N11471
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

CR (FC) 104 OF 2024

THE STATE

V

VEATA PATANA

WAIGANI: BERRIGAN J
19, 20 SEPTEMBER 2024; 30 JUNE, 5 SEPTEMBER 2025

CRIMINAL LAW – PRACTICE AND PROCEDURE – VERDICT – Sections 383A(1)(a)(2)(d), 407(1)(b), 404(1)(a) and 463(2), Criminal Code – Whether accused conspired with another to defraud Motu Koita Assembly to repay his loan, falsely pretended to Moni Plus the value of his monthly salary and uttered a false document and misappropriated the funds – Not Guilty. 

Cases cited
State v Ima (2020) N8676
Prosecutor’s Request No 4 of 1974 [1975] PNGLR 365
Age v The State [1979] PNGLR 589 
Roland Tom v The State (2019) SC1833 
Havila Kavo v The State (2015) SC1450
State v Kingsley (No 3) (2024) N10916 

Counsel
A Kaipu, for the State 
F Kirriwom, for the accused

DECISION ON VERDICT

1.	BERRIGAN J: The accused was the elected member for the Mahuru Electorate of the Motu Koita Assembly (MKA). He is charged with four counts, such that he between 1 September and 31 October 2022: 

•	On Count 1, misappropriated K18,002.88, the property of MKA, contrary to s 383A(1)(a)(2)(d), Criminal Code.
•	On Count 2, conspired with Nancy Nanai to defraud the MKA by using the Mahuru Electorate Public Infrastructure Project Sub Grant (PIP) funds for personal loan repayments owed to Heduru Moni Ltd trading as Moni Plus (Moni Plus) by him, contrary to s 407(1)(b), Criminal Code.
•	On Count 3, falsely pretended to Moni Plus by way of a fraudulent loan application that he authorised Moni Plus to deduct K4038.85 from his fortnightly salary when he actually earned K2500 per fortnight and thereby obtained from Moni Plus K100,000 with intent to defraud, contrary to s404(1)(a), Criminal Code.
•	On Count 4, knowingly and fraudulently uttered a false document purporting to be a loan application to Moni Plus, contrary to s 463(2), Criminal Code. 

2.	The State alleged that the accused obtained a loan of K100,000 from Moni Plus on the false pretence that K4038.85 could be deducted from his fortnightly salary when he only earned K2500 per fortnight. He conspired with Nancy Nanai for the loan repayments to be deducted from the Mahuru Electorate Public Infrastructure Project Sub Grant (PIP) which was intended only for electorate purposes. Two loan repayments were made, K6001.44 and K12,001.44 on 30 September and 28 October 2022, respectively, before the matter was discovered and further payments stopped. 

3.	It is the defence case that the accused applied for a K100,000 loan to refinance an existing loan with Moni Plus. He did not misled Moni Plus. He was refinancing and Moni Plus was aware of his monthly upkeep allowance of K5000. All of the information in the loan application shows that the loan deductions were to be made from the accused’s upkeep allowance. He never intended to defraud Moni Plus or MKA. He did not conspire with Nancy Nanai to defraud MKA of the K18,002.88 paid towards his loan.  It was Toka Owen, Acting Payroll Officer, who revealed, as a surprise even to the State during the trial, that it was he, not Nancy Nanai who initiated the disbursement of K12,001.44 to Moni Plus in October 2022, which was approved by the Acting Finance Manager, Gaudi Frank. It was not the accused who initiated or approved the payments from his electoral account. That was done by Toka Owen and Gaudi Frank. Moreover, the payments to Moni Plus were above what the accused approved. The accused did receive his upkeep allowance in September and October but then the Finance Manager, Mr Frank, wrote to him advising that there were some irregularities in the servicing of his personal loan and to correct it the deductions would be taken from up-keep funds, which he had no issue with. Thereafter he received no further upkeep allowance payments. He assumed everything was okay until he was arrested in October 2023. 

Findings of Fact  

4.	As a member of the MKA the accused was entitled to a K5000 monthly upkeep allowance, equivalent to a personal salary. He was also responsible for managing K15,000 per month for the benefit of his electorate. 

5.	MKA received funds from NCDC into its main account and the funds were allocated through the Kundu Pei system to the electoral accounts and the member’s personal bank accounts. Funds were allocated by the Payroll Officer upon approval by the Finance Manager.

6.	Moni Plus gave loans to employees of certain approved organisations, one of which was MKA. Upon approval of a loan an irrevocable salary deduction authority stating the amount of the loan and the fortnightly deduction was sent by Moni Plus to the organisation for it to make deductions from the borrower’s salary upon the borrower’s direction. 

7.	Nancy Nanai, the Payroll Officer, was responsible for assisting officers at MKA apply to Moni Plus for loans. She prepared the paperwork and compiled the supporting documentation which was endorsed by either the Financial Controller or the Finance Manager. It is not clear but it appears that she was Payroll Officer until sometime in October 2022.

8.	There is some discrepancy between the State witnesses about who the Financial Controller was at the time. Mr Frank says that Robert Mougwaboda was but Mr Mougwaboda says that in April 2022 he was assigned to take care of the HR Division and Mr Frank took over the role of Financial Controller and that Nancy reported directly to Mr Frank. Mr Frank became Acting Finance Manager in August 2022. He is now the Finance Manager. 

9.	The accused had an existing loan with MKA. As at 6 September 2022 K106,633.77 was owing but could be reduced, assuming the accused refinanced with Moni Plus, to K61,533.98. Up to that stage he had been repaying “instalment amounts” of K2,221.56 per fortnight which in fact were paid once monthly, in an amount of K4443.12. There were no arrears.  

10.	On 6 September 2022 the accused signed an application for a personal loan of K100,000 with Moni Plus. The purpose of the loan was to refinance the existing loan and obtain the balance in cash. The application stated that the accused’s salary was K5000. Attached to the form were documents in support, including monthly payslips showing his net salary of K5000. 

11.	There was no direct evidence or handwriting evidence as to who completed what part of the application form or a related irrevocable deduction authority. Whilst Mr Mambote was called from Moni Plus to explain the process in general terms none of the officers concerned with the particular loan gave evidence.  

12.	It appears having regard to certain entries, signatures, vetting marks and ink colour that at least four different persons wrote on the application form at different times: the accused, Nancy Nanai and at least one if not two or even three persons from within Moni Plus.  

13.	At some stage after the form was submitted someone within Moni Plus filled out the loan break up in the “office use only” section into a loan amount of K100,000, first instalment amount of K61,533.98 and net disbursement of K38,466.02. 

14.	According to an internal Moni Plus document an officer confirmed via email that the accused was receiving a salary of K5000 per month on 6 September 2022. It is not clear with whom that confirmation was made and the email is not produced.

15.	At some stage someone wrote “ – 4038.85” against the typed words “PVA Amount”: 100,000 and below that against “No of FNs”: the number “52”. It appears that the same person crossed out the “gross loan” amount of K100,000 on the application form and replaced it with K210,020. K4038.85 is the instalment amount over 52 fortnights required to repay a gross loan of K210,020. It appears to me both from Mr Mambote’s evidence and the ink and handwriting, not to mention common sense, that those entries were made by someone within Moni Plus. 

16.	At some point somebody within Moni Plus crossed out “4038.83” and “52” and changed them to “6000.71” and “28” in red ink. I accept on Mr Mambote’s evidence that was done by someone within Moni Plus.  There was no explanation as to why the changes were made by Moni Plus.

17.	Also produced was an irrevocable salary deduction authority on Moni Plus letterhead which appears to have been signed by the accused, endorsed by Nancy Nanai as herself, and also signed by Nancy “for Robert Mougwaboda, Financial Controller”, using his stamp. The form is typed and directs the paymaster upon approval of a loan to deduct an amount from the applicant’s fortnightly salary. The original loan amount was K100,000. It appears having regard to ink and other features that the same person who changed the loan amount to K210,020.20 and entered the repayment amount of “4038.85” on the application form also entered those figures on the irrevocable salary deduction.  

18.	According to bank statements, K38,466.02 was deposited to the accused’s bank account on 7 September 2022. 

19.	The accused’s upkeep allowance of K5000 was paid to his account in September and October but thereafter payments ceased. 

20.	Mr Frank says that on 28 October 2022 he went thought the Kundu Pei file and came across a payment of K12001.44 to Moni Plus in favour of the accused’s personal loan. He requested the loan documentation from Moni Plus and saw that it was prepared by Nancy Nanai, his cousin. He saw that the repayment amount had been changed to K6000.71 in red. He also saw according to a Moni Plus statement, P4, that an earlier payment of K6001.44 had been paid. That is what triggered him to investigate. He maintained that it was not Moni Plus who changed the repayment amount to K6000.71 and further it was Nancy Nanai who changed the irrevocable amount to facilitate the loan. Nancy had since resigned or been stood down. He agreed that Nancy assisted several other members and staff of MKA including himself to obtain loans. Nancy prepared the documentation, application form, employment confirmation and payslip and approved the loan, although he clarified later that it was the Financial Controller or the Manager who was responsible for approving the loan before submitting it to Moni Plus. Realising that there was an error, Mr Frank wrote to the accused on 25 November 2022 informing him that he was taking measures to correct it.  He had never seen the irrevocable deduction authority until it was shown to him in court under cross-examination. 

21.	I do not accept Mr Frank’s evidence that he saw the Moni Plus statement, P4, in October or November 2022. That document is dated 6 April 2023 and reflects payments up to that date. It did not exist in 2022.  

22.	I accept Toka Owen’s evidence that P11, which was not shown to Mr Frank during his evidence, is not a document created as part of an investigation by Mr Frank but is the spreadsheet that Mr Owen as Acting Payroll Officer prepared for data entry into the Kundu Pei system in respect of the electorate sub-grant monies for the month of October 2022 and which was authorised by Mr Frank and signed by him on 27 October for that purpose. 

23.	It shows that K12,001.44 was approved for payment to Moni Plus from the funds that would have gone into the electorate account of Mahuru Village. Mr Owen said that he allocated the funds from the electorate monies because the accused’s upkeep allowance did not cater for the loan deduction. He was asked to clarify but it was not clear from his evidence whether Nancy Nanai told him to do so or Mr Frank told him to do so or whether he worked it out himself. 

24.	It is not clear who authorised or approved the first payment of K6000.44 to Moni Plus from Mahuru Electoral Account in September. Mr Owen says he was not acting Payroll Officer at the time and no documentation was produced. 

Count 3

25.	The elements of the offence and the principles applying are well established: see for instance State v Ima (2020) N8676; Prosecutor’s Request No 4 of 1974 [1975] PNGLR 365; Age v The State [1979] PNGLR 589. 

26.	The State has failed to establish beyond reasonable doubt that the accused obtained a loan of K100,000 from Moni Plus by falsely authorising Moni Plus to deduct K4038.85 from his fortnightly salary when he earned K2500 per fortnight. There are a number of issues. 

27.	The State has not established that it was the accused who entered the repayment amount of K4038.83 on the loan application form. It appears that Moni Plus determined that figure. That is the effect of Mr Mambote’s evidence and it is keeping with the ink notations on the document and common sense. 

28.	In general terms a loan applicant indicates the amount of the loan sought and their salary and any other matters affecting their ability to repay the loan. It is the lender who determines the gross loan amount, that is the amount of the loan, plus interest (which in this case was at the very high rate of between 50 and 60%), plus other costs (which again in this case included K68,019.96 in “other charges”, a figure which can only have been known to Moni Plus at the time it was calculating the gross loan amount and does not appear anywhere in the documentation presented to me until the loan statement of 6 April 2023), and then the instalment amount required over the life of the loan. Why would the accused choose a figure like K4038.85 as an instalment and how would he calculate it? As above, K4038.85 is in fact the gross loan amount of K210,020.20 divided by 52 fortnights. 

29.	For similar reasons the State has not established that it was the accused who entered the figure of K4038.83 on the irrevocable salary deduction form, which is not in fact directed to Moni Plus but sent by Moni Plus back to the employer, in this case MKA, upon approval of the loan and on which the applicant directs their employer to make deductions from their salary. 

30.	Even assuming that the accused signed the irrevocable deduction authority authorising the deduction of K4038.85 from his fortnightly salary instead of his monthly salary the State has not excluded the possibility that was an oversight or established beyond reasonable doubt that he had any intention to mislead or defraud Moni Plus. 

31.	The accused had an existing loan with Moni Plus. He was refinancing. Moni Plus was aware of his monthly income and he provided payslips confirming his net monthly salary of K5000, a matter which was confirmed by Moni Plus on 6 September. 

32.	As for the change of the instalment amount to K6000.71, Mr Mambote was clear that was done by Moni Plus and there is no evidence that the accused was made aware of that change. Despite the fact that the loan amount was increased to the gross loan figure of K210,000 on the irrevocable deduction authority the instalment amount of K4038.85 on that document was not changed.

33.	In summary, the State has failed to establish beyond reasonable doubt that the accused falsely represented his income to Moni Plus with an intention to defraud or that Moni Plus acted on any such representation to give him the loan.  

Count 1 and 2  

34.	The fact that the State has failed to establish that the accused obtained the loan by false pretence does not necessarily exclude the possibility that he then conspired with Nancy Nanai to have the loan paid out of electoral funds instead of his personal upkeep allowance: see Roland Tom v The State (2019) SC1833 and Havila Kavo v The State (2015) SC1450 for the elements and principles applying.

35.	The accused continued to receive his salary in both September and October despite the fact that the disbursement under the loan had been paid into his bank account. As the elected official responsible for managing a relatively small monthly allowance intended for the public benefit it is surprising that he did not realise, at least in October, that a significant portion of those monies had not been paid into the electoral bank account. 

36.	It must be said, however, that the matters identified under Count 3 do in general terms weaken the State’s case. 

37.	As above, the State failed to establish that the accused was informed of the instalment amount of K6000.71. Nor is it clear who made the payment of K6001.44 to Moni Plus on 30 September 2022. It appears it was Nancy Nanai approved by Mr Frank but he gave no evidence about that and there was no documentary evidence in relation to that payment other than an entry on the Moni Plus document, P4, showing that it was made on 30 September 2022. 

38.	It was, furthermore, not Nancy Nanai but Mr Owen who directed the payment of K12001.44 to Moni Plus in October and he did so upon approval by Mr Frank. There was no evidence to suggest that either of them did so at the instigation of the accused and the amount paid was based on the incorrect understanding by Mr Owen that K6000.71 was repayable fortnightly when it was not. 

39.	In addition, Mr Owen says that he made the decision to direct funds from the electoral fund because the repayment amount exceeded the accused’s monthly upkeep allowance. That may be but the documentation shows that the accused was one of five other members whose electoral funds were used to repay their loans to Moni Plus. The accused’s repayment was certainly the largest but none of them were entitled to have their loans paid from electoral funds and nor were their repayment amounts greater than their upkeep allowances in any event. It appears, or at least the State has not excluded the possibility, that loan repayments for all members were deducted from the electoral accounts in error. 

40.	Whilst the accused did continue to receive his monthly upkeep allowance and did not report a reduction in the funds being deposited to the electoral account, the timeframe concerned was relatively short.

41.	In all the circumstances, the State has failed to exclude beyond reasonable doubt the possibility that it was a combination of the changes made by Moni Plus to increase the accused’s loan repayments to K6000.71 per month and the changes in personnel in the Finance Section of MKA that led to electoral monies being used to repay the accused’s loan, and that the accused did not become aware of the payments from the electoral account within the time frame concerned. 

42.	Accordingly the State has failed to establish that the accused conspired with Nancy Nanai to defraud the electoral funds or did dishonestly apply them.

Count 4

43.	Finally, the State alleged that the accused uttered the loan application to Moni Plus on the basis that the application contained a false statement as to his fortnightly salary. 

44.	I found that there was no case to answer on that charge as a matter of law on the basis that for a document or writing to be false for the purpose of 463(2), the document must “tell a lie about itself”, in the sense that it purports to be made or altered by or on behalf of a person who did not make it or alter it or authorise it to be made or altered (or where material, be falsely dated as to the time or place of making with a fraudulent intent): ss 459(2)(b)(c)(d), Criminal Code; State v Kingsley (No 3) (2024) N10916 adopting R v More [1988] 86 Crim App R 234; Brott v R [1992] HCA 5; (1992) 173 CLR 426.  

45.	I upheld the no case on the basis that even assuming that the accused lied in his loan application about his fortnightly salary that did not make the document a “false document” for the purposes of s 463(2), Criminal Code. As above the State failed to prove the accused lied in any event.

46.	I now enter a formal verdict of not guilty on that charge.

47.	In conclusion, the accused is found not guilty and acquitted on all charges.

Verdicts accordingly.
__________________________________________________________________
Lawyer for the State:	 Public Prosecutor	
Lawyer for the accused: 	 Public Solicitor