The State V Phillip Kikala [2014] N6874

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  • About

    The defendant was found guilty on four counts of misappropriation relating to the misuse of a total of K1,107,000 in District Support Infrastructure Funds while he was the Member of Parliament for the Lagaip-Porgera Open Seat.

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  • N6874
    PAPUA NEW GUINEA
    [IN THE NATIONAL COURT OF JUSTICE]

    CR (FC) NO 17 OF 2014

    BETWEEN:
    THE STATE

    AND:
    PHILLIP KIKALA

    Salika, DCJ: Wabag / Waigani
    2017: 01, 02, 03. 22, 23, 24 March
    19 May

    CRIMINAL LAW – PRACTICE AND PROCEDURES – misappropriation of
    funds – Government funds – District Support Improvement Programme
    (DSIP) Funds – JDP & BPC decision to award contracts to company owned
    by the Chairman JDP & BPC – funds deposited into Chairman’s personnel
    company – whether accused acted dishonestly – whether accused applied
    money to his own use and use of others.

    Cases cited

    Kindi Lawi v The State (1987) PNGLR 183
    The State v Gabriel Ramoi (1993) PNGLR 390
    The State v Francis Laumadava (1994) PNGLR 291
    The State v Jimmy Liriope (1990) N916

    Counsel

    Ms H Roalakona, for the State
    Mr O Yallon, for the Accused

    VERDICT ON CHARGES

    19th May, 2017

    1. SALIKA DCJ: INTRODUCTION: The accused is charged with the
    following 4 counts of misappropriation:

  • Page 2 of 13

  • Count 1:

    Phillip Kikala of Aiaka Village, Lagaip, Enga Province stands charged
    that he between the 1st day of March 2012 and the 31st day of March
    2012 at Port Moresby and Enga Province in Papua New Guinea
    dishonestly applied to his own use and to the use of others the sum of
    Seven Hundred and Ninety Thousand Kina (K790,000), the property of
    the Independent State of Papua New Guinea.

    Count 2:

    The said Phillip Kikala of Aiaka Village, Lagaip, Enga Province stands
    charged that he between the 1st day of March 2012 and the 31st day of
    March 2012 at Port Moresby and Enga Province in Papua New Guinea
    dishonestly applied to his own use and to the use of others the sum of
    Eighty Thousand Kina (K80,000) the property of the Independent State of
    Papua New Guinea

    Count 3:

    The said Phillip Kikala of Aiaka Village, Lagaip, Enga Province stands
    charged that he between the 1st day of April 2012 and the 30th day of
    April 2012 at Port Moresby and Enga Province in Papua New Guinea
    dishonestly applied to his own use and to the use of others the sum of
    One Hundred and Twenty Eight Thousand Kina (K128,000), the property
    of the Independent State of Papua New Guinea

    Count 4:

    The said Phillip Kikala of Aiaka Village, Lagaip, Enga Province stands
    charged that he between the 1st day of May 2012 and the 30th day of
    May 2012 at Port Moresby and Enga Province in Papua New Guinea
    dishonestly applied to his own use and to the use of others the sum of
    One Hundred and Nine Thousand Kina (K109,000), the property of the
    Independent State of Papua New Guinea

    The Brief Allegations

    2. The following are the brief allegations relied on by the State.
    Between the year 2007 and 2012 the accused, was the sitting Member of
    Parliament for the Lagaip-Porgera Open Seat, Enga Province. As the MP for the
    District he was also the Chairman of the Joint District Planning and Budget

  • Page 3 of 13

  • Priorities Committee (JDP&BPC).

    On 19 January 2011, the accused registered a company with the Investment
    Promotion Authority under the name West Rural Industries Limited. On 6 May
    2011 he opened the company account with the Bank South Pacific (BSP) under
    account name West Rural Industries Limited Account Number 103380431 for
    which he was the sole signatory.

    On 18 July 2011 there was a purported JDP& BPC meeting. The Chairman
    informed the committee members that there was a K1,000,000 DSG (District
    Support Improvement Grant) for the District for the year 2010 and 2011 which
    had not been used. The JDP and BPC resolved to spend the grants and resolved
    that West Rural Industries Limited be a recipient of some of the funding.
    On 25 February 2012 Lagaip-Porgera JDP & BPC purportedly convened a
    special meeting No 2 of 2012 and it was at this meeting that the JDP & BPC
    members agreed that West Rural Industries Limited would take over the
    contract of Building Pyrethrum and Potato processing staff houses for an
    allocated amount of K500, 000. This purported meeting was never convened as
    members of the JDP & BPC committee did not attend.

    In late February 2012, various documents were submitted by the accused to the
    Department of Rural Development and Implementation to justify the release of
    funding. These documents included:

    1. Lagaip-Porgera JDP& BPC meeting minutes and resolutions;
    2. Tender Documents;
    3. Letters drafted by Philip Kikala.

    It was upon the written instructions of the accused that the funds should be paid
    to the West Rural Industries Limited and not the District Treasury Account as
    was the normal process.

    On 2 March 2012, cheque number 14553 was raised by the Department of
    Implementation and Rural Development (DI&RD) and paid to West Rural
    Industries Ltd for the sum of K790, 000 being for payment for staff houses for
    the food processing plant. The cheque was deposited into the account of West
    Rural Industries on 6 March 2012. No acquittals were received for this fund and
    no projects done. The monies were paid from the Districts DSIP funds.

    On 21 March 2012 cheque number 14734 was paid to West Rural Industries Ltd
    for the sum of K80, 000 for construction work on a chicken house project. This
    cheque was deposited on 22 March 2012 into West Rural Industries bank
    account. This payment was also from the District DSIP funds.

  • Page 4 of 13

  • On 19 April 2012, another cheque in the sum of K128, 000 was paid again to
    West Rural Industries Ltd by cheque number 14886. This payment was for
    project management fees. This payment was paid from the Districts
    Discretionary Grants.

    On 8 May 2012, a cheque for the sum of K109, 100 for technical and
    consultation services was paid to West Rural Industries Ltd. This payment was
    deposited into the bank account of West Rural Industries on 24 May 2012. The
    payments were made from the Districts Discretionary Grants. None of these
    funds were ever acquitted and no projects done.

    It was alleged that when the cheques were paid to the accused’s company
    account on those four different occasions; that is a sum of K790, 000; K80, 000;
    K128, 000 and K109, 100 for housing projects; chicken house project and for
    consultation and project management fees; the accused did not use the monies
    for the intended purpose rather diverted and dishonestly applied the monies to
    his own use and the use of others thus contravening section 383A (1) (2) of the
    Criminal Code Act.

    Issue

    3. The issue is whether the accused dishonestly applied to his own use and
    to the use of others the monies which belonged to the State.

    Onus of Proof

    4. The law is that the State has the onus of proof to prove each of the
    charges beyond reasonable doubt.

    Evidence

    Documentary

    5. A good part of the evidence was documentary and were tendered by
    consent. The following documentary evidence was tendered.

    (i) Exhibit A – Cheque for the amount of K790,000.00
    (ii) Exhibit B – FF3 and FF4
    (iii) Exhibit C – Cheque for the amount of K80,000.00
    (iv) Exhibit D – Witness Statement of Mark Ravu
    (v) Exhibit E – FF3 and FF4 for cheque No 14734
    (vi) Exhibit F – Cheque for the amount of K128,000.00

  • Page 5 of 13

  • (vii) Exhibit G – FF3 and FF4 for cheque No 14886
    (viii) Exhibit H – Copy of Cheque for K109,100.00
    (ix) Exhibit I – Statement of Paul Sai’i.
    (x) Exhibit J – FF3 and FF4 for cheque No 14940.
    (xi) Exhibit K – Copy of cheque No 14940.
    (xii) Exhibit L – Statement of Langin Andale
    (xiii) Exhibit M – Meeting minutes of Grand Review Evaluation
    Meeting
    (xiv) Exhibit N – Is the prior inconsistent statement of George Poiyo.
    (xv) Exhibit O – Is the statement of Kamean Andreas
    (xvi) Exhibit P – Is the documents formulating the Search Warrant.
    (xvii) Exhibit Q – is the Bank documents obtained from the Bank of
    South Pacific

    Oral
    Paul Sai’i

    6. His evidence is:-

    (i) He is the current Acting Secretary of the Office of Implementation
    and Rural Development.

    (ii) The process of payments are done through established guidelines
    through his office.

    (iii) Upon receipt of the JDP and BPC Meeting Minutes and
    Resolutions, it goes to a committee in the department who screen
    the documents from the JDP and BPC and then it goes in for
    approval.

    (iv) Confirmed receipt of the JDP & BPC meeting No 2 of 2012
    minutes, the tender documents and letters from Mr Kikala and the
    resolutions were signed by the Chairman of the JDP & BPC who is
    the open Member of Parliament for that District.

    (v) The technical team from Department of Implementation and Rural
    Development screens the documents and thereafter it goes to this
    witness for approval. It is also within his discretion to pay direct to
    a contractor. In this case he used his discretion to pay the funds to
    West Rural Industries Ltd because Mr Kikala had written saying
    that if the funds were deposited into the District Treasury they
    would be misused by the District and Provincial public servants
    and therefore asked for the funds to be paid to West Rural
    Industries Ltd and thereafter the cheques were paid in favour of

  • Page 6 of 13

  • that company.

    (vi) The acquittal process is based on guidelines and they rely heavily
    on the District Administrator and the District Treasurer.

    (vii) He also relies heavily on his assistant Regional Managers.

    (viii) Gave an account of what actually happens through the process of
    payments to the districts.

    Mark Ravu

    7. Mark Ravu’s evidence is that:

    (i) This witness is a former employee of Department of Rural
    Development and Implementation and was the former Manager
    Accounts.

    (ii) The witness in his oral evidence stated that in his employment as
    the Accounts Manager, it is his duty to countersign and approve
    claims and thereafter check the availability of funds before
    approving payments.

    (iii) He confirmed in his statement that he did issue payments to Phillip
    Kikala for K780,000.00 on the 06th March 2012, K80,000.00 on
    the 21st March 2012, K128,000.00 on the 19th April 2012 and
    K109,100.00 on the 08th May 2012. These payments were
    admitted by the accused and marked as Exhibits.

    (iv) He further stated that it was the responsibility of the District
    Administrator to acquit funds but since then he has never received
    any acquittals from the District Administrator and or the District
    Treasurer.

    Langin Andale

    8. This witness evidence is that:-
    (i) This witness is employed as the Project Manager for the Highlands
    Region for the Department of Implementation and Rural
    Development.
    (ii) In his oral evidence he states that his responsibility is for the
    overseeing of the planning, co-ordination, administration and all
    the managing and development in the highlands 2 region which

  • Page 7 of 13

  • comprises of Southern Highlands, Western Highlands, Enga and
    Hela Provinces.
    (iii) He explained that the committee screens the documents from the
    JBD & BPC before it is satisfied and paid. He further stated that
    there was no inspection done as those projects as it was on the eve
    of election and there was no funding to carry out a project
    implementation report.
    (iv) He further stated that it was not a responsibility of a member to
    provide acquittals but that was the responsibility of the District
    Administrator and District Treasurer who are to provide acquittals
    for every payment made.
    (v) He received K40,000.00 from Accused for Bride Price.

    George Poio

    9. George Poio’s evidence is that:-

    (i) He is the current District Administrator for the Lagaip Porgera
    District.
    (ii) Does not recall giving the first page of his statement to the police.
    (iii) Stated that he did not know of payments made to the West Rural
    Industries Ltd. He stated that he only signs cheques from the
    Laiagam District and does not know of any other cheques paid out.
    (iv) He was not aware of any payments made to West Rural Industries
    Ltd or Phillip Kikala.

    Kamen Andreas

    10. Kamen Andreas evidence is that:-

    (i) He is the policeman involved in investigating, arresting and
    charging of the Defendant.
    (ii) The defendant opened a bank account under his company name
    West Rural Industries Ltd and was the sole signatory to that
    company account.
    (iii) He stated that there were many projects done in Laiagam.
    (iv) As to those projects, he was informed during his investigation that
    those projects were done between 2008 and 2011.
    (v) Confirms that he saw the establishment of the Pyrethrum project
    and the staff houses and other buildings but could not establish if
    those buildings were all staff houses.

    Defence Case

  • Page 8 of 13

  • 11. The defence called the accused as its only witness. His evidence was:-

    (i) That he had received all the cheque payments from the Department
    of Implementation and Rural Development.
    (ii) That the funds were to pay for the project management fees,
    consultants fees and labour payments for persons involved in the
    construction of the Chicken Factory, Bank, Commercial Centre and
    the Pyrethrum Factory.
    (iii) Further part of the K1,107,100 was used for the construction of the
    staff houses for the chicken projects and the chicken processing
    plant. The construction of the three (3x) three bedroom houses and
    a self contained house was completed over a five months period
    from March to August 2012.
    (iv) That the projects approved for implementation were the
    K790,000.00 for the staff houses for the food processing plant and
    that the staff houses were built,
    (v) That he had to also make payments for contractual obligations,
    settling in and out allowances and airline tickets for the contractors
    back to their countries.
    (vi) The K80,000.00 was for the construction of chicken house project,
    which were built, the K128,000.00 was for the chicken house
    project, staff houses, the K109,000.100 was paid for consultation
    and management fees.
    (vii) That he had sold his piece of land to make room for the
    establishment of a Bank and that the Bank is now existing but
    incomplete.
    (viii) That the funds were solicited and used for those purposes.
    (ix) That the year 2012 was an election year and he and his
    Administration needed to deliver those projects before he went for
    elections.

    Production of Search Warrant

    12. When the trial was in progress the States police witness Kamen Andreas
    gave evidence. He was asked to produce the search warrant which he used to
    obtain documents in relation to this case from the Bank South Pacific. He could
    not produce the search warrant then but said he could later in the course of the
    trial or later. The State case closed after that with a request to re-open when the
    search warrant was found and the defence went into evidence after its no case
    submission was dismissed. After this the defence called its one and only
    witness, the accused. After the accused gave evidence the matter was adjourned
    by consent to Waigani and again by consent for the State’s police witness to find
    the search warrant and have it tendered into evidence and for the defence to
    have an opportunity to cross examine the witness. All these was done by

  • Page 9 of 13

  • consent and the prosecution re-opened in Waigani for that purpose only.

    Elements of Charge

    13. The Elements of the charge of misappropriation are:-

    (i) A person
    (ii) On a date
    (iii) At a place
    (iv) Dishonestly apply to his own use or to the use of another
    (v) Property belonging to another

    14. Those elements of the charge must be proven beyond reasonable doubt
    by the State or the prosecution.

    15. Elements (i), (ii), (iii) and (v) are not in dispute. The accused admitted he
    on a date and place did receive the various cheques from the Office of Rural
    Development and Implementation (ORDI). The cheques were from ORDI and
    therefore the State and written out to “West Rural Industries Limited” a
    company owned by the accused who was the sole signatory to the company’s
    bank account number 1003380431. The accused admitted he went personally to
    the Office of Rural Development and Implementation obtained the four cheques
    the subject of the charges all written out to “West Rural Industries Limited’.

    Dishonestly apply

    16. Dishonesty is what goes on in the mind of the accused before, during and
    after the monies were obtained. The accused’s state of mind during this times,
    that is before, during and after the money came into his possession, is a question
    of fact for the court to consider and determine. All the relevant evidence, direct
    and circumstantial is to be considered by the court to make finding as to
    whether or not the accused had the dishonest intention in getting the money (see
    The State v Gabriel Ramoi (1993) PNGLR 390, Kindi Lawi v The State (1987)
    PNGLR 183.

    17. The evidence of Mark Ravu is that he was the Accounts Manager to the
    ORDI. He said he issued payments to Phillip Kikala for the amount of
    K790,000.00 on 6 March 2012, K80,000.00 on 21 March 2012, K128,000.00 on
    19 April 2012 and K109,100.00 on 8th May 2012. There is no dispute by Mr
    Kikala on these facts. The State alleged that Mr Kikala never acquitted these
    funds. Mr Kikala said acquittal of funds was the responsibility of the District
    Administrator and not him. The District Administrator said he was not aware of
    those payments made to Mr Kikala’s company and that those transactions were
    done outside the normal procurement processes. He said he only acquitted funds

  • Page 10 of 13

  • which came through his office. These payments did not come through the
    Lagaip Porgera District Administration. There is no dispute about that.

    18. These payments were done according to a purported meeting resolution
    of the Joint District Planning and Budget Priorities Committee (JBP & BPC)
    held on 18 July 2011. Mr Kikala’s evidence was that because he gave his own
    piece of land to the District for projects, he was to be reimbursed for that and
    that the JDP & BPC resolved that the payment be paid to his private company
    account. It was upon that understanding that JDP and BPC resolution that the
    monies were paid to West Rural Industries Limited. At the meeting the accused
    informed the JDP and BPC that there were District Support Grants (DSG) for
    the Lagaip Porgera in the amount of K1,000,000.00 to be used.

    19. On 25 February 2012, the Lagaip Porgera JDP and BPC is said to have
    had a special meeting No 2 of 2012 which it resolved that West Rural Industries
    would take over the contract to build the Pyrethrum and Potato processing staff
    houses.

    20. In February 2012, Mr Kikala submitted the JDP & BPC with tender
    documents and letters from and signed by Mr Kikala. The request for funds
    was purportedly authorised by the JDP and BPC of which he was the Chairman.
    The Department of Rural Development and Implementation received the
    documents and approved payments for the amounts to the accused’s company.
    These payments in cheques were made in favour of his company and deposited
    into his company account. There is no dispute on this.

    21. Evidence from Kamean Andreas is that when he visited the project sites
    in 2013 the projects had been completed in 2008 to 2011 and that there were no
    new projects in 2012 in the subject areas. Evidence from witness Langip
    Andale and the accused was that this was election year. I also take judicial
    notice of the fact that PNG National Elections are held every 5 years and that
    indeed 2012 was the year of the last elections and that this year (after 5 years) is
    another election year. Mr Kikala was the sitting member from mid 2007 up to
    mid 2012. It was therefore not possible and not advisable to start any new
    projects. The fact that this was an election year is important because candidates
    look for money at this time to run their election campaign.

    22. In his evidence Mr Kikala said K790,000 was for staff houses for the
    food processing plant and that staff houses were built. He said he also had
    contractual obligations to settle and airline tickets for contractors to take them
    back to their countries.

    23. He said the K80,000.00 was for the construction of the chicken houses
    which were built and that the K109,100.00 was for consultation and

  • Page 11 of 13

  • management fees but he does not say who those consultants and managers were
    or are.

    24. Mr Kikala after the case was reopened said he had over K570,000 of his
    own company money in that company account before the State monies of
    K1,107,100 were deposited. He said K250,000 was paid to the Agro Projects
    Consultant and that K462,000 was withdrawn to buy materials from Mt Hagen,
    Lae and Wabag to build the projects, the chicken house, the chicken factory, the
    pyrethrum factory and a Bank and Commercial centre. He was unable to
    produce receipts and invoices from hardware shops in Mt Hagen, Lae or Wabag.
    Those would have been easy to find if he acquitted the funds.

    25. To build these projects would take time. Election was coming in the next
    2 or 3 months. On 2nd March 2012, the K790,000 was raised and on 6 March
    2012 it was deposited into the West Rural Industries Ltd account. There were
    no acquittals for the amount of money. The K80,000 was deposited into West
    Rural Industries Ltd account on 22 March 2012. Again no acquittals were done
    for this amount. On 19 April 2012 K128,000 was deposited into the West Rural
    Industries Account. Again no acquittals were done for this amount. On 24 May
    2012, the K109,100.00 was paid into West Rural Industries Ltd account. Again
    no acquittals were done for that amount.

    26. Mr Kikala was not re-elected and so by July and August he had finished
    being a Member of Parliament. Serious questions arise as to whether those
    projects were completed between 2008 and 2011 or whether those projects were
    completed in 2012 when the new Member of Parliament was in office.

    27. When Mr Kikala was asked why there were no acquittals, his answer was
    that it was not his responsibility but those of his District officers. However, the
    evidence is that the District Officers were unaware of these payments from the
    Department of Rural Development and Implementation to Mr Kikala’s
    company. The District Officers only acquitted funds that came through the
    District Treasury. These funds to Mr Kikala’s company never made it to the
    District Treasury. Therefore the District Officers were in no position and power
    to acquit the funds that went direct from Department of Rural Development and
    Implementation to Mr Kikala’s company. Mr Kikala therefore had the duty and
    the obligation to acquit the public funds. He failed. He now cannot blame the
    District Officers.

    28. There were no new building at the site which was visited by the
    investigating policeman. According to the Police Investigation, the buildings
    Mr Kikala said were built were built with funds from the District before these
    new funds were released. This means that this was a case of double dipping in
    that funds were requested for projects which had already been funded and

  • Page 12 of 13

  • completed. The second lot of funding therefore went to something else and not
    what they were purportedly released for.

    29. Considering all the evidence both direct and circumstantial, I am satisfied
    beyond reasonable doubt that the project buildings that Mr Kikala is referring to
    were built in the years 2008 and 2011 and that there was no new project in 2012
    on the eve of election. I accept the evidence of the policeman Andreas Kamen
    that he did not see any new buildings when he visited the project area in 2013.

    30. Why direct government funding to a private company owned by Mr
    Kikala and not put the funds in the District Treasury is in my opinion
    deliberately orchestrated so that Mr Kikala could access the funds and not be
    held accountable for how the funds were used. Mr Kikala would have had a
    conflict of interest in the matter for all funds to go to his company. In my view
    he had a serious conflict of interest situation in the matter.

    31. Applying the objective test Mr Kikala’s conduct in my opinion in those
    circumstances was dishonest. The ordinary standard of decency of a reasonable
    and honest man would be that to award a contract to yourself and have
    government funds deposited into ones private company account is not honest or
    to award a contract to yourself and your company is wrong. (see The State v
    Francis Laumadava (1994) PNGLR 291).

    32. Similarly applying the subjective test to Mr Kikala’s conduct, when the
    court looks into the mind of Mr Kikala and given his work experience,
    educational level, his intelligence, maturity and his standing, he would have
    known that awarding a contract to oneself and then having the contract funds
    deposited into one’s own company account was wrong (see The State v Francis
    Laumadava (supra) and The State v Jimmy Liriope (1990) N916). That is what
    Mr Kikala did in this case.

    33. In my respectful view the application and the request for the funds and
    the cheques to be written out in favour of his own company were deliberately
    orchestrated by Mr Kikala to be used for purposes other than for the purpose he
    had applied and obtained the funds for. To me with respect, that was glaringly
    dishonest. All the ingredients of dishonesty are present in this case because of
    how the funds were applied for and where the funds were deposited. Moreover,
    no acquittals were done to account for the money and when funds were applied
    for on the eve of elections.

    34. Accordingly, I am satisfied beyond reasonable doubt that Mr Kikala’s
    actions, prior to, during and after the obtaining of the funds were dishonest for
    reasons I have explained above.

  • Page 13 of 13

  • 35. All other elements of the charge having been admitted and not disputed, I
    am therefore satisfied beyond reasonable doubt of the guilt of the accused in
    relation to all the four counts he is charged with.

    Ordered accordingly.
    ________________________________________________________
    Public Prosecutor: Lawyer for the State
    Yallon Lawyers: Lawyer for the Accused