The State v Jimmy Maladina [2004] N6049

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  • About

    Sentencing of Jimmy Maladina on charges of conspiracy to defraud and misappropriation arising out of the infamous National Provident Fund scandal. Maladina was given a suspended sentence of eight years imprisonment and placed on a two-year good behaviour bond.

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  • N6049

    PAPUA NEW GUINEA
    [IN THE NATIONAL COURT OF JUSTICE]

    CR (FC) 402 of 2004

    BETWEEN:

    THE STATE

    AND

    JIMMY MOSTATA MALADINA

    Waigani: Salika, DCJ
    2015: 04th, 05th & 21st May, 24th July and 13th August

    PRACTICE AND PROCEDURE – Criminal Law – Dishonesty offence – Sentence –
    Conspiracy to defraud – misappropriation of superannuation funds – Chairman of a
    superannuation fund – a high position of trust – total amount restituted – a deterrent
    sentence to be imposed.

    Cases Cited:

    The State v Paroa Kaia Unreported, (1995) N1401
    The State v Iori Veraga Unreported N2849
    The State v Jimmy Kendi (No 2) N3131
    The State v Stanley Haru (2014) N5660
    The State v Peter Tokunai(2015) N6039
    Avia Aihi v The State (1982) PNGLR 92
    Goli Golu v The State (1979) PNGLR 653;
    The State v Niso (No2) [2005] PGNC 26; N2930
    The State v Paul Tiensten Unreported (2015) N5563
    Ure Hane v The State (1984) PNGLR 105

    Counsel:
    Mr A Kupmain, with Ms R Koralyo, for the State.
    Mr Ian Molloy, with Mr G Purvey and Ms C Copland, for the Defence

    Sentence

    13th August, 2015

    1. SALIKA DCJ: Introduction On 21 May 2015, I convicted Jimmy Maladina on the
    following charges namely:

  • Page 2 of 22

  • “First Count:

    Jimmy Mostata Maladina of Mena’ala, Esa’ala, Milne Bay Province stands charged
    that he, between the 1st day of November 1998 and the 10th day of October 2000, at
    Port Moresby, National Capital District in Papua New Guinea, did conspire with
    Herman Joseph Leahy, Henry Fabila, Shuichi Taniguchi, Kazu Kobayashi and other
    persons to defraud the National Provident Fund Board of Trustees of the sum of
    K2,650,000.00 by fraudulently increasing the construction costs of the National
    Provident Fund Tower situated at Douglas Street, Port Moresby, National Capital
    District.

    Second Count:

    Between 26 February 1999 and 30 July 1999, at Port Moresby, National Capital
    District, he dishonestly applied to his own use and to the use of others the sum of
    K2,650,000.00, the property of the National Provident Fund Board of Trustees.”

    Facts:

    2. Between the 1st of November 1998 and 10th October 2000, National Provident Fund
    engaged the services of Kumagai Gumi Limited (Kumagai) to build the NPF Tower. National
    Provident Fund Board of Trustees also engaged the services of Pacific Architects Consortium
    Limited as the administrators of the project. Their job was to provide monthly progress
    reports to NPF Board of Trustees and to negotiate other subcontracts, mainly the
    administration part of it. The Court found that between November 1998 and around June
    1999, the accused conspired with Mr Herman Joseph Leahy, Mr Henry Fabila, Mr Shuichi
    Taniguchi and Kazu Kobayashi and other persons to defraud the National Provident Fund
    Board of Trustees of K2,650,000.00.

    3. This court found that the conspiracy to defraud occurred between Mr Shuichi
    Taniguchi and Mr Kazu Kobayashi who both were employed by Kumagai as General
    Manager and Project Manager respectively and Jimmy Maladina, the Chairman of Nasfund
    Board, Mr Herman Joseph Leahy and Mr Henry Fabila both employees of NPF Board of
    Trustees and a host of others. Jimmy Maladina was at the relevant time a partner with Carter
    Newell Lawyers and was appointed the chairman of the NPF Board of Trustees in January
    1999.

    4. The court found that the conspiracy began from around November 1998 onwards. The
    conspirators agreed for Kumagai to falsely charge extra fees termed as “further accelerated
    fees” on top of the normal cost of building the tower which was contractually agreed at K50
    million. The further accelerated fee of K2,650,000.00 was fraudulently paid to Kumagai by
    Nasfund bankers which was then paid to Ken Yapane who then distributed to each of the
    conspirators..

    5. The Court further found that the conspiracy was accordingly executed as planned and
    Kumagai paid the moneys to Mr Ken Yapane who in turn paid it to the other beneficiaries.
    Those payments were made in accordance with the conspiracy that the accused would engage

  • Page 3 of 22

  • or would use Ken Yapane and his company account to have this money transferred. The court
    found the way the money was being handled amounted to money laundering,

    Issue

    6. The issue before this Court is what penalty to impose on the prisoner.

    The Law

    7. The charge of conspiracy to defraud was brought under s.407(1) (b) of the Criminal
    Code. It also provides the penalty. It reads:

    407. Conspiracy to defraud.
    (1) A person who conspires with another person—
    (a) by deceit or any fraudulent means to affect the market price of anything
    publicly sold; or
    (b) to defraud the public, or any person (whether or not a particular person); or
    (c) to extort property from any person,

    is guilty of crime

    Penalty: Imprisonment for a term not exceeding seven.
    years.

    8. The charge of dishonestly applying property to his own use or to the use of others was
    brought under s.383A(i)(a) of the Criminal Code . It reads:-

    “383A. Misappropriation of property.
    (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.”

    9. The penalty provision for misappropriation of property is under subsection 2. It
    reads:-

    “(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)……………….
    (b)……………….
    (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.”

  • Page 4 of 22

  • 10. The law as demonstrated above provides for the maximum penalties of 7 years and 10
    years respectively for counts 1 and 2 of the charges. The courts have however stated on many
    occasions that the maximum penalties should be reserved for the worst type of cases in each
    category of offence depending on the circumstances and the aggravating features of the case.
    See Goli Golu v The State (1979) PNGLR 653; Ure Hane v The State (1984) PNGLR 105
    and Avia Aihi v The State (1982) PNGLR 92. Many National Court and Supreme Court
    decisions have subsequently approved the above Supreme Court decisions as the appropriate
    law on that point.

    11. Moreover, this court is mindful of the provisions of s.19 of the Criminal Code. That
    provision empowers the court to impose lesser penalties other than the maximum prescribed.

    12. Apart from the provision of statute, the court is also usually guided by similar case
    precedents in determining what penalty to impose. The following cases were cited by counsel
    as relevant in assisting the court in determining the appropriate sentence in this case.

    Case Offence Sentence Particulars

    St v Niso (No2) 1 x conspiracy 3 Yrs 6 mths IHL Not Guilty Plea
    [2005] 1 x forgery for conspiracy The prisoner conspired with
    PGNC26; 1 x fraudulently one Soni Harvies and other
    N2930 uttering a false 1 Yr 3 mths IHL unknown persons to the Bank
    Gavara-Nanu, J document and for forgery of PNG of K500,000.00 He
    1x then forged a Westpac Bank
    misappropriation 1 Yr 3Mths IHL (PNG) Ltd cheque account
    for fraudulently application form in the name
    uttering a false of Raymon Mell. Prisoner
    document. knowingly and fraudulently
    uttered a false document
    7 Yrs 6 Mths IHL purporting to be a Westpac
    for Bank (PNG) Ltd Cheque
    misappropriation Account application form in
    the name of Raymond Mell.
    (sentences for He then applied to his own use
    first, second and and to the use of others
    third counts to be K500,000.00.
    served
    concurrently with
    the sentence for
    the fourth count).

    (effective term of
    imprisonment 7
    yrs 6 mths IHL
    minus period
    spent in custody
    which is 8mths.
    Balance of
    effective sentence
    at 6 yrs 10 mths
    IHL.

  • Page 5 of 22

  • Case Offence Sentence Particulars

    St v Niso (No2) 1 x conspiracy 3 Yrs 6 mths IHL Not Guilty Plea
    [2005] 1 x forgery for conspiracy The prisoner conspired with
    PGNC26; 1 x fraudulently one Soni Harvies and other
    N2930 uttering a false 1 Yr 3 mths IHL unknown persons to the Bank
    Gavara-Nanu, J document and for forgery of PNG of K500,000.00 He
    1x then forged a Westpac Bank
    misappropriation 1 Yr 3Mths IHL (PNG) Ltd cheque account
    for fraudulently application form in the name
    uttering a false of Raymon Mell. Prisoner
    document. knowingly and fraudulently
    uttered a false document
    7 Yrs 6 Mths IHL purporting to be a Westpac
    for Bank (PNG) Ltd Cheque
    misappropriation Account application form in
    the name of Raymond Mell.
    (sentences for He then applied to his own use
    first, second and and to the use of others
    third counts to be K500,000.00.
    served
    concurrently with
    the sentence for
    the fourth count).

    (effective term of
    imprisonment 7
    yrs 6 mths IHL
    minus period
    spent in custody
    which is 8mths.
    Balance of
    effective sentence
    at 6 yrs 10 mths
    IHL.

    St v Paroa Kaia Misappropriation 4 Yrs IHL Guilty Plea. Account
    Unreported, 6 x1 Supervisor applied money to
    September 1995 his own use and to the use of
    CR340/1995 others K94,478.31 from ANZ
    N1401 Bank Corporation over 2 years
    Sawong, J period. No restitution made.
    An Account Supervisor, high
    degree of trust. Severe
    sentence required to act as
    deterrent and restore public
    confidence in banking
    institutions.

    St v Iori Veraga Conspiracy x 2 4 Yrs on each Not Guilty Plea.
    Unreported Misappropriation conspiracy count Valuer conspired with others,
    17 June 2005 x4 to be served including senior executives of

  • Page 6 of 22

  • effective sentence
    at 6 yrs 10 mths
    IHL.

    St v Paroa Kaia Misappropriation 4 Yrs IHL Guilty Plea. Account
    Unreported, 6 x1 Supervisor applied money to
    September 1995 his own use and to the use of
    CR340/1995 others K94,478.31 from ANZ
    N1401 Bank Corporation over 2 years
    Sawong, J period. No restitution made.
    An Account Supervisor, high
    degree of trust. Severe
    sentence required to act as
    deterrent and restore public
    confidence in banking
    institutions.

    St v Iori Veraga Conspiracy x 2 4 Yrs on each Not Guilty Plea.
    Unreported Misappropriation conspiracy count Valuer conspired with others,
    17 June 2005 x4 to be served including senior executives of
    CR 389/2004 concurrently; 2 NPF, to defraud NPF of
    N2849 yrs of each K60,300.00 and
    Sakora, J misappropriation K175,000.00,by charging
    count to be valuation fees that were
    served excessive. Valuer then applied
    concurrently. K20,300 and K7155 of that
    Misappropriation money to his own use, and
    sentences K30,000 and K87,500 to the
    cumulative on use of Jimmy Maladina.
    conspiracy Court found that the prisoner
    sentences played secondary role to that
    of co-conspirators. Court
    noted that the prisoner had to
    that point been a productive
    member of the community.
    The crime was a well planned
    scheme designed to defraud a
    public institution specifically
    established to provide a
    “safety net” for the future of
    ordinary workers, who did not
    have a welfare system in PNG.
    The prisoner showed no
    remorse for the ordinary
    workers of the private sector,
    whose life savings were raided
    by him and his conspirators.
    No restitution was made.

    St v Jimmy 1 x False 4 Yrs for False Not Guilty Plea
    Kendi (No 2) Pretence Pretence; and 9 The prisoner fraudulently
    (2007) N3131 Yrs for obtained K4,298,037.33 from
    1x misappropriation. the State, with assistance of
    Misappropriation corrupt officers, from the
    (to be served Department of Finance and
    concurrently thus Treasury and Department of
    total of 13 Yrs Defence, in payment for a

  • Page 7 of 22

  • remorse for the ordinary
    workers of the private sector,
    whose life savings were raided
    by him and his conspirators.
    No restitution was made.

    St v Jimmy 1 x False 4 Yrs for False Not Guilty Plea
    Kendi (No 2) Pretence Pretence; and 9 The prisoner fraudulently
    (2007) N3131 Yrs for obtained K4,298,037.33 from
    1x misappropriation. the State, with assistance of
    Misappropriation corrupt officers, from the
    (to be served Department of Finance and
    concurrently thus Treasury and Department of
    total of 13 Yrs Defence, in payment for a
    IHL) false claim that members of
    the Defence Force present in
    Bougainville during the crisis
    unlawfully used machinery
    and equipment belonging to
    his company between 1993
    and 1997. Evidence proved
    that the prisoner’s company
    never owned any machinery or
    equipment during the claim
    period.

    St v Stanley Misappropriation 8Yrs IHL Prisoner unlawfully sold the
    Haru (2014) 4 Yrs to be Kone Tigers Rugby League
    suspended if all Oval in Waigani and
    the money is misappropriated the proceeds
    restituted. of the transaction on himself
    in the amount of
    K2,600,000.00 which was the
    property of Kone Tigers
    Rugby League Club, and was
    found guilty after a trial.
    Existing Trust and Significant
    amount of money.

    St v Peter Misappropriation 6 Yrs IHL Prisoner was found guilty after
    Tokunai (2015) a trial for misappropriating
    funds of K1,500,000.00
    property belonging to the
    Department of National
    Planning & Monitoring. The
    prisoner obtained those
    monies upon a project
    proposal he submitted for the
    reconstruction of the
    Malaguna Catholic Church
    which did not eventuate. The
    Court found that only a little
    over K100,000 was used on
    the project but most of it was
    used by the prisoner on
    himself and a few of his
    friends.

    St v Moko Essi Misappropriation 8 Yrs IHL Guilty Plea – Prisoner was

  • Page 8 of 22

  • property of Kone Tigers
    Rugby League Club, and was
    found guilty after a trial.
    Existing Trust and Significant
    amount of money.

    St v Peter Misappropriation 6 Yrs IHL Prisoner was found guilty after
    Tokunai (2015) a trial for misappropriating
    funds of K1,500,000.00
    property belonging to the
    Department of National
    Planning & Monitoring. The
    prisoner obtained those
    monies upon a project
    proposal he submitted for the
    reconstruction of the
    Malaguna Catholic Church
    which did not eventuate. The
    Court found that only a little
    over K100,000 was used on
    the project but most of it was
    used by the prisoner on
    himself and a few of his
    friends.

    St v Moko Essi Misappropriation 8 Yrs IHL Guilty Plea – Prisoner was
    Kom approached by others to use
    (2009) the name Simon Wapo so that
    CR 114/2008 he and others would embezzle
    David J funds from the Dept of
    Finance & Treasury. Claims
    were made and payments
    made to the prisoner totalling
    K3,780,000 which funds were
    used by the prisoner and
    others for their own use.

    St v Daniel Misappropriation 9 Years wholly Not guilty plea
    Mapiria (2004) suspended on Chairman of National Gaming
    Unreported condition Control Board
    CR 1118/2000 including misappropriated K3.188
    Mogish, J million from the state by
    – restitution counter signing 41 cheques
    to State of K1 drawn payable to cash over 10
    million within mths and applied to the benefit
    18 mths of another, namely the
    – upon Registrar of the Board, Mr
    payment Aisa, rather than for the
    sentence purpose of health, welfare,
    suspended community etc as directed by
    – 5 years the NEC. Aisa was acquitted
    community by another trial judge.
    service The prisoner in this matter did
    – 5 year not personally benefit from
    good this crime.
    behaviour
    bond
    – 6 monthly
    PS report

  • Page 9 of 22

  • were made and payments
    made to the prisoner totalling
    K3,780,000 which funds were
    used by the prisoner and
    others for their own use.

    St v Daniel Misappropriation 9 Years wholly Not guilty plea
    Mapiria (2004) suspended on Chairman of National Gaming
    Unreported condition Control Board
    CR 1118/2000 including misappropriated K3.188
    Mogish, J million from the state by
    – restitution counter signing 41 cheques
    to State of K1 drawn payable to cash over 10
    million within mths and applied to the benefit
    18 mths of another, namely the
    – upon Registrar of the Board, Mr
    payment Aisa, rather than for the
    sentence purpose of health, welfare,
    suspended community etc as directed by
    – 5 years the NEC. Aisa was acquitted
    community by another trial judge.
    service The prisoner in this matter did
    – 5 year not personally benefit from
    good this crime.
    behaviour
    bond
    – 6 monthly
    PS report

    St v Zebedee 3 x False 11 Yrs IHL The court found there was a
    Jabri Kalup Pretence significant amount of money
    4x of K4,750,000 was
    Misappropriation misappropriated and a breach
    of trust had occurred as well.
    The prisoner was to serve a
    total of 11 years imprisonment
    in hard labour inclusive of the
    other charges he was
    convicted upon, however for
    the four (4) misappropriation
    charges alone, the accused was
    to serve 8 yrs imprisonment
    which is the sentence to be
    served concurrently.

    St v Paul Misappropriation 9 Yrs The court found the prisoner
    Tiensten guilty of misappropriation of
    N5563 K10,000,000.00 the property
    of the state.

    13. The above listed cases are just some of the cases involving conspiracy to defraud and
    misappropriation. There are numerous more such cases, thus the above list of case precedents

  • Page 10 of 22

  • is not exhaustive.

    Personal Particulars.

    14. The prisoner is 49 years old. He was about 33 years old at the time of the offences.
    His father is from the Milne Bay Province while his mother is from the Western Highlands
    Province. He is the 6th born of 7 siblings.

    15. He is married to Janet who is from Chimbu Province and they have been married for
    29 years now after having met while both studying at the University of Papua New Guinea.
    They have 4 children who are now living and studying in Australia.

    16. The prisoner is a lawyer by profession. He started his education in Lae at St Mary’s
    Primary School. He then went to Lae Provincial High School and then to Aiyura National
    High School.

    17. After completing National High School he enrolled at the Law School at the
    University of PNG. After obtaining his law degree from UPNG he then completed a Masters
    Degree in Law at the University of Sydney. He is admitted to practice law in PNG and in
    Australia. He worked with Gadens Lawyers from 1990 to 1991. He then worked with Phillips
    Lawyers for a short time in Australia. He came back to PNG and worked for a short time with
    Young and Williams Lawyers. From 1992 to 2000 he worked with Carter Newell Lawyers
    from where these offences were committed.

    18. In 2000 he and his family moved to Brisbane, Australia. While there he did some
    consultancy work for a fishing company which operated between Brisbane, Korea and New
    Zealand. He sold his business in Australia when declared bankrupt after he was taken to court
    relating to this matter.

    19. He currently works for his family companies namely (PICC) Property & Investment
    Consultants Ltd) and Favalea Ltd.

    20. The prisoner is of the Seventh Day Adventist Church but is not a regular church
    attendee since his arrest. It is not stated which congregation he is a member of. He still assists
    the church in the return of his tithes and offerings. He also assists the Lutheran Church at 5
    Mile in Port Moresby. The prisoner says he does not attend church for the reason that after his
    arrest, the situation he was in was humiliating and brought shame on himself and his family
    and confined himself to his family home.

    21. The prisoner suffers from high blood pressure or hypertension. He has been a patient
    of Dr Jack Amana, a senior cardiologist at the Port Moresby General Hospital. Dr Amana
    filed a report on 22 May 2015 on the health condition of the prisoner. He reports that the
    prisoner has had two episodes of “transient ischaemic attacks”. He did not say when the 2
    events occurred as he has been seeing the patient since 2007. He did not state when the last
    one occurred and when he last saw him. Furthermore did not explain what those medical
    terms meant and what was the cause of such conditions. The missing information is necessary
    if any weight is to be given to the report. I therefore, went to the medical dictionaries to help
    me find the meaning of the terms “transient ischemic attacks.”

  • Page 11 of 22

  • 22. “Transient ischaemic attacks” is defined by Blacks Medical Dictionary 35th Edition
    as:

    “Transient ischaemic attacks are episodes of transient ischaemic of parts of the
    cerebral hemispheres of the brain stem lasting anything from a few minutes to several
    hours and followed by complete recovery. By definition the ischemic episode must be
    less than 24 hours. These episodes maybe isolated or they may occur several times in a
    day. The cause is atheroma of the carotid or vertebral arteries and the embolisation of
    platelets or cholesterol. These attacks present with strokes that rapidly recover.”

    23. The Oxford Concise Colour Medical Dictionary defines atheroma as:

    “degeneration of the walls of the arteries due to formation in them of fatty plagues and
    scar tissue. This limits blood circulation and predisposes to thrombosis.”

    The same dictionary defines thrombosis as:

    “a condition in which the blood changes from a liquid to a solid state within the
    cardiovascular system……”

    The Oxford Concise Color Medical Dictionary defines transient ischaemic attacks (TIA) as:-

    “The result of temporary disruption of the circulation of part of the brain due to
    “embolism, thrombosis to brain arteries, or spasm of the vessel walls. The most
    common symptoms are transient loss of vision in one eye and weakness or numbness in
    one limb or part of a limb. Patients recover within 24 hours.”

    The Oxford Concise Color Medical Dictionary defines “stroke” as:

    “A sudden attack of weakness usually affecting one side of the body. It is the
    consequence of an interruption to the flow of blood to the brain. An ischemic stroke
    occurs when the flow of blood is prevented by clotting or by a detached clot, either
    from the heart or a large vessel ( such as the carotid artery) that lodges in an artery.”

    The Oxford Advanced Learners Dictionary defines “transient” as:-

    “Continuing for a short time – fleeting, temporary”.

    The same dictionary defines ischemic as:

    “the situation when the supply of blood to an organ or part of the body, especially the
    heart muscles, is less than is needed”.

    24. To put it in layman’s terms and in the absence of a doctor’s explanation of what the
    condition is, the prisoner has had on two occasions a situation where blood supply to his heart
    or body was not enough for short periods. Such attacks could prove fatal. Dr Amana did not
    state what caused the attacks and what caused the hypertension. Was the condition as a result

  • Page 12 of 22

  • of this case or from some other source or whether this was a pre existing condition before this
    case. For that reason his report is unhelpful to the court.

    25. Another medical practitioner Dr Julius Ngason, Senior Psychiatric registrar also at the
    Port Moresby General Hospital filed another report which says that the prisoner to him is a
    known hypertensive patient since 2007 and has been seeing him for a number of months for
    treatment of depression. Again this doctor does not say when he first saw him with the
    condition and when he last saw him with this condition. He recommends that the prisoner’s
    condition be regularly monitored on his medications and mental state. He says that due to the
    circumstances he went through and is going through now, the severity of the symptoms of his
    depression have increased. He says this consists of insomnia, headaches, loss of appetite,
    difficulty in concentration, loss of interest and suicidal inclinations. The difficulty with this
    report is the same as the other medical report. It does not say when was the last hypertension
    attack or when was the last transient ischaemic attack. It does not state when the doctor last
    saw him. Again this report is of very little help to the court.

    SENTENCING CONSIDERATIONS

    26. The sentencing trend in misappropriation and conspiracy to defraud cases have been
    to a large extent been dictated by sentences meted out in earlier cases by the National Court
    and the Supreme Court, in other words by case precedents. The often cited case of Wellington
    Belawa v The State (1988-89) PNGLR 496 again comes to the fore in assisting this court to
    consider certain relevant factors when deciding a sentence. The Supreme Court in the Belawa
    case adopted the sentencing considerations set in the English case of R v Barrick (1985) 81
    Cr App R 78. Those considerations are:

    a) The quality and degree of trust reposed in the offender.
    b) The period over which the fraud was perpetrated
    c) The use to which the money was put to
    d) The effect on the victim
    e) The impact of the offence on the public and public confidence.
    f) The effect on fellow employees or partners.
    g) The effect on the offender himself
    h) His own history
    i)Matters of mitigation spared to himself such as illness, being placed under great strain
    by excessive responsibility or the like, where as sometimes happens, there has been a
    long delay, say over two years, between him being confronted with his dishonesty by
    his professional body or the police and the start of his trial, and finally any help given
    by him to the police.

    27. The Supreme Court in Belawa added two other factors namely:

    (a) Amount taken; and
    (b) Restitution

    With respect I agree that the above factors adopted from the English case and the additional
    factors from the Belawa case are relevant factors in my respectful opinion in determining an
    appropriate sentence. This is because there is “no mathematical or scientific formula” to work

  • Page 13 of 22

  • from to arrive at a sentence.

    28. I now go on to discuss the above mentioned factors in this case.

    (a) Amount taken.

    29. The total amount taken was K2,650,000 for which the prisoner was convicted of but
    evidence shows the prisoner directly benefited personally in the amount of K400,000.00

    (b) The quality and degree of trust reposed in the offender including his rank.

    30. The prisoner was the Managing Partner of a major legal firm and the Chairman of the
    National Provident Fund Board. The Board members were trustees of the savings belonging
    to employees or workers of private companies. Their job was to look after the workers
    savings for the benefit of workers who do not have the benefit of a social welfare system
    when they retire or finish from employment. They had the powers to invest the funds for the
    benefit of the Fund contributors. As the chairman of the Fund Board the prisoner was
    entrusted with a lot of power, trust and confidence to make good sound economic decisions
    for the management of the Trust Funds. He obviously abused that trust and confidence and
    instead stole from it.

    (c) The period over which the fraud or thefts have been perpetrated.

    31. The conspiracy to defraud was hatched in around November 1998 and went on to
    about October 2000 a period of over two years while the misappropriation took place from
    February 1999 up to July 1999 a period of 5 months.

    (d) The use to which the money was put to use.

    32. There is no evidence as to what he money was used for.

    (e) The effect on the victim.

    33. The Corporate victim in the matter was NASFUND but there were also individual
    victims who contributed to the fund through salary deductions.

    34. There is no evidence from the NASFUND contributors how they felt when they found
    out that their savings were misappropriated by the prisoner and others. All the members of
    the Nasfund Board were also trustees and had a duty to protect the funds of the contributors.
    The other Board members were also negligent in their role as trustees, more so the Board
    Members who represented the contributors on the Board.

    NASFUND took Kumagai to court and the proceedings in that matter were settled out of
    court for K3,000,000.00 which Kumagai paid.

    35. The Pre-Sentence report says:

    “Mr Ian Tarutia further stated that when this NPF saga came about, the reaction of the

  • Page 14 of 22

  • contributors at that time was hostile and negative towards the government institutions
    who were custodians of their contributions and life savings. He was then a junior
    officer within NPF and he had no knowledge and access to this information but there
    was a public outcry in regards to these issues.

    This public outcry prompted the Prime Minister that time, Sir Mekere Morauta to call
    for a commission of inquiry into the NPF saga and resulted in two proceedings to take
    place Civil Jurisdiction and criminal proceeding which saw Jimmy Maladina and
    others arrested and charged.

    The interest of the contributors now is that, they want their money back and they are
    not concerned about what the court imposes on Jimmy Maladina. This has also being
    circulated on their Social Network Nasfund Website as people are just interested in the
    offender paying restitution back to the state as it has taken almost 17 years and finally
    coming to an end of the saga.

    Mr Ian Tarutia stated that Jimmy Maladina, was placed in a position of trust and
    when this saga took place, it was a loss to our contributors as members lost their trust
    and confidence in the institution.

    On the other hand he expressed that he had known Jimmy Maladina and had found him
    to be a mature, professional, open minded and well respected person. He is a very good
    person who has always assisted and encourages other young Papua New Guineans to
    work hard and excel in the different field they work in whether it was in the government
    or private sectors.

    He also acknowledged that this case has taken a long time and he is sorry about the
    humiliation and what he had to endure all this years, however the interest of the
    contributors as stated earlier is for their money to be repaid.

    Mr Ian Tarutia went on to say confidently that NPF saga had not only had negative,
    chaos or adversity effects on the Institution but has instituted very positive structural
    reforms within the Institution. The Institution has changed in a positive angle,
    legislations, procedures and processes were put in place to regulate tighter measures,
    and control to foster change and the institution is now reaping the benefits of this
    saga.

    The Institution is now flourishing from 1.24 million Kina to 3.8 billion Kina. To
    conclude he believes Jimmy Maladina has suffered enough and all this should be
    taken into account when sentencing him, the bottom line is that he has to pay
    restitution to the state.

    He also acknowledged that this case has taken a long time and he is sorry about the
    humiliation.”

    In that regard the full K2,650,000.00 has now been restored to the contributors.

    (f) Public confidence.

  • Page 15 of 22

  • 36. The actions of the prisoner as reported by Mr Ian Tarutia was such that public
    confidence in NASFUND was diminished at the material time. The then government
    established a Commission of Inquiry which led to these charges and for civil action to be
    taken by Nasfund against Kumagai and the prisoner. However, Mr Tarutia said public
    confidence has been restored in that there has been positive structural reforms at Nasfund as a
    result of this incident. He reports that Nasfund is now flourishing from then K1.24 million to
    K3.8 billion. That is tremendous growth. Public confidence has therefore been restored in that
    regard. Lessons have been learned both from Nasfunds point of view and from the prisoners
    point of view. Time has moved on and events at Nasfund appears to have progressed for the
    better thus making the case look stale and of little consequence.

    (g) Effect on the offender.

    37. On allocatus the prisoner opted for his lawyers to speak which the lawyers did. The
    pre-sentence report says this:

    Attitude towards Offence:

    “The accused admitted freely that he had committed the offence. He stated that
    he is sorry for what he did. He further apologises and is remorseful especially
    to the contributors of NPF for what he had done that deprived them of their
    benefits which was to be enjoyed with their families and to his family for the
    sufferings, shame that he has brought on them for the last 17 years. He is
    making arrangements and is willing to repay the money owed back to the state.

    Jimmy Maladina went on to say that since 2003 when he returned to Papua New
    Guinea and got charged by the Police. He has appeared in court 95 times and
    had been on bail since 2003 in the district court and subsequently in the National
    Court in 2004. He has been on bail for over 12 years.

    He believes that he has been under tremendous public scrutiny since 2000 when
    the NPF Inquiry began and his reputation and his family name ridiculed and
    badly tarnished. He has suffered with this bad image for over 15 years where
    people have labelled him a thief as a result. He has never gone out to public
    places and enjoyed himself but have restricted himself to his home for the last 15
    years, virtually as a prisoner.”

    What the prisoner and his family had gone through was brought about by himself and cannot
    blame anyone for this.

    38. The State submitted that the prisoner was not remorseful. The pre-sentence report
    reports the prisoner to be remorseful for his wrongdoings and his willingness to pay
    restitution. It would have been better for the prisoner to make that statement as a public
    statement in Court for the benefit of victims.

    (h) His own history:

  • Page 16 of 22

  • 39. The prisoner is a lawyer. He was a principal of a leading law firm in Papua New
    Guinea. He was placed by the then government on boards of companies and government
    institutions because of his standing. He had impressive academic qualifications and work
    history. However with respect I agree with Barnett J in the Belawa case where his honour
    said:-

    “As pointed out by the Lord Chief Justice of England in R v Barrick (1985) 81 Cr App R
    78, in cases where senior employees are guilty of breach of trust or dishonesty, they will
    normally be people with an impressive employment record and previous good character
    – otherwise they would not be holding the job in the first place. For such people, the
    mere fact of conviction will bring about disgrace, dismissal, shame and the loss of
    future employment opportunities. The crime involved taking advantage of the position
    obtained as a result of the record of previous good character and faithful service
    fraudulently to steal from the employer. Such factors standing alone should carry little
    weight in determining the appropriate sentence in cases such as this.”

    40. The prisoner served the country well, but now for this incident has blemished his once
    good record and will remain with him for the rest of his life.

    (i) Whether restitution has been made to the victim.

    41. Restitution was made in full on 24 July 2015, the very day I heard submissions on
    sentence.

    42. However some earlier restitution (if I can call it that) was done when Nasfund took
    out a civil claim against Kumagai and the prisoner and others. That civil action was settled
    out of court with a payment of K3,000,000.00 by Kumagai but not with the prisoner. On the
    part of prisoner the pre-sentence report records Mrs Janet Maladina saying:

    “Everything fell apart for the family, her husband had to appear in court in Australia
    and here in Port Moresby, they were declared bankrupt and their property in
    Queensland which they were living in was repossessed under the Trusties of Blake
    Dawson Lawyers who acted for NPF and sold it to recoup their money back to the total
    $500,000.00 Australian Dollars including monies from his personal account. It was a
    very difficult time for them and their children, which saw them move and live in a rental
    apartment and were then put on Welfare Services provided by the Australian
    Government.

    Janet Maladina stated that because of the charges laid against her husband Jimmy
    Maladina, the Australian Government revoked his Permanent Residence in Australia.
    He has to apply for a Visa to travel back and forth to visit her and their child which has
    been difficult at times for him. He had to go back to the court to seek the court’s
    permission for him to travel to Queensland to visit his family.

    Janet further stated that what her husband had gone through for the last 17 years had
    affected him so much and it was like him already serving a sentence. From the stress
    and pressure on him he had suffered a stroke which is life threatening and still today he
    is under strict medication and has to continuously go for medical checkup.

  • Page 17 of 22

  • Not only that but it has also tarnished his reputation which has a lot of negative effects
    on the family and their business. The children had to bear the shame and undergo the
    suffering due to the father’s case.

    Janet stated that she accepts the decision of the court in finding her husband guilty and
    stands by her husband in this time. She has committed her support for her husband and
    has gone back to Australia to organise the sale of their properties and assets to assist
    her husband pay restitution back to the State of Papua New Guinea.

    Finally, Janet Maladina stated that what her husband has gone through for the last 17
    years the suffering, humiliation and shame is seen to, as being penalized enough. Their
    family accepts the guilty verdict and are now doing everything possible to assist pay
    restitution to the amount of K2,650,000.00 back to the State.”

    What Mrs Maladina has described above is the result of rather unfortunate consequences of
    the actions of Mr Jimmy Maladina her husband. Blame should not be shifted to anyone else
    but her husband. He was placed in a position of trust because the then government had trust
    and confidence in him.

    43. However from this report it appears that Australian $500.000.00 was recovered from
    the Maladina Family by way of sale of assets they bought in Australia. Also from the Pre-
    sentence Report and submissions on sentence the Court was informed that Mr Maladina was
    also declared bankrupt for a while. In that regard it can be said that Mr Maladina has repaid
    AUD$500,000.00 to the victim. Today in PNG Kina, that amount would be in excess of
    K1,000,000.00. The additional amount repaid in the amount recently of K2,650,000.00 in
    restitution is taken into account, as well. In reality some restitution was paid right at the
    outset and quite a lot of restitution was paid at that time. It could be that the prisoner has
    overpaid the total amount of K2,650,000.00 by AUD$500,000.00.

    44. While I know that the full restitution is done at this late stage an earlier restitution of
    AUD$500,000.00 was made. The prisoner was also declared bankrupt. I take those into
    account. The only down side to the last minute full restitution is the perception that the “have
    or the rich” can pay their way out of jail terms.

    (j) long delay in being confronted with his dishonesty

    45. This case has a long history. It has its beginning in around 1998. The case of the State
    v Iori Veraga (2005) PGNC 43: N2921 bears testimony to that. The State in their submissions
    do acknowledge the delay but say that due to various other court proceedings this matter has
    been delayed. The State also submitted that part of the delay be attributed to the prisoner’s
    lack of co-operation and appreciation of the Criminal Law processes.

    46. Counsel for the prisoner devoted 7 pages of his 10 page submission on sentence on
    the issue of delay. The issue for delay therefore needs to be addressed by the Court. Delay in
    bringing a matter to court is one consideration in considering a sentence as was adopted by
    the Supreme Court in the Belawa case. The English case of Barrick (supra) which Belawa
    approved and applied says any delay of say 2 years from the date of the offence to the date of

  • Page 18 of 22

  • trial would be taken into account in mitigating a sentence. The prisoner was formally arrested
    and charged in July 2003 for events which took place in 1998 and 1999.

    47. The committal process took 15 months and in October 2004 the prisoner was
    committed to stand trial in the National Court. From November 2004 to May 2015, a period
    of 11 years the prisoner’s matter has been in and out of the National Court. The prisoner was
    committed to stand trial. Somehow his co-accused Herman Leahy was not committed to trial.
    The Public Prosecutor however indicted him under s.526 (indictment without committal) of
    the Criminal Code. Since then, the matter of Herman Leahy has been permanently stayed by
    the National Court.

    48. The trial of the matter was initially set to run from 6 to 24 June 2005. The trial date
    was set in March 2005. In April 2005 the trial date was confirmed to start on 6 June 2005.

    49. In May 2005 the trial date was vacated upon a request by the State before the National
    Court. The Court upon that request vacated the trial date. From May 2005 nothing was done
    to prosecute the prisoner until the middle of 2007. Two full years was wasted there. The State
    must be held responsible for that part of the delay with the Courts.

    50. In 2008 the matter came before Mogish, J to fix a date for trial of the matter and was
    fixed on 11 August 2008 for Public Prosecutor to formally apply for a joint trial of the
    prisoner and Herman Leahy. On 11 August 2008, the matter was before Kirriwom J. His
    Honour adjourned the application for joint trial generally to a date to be fixed. That part of
    the delay appears to be occasioned by all parties.

    51. In the meantime there were various applications before the Supreme Court by Herman
    Leahy objecting to an ex-officio indictment presented by the Public Prosecutor which the
    Supreme Court in March of 2010 ruled the ex-officio indictment to be in order and allowed
    amendment to the ex-officio indictment.

    52. The Public Prosecutor on 6 July 2010 moved an application for a joint trial of the
    prisoner and Herman Leahy. This application was opposed by the prisoner and Herman
    Leahy.

    53. On 12 July 2010 the National Court ruled in favour of the application for a joint trial
    of the prisoner and Herman Leahy. On 18 August 2010 the prisoner and Herman Leahy filed
    for review of the National Court decision to have a joint trial.

    54. The review applications were never heard but were dismissed for Want of Prosecution
    in December of 2012. Since December 2012 both the State and the prisoner have done
    nothing to prosecute the matter until this Court called the matter early this year and listed the
    mater for trial with reluctance from both State and the lawyers for the prisoner. This part of
    the delay was caused by the prisoner and Herman Leahy.

    55. After going over the history of the matter all the players involved in the process of
    bringing the matter to trial within a reasonable time have all failed to perform their respective
    duties in bringing the matter to trial. The Public Prosecutor failed, the Courts failed and the
    prisoner himself and his lawyers failed. In my respectful opinion after going through the

  • Page 19 of 22

  • history of the case from committal to trial all parties including the prisoner and his lawyers
    are guilty of this rather lengthy delay.

    56. The Public Prosecutor has the primary responsibility to bring a matter to trial under s.
    177 (1) (a) of the Constitution. He must have the matter tried within a reasonable time
    pursuant to s.37 (3) of the Constitution. In recent years the courts have taken on the
    responsibility to move cases for trial. The Court Rules relating to listings of cases was meant
    for the speedy disposition of a case. T his is usually done in open court where Judges and
    Lawyers play a major part in listing of cases for trial within a reasonable time. The systems
    and the process provided under the listing rules failed to have this matter brought to a speedy
    trial. In that regard this court takes this failure into account in sentencing.

    57. On the part of the prisoner and his lawyers the provision of s.552 of the Criminal
    Code were always available to be invoked if they wanted the trial to be expedited. See The
    State v Yamai (1987) PNGLR 314, Lindsay Kivia & Ors v The State (1988) PNGLR 107 and
    The State v Alphonse Wohuinangu (1991) N966, but were never invoked.

    58. For the beneficiary of lawyers who do not practice criminal litigation and law very
    much s.552(2) and (4) of the Criminal Code provides:-

    552. Right to be tried.
    (1) ……………
    (2) A person who has been committed for trial or sentence or against whom the
    Public Prosecutor has laid a charge under Section 526 may make application at any
    sittings of the National Court to be brought to his trial.
    (3) ………………
    (4) If—
    (a) a person has made an application under Subsection (2);
    and
    (b) at the end of the sittings of the National Court at his
    place of trial next following the application
    (i) no indictment has been presented against him; or
    (ii) the court is satisfied that the prosecution has not in the circumstances of the
    case made a genuine attempt to complete its case,he is entitled to be discharged.

    Invoking these provisions in my respectful opinion might have ensured an earlier trial or a
    possible discharge.

    59. The delay from time of committal to time of trial is 11 years. The offences were
    committed in 1998 some 17 years ago. The delay for 11 years reasonable or unreasonable and
    regardless of who is at fault to me with respect is a breach of s.37(3) of the Constitution and
    as such is a serious breach of an accused persons fundamental right to a fair trial within a
    reasonable time. The breach was caused and occasioned by all parties involved in the matter
    including the prisoner himself and his lawyers. I am not sure whether as a result of the delay
    the offence can be considered stale in that the crime perpetrated by the prisoner and others
    has strengthened Nasfund, the institution they stole from. Nasfund is now in a sound financial
    and management position. Moreover, the contributors money has now been restored.

  • Page 20 of 22

  • Mitigating Factors

    60. Having now gone through the Belawa factors. I will now go on to deal with the
    mitigating factors, if any, which has the effect of making any offence less serious:

    (a) The prisoner is a first offender, that is that he has no prior convictions.
    (b) The prisoner has a good personal and family background.
    (c) The prisoner is suffering from a serious health condition in that he suffers
    from hypertension. This condition needs to be monitored closely.
    (d) The prisoner has now made full restitution and in doing so has restored the
    victim’s position financially.
    (e) There was a long delay of getting the prisoners matter to trial. He was
    committed by the District Court to stand trial in the National Court 11 years ago. Had
    the matter been prosecuted with due diligence the prisoner might have served his time
    by now.
    (f) I think the prisoner has a learnt valuable lesson from this case, is not likely to
    reoffend and is not a danger to society. There were others in the conspiracy and the
    theft but were not been charged. Co-accused has his case permanently stayed by the
    National Court.

    Aggravating Factors

    61. Against the prisoner are the following aggravating factors:-
    (1) He is a lawyer and the Chairman of the Board and as such was in a high position of
    trust. He abused the trust.
    (2) The amount he stole was a large amount of money.
    (3) The conspiracy and the elaborate plans between Kumagai officials, Ken Yapane and
    others and execution of the conspiracy and plans.

    Sentence

    62. This was a case where a number of players were involved namely Jimmy Maladina,
    the late Henry Fabila, Herman Leahy, Shuichi Taniguchi, Kazu Kobayashi, Ken Yapane and
    others. This court concluded from circumstantial evidence that all the above named persons
    were involved in the conspiracy to defraud NASFUND.

    63. The Court has now dealt with the matter of Jimmy Maladina. Herman Leahy’s matter
    the co-accused has been permanently stayed by the National Court for reasons that he had
    been denied the right to be tried expeditiously. Evidence before the Court from Robin
    Flemming was that the late Henry Fabila and Herman Leahy dealt with the Bank and that
    some of the money from Kumagai went to Ulya Real Estate of which Herman Leahy was a
    director. The point of all these is that only Jimmy Maladina is being punished for this crime
    while others involved might or could get off scott free.

    64. While this matter was a trial, the prisoner admitted his wrong doing to the Probation
    Officer who reported that:

    “The accused admitted freely that he committed the offence. He stated that he is sorry

  • Page 21 of 22

  • for what he did.”

    Firstly this is a late admission of the offences he was convicted of after the trial. Secondly, I
    consider his admission and his apology to the contributors to the Fund to be an expression of
    some remorse.

    65. I take into account the delay factor seriously more so the fact that his Constitutional
    right to a speedy trial was denied him. That is however a factor he contributed to. I take into
    account the submissions of his Counsel on the aspect of the delay.

    66. However, I do not forget the fact that the prisoner was in a very high position of trust.
    He was the principal trustee of a Superannuation Fund. He abused the trust. He was also in a
    position of power. Again he abused that power. The interest of the contributors to the
    Superannuation Fund in my view is a matter of paramount concern, but they are happy now
    according to Mr Ian Tarutia. The Court must continue to send out a stern message to deter
    those in positions of trust from abusing and manipulating the systems to benefit themselves
    and their cronies. This case calls for a stern punitive and deterrent sentence to serve as a clear
    warning to the trustees and chairman of boards looking after superannuation funds that high
    standards of integrity and honesty are expected from and of them.

    67. Sentencing patterns from case precedents Wellington Belawa v The State (1988-89)
    PNGLR 496, The State v Paul Tiensten(2014) N5563, The State v Stanley Haru (2014)
    N5660, The State v Zebedee Kalup (2015) N6038 and others cited earlier in this judgment set
    the pace. I am guided by sentences imposed in those case precedents.

    68. Accordingly, considering all the factors in this matter and the sentencing patterns I
    impose a sentence of 6 years on the first count and a sentence of 8 years on the second count.
    Both these sentences are to be served concurrently meaning that the head sentence is 8 years
    imprisonment for the two offences.

    69. I take into account these following factors that will enable me to exercise the Courts
    discretion in the way I will. They are:

    (1) Full restitution over and above what the prisoner dishonestly obtained has
    been made by the prisoner.

    (2) A civil action was taken against him by Nasfund wherein he was declared
    bankrupt and his properties in Australia sold for over AUD$500,000.00 which was
    given back to Nasfund.

    (3) Nasfund is now in a better position than it was those 17 years ago. It and the
    contributors are now happy that they have got back what was stolen from them by
    Kumagai and the prisoner.

    (4) The prisoner will no longer be able to practice law ever again and I think he is
    aware of that fact.

    (5) His co-accused’s case has been permanently stayed by the National Court.

  • Page 22 of 22

  • Others involved in the case have never been charged, thus issue of where is fairness is
    asked.

    (6) I am aware that he brought all these on himself and he has no one to blame;
    but he was now put right in full and over what he did wrong. He will still suffer in that
    he will have to find other ways to survive in this world as he will no longer practice
    law.

    (7) There has been a long undue delay to have this matter tried, thus his
    constitutional right to a trial within a reasonable time denied. The State had the primary
    role to expedite his trial.

    70. In the circumstances as pointed above I will exercise the courts discretion and suspend all
    the 8 years and place him on good behaviour bond for 2 years.
    ______________________________________________________________
    Public Prosecutor: Lawyer for the State
    Young & Williams Lawyers: Lawyer for the Defense