with the request that had come from the accused who was at the relevant time, to her knowledge, the Acting Director of the NIO.
	
5	Ignatius Yedu	Paymaster, NIO	
Evidence	
On the morning of Monday 4 November 2013 his immediate boss, Jennifer Kula, sent him to the Bank of Papua New Guinea to cash a special operations cheque for K36,000.00 – the cheque had been processed by the data controller, Miss Odette Keme – he drove to the bank, accompanied by Senior Budgets Officer, John Koiala –the accused, who at that time was Acting Director-General, followed them in his own car and did not come inside the bank.

He (the witness) cashed the cheque and came out and handed the K36,000.00 cash in K100.00 notes to the accused, who drove off with the cash – he and Mr Koiala then went back to the office – when they returned to the office, he found out that Mr Baki had come in and had a meeting with staff – he was not at that meeting. 

His view is that the cashing of a special operations cheque in this manner was in accordance with normal procedures – it is part of his normal duties to cash such cheques – usually he would take the cash back to Mrs Kula, but on this occasion the accused asked for the cash and as the accused was, as far as he (the witness) knew, the Acting Director-General at the time, there were no irregularities.
	
6	Edward Wesley	Assistant Director, Counter-Intelligence Operations, NIO	
Evidence	
He has no knowledge of the K36,000.00 special operations cheque – he was given none of the proceeds of the cheque – on the morning of Monday 4 November 2013 he was on duty, but was out of the office when Mr Baki came in and held a meeting with staff – that was when he learned of Mr Baki’s appointment. 

The normal procedure is that if cash is needed for an operation, the Director Operations will make a request to the Director-General – if the request is approved and cash is made available, the Director Operations will provide an acquittal to the Director-General.

He (the witness) was interviewed by the Police in connexion with the criminal investigation of the accused in September 2015 – he has no reason to believe that Mr Baki had initiated the investigation after he was reappointed Commissioner of Police in May 2015 – Mr Baki did not direct him to provide a statement for the Police –  in September 2015 the Acting Director-General of the NIO was Benjamin Umba – Mr Umba asked him (the witness) to assist the Police in their enquiries – the Police asked him to make a statement and he complied with their request. 
	
7	Gari Baki	Commissioner of Police	
Evidence	
He and the accused had a meeting with the Chief Secretary during the week prior to Monday 4 November 2013 – the Chief Secretary asked the accused to arrange a handover-takeover – it was the responsibility of the accused, as the outgoing leader, to do that, but he failed to do so – instead the accused used public money to institute private court proceedings aimed at stopping him (the witness) assuming office – he was served court documents on Sunday 3 November 2013 – the accused was unsuccessful in getting a court order to prevent him taking up the post.

At the meeting with staff on the morning of Monday 4 November 2013 he (the witness) explained the decision of the NEC and told them that he was the legitimate appointee – the accused was not present at the meeting – he asked for a briefing from the various divisions.

It came to his attention on 12 November 2013 that some dubious payments had been made on Monday 4 November 2013, on the instructions of the accused –he discovered that a cheque for K55,000.00 had been given to Warner Shand Lawyers for the accused’s court case and a cash cheque had been drawn for K36,000.00 and the cash was given to the accused – he formed the view that drawing of both cheques was improper – government funds should not be used to fund private court cases; and there were, to his knowledge, no special operations being conducted at that time  – there was K91,000.00 “missing” – he called in the NIO officers responsible for processing the cheques and told them that what they had done was wrong – he referred the matters to the Fraud Squad towards the end of 2013, during the time that he was Director-General, well before he was reappointed Commissioner of Police.

The witness denied acting out of malice towards the accused – he (the witness) had known the accused for a long time and had nothing against him – the accused was a very senior officer who should have known better – he (the witness) felt it was his duty to report the misuse of government money.
	
8	John Ma’o Kali	Secretary, Department of Personnnel Management	
Evidence	
Though, as head of a governmental body, the accused, at the time that he approved the payment of K55,000.00 to a private law firm, was a “Section 32 officer” and had a financial delegation under the Public Finances (Management) Act to expend funds up to an amount of  K500,000.00, he was still obliged to apply the funds to a lawful purpose – he (the witness) could not see how it was proper for the accused to use public funds to defend his position – the accused had no entitlement under his contract of employment to legal costs.

Furthermore, the accused should have obtained approval from the Attorney-General to engage a private law firm – if the accused were concerned about his contract of employment he should have sought advice from the Secretary for Personnel Management (the witness) whose task it is to administer contracts of employment of departmental and statutory heads.

He (the witness) had no knowledge of the allegations about misuse of public money by the accused until the Fraud Squad asked in September 2015 to interview him.
	
9	Dr Lawrence Kalinoe	Secretary, Department of Attorney-General & Justice	
Evidence	
The legal proceeding commenced in the accused’s name in 2013 against the Prime Minister and others, including the State, was an employment-related matter which the accused was entitled to commence – but he was not entitled to engage private lawyers to represent him and have their legal fees funded by the State unless he obtained the approval of the Attorney-General, through the Secretary for Justice, under Section 7 of the Attorney-General Act, for a brief-out of the matter.

He (the witness) has checked the ‘register of brief-outs’ for 2013 and found no record of approval being sought or given for a brief-out of the accused’s 2013 court proceeding to Warners Shand Lawyers – if the accused had sought approval, it is most unlikely it would have been given as his court proceeding was a private matter. 

This is a consistent approach that has been taken since he (the witness) became Secretary for Justice in 2010 – it is a necessary restriction – it is a legal  requirement – it has been enforced since 2010 to contain and control the State’s legal costs – the restriction applies to all State institutions and instrumentalities and is designed to prevent them awarding a general brief-out of legal matters to private law firms – each request for a brief-out is dealt with on a case-by-case basis – if his office receives a bill from a private law firm for legal services provided to a State institution or instrumentality and there has been no authorised brief-out under Section 7 of the Attorney-General Act, he will send the bill back to the law firm without endorsement and the bill will not be paid by the State. 

He (the witness) could not recall raising with the accused the issue of restrictions on brief-outs to private law firms– but the accused was a statutory head and all such persons are expected to know these basic laws and procedures – what happened in this case was illegal. 
	
10	Sgt Philip Yongi	Investigating officer	
Evidence	
He was the lead investigator – the investigation was commenced after a referral by Mr Baki, who was at the time Director-General of the NIO – he (the witness) could not recall when Mr Baki’s referral was made or when the case was allocated to him by the internal panel in the Fraud Squad directorate – Mr Baki did not push him to investigate the matter – the instructions to conduct the investigation came from the Fraud Squad panel, not from Mr Baki.

Documentary evidence 

16.	The exhibits fall into the following categories:

•	Police statements of witnesses and other persons interviewed in the course of the Police investigation [exhibits P1 to P4, P10 to P17];

•	Warner Shand invoice for K55,000.00, dated 31 October 2013 [exhibit P5];

•	internal NIO memos, dated 1 November 2013 [exhibits P6, P18];

•	cheques for K55,000.00 and K36,000.00 and statement of NIO account at Bank of Papua New Guinea [exhibits P7 to P9];

•	requisitions for expenditure, general expenses forms re processing of cheques [exhibits P19-P22];

•	record of interview of the accused [exhibit P23]: he was interviewed in the presence of Mr Wilson of Warner Shand Lawyers – he said that he was not given notice of the intention of the NEC to revoke his appointment and to appoint Mr Baki – it was apparent that the NEC had acted on misinformation that he was not performing – it made the decision when he was overseas with the Prime Minister on security-related business – he confirmed authorising the processing of the two cheques (which have become the subject of the criminal charges): K55,000.00 to Warner Shand Lawyers and K36,000.00 cash – as for the K55,000.00 payment, he authorised this as he was still Acting Director-General of the NIO – by 4 November 2013, he had not been given anything in writing to confirm the rumours that he was being replaced – he sought advice from sources within the Department of Prime Minister who advised that it was legal for him to engage Warner Shand Lawyers – the court proceedings were not a challenge to the decision of the NEC as there was no formal decision in place at that stage – the court proceedings were necessary to protect the NIO  – as for the K36,000.00: part of it was given to Mrs Kula and part to Mr Wesley and the rest was used to pay his sources – he was unable to acquit the K36,000.00 as Mr Baki, on 4 November 2013, banned him from entering the NIO office;

•	National Gazette, 29 October 2013 [exhibit P24].

Evidence for the defence

17. Oral testimony

No	Witness	Description	
1	Maika Bruno 	The accused	
Evidence	
In examination-in-chief the accused stated that he had commenced the National Court proceedings regarding Mr Baki’s appointment to protect the integrity of the NIO – when Mr Leia came to NIO headquarters on 29 October 2013 he was drunk and aggressive and unprofessional – Mr Baki also arrived unannounced that day – it was unclear whether he (the accused) had in fact and law actually been replaced as there was nothing in writing.

When he (the accused) and Mr Baki went to see the Chief Secretary on 29 October 2013 the Chief Secretary could only say that he knew of the NEC decision (to revoke the appointment of the accused and to appoint Mr Baki) but did not have a copy of it – the Chief Secretary told him to stay in office until there was something in writing – he (the accused) was of the view that at least up to and including 4 November 2013 he remained in office as the acting Director-General – but the issue required clarification and that was another reason he decided, in the best interests of the NIO, to take the issue to court – the K55,000.00 cheque was used to fund the court case – the money was drawn from the special operations vote as the court proceedings were, in effect, a special operation undertaken in the best interests of the NIO.

As for the K36,000.00 cash cheque: this was for a special operation, “Operation Black Tee-shirt”, regarding the 2011-2012 political impasse – Edward Wesley was not involved in the operation due to a conflict of interests.

In cross-examination the accused was adamant that on 29 October 2013 there was nothing in writing about his removal and Mr Baki’s appointment – before the meeting with the Chief Secretary, there were only rumours – the Chief Secretary simply confirmed the rumours that he (the accused) was being replaced and told him to remain in office until something was in writing – he was not to arrange a handover-takeover until something was in writing.

The accused denied that the K55,000.00 payment to Warner Shand Lawyers meant that he was using government money to pay his private legal bills – he commenced the court proceedings in the best interests of the NIO and the State – he agreed that he did not seek the approval of the Attorney-General to engage Warner Shand Lawyers – he did not consider that it was necessary given the urgency and sensitivity of the situation – engagement of a private law firm was in the circumstances proper – the court case was not a personal matter, he commenced the court case in the interests of the NIO – Warner Shand Lawyers were actually acting for the NIO, not for himself –Mr Baki’s appointment was a threat to national  security – Mr Baki was a person of interest in a major NIO operation,  they held  a thick file on him – he was the wrong candidate for the position and the Government needed to be told that – he (the accused) had previously advised the Chief Secretary of the highly sensitive file the NIO had on Mr Baki and his activities in his first term as Commissioner of Police.

The handover-takeover did not take place as Mr Baki, on 4 November 2013, verbally banned him from the office and the next day, 5 November 2013, put that instruction in writing.

He went to the bank with Mr Yedu and Mr Koiala on 4 November 2013 as he was still at that time the Acting Director-General – he sought and obtained the K36,000.00 cash for proper purposes – in the normal course of events that cash would have been distributed to NIO sources during a three-week period in September-October 2013, however in that period he was overseas on official duty with the Prime Minister – he (the accused) raised it in weekly management meetings after he returned from overseas and Jennifer Kula knew about it and he had verbally reminded her of it – the amount was not large by NIO standards as on average K10,000.00 cash per week is needed to pay intelligence sources – he gave the instruction to raise a cash cheque for K36,000.00 well before Mr Baki came to the office – the cash was in fact used to pay NIO sources – he (the accused) agreed that he did not acquit the application of the cash as Mr Baki made it impossible for him to do so by, on 4 November 2013, verbally banning him from the office, on 5 November 2013 putting the ban in writing, on 15 November 2013 suspending him from duty and in December 2014 forcing him to resign – another problem was that after November 2013, the NIO moved to new offices and he was advised by his former staff that the confidential documents necessary for him to prepare the acquittal were missing – if he (the accused) had not been banned from the office he would have acquitted the K36,000.00 – Mr Baki should have called him so that they could discuss the issue of acquittals – but Mr Baki is a very aggressive man and he did not call him.

He (the accused) remains of the view that the appointment of Mr Baki was politicised and not in compliance with the Public Services (Management) Act and other laws – he brought these matters to the attention of the Prime Minister in an “appeal” letter dated 28 October 2013 
(though the accused stated that that was not the correct date) in which he stated that the NEC had been misled to believe that he was not performing and that the NIO was in a state of decline – on 3 December 2013 he wrote a detailed letter to the Public Services Commission pointing out a number of serious questions that needed to be answered 
	
2	Rupa Loi 	Protective Security Co-ordinator	
Evidence	
He recalls that at 9.00 am on 29 October 2013 there was a senior management meeting to address a number of outstanding issues, including the need to draw funds to pay sources  for various special projects, in particular Operation Black Tee-shirt – he (the witness) was team leader of that operation – the accused instructed the Director Finance & Administration to arrange K36,000.00 cash for payment to sources – Edward Wesley was not part of that operation and would not have known about the need for the K36,000.00 cash.  

Later that day, 29 October 2013, Mr Baki and Mr Leia walked in, and informed some staff that Mr Baki had been appointed to replace Mr Bruno – he (the witness) met them and mentioned that the staff had heard rumours to that effect – but Mr Baki had no document to verify what he was saying – later that day Mr Bruno went to see the Chief Secretary.

One of the first things Mr Baki did upon taking up office as Director-General was to organise movement to a new office location – as a result, many files and documents were lost – he (the witness) has no record of disbursement of the K36,000.00 cash.
	
3	Naraman Towaira	Executive Officer to Director-General, NIO	
Evidence	
He was the accused’s Executive Officer – he (the witness) was present at the office on 29 October 2013 when Mr Leia (who was behaving very aggressively and shouting) and Mr Baki came to the NIO office to notify the staff that Mr Baki had been appointed as the new Director-General – however, they had nothing in writing. 

He (the witness) was also present on 4 November 2013 when Mr Baki came to the office and called a meeting of staff in the conference room – he could not recall whether Mr Baki presented a copy of the National Gazette to verify his appointment – he has no knowledge of the accused’s engagement of Warner Shand Lawyers.

Documentary evidence 

18.	  The exhibits fall into the following categories:

•	an affidavit of the accused, filed in the court proceedings, OS No 573 of 2013 – the accused deposes to the events of 29 October 2013 at the NIO office and gives an opinion on the unsuitability of Mr Baki for the position of Director-General of the NIO [exhibit D1];

•	letter to the Prime Minister by Warner Shand Lawyers, 31 October 2013, entitled “Appeal against the appointment of Mr Gari Baki as the Director-General, National Intelligence Organization”, signed by Mr Wilson – the begins “We act for Mr Bruno Maika who is our client in respect of the above matter …”– it is argued that revocation of the accused’s appointment should have been referred to the Public Services Commission, that the accused was denied his right to be heard, that Mr Baki’s appointment had not undergone the necessary “screening”, that the dismissal of the accused had the effect of compromising intelligence and security contracts with the Israeli Government as it was apparent that the accused had been negotiating them “after he was dismissed” [exhibit D2];

•	various official documents recording the work of the NIO in the period that the accused was its Acting Director-General [exhibits D3-D7];

•	affidavit of search of Edward Wesley used in OS No 573 of 2013: Mr Wesley on 1 November 2013 deposed that a search of the Government Printing Office revealed that in the period from 1 to  29 October 2013, there had been no gazettal of Mr Baki’s appointment [exhibit D8];

•	Mr Baki’s memo of 5 November 2013 to the accused, alleging that the accused, by taking the State to court challenging the decision of the NEC, had compromised his position as Deputy Director-General, NIO, and informing him that he was “not required” to report for duty until the matter of verification of documentation as to Mr Baki’s appointment was resolved on the date that the matter would next be mentioned in Court, before Justice Kandakasi, on 4 December 2013, and directing him to return all keys and security implements to the office of Director-General, to return the vehicle in his possession, and to refrain from entering the NIO office until further advice [exhibit D9];

•	a 1989 NIO internal circular re financial instructions for management, control and accountability of special operation funds [exhibit D10];

•	the accused’s “appeal” document addressed to the Public Services Commission, dated 3 December 2013, in which he raised six complaints regarding the revocation of his appointment and the appointment of Mr Baki [exhibit D11].

Findings on disputed facts

19.	I make these findings, further to the facts recorded above as undisputed facts:

•	When the accused, together with Mr Baki, met the Chief Secretary on 29 October 2013, the Chief Secretary was unable to provide them with anything in writing relating to the revocation of the accused’s appointment and the appointment of Mr Baki. However, the Chief Secretary orally confirmed that that was the decision of the NEC and that the accused should arrange a handover-takeover for 4 November 2013. I prefer the evidence of Mr Baki on the issue of whether the Chief Secretary asked the accused to arrange the handover-takeover. Mr Baki testified that that was a specific request and I consider that it is much more believable that the Chief Secretary would have asked the out-going head to arrange that process rather than leaving it to both of them to sort it out in some undefined way. 

•	The first request from the accused to Mrs Kula to prepare the cheques for K55,000.00 and K36,000.00 was made on 1 November 2013. I reject the evidence of Rupa Loi that there was a senior management meeting on the morning of 29 October 2013 at which the need for K36,000.00 to pay sources regarding Operation Black Tee-Shirt was raised. There was no evidence to corroborate that version of events and it was not put clearly to the State witnesses, in particular Mrs Kula, that the accused had raised the need for such an amount in cash before the date on which she said in evidence the accused first made the request, 1 November 2013. 

•	The court proceedings, OS No 573 of 2013, were commenced by the plaintiff solely in his own name, not in his capacity as Acting Director-General of the NIO, and not on behalf of the NIO.

•	I accept the evidence of Mr Baki as to the timing of his complaint to the Fraud Squad as to the alleged misappropriation of the amounts of K55,000.00 and K36,000.00. The complaint was made at the end of 2013, after Mr Baki occupied the office of Director-General, on 4 November 2013.

•	I accept the submission of the defence that the Fraud Squad investigation was not conducted until 2015. However, I refrain from finding that the investigation was conducted on the insistence of Mr Baki, after he was reappointed Commissioner of Police in May 2015. Mr Baki denied that contention and there is no reason to reject his evidence on that issue; or on any other issue, for that matter. Mr Baki was an impressive and credible witness, more so than the accused. In the event of conflict in their testimonies I preferred Mr Baki’s evidence to that of the accused. 

•	I find no evidence of personal animosity of Mr Baki towards the accused and no evidence that Mr Baki was improperly motivated when he decided to refer the matter to the Fraud Squad.  

•	I find that as a matter of fact and law, in accordance with the instrument executed by the Governor-General on 28 October 2013 and published in National  Gazette No G472 of 2013, dated 29 October 2013, the accused ceased to be Acting Director of the NIO on 9 October 2013 and that Mr Baki’s appointment commenced on that date.

•	However, the accused was not aware of the revocation of his appointment and the appointment of Mr Baki – although he had heard rumours – until 29 October 2013, when the Chief Secretary confirmed the veracity of the rumours. 

Was the money applied to lawful purposes? 

20.	This issue must be addressed separately in relation to each count.

Count 1 

I find that the K55,000.00 paid to Warner Shand Lawyers was not applied to a lawful purpose. It was public money. Although it was within the financial delegation of the accused to, generally, expend up to K500,000.00, any such money had to be applied to purposes of the NIO. I reject the contention that the primary purpose of the court proceedings, OS No 573 of 2013, was to protect the interests of the NIO. The primary purpose of the proceedings was to protect the interests of the accused. I reject the contention that the court proceedings could be regarded as a special project for which special project funds could be utilised. Even if the proceedings could be regarded as having been commenced to protect the interests of the NIO or as a special project of some sort, the approval of the Attorney-General was not sought or granted, as required by Section 7 of the Attorney-General Act. 

I accept the evidence and opinion of Dr Kalinoe and Mr Kali that the payment to Warner Shand Lawyers was made in breach of established protocols for engagement of private firms by governmental bodies, that approval should have been sought and granted before public money was used to engage Warner Shand Lawyers and that the failure to comply with those procedural and legal requirements meant that the payment of K55,000.00 to Warner Shand Lawyers was unlawful.

Furthermore, the accused gave the administrative instruction to Mrs Kula to process and raise the cheque for K55,000.00 on 1 November 2013, two days after the meeting with the Chief Secretary at which the accused was clearly told that he was being replaced. He thus made the decision to commit public funds to his private purposes at a time when he knew that there was considerable doubt as to his legal authority to do so. 

I find, therefore, that the State has proven beyond reasonable doubt the existence of elements (ii) and (iv) of count 1, in that:

•	the K55,000.00 remained at all material times the property of the State, as it was not used in accordance with the conditions on which it was given into the control of the accused; and 

•	the accused applied the K55,000.00 to his own use (payment of legal fees which he should have borne himself) and the use of other persons (viz Warner Shand Lawyers).

Count 2 

I find that the K36,000.00 cash obtained by the accused on 4 November 2013 was not applied to a lawful purpose. Obtaining State money in the form of K36,000.00 cash is inherently suspicious. There was evidence that normally an officer of the NIO would not be given more than K10,000.00 at any one time to distribute to intelligence sources or to apply to other proper purposes. It  is incumbent on a person who obtains such a substantial sum of State money in cash to disclose proper purposes to which it has been applied, which the accused did not do, the natural consequence, in my view, being that the cash must be deemed to have been applied to unlawful purposes. 

The accused’s evidence that the cash was used to pay sources used in “Operation Black Tee-Shirt” was vague and unconvincing. The only corroboration of that claim came from defence witness, Rupa Loi, whose evidence was equally vague and unconvincing. 

I reject the accused’s explanation that he was prevented by Mr Baki from making an acquittal. There is evidence only that Mr Baki barred the accused from entering the NIO office in the period from early November to early December 2013. There is no evidence that Mr Baki took any steps to prevent the accused from acquitting the funds. The excuse offered by the accused, and by his witness, Mr Loi, that the NIO moved office in the first half of 2014 and this made it impossible to locate the necessary documents to verify the acquittal, was unconvincing. There was no evidence that the accused made any attempt to acquit the cash. 

The accused had the opportunity at the trial to state who the cash was given to and why, but failed to take the opportunity. The defence raised the point at the early stage of the trial that such evidence could not be given as the accused was still subject to the secrecy provisions of Part VIII of the National Intelligence Organization Act. This was an interesting point, but it was not pursued. No attempt was made to seek an order from the Court to relieve the accused from the alleged consequences of giving such evidence. No application was made for an order under Section 37(12) of the Constitutionto conduct parts of the trial in camera, in the interests of national security, so that the accused might give evidence of how he applied the cash. 

This is not to say that the accused bore the onus of proving his innocence. He had a constitutional right to the presumption of innocence throughout the trial. However, where a person is charged with misappropriating cash and where the defence is raised that an acquittal of cash could not be given, the accused bears an evidentiary burden of showing that that explanation is plausible. The accused has not discharged that evidentiary burden. 

Furthermore, the accused gave the administrative instruction to Mrs Kula to process and raise the cheque for K36,000.00 on 1 November 2013, two days after the meeting with the Chief Secretary at which the accused was clearly told that he was being replaced. He thus made the decision to commit public funds, allegedly to pay “sources” at a time when he knew that there was considerable doubt as to his legal authority to do so.

It is difficult to appreciate any good reason for the alleged “sources” having to be paid as a matter of urgency. If there were any obligation to pay sources, or any sources had a legitimate expectation of being paid, surely such obligations or expectations could be dealt with by the accused’s successor, Mr Baki.

I find, therefore, that the State has proven beyond reasonable doubt the existence of elements (ii) and (iv) of count 2, in that:

•	the K36,000.00 remained at all material times the property of the State, as it was not used in accordance with the conditions on which it was given into the control of the accused; and 

•	the accused applied the K36,000.00 to his own use and/or to the use of other persons.

ISSUE (B): DID THE ACCUSED APPLY THE MONEY DISHONESTLY TO HIS OR ANOTHER PERSON’S USE?

21.	Proof of dishonest application of another person’s property requires a determination of the state of mind of the accused at the time of application of the property. It is a question of fact for the trial Judge to determine, based on the facts of the case and according to the ordinary standards of reasonable and honest people (Brian Kindi Lawi v The State [1987] PNGLR 183). A subjective test must be applied: it must be proven beyond reasonable doubt that the accused in fact knew that he or she was acting dishonestly. However, in applying that test, an objective standard can be taken into account: it might reasonably be inferred that the accused must in fact have known that he or she was acting dishonestly. 

22.	Before applying those principles to the facts of this case, I point out that at the end of the defence submission, the accused’s counsel, Mr Wanis, argued that the accused ought not, by virtue of Section 25 (mistake of fact) of the Criminal Code, be found criminally responsible for his application of the proceeds of either the K55,000.00 cheque or the K36,000.00 cheque. Mr Wanis submitted that the evidence showed that the accused honestly; he reasonably believed that he could lawfully apply the proceeds of the cheques to the purposes to which they were in fact applied. So, even if the Court finds that in fact and law the proceeds of the cheques could not be lawfully applied in that manner, the accused is entitled to an acquittal. 

Section 25 states:

(1)	Subject to Subsection (2), a person who does or omits to do an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as he believed to exist.

(2)	The operation of Subsection (1) may be excluded by the express or implied provisions of the law relating to the subject.

23.	I am persuaded by the submission of Ms Tamate for the State that the accused did not honestly believe that he was applying the proceeds in a lawful manner. Moreover, to the extent that he might have held such an honest belief, it was not a reasonable belief. The State has excluded the existence of both of the prerequisites to operation of Section 25(1). The exclusion of one was sufficient. Section 25 does not relieve the accused from criminal responsibility. I will now proceed to determine whether the critical element, (v), of dishonesty, has been proven beyond reasonable doubt in respect of either or both of the charges.  

Count 1 

The only reasonable inference to draw from the evidence is that the accused should and would have known that it was an unlawful use of State money to use K55,000.00 to pay his own legal costs to challenge, in his individual capacity, decisions of the National Executive Council affecting his own interests. The State has proven beyond reasonable doubt that the accused acted dishonestly. Thus element (v) has been proven. 

Count 2 

The only reasonable inference to draw from the evidence is that the accused, by obtaining K36,000.00 cash, and failing to acquit those funds, should and would have known that it was an unlawful use of State money. The State has proven beyond reasonable doubt that the accused acted dishonestly. Thus element (v) has been proven. 

CONCLUSION

24.	The State has proven beyond reasonable doubt the existence of all elements of each of the two counts. The accused will be convicted accordingly.

VERDICT

The accused, Maika Bruno, having been indicted on two counts of misappropriation of property under Section 383A(1)(a) of the Criminal Code, is found guilty, on both counts, as charged.  

Verdict accordingly,
__________________________________________________________________

Public Prosecutor: Lawyer for the State 
Warner Shand Lawyers: Lawyers for the Accused