State v Zuvani [2004] PGNC 127; N2641 (25 August 2004)

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CRIMINAL LAW – indictable offence – Criminal Code, Subdivision VI.1A – Section 383A, misappropriation of property – guilty plea – sentencing principles – prisoner a bank officer at time of offence – relevance of amount misappropriated (K22,685.43) – violation of position of trust – abuse of privilege – consistent course of conduct – use to which money put questionable – effect on bank’s customers – effect on offender – degree of restitution – appropriate head sentence – whether part or whole of sentence should be suspended – trend towards alternative sentencing for crimes not involving physical violence – probation – conditions.

Cases cited:
The State v Yaulipa Bulaim (1980) N234
Wellington Belawa v The State [1988-89] PNGLR 496
The State v Peter Sari [1990] PNGLR 48
The State v Paroa Kaia (1995) N1401
Doreen Liprin v The State (2001) SC673
The State v Mekeu Kig (2001) N2177
Eric Vele v The State (2002) N2252

This is a criminal case. The accused, Scholar Zuvani, is a woman aged 27, who lives in Wewak. She faced the following indictment:

Scholar Zuvani of Abegani in Madang Province stands charged that while being employed as a bank officer by Bank South Pacific Ltd, Wewak branch, she between 13 August 2003 and 4 March 2004 at Wewak in Papua New Guinea, dishonestly applied to her own use K22,685.43, property of Ponam Local Church and Ecom High School, both in Manus Province.

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

(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,

(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.

(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.

The events giving rise to the charge occurred from August 2003 to March 2004. On 27 April 2004 the accused was interviewed, arrested and charged at Wewak. She was released on K400.00 Police bail. On 29 July 2004 she was committed to stand trial.

On 19 August 2004 the indictment was presented and the accused was arraigned. She pleaded guilty. I then entered a provisional plea of guilty subject to my reading of the District Court depositions.

The purpose of my reading the District Court file was to satisfy myself that the accused had properly pleaded guilty to the charge. I had to be satisfied that there was reasonable evidence available, on the face of the file, of all of the elements of the charge.

Further that there were no reasonable defences available to the accused that may have been overlooked. An accused person has a right under Section 37(1) of the Constitution to the full protection of the law.

The Court has a duty to satisfy itself that it is safe to accept a plea of guilty. The Court must not surrender its duty by relying merely on the word of defence counsel. (See The State v Yaulipa Bulaim (1980) N234 and The State v Peter Sari [1990] PNGLR 48 and, generally, Chalmers et al Criminal Law and Practice of Papua New Guinea 3rd edition, Lawbook Co 2001, at pages 471– 479.)

The Court was adjourned for 15 minutes and I examined the depositions and observed the following matters.

The accused was a bank officer. She was employed by the bank from October 1996 to March 2004, when her employment was terminated. In 2003 she was working at the bank’s Lorengau branch until November when she transferred to Wewak. She was at the Wewak branch when she was terminated.

From August 2003 to March 2004 she used her knowledge and position as a bank officer to transfer a total of K22,685.43 from two accounts at the Lorengau branch to an account in the name of her sister-in-law. She transferred the money by ‘paperless transactions’ without the knowledge or consent of the operators of the accounts or her employer, the bank. The bulk of the money (K20,015.43) came from an account operated by Ponam Local Church. It was transferred by making 25 separate transactions. The rest (K2,670.00) was from the Ecom High School account.

She obtained the use of her sister-in-law’s Save card. Then she used the card to withdraw cash from her sister-in-law’s account for personal consumption. Her sister-in-law did not know about this and was not a party to the scheme.

In March 2004 the church and the school discovered that their accounts were depleted of funds. They contacted the bank. The bank investigated. The accused was interviewed. She admitted what she had done. The matter was reported to the Police National Fraud and Anti-Corruption Squad. On 27 April 2004 she was interviewed by Detective Senior Sergeant Frank Misso at Wewak. She admitted everything. She has co-operated with the Police.

When looking at the District Court file I reconsidered the indictment. It originally stated that the misappropriated property belonged to Bank South Pacific Ltd. Upon my suggestion and with the consent of the accused’s counsel, Mr Simingi, the prosecutor, Mr Wala, amended the indictment. It then read that the misappropriated property was that of Ponam Local Church and Ecom High School.

I was satisfied that the accused had properly pleaded guilty. I accepted the guilty plea, entered a guilty verdict and convicted the accused of the offence as charged.

The prisoner was given the opportunity to say what matters the Court should take into account when deciding on punishment. A paraphrased summary of her statement follows:

I have pleaded guilty to the dishonest application of funds. This is the first time I have appeared in Court. Because I come from a God-fearing family I apologise in this court to God, my family, BSP, those who have been affected – the complainants – and this Court for the offence I have committed.

During the time I committed the offence I was the only salary earner in a family of 13 members, including both parents and in-laws. I am the third born in a family of three brothers and two sisters. Both parents are unemployed.

I have been suffering a lot – physically, financially, spiritually and mentally. I have cooperated well with my former employer and with State authorities. I have been complying with bail conditions.

I am facing a financial crisis. All my accounts and my sister-in-law’s account have had a stop caution put on them by the bank. No withdrawals can be made. We have been surviving on daily sales of cream buns. Therefore I cannot afford to seek legal advice from a private lawyer. But thank you to the Government and the Court for providing the Public Solicitor.

On the day of my termination from the bank I signed a form that all my NASFUND [superannuation] funds would be paid to the bank. I have also signed an irrevocable authority to assign my savings to the bank.

I am able to reimburse the full amount that I misappropriated to the bank. My father has assured me that he will help me pay any outstanding amount that I still owe to the bank. This assistance will come from his final entitlements as a casual employee, deposited to his account two days ago.

I have suffered a lot mentally because of the financial constraints and humiliation my family and I have been going through.

I now have a criminal record. My chances of obtaining alternative employment are very slim.

Mr Siminji, for the prisoner, adopted everything stated in allocutus, then added the following.

The prisoner is aged 27 and single. Both parents are alive and present in Court. The prisoner was educated to Grade 12. Her only job was with
Bank South Pacific or its predecessor the Papua New Guinea Banking Corporation. The amount misappropriated is more than K2,000.00. Therefore under Section 383A of the Criminal Code the maximum penalty is ten years imprisonment.

However Section 19 of the Criminal Code (construction of provisions of Code as to punishment) gives the Court a wide discretion. Sections 19(1)(d) and 19(6) are particularly relevant.

In the construction of this Code, it is to be taken that, except when it is otherwise expressly provided ... a person convicted on indictment of an offence not punishable with death may —

(i) instead of, or in addition to, any punishment to which he is liable—be ordered to enter into his own recognizance, with or without sureties, in such amount as the court thinks proper, to keep the peace and be of good behaviour for a time fixed by the court; and

(ii) comply with such other conditions as the court may, in its discretion, impose.

When a court sentences any person convicted under Subsection (1)(d) to a term of imprisonment, it may further order that—

(a) the offender be imprisoned for such portion of that term as it thinks proper; and

(b) the execution of the sentence for the remaining portion of the sentence be suspended on his entering into a recognizance, with sureties if so directed, in accordance with Subsection (1)(d) but further conditioned that, if called on, he shall appear and receive judgement in respect of his service of the portion of the sentence.

Mr Siminji referred to a number of mitigating factors in support of his submission that the discretion conferred by Sections 19(1)(d) and 19(6) should be exercised in this case:

No	Date	Description
1	19.08.04	Pre-sentence report by Moses Galus – Community Corrections Officer, Wewak – prepared pursuant to Sections 13 and 25 of the Probation Act 1990 – this records the prisoner’s residence, family background, marital and dependents status, education, work history, financial situation, health, future plans, community history, contact with the complainant (the bank), circumstances of the offence and attitude towards the offence – as to potential danger of the prisoner to others, the report states: "the offender is not a danger to the community nor to any individual persons" – as to suitability for probation supervision, the report states: "this offender is a suitable candidate for probation supervision on a longer term of one year. If the Court sees appropriate it could order a period of community work to be performed at Wewak Town Clinic doing general clean up and washing up".
2	16.08.04	Reference by Fr Otto Separy, Parish Priest, St Francis Parish, Kaindi – this states that the prisoner is a very good person in her moral behaviour – she and her family are of good standing – her daily life is directed by Catholic principles.
3	Undated	Reference by Cr Francis Hevu, Ward Member, Mengar Village, Wewak Rural Local-level Government – this states that the prisoner is in the councillor’s ward 21 area – he has known the prisoner for a life time – she is a very honest and reliable person.
4	17.08.04	Statement by Theodore Zuvani, the prisoner’s father – his family has strong Christian values – shocked by news of the prisoner’s termination and the reasons given – she has said sorry – she as the main breadwinner – feels guilty as he has been the one contacting her regularly seeking financial assistance – have always been ready and willing to repay the full amount outside the court – his daughter was very honest with the Police – told the truth and co-operated freely – he and the prisoner’s mother are old and want to say sorry to her for getting into this situation while trying to help the family – also want to say sorry to the State through the Court.

Mr Siminji submitted that the Court should pay close attention to the criteria outlined by the Supreme Court in Wellington Belawa v The State [1988-89] PNGLR 496. These are summarised in Chalmers et al at page 364, as follows.

There were some other factors identified in Wellington Belawa’s case by Bredmeyer J (at pages 500-501) and Barnett J (at pages 505-507). These were: the impact of the offence on the public and on public confidence; whether genuine remorse has been shown; whether the offender pleaded guilty; whether there was any prior record; whether there are any matters of mitigation special to the offender. These will also be considered below.

Mr Siminji conceded that factors (a), (b) and (c) identified in Wellington Belawa’s case were not in the prisoner’s favour. But the remaining factors would militate towards a light-range sentence, in the order of two years imprisonment. This should, however, be suspended on condition that the prisoner is placed on probation and ordered to do community work. The Court should exercise the discretion in Section 19 of the Criminal Code to achieve that end, Mr Siminji argued.

Mr Wala, for the State, submitted that the prisoner was guilty of a serious offence. He conceded that there were mitigating factors. In particular that she had pleaded guilty; that she is a first time offender; and that she has almost completely made restitution of the money she misappropriated. He referred me to the case of The State v Mekeu Kig (2001) N2177. A woman employed by a clothing company in Madang misappropriated approximately K28,000.00 from her employer. She pleaded guilty but had not paid back the money. Sawong J imposed a sentence of two and a half years. But it was suspended on condition that the prisoner be subject to probation and make restitution within the period of the sentence.

Mr Wala concluded by submitting that a prison sentence of two to three years be imposed in this case. But the sentence should be suspended on condition that the prisoner undertakes unpaid community work.

The criteria in Wellington Belawa v The State are still the guiding principles when deciding on sentences in misappropriation cases. That case is useful as it sets out the different factors that have to be weighed in the balance when determining the length of the term of imprisonment.

But in my view the tariff of sentences suggested by Bredmeyer J needs upgrading. Circumstances in Papua New Guinea have changed. There is an enhanced level of community concern about corruption, dishonesty and misappropriation both in the public sector and in the private sector. There have been significant developments in misappropriation cases. Some of those cases have involved bank officers.

In The State v Paroa Kaia (1995) N1401 an ANZ Bank accounts supervisor pleaded guilty to misappropriating approximately K94,000.00. He was convicted and sentenced to four years imprisonment. He had hatched a scheme in collaboration with two associates. He misused his authority to withdraw amounts from innocent customers’ accounts and transfer them to his associates’ accounts. Sawong J emphasised the adverse effect that that sort of blatant abuse of trust has on the community. It undermines confidence in the banking system. His Honour recognised the special place that bank officers have in the business community and in the lives of many thousands of individuals in Papua New Guinea.

Another bank officer/misappropriation case is Eric Vele v The State (2002) N2252. That was a decision by Kandakasi J. A Westpac Bank supervisor based in the international business centre at the Port Moresby branch misappropriated approximately K16,000.00. He used his position to withdraw amounts from different accounts and transfer them to accounts in the name of himself, his wife and a cousin. A head sentence of two and a half years was imposed. But it was suspended subject to strict probation conditions.

In the Eric Vele case Kandakasi J carefully assessed the policy considerations the Court must take into account in deciding on sentence. His Honour noted the significance of the decision in Doreen Liprin v The State (2001) SC673 (Supreme Court, Amet CJ, Kapi DCJ, Los J.) The Supreme Court examined the conflicting interests that have to be balanced whenever a person is punished for a crime of non-physical violence such as misappropriation. A Judge should, for the purposes of imposing an effective punishment that will rehabilitate the offender, explore all options before taking what might be regarded as the drastic step of imposing a prison sentence.

A prison sentence costs the State money and exposes the offender to what is often not a conducive environment for rehabilitation. It does not involve the community very much in the sentencing process, compared with the direct community involvement that happens when, for example, an offender is forced to do community work as part of his or her punishment.

It might be argued that such an approach to criminal sentencing might let offenders off the hook or that they might be made to avoid the full weight of their wrongs by reason of it being shared. The argument might be extended to say that ... offenders might force their family or communities to bear the penalty and they themselves avoid it. The simple response to that is, prior to Independence and even before the coming of the white man, our people lived and continue to live in their respective societies without prisons and a police force to maintain law and order. Collective community or family responsibility prevailed. The situation is still the same throughout the country today. Even at the international scene, though not strictly in relation to the subject under discussion, countries are desperately trying to form into bigger unions or communities because of the strength or the force collective responsibility brings as opposed to working alone. The chances of success at the community level are far greater than going through the prison system, because it becomes personalised as opposed to an imposed system and people just doing a job under the current criminal law justice system.

Only an effective sentence can bring about a real achievement of the aims or purposes of criminal sentencing. It is now well accepted that an offender may be better reformed through community participation. As I already stated, my previous community-based sentence orders are doing well and were having a positive impact on the offenders. When placed with such information, it is far better to get the community involved than not, if to do so will keep reform offenders whilst at the same time make them pay for their wrongs by rendering free service to the community rather than become a strain in the public purse. The onus is on a sentencing judge to devise a sentence that will meet the interests of society in punishing offenders and at the same time the interest of the offender to be treated fairly and to be given a chance to reform and become a better law abiding citizen.

There is a clear direction and policy in those cases. Where non-violent crimes are involved, a Judge should conscientiously explore the feasibility of a non-custodial sentence. In that way, the local community where the offence was committed will become part of the process of solving the problem that has been brought about by the offender.

I will be candid and say that I have some reservations about that policy and its effectiveness. But I must attempt to impose a penalty and impose a sentence that is consistent with the authority of recent decisions of the National Court and certainly the Supreme Court.

I have accordingly adopted the following decision making process for the present case. In step 1 the question is: what is the appropriate head sentence, in terms of years? In step 2: should the whole or part of the sentence be suspended? And step 3: if the whole or part of the sentence is suspended, what conditions should be imposed?

Taking all the above considerations into account my decision is that the head sentence in this case should be four years.

Yes. I feel obliged to suspend the sentence in light of the recent trend towards imposition of non-custodial sentences in non-violent crime cases. I have given consideration to whether I should suspend only a part of the sentence so that the prisoner should spend some time in prison. But I have ultimately elected not to exercise that discretion.

The seriousness of the offence requires the imposition of strict conditions, as follows:

I have imposed conditions that leave scope for negotiation. The prisoner herself is a party to the formulation of the plan of action. It becomes a joint effort. The conditions also ensure continuing accountability for administration of the sentence. The Court must be kept informed about how the probation is going. The prisoner is not just being released into the community so that everybody forgets about her. She must not forget that she will, throughout this period of four years, continue to be under sentence.

For the reasons stated above Scholar Zuvani is convicted of the crime of misappropriation.

_____________________________________________________________________
Lawyers for the State : Public Prosecutor
Lawyers for the accused : Public Solicitor

National Court of Papua New Guinea

State v Zuvani [2004] PGNC 127; N2641 (25 August 2004)