Director of Public Prosecutions v Condon

[2012] VCC 581

IN THE COUNTY COURT OF VICTORIA Revised

AT MELBOURNE

CRIMINAL DIVISION

Case No. CR-10-02013

DIRECTOR OF PUBLIC PROSECUTIONS

v

CLINTON EDWARD CONDON

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JUDGE:	HER HONOUR JUDGE GAYNOR
WHERE HELD:	Melbourne
DATE OF HEARING:
DATE OF SENTENCE:	4 May 2012
CASE MAY BE CITED AS:	DPP v Condon
MEDIUM NEUTRAL CITATION:	[2012] VCC 581

REASONS FOR SENTENCE

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Catchwords:

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APPEARANCES:	Counsel	Solicitors
For the DPP	Mr C. Beale
For the Accused	Mr M. Tovey QC with Mr J. Hannebery

HER HONOUR:

1 Clinton Condon, you have pleaded guilty before me to two charges of obtaining a financial advantage by deception contrary to s.82(1) of the Crimes Act, and one charge of making available to auditors information which was false or misleading in a material particular contrary to sub‑s.1309.1 of the Corporations Act 2001. The facts underlying your offending are as follows.

2       The offending occurred between 1 July and 19 October 2001, at which time you were the executive chairman and a director of Bustan International Pty Ltd, a company which engaged in grain and wool trading activities as well as exported grains, pulses and wool to the Middle East.  You were also a shareholder of Bustan Australia Holdings Pty Ltd, a holding company of Bustan International, you and your wife holding one million shares in it as trustees for the Condon Family Trust.  Both companies were controlled by the Gulf and Export Company LLC (GIEX) based in Dubai.  Bustan International’s bankers were Rabo Australia Ltd and HSBC Bank Australia Ltd, they providing a syndicated facility consisting of a commercial bills facility, an overdraft facility, an export cash line, and a foreign exchange line.  The opening balance of that facility was approximately $45m, which despite BI’s request for an increase was reduced over a period of time.

3       Covenants making up the facility required Bustan International to report directly to the banks on a monthly and annual basis, and it was required to provide unaudited financial reports each month in respect of the previous month’s trading, and audited annual financial reports in late August or early September of each year.  You held the position of executive chairman of both Bustan International and Bustan Australia Holdings from 1 June 1995 until 22 February 2003 inclusive.

4       The monthly reports provided a snapshot of the actual value of commodity trading stock owned by Bustan International, a breakdown of commodity trading contracts to purchase trading stock executed by Bustan International but not completed at the day of the report, an executed loan security ratio certificate where Bustan International certified its compliance or otherwise with the covenant requirements of the facility, and unaudited financial management accounts comprising a balance sheet and a profit and loss report.

Charge 1

5       Charge 1 relates to a period of time between 1 September 2000 and 21 September 2001 whereby the unaudited monthly financial reports provided to the bank falsely represented Bustan International’s financial situation by:

(i)    Systematically inflating the value of commodities to conceal unrealised losses in grain inventory;

(ii)   Falsely classifying losses from speculative foreign exchange trading;

(iii)   Fabricating contracts for the sale of grain to GIEX to satisfy auditors and the banks that the foreign exchange trading was not speculative; and

(iv)   Falsely representing that Bustan International was the owner of 9060.15 tonnes of lentils, which were in fact merely being stored by the company and not owned by it.

6       The falsification of these reports had gone on for some time prior to 1 September 2000.  Before 1997 Bustan International had acquired grain inventory that fell in value due to prevailing market conditions, which meant the inventory could not be sold without incurring a loss.  Before your appointment as a director of Bustan International, a practice had developed within the company of inflating commodity values in grain inventory to conceal the unrealised losses in grain.  This practice was probably begun by one Mark Thiele, whose position was then taken over by Mark Timleris who held the position of Manager Grain for Bustan International from January 1999 until about 11 October 2001.

7       You, however, became aware of this practice, and instructed Timleris to continue it in about September of 2000, as well as instructing the company secretary, Annette Horsman, who also held the position of Manager Finance from November 1998 to 19 October 2001, as to what levels of profit or loss should be stated in the monthly reports when you were present in the office, and to report the month-end results as close as possible to the budget when you were not present in the office.  The monthly reports sent to the bank therefore falsely indicated positive total grain figures.

8       From at least May 2000, Timleris and a grain trader, Michael Reeves, engaged in unauthorised speculative foreign trading in an attempt to generate income for Bustan International.  Under the facility provided by the banks Bustan International was not authorised to enter into foreign exchange contracts for speculative purposes.  This speculative trading was also contrary to Bustan International’s foreign exchange risk-management policy.  Despite some initial success, ultimately the foreign exchange trading was spectacularly unsuccessful, and between 29 February 2000 and 25 October 2001 Bustan International accumulated losses of $6,063,543.24 from this unauthorised speculative foreign exchange trading.

9       On your return to work in about late August 2000 following an illness, you were informed by Timleris of the speculative foreign exchange trading and the fact that he had fabricated a series of grain contracts with GIEX to defer the foreign exchange losses and satisfy auditors of the existence of underlying “contracts” which were required by the banks before any exchange trading could take place.  You advised Timleris that you thought Bustan International might be able to trade out of the situation rather than reporting it to the directors and shareholders in Dubai.  You also told Timleris he should not tell anyone outside those who already knew of the foreign exchange losses and the other unrealised losses, and that he should report the ongoing activity to you.

10      Between September 2000 and August 2001 fabricated contracts for the sale of grain to GIEX were included in the monthly reports forwarded to the banks, with your knowledge and consent, and also in the audited financial statements for 2001.  These contracts falsely represented that Bustan International was contracted to receive US $12,465,300.

11      Because the foreign exchange trading was speculative, with no real underlying contract, losses should have been expensed to the profit and loss account as incurred, but in the months between October 2000 and August 2001 the monthly management accounts falsely classified deferred foreign exchange losses as an increase in Bustan International’s assets inventory.  As a result, the losses were understated by approximately $5,966,912 as at 30 June 2001.  This meant the representations made by Bustan International to the banks each month in the loan ratio security certificates significantly misrepresented the security position of Bustan International.

12      The banks became concerned at the amount of unrealised losses which had been deferred on the basis that the underlying contracts had not yet been delivered, and in the latter half of 2000 you and Timleris and Horsman attended a meeting with the representatives of the RaboBank, where you falsely advised the bank that the underlying contracts would be delivered some time in the future, even though you knew they did not exist.

13      Between May and August 2001 you, Timleris and Horsman under your instructions, falsified accounting records to represent that Bustan International was the owner of 9060.15 metric tonnes of lentils, when in fact they were owned by GIEX.  They were added to Bustan International’s inventory to offset losses incurred from the speculative futures and foreign exchange trading which you approved of as a way of giving Bustan International time to trade out of its financial difficulties.  The inventory was included in the monthly reports provided to the bank.  Initially Timleris entered the value of the lentils at $497 per tonne, which falsely increased the value of Bustan International’s inventory by $4,502,895.  Between May and August 2001 the value of the lentils was increased, which then falsely increased the value of Bustan International’s inventory by between $4.5m and $6.9m, despite no change in the quantity.  These actions underlie Charge 1 on the indictment.

Charge 2

14      Charge 2 relates to the audited financial reports which both Bustan Australia Holdings Pty Ltd and Bustan International were obliged to provide to the banks each year.  In a meeting in late May 2001 when the losses of Bustan International were discussed with you, Horsman asked you to tell the shareholders of the real financial position of Bustan Australia Holdings on a forthcoming trip you were making to Dubai.  You failed to do this, and on your return in June 2001 instructed Timleris to enter more fabricated GIEX contracts onto Bustan International’s system and falsely record lentils as stock belonging to Bustan International.  You also told Horsman to report the end-of-year accounts based on the fabricated GIEX contracts in lentils, which were falsely recorded as stock, saying you wanted to get through the end of the financial year and that you believed there would be a rally in the US Dollar that would significantly reduce the losses incurred.

15      You signed the audited annual financial reports for the year ending 30 June 2001 as director of Bustan Australia Holdings and Bustan International with a declaration that it provided a true and fair view of the company’s financial position, knowing the report was false in that it underestimated accumulated losses by approximately $12.5m; falsely represented Bustan International had made a loss of only $74,787 for the financial year when in fact the actual financial loss for that financial year was at least $5,966,912; fabricated GIEX contracts included in the 2001 audited financial statements; falsely represented to financiers that Bustan International was contracted to receive $12,465,300; and included lentils not owned by Bustan International as inventory assets of the company, overstating the inventory at June 2001 by $6,546,703.

16      The 2001 audited financial statements were provided to the banks on around 15 August 2001, at which time you were aware that the banks were misled as to level of security they held and their exposure to the Bustan companies.  Had the banks been aware of Bustan International’s true financial position they would not have continued to extend the facility.  These actions underlie charge 2 on the indictment.

Charge 3

17      Charge 3, making available false or misleading information to auditors, related to a 2001 audit of Bustan International and Bustan Australia Holdings which was conducted by chartered accountants Ernst & Young between 1 July and 14 August 2001.  During the course of the audit, with your knowledge and consent, the following false material was made available to the auditors:

(i)    A false grain inventory representing that 9,060.15 tonnes of lentils belonged to Bustan International;

(ii)   False grain inventory valuations for the year ending 30 June 2001, which were higher than the true market value;

(iii)   False foreign exchange dealing tickets representing that foreign exchange trades were linked to specific contracts with GIEX for the purpose of deferring losses until such time as the purported underlying contracts were settled;

(iv)   Bogus contracts for the sale of grain to GIEX in order to deceive auditors and the banks into believing there were legitimate contracts with GIEX underlying what was really speculative foreign exchange trading.

18      At a meeting on 10 August 2001, you and Timleris resolved to accept the accounts and agreed to sign the directors’ report and the directors’ declaration, a procedurally important step for the auditors to then sign the audit report without any qualification.

19      On 15 August 2001 you, as director of Bustan International, signed a management representation letter addressed to the auditors stating there had been no irregularities involving management or employees, or no irregularities that could have a material effect on the financial report.

20      As a result of the information provided, an unqualified opinion was signed by the auditors that the financial report of Bustan International gave a true and fair view of the financial position of the company as at 30 June 2001.  A subsequent analysis revealed that approximately $12.5m worth of losses were not brought to account by Bustan International at 30 June 2001.

21      Eventually and unsurprisingly the situation became unsustainable, and the true situation emerged, and an external administrator was appointed by the bankers to Bustan in early November 2001.  By this stage the debt owed to the banks was about $6,306,427, and a further $1.098m was owed to Bustan International’s unsecured creditors.

22      On 12 October 2001 you wrote to the principal of GIEX, Essa Al Ghurair, where you summarised what had happened, stating, amongst other things:

“It is devastating to know that the problems had been in the accounts for a long time when Mark Thiele was here and that tyring to conceal the losses in order to rectify the position has only made the problem worse.”

And that:

“It is imperative that this matter be maintained confidential to protect the interests of the directors.  This matter has been kept within the walls of our company and only four of our staff members at Bustan International are aware of the situation.  If the banks and auditors are made aware of the situation the banks will immediately withdraw all funds and both the auditors and the banks will be obliged to inform the Australian Securities and Investments Commission.  This will have legal implications for all directors.”

You also stated:

“At last I know just how bad the situation is.”

23      Soon after the appointment of the receiver in 2001, Timleris approached lawyers acting for shareholders and for the banks, and revealed what he had done since 1999 in relation to the falsification of the accounts.  He gave what Her Honour Judge Felicity Hampel later described in sentencing remarks dated 23 November 2006 as “a full, frank and truthful” account of his conduct, the conduct of Ms Horsman, and also of yourself.  On 1 November 2006 he pleaded guilty in the County Court to four charges, they being charges of false accounting, obtaining a financial advantage by deception, and two charges of furnishing false information to financiers, and was sentenced by Her Honour to three years’ imprisonment, two years of which was wholly suspended for a period of two years.

24      Claire Horsman, who left Bustan International in October 2001 and moved to the United Kingdom, was eventually interviewed in 2006 and provided a full statement of events, and both she and Mr Timleris undertook to assist authorities in future proceedings.  On 3 April 2009, after pleading guilty to two charges of obtaining a financial advantage by deception and one charge of making available false or misleading information to auditors, she was sentenced to two years and six months’ imprisonment, nineteen months of which was suspended.

25      You were interviewed by ASIC investigators on 19 June 2003, when you denied knowing, having made, or been party to, any misrepresentations as to Bustan International’s financial position during your time as director, although you admitted that at some point in time after Mark Thiele, the former grain manager, left, Timleris had met with you and said there were some bad contracts written when Thiele was in charge of marketing.  You indicated it was not until later in 2001 that you realised something was amiss and suggested that GIEX send someone to investigate.

Personal circumstances

26      You are 69 years of age, one of four children born to your parents, your father being a farmer, shearer and saw-miller in Queensland.  You completed Year 12, worked on the family farm, and then lived on a property close to your parents’ farm.  You married when you were 22, having met your wife when you were 18, her parents also being local farmers.  The two of you have been married for 46 years.  You eventually took over the conduct of the family farm.

27      In your early 20s you became involved in farming politics, and at the age of 20 represented the Dalby district at the Queensland Grain Growers Association.  Several years later you became a Director of the Queensland Grain Growers Association, eventually becoming Vice President of that association when you were 27.  You became involved on a daily basis in the development of State policy on matters such as freight charges, disease control, and essentially what your counsel described as “all things concerning the life of farmers”.  You worked for two to three days a week on an unpaid basis for the Association.

28      Between 1975 and 83 you were a Deputy at the Federal Wheat Growers Federation, and in 1975–1976, when you were only 32, were made a Director of it.  From 1974 to 1984 you were Deputy Chairman of the State Wheat Board, during which time you travelled 50,000 miles a year in your car and at the same time ran your own farm, time restrictions requiring that you often worked on it at night.  In 1979 you were voted a member of the Australian Wheat Board, again a time-consuming position, for which the only compensation received was petrol money.  In 1984 you were offered the position of Chairman of the Australian Wheat Board, which you took up in 1985 to 86.

29      During your years of involvement with these organisations you achieved a number of significant improvements for growers.  For example, whilst involved with the Queensland Grain Growers Association you set up a cooperative of farmers growing sorghum, which was then selling at historically low prices, spoke directly to importers, and achieved a contract at a 40 per cent price increase.  That cooperative eventually traded 60 to 70 per cent of all sorghum grown in Queensland.  In your years with the Queensland Wheat Growers Federation you devised a bulk insurance scheme for farmers resulting in a 50 per cent drop in premiums in one year.

30      Your work as Chairman of the Australian Wheat Board required that you move to Melbourne and lease your farm.  You and your family lived in a house provided by the AWB at reduced rental, and, whilst you were paid a wage of between $80–100,000, you struggled to set up superannuation and support your two daughters who were then studying at school and university in Toowoomba.  The farm was heavily mortgaged, and, whilst leased, was not well run in your absence.  The rise in interest rates, and the maintenance costs you were forced to pay in relation to it, much exceeded the rental you received from the property.  It appears you were a most successful Chairman of the AWB.

31      In 1990, four AWB contractors were taken hostage in Iraq at the time of the Kuwait invasion, and you personally travelled to Baghdad, conducting negotiations for a week, until their release was secured.  Your counsel informed me there was some danger attached to your activities, in that you too could have been restrained by Iraqi authorities.

32      You oversaw deregulation of the Wheat Board, which had previously had a monopoly on wheat sales in Australia, and were instrumental in defusing a serious dispute between exporters and the Maritime Union, establishing good relationships with the Waterside Workers Federation executive, working in agreement with the unions, which achieved increased production and allowed union members to keep their jobs in the face of threats to bring in contract labour.

33      You were reappointed to the position twice, eventually resigning in 1995, having been advised to do so by your doctor due to a number of health problems, your position essentially being a 7‑day a week job.

34      You were then offered the position with Bustan, which your counsel informed me you accepted hoping that this would offer you a somewhat easier life.  Eventually you left Bustan after it was placed in receivership in 2003.

35      You have had a number of serious health problems over the years.  In the mid-1980s you developed bowel obstructions requiring corrective surgery following a rupture.  You have since suffered adhesions, abscesses and obstructions which have required four surgical procedures.  You developed diabetes in around 1987–8, for which you have been medicated since 1989, and you are now insulin-dependent.

36      You have suffered cardiac problems for about 25 years, your blood pressure and cholesterol having both been elevated, and you suffering narrowing of the cardiac arteries.  In 2000 you were suffering angina.  Severe narrowing was discovered in your arteries, and two stents were inserted.  In 2001, following an exacerbation of chest pain, an angiogram was performed on 8 November, showing a re‑narrowing of the previously-placed stent, requiring balloon angioplasty.  At the same time, due to what was described as diffuse coronary disease, you were diagnosed as not suitable for bypass surgery.

37      In early 2003, cardiologist Dr Tony Walton noted worsening angina, but said you were not suitable for further angioplasty because your angina had become micro-vascular.  In other words, the narrowing had continued to smaller blood vessels, so that they could not cater for an increased blood flow from larger arteries should further stents be inserted.

38      In 2003 you developed a subdural haematoma from a fall, requiring a craniotomy and drainage.  Side-effects of your medication and the condition have been depression and fatigue.

39      You now reside on the Gold Coast, and I received a report from your general practitioner, Dr Donald MacGeachy, dated 1 February 2012m stating that you are suffer from insulin-dependent diabetes, angina pectoris, high blood pressure, high cholesterol, an adhesive bowel disease/obstruction, multiple skin cancers, depression and memory loss – possible arteriosclerotic dementia.

40      Dr Peter Eng, a general practitioner on whom you have attended for many years in Victoria, gave evidence on the plea, as well as producing a report.  In essence, he confirmed Dr MacGeachy’s summary, stating that you have also developed symptoms of vascular dementia with memory impairment and progressive loss of cognitive function.

41      A report from consultant physician Dr Elizabeth Merson dated 12 December 2009 detailed the results of testing earlier that year, including a CT scan, SPECT, and pathology tests resulting in a diagnosis of mild cognitive impairment which Dr Merson stated:

“May or may not advance to dementia of Alzheimer’s type.”

42      She noted some improvement in you when she reviewed you on 16 September 2009.

43      Dr Eng gave evidence that he has continued to see you on a social basis since you left to live in Queensland, and that he has noticed the development of confusion indecision and short-term memory loss in you in latter years.

44      You now reside with your wife in Paradise Waters on the Gold Coast in a 2‑bedroom unit worth – your counsel said – about $600,000.  You own two cars, about six or seven years old, and a caravan.  You and your wife live on a limited self-managed superannuation fund which is topped up with the old-age pension.

45      Your daughter Gillian Condon-Scherf also gave evidence on the plea, describing your years of travelling away from the family, your work with the various grain-farming organisations in Queensland, you working the farm at night, the illnesses you have endured since the 1980s, the financial difficulties resulting from your appointment as Chairman of the Australian Wheat Board, and the economies practised by your family in those years, which included limited contact with your daughters whilst they were living in Toowoomba and you in Melbourne, the expenses involved in flying your daughters down, limiting your contact with them to a sporadic basis only.

46      She said your health had deteriorated a great deal in the last few years, that you became confused easily, and that when you stayed with her to help with grandchildren in the holidays she had to write instructions down for you.  She said you commonly leave on taps and the stove.  She said your angina attacks have increased in the past 12 months, and that you visit the doctor at least every two weeks.

47      In addition, your wife has been diagnosed with breast cancer and will be undergoing surgery in the near future.

48      Forensic psychologist Patrick Newton also gave evidence on the plea, and his report dated 4 April 2012 was also tendered.  He said you suffer significant anxiety arising from your multiple medical complaints, and that superimposed on these are longstanding worries over your legal situation.  He said you suffer a significant level of stress.  In his report he said that your mental status was characterised by ongoing symptoms of depression focused around your physical wellbeing.  He described you as profoundly pessimistic, and said you ruminate on morbid themes, and “at times can feel such an overwhelming sense of despair that he lapses into suicidal ideation”.  He said during the interview you were mildly distractible and experienced brief episodes when you seemed to lose your train of thought, complaining of chronic difficulties with memory and concentration; these being confirmed by your wife.

49      There was no indication you suffer from any psychosis or thought disorder.  Your reality testing was intact, and capacity for moral reasoning was unimpaired.  He believed you would have particularly significant difficulties coping with any custodial sentence a court might impose, with a significant risk of marked mood deterioration and a difficulty accessing the multi-faceted specialist medical and allied health treatment you require.  He stated:

“Accordingly, I would respectfully suggest that the rigours of a custodial penalty would weigh upon Mr Condon in a particularly onerous fashion and would cause him considerable distress over and above the usual hardship that would be experienced by any individual in custody.”

50      It was also Dr Eng’s view that you would have a great deal of difficulty coping with custody.

51      I had some difficulty with the medical reports.  Whilst I am satisfied that you do suffer the range of illnesses outlined by Dr MacGeachy, I received no material indicating you are under any particular specialist care at this present time.  There is no formal evidence before me that your cognitive difficulties arising from your longstanding vascular disease have progressed in any marked fashion, although I do accept the observations of Mr Newton as to your distractibility on interview and the evidence of your daughter that you are more forgetful.  The evidence of Dr Eng was that your continued vascular problems will affect your life expectancy.

52      Your counsel listed a number of mitigatory factors which he submitted I should take into account.  He submitted that your experience at the Australian Wheat Board did not prepare you for the role you held at Bustan.  He said yours had always been a big picture role involving the establishment of relationships in your involvement in farming politics, rather than concerning itself with the minutiae of corporate life, and that you were ill-prepared to deal with the problems that arose in that latter scenario.

53      He also submitted that the first limb of Verdins had application in your case; that the medical evidence showed that you were suffering the effect of angina, of heart disease; in addition to the long-running diabetic and vascular illnesses you suffered; and that the trauma of undergoing the surgery, superimposed on your longstanding illnesses in 2000 and 2001, meant you were not in a position to exercise proper judgment, and this therefore affected your moral culpability.

54      I have some difficulties with that submission.  It appears that in June and July 2001 you travelled to Dubai, and in August took a holiday to Queensland.  Again, you were appointed as a Deputy Chairman of Marcus Oldham in August 2001, which position you held during the period of the offending.  Further, in 2001 you were elected as a Director of the Livestock Export Corporation, a position you held until 2005.  I am not satisfied that the necessary causation between the illnesses you suffered and your offending has been sufficiently established so that I should apply that limb of Verdins in the way submitted.

55      Your counsel, Mr Tovey SC, also submitted that delay was a significant factor in your case.  You were not charged until 2009.  There appears to be no explanation for this in all the circumstances, and indeed the prosecution conceded that delay was a significant mitigatory factor in your case.  Certainly I am satisfied that this is so.  An 11‑year delay is exceptional, and I am certainly satisfied that your health has deteriorated on a steady basis in the meantime, and that you are now, by reason of your age and the progression of your various medical conditions, far less able to cope with a term of imprisonment than you would have been had the matter proceeded more expeditiously.

56      I also accept that prior to your involvement in this offending you had led a most praiseworthy life, involving considerable public service for little financial reward.  I received a raft of impressive references from persons who have known you over the years in the capacity of the various positions you have held, and all have spoken of your sacrifice, honesty, integrity and achievements in those roles.

57      Whilst the plea of guilty was not entered until a late stage – that is, essentially until the commencement of this trial – it does appear that the sticking-point largely related to the period of time over which it was said you had knowledge of the fraudulent activities being undertaken by Timleris and Horsman.  Your counsel informed me that this issue was raised at a conference in mid-2011 with the prosecution, but was not accepted.

58      I also accept that the second limb of Verdins has application in your case, and again it was conceded by the prosecution that your current ill-health would make the service of a gaol sentence significantly harder for you than the ordinary prisoner.

59      Certainly I am satisfied that specific deterrence has no part in the sentencing exercise before me; that you are a man who reached a mature age before offending in any way, and that you have not subsequently offended, but live a quiet and relatively modest life with your wife in Queensland.

60      I am also satisfied, as per the evidence of Dr Eng, that you are dependent upon your wife, that you would find it difficult without her, and that you would be additionally distressed by her enduring her current illness and its prolonged treatment were you not present to support her.

61      Your position is somewhat different from that of Mr Timleris and Ms Horsman.  You were not an initiator or architect of the fraudulent activity, nor were you involved in it for as long as they.  However, I do not accept that your role was, as your counsel seemed to suggest, merely an acquiescent one.  It does seem to me that perhaps you were somewhat ill-equipped in terms of practical experience insofar as the actual corporate activities relating to the financial health of the company were involved.  Nevertheless, you have been presented to me as a man of integrity.  It must have been perfectly clear to you that what was occurring was utterly dishonest and utterly illegal, and yet you did not have the moral fortitude to order its cessation and reveal those activities to those to whom you had responsibility: that is, the parent company, the shareholders, the banks.  You took on a responsible role, and I am not persuaded that you were unaware of the enormity of your actions.

62      Your counsel submitted to me that you were concerned about others losing their jobs, and that in your naivety you encouraged the activity in the hope that the losses could be recouped and then that illegal activity could cease.  If that were so, such naivety reached stupendous levels in your case.  You were a man who had held highly-responsible positions in the past, and it is an understatement to say you should have known better.  Whether it was a matter of pride, a desire to retain your well-paid position, which on the evidence you did see as a means of financing the latter years of your life, whether it had to do, as the prosecution seem to suggest, with the fact that you had a number of shares in Bustan Australia Holdings and wished to retain their viability, I simply do not know and do not wish to speculate.

63      At the end of the day, however, you were in a position of ultimate authority, and, as was said a number of times on the plea, the buck stopped with you.  The community must be able to have confidence in the honesty and integrity of corporate leaders such as you were.  Their actions affect the commercial welfare of the large institutions they represent, and of those who invest in them.

64      You participated in the perpetration of a serious fraud involving large-scale dishonesty at the most fundamental level.  Ultimately you sought to deny the extent of your knowledge when you wrote to GIEX in October 2001, and sought to distance yourself from the dishonesty in which you had participated by further dishonesty.  Nor were you completely frank or forthright with ASIC.

65      Mr Timleris and Ms Horsman were, as I have said, far more involved in the carrying out of the continuing fraud, and involved over a longer period of time.  Nevertheless, ultimately they were cooperative with authorities, and made offers of assistance which very much strengthened the case against you, for which they received substantial discounts.  You do not bring with you that level of openness or assistance.

66      As against this, of course, as I have already indicated, I accept your continuing ill-health, your age, your previous good character, and most significantly, to my mind, the issue of delay.  A delay of 11 years is to my mind almost intolerable.  I further accept that service of a term of imprisonment would be very difficult for you indeed, and far more difficult than for another prisoner. 

67      Moreover your plea of guilty has saved the community the considerable time and expenditure in a trial of this kind.  But if it were not for the magnitude of the delay in these proceedings I would not have hesitated to gaol you.  Your offending was so dishonest, and such an abrogation of the power and responsibility of your position and your duty to those dependent upon the company and its fortunes, I would have seen no other course open to me.  Further your response once the true state of affairs was revealed was quite repugnant, dishonest, and self-seeking.  You feigned ignorance, and sought to cast blame on those further down the hierarchy than you, whom you had clearly encouraged to continue in their fraudulent activity.  At the end of the day however the delay in my mind in bringing these proceedings has been so extraordinarily protracted that I have formed the view I cannot sentence you to a term of imprisonment to be immediately served.  In the intervening 11 years I am satisfied your physical condition has deteriorated significantly and you have aged.  There has been no satisfactory explanation for this delay, and to sentence you to an active term of imprisonment in the face of it in my view would be utterly unjust, and militate against principles relating to the issue of delay. 

68      I propose to deal with you by way of suspended sentences and a fine.  Stand up please sir.

Sentence

69      On Charge 1 you are sentenced to 18 months imprisonment.  On Charge 2 you are sentenced to 12 months imprisonment, and I order that six months of that sentence be served cumulatively to the sentence imposed on Charge 1, giving a term of two years.  On Charge 3 I am - and I apologise Mr Beale I always seem to manage to incorrectly state federal sentencing.  I am sentencing - I am going to release him on a recognisance - I think that is the way I put it.

70      MR BEALE:  Yes.

71      HER HONOUR:  For 18 months, which will commence on 4 May 2013.  It will therefore run for six months over the two years.  On Charge 1 you are fined $5000.  On Charge 2 you are sentenced - you are fined $3000, and on Charge 3 you are sentenced to $3000 giving a total effective fine of $12,000. 

72      Pursuant to s.6AAA, I think it is relation to Charges 1 and 2 only, is that right Mr Beale?

73      MR BEALE:  Its debatable.

74      HER HONOUR:  Pursuant to s.6AAA I declare that had you not pleaded guilty I would have sentenced you to a term of imprisonment of two years and six months, and ordered that you serve ten months of that sentence.  Thank you, you can have a seat.  You may sit down.

75      Sorry, the suspension in relation to Charges 1 and 2 will be for three years.  Wholly suspended for a period of three years.

76      MR BEALE:  Your Honour just a couple of matters.

77      HER HONOUR:  Yes,

78      MR BEALE:  In relation to (indistinct) fine - - -

79      HER HONOUR:  Fine, I just was realising.

80      MR BEALE:  It comes to $11,000.

81      HER HONOUR:  Eleven thousand, I'm sorry, I meant it to be - I wanted the total of 12, I beg your pardon.  So it should've been - it should've been, I'm sorry, 6000, Charge 1.

82      MR BEALE:  On the first count.

83      HER HONOUR:  On the first count, 3000 in relation to the other two.

84      MR BEALE:  Yes, we have a draft recognisance release order.

85      HER HONOUR:  Thank you.

86      MR BEALE:  In relation to  the Commonwealth matter.

87      

HER HONOUR:  Stand up please Mr Condon. What has happened

Mr Condon is that you have effectively been sentenced to suspended terms of imprisonment, and you will not be going to gaol, all right.  I need to inform you that should you commit any offence punishable by imprisonment in the next three years you'll be brought back before me on breach of suspended sentence.  I need to inform you that parliament has stated that unless there are exceptional circumstances attached to any re-offending whilst a person is on a suspended sentence, I must make that person serve all or part of that sentence of imprisonment which I have suspended.  Thank you, have a seat. 

88      MR BEALE:  I'm just making some alterations to the pro forma Your Honour.

89      HER HONOUR:  Thank you very much, no problem.

90      MR BEALE:  Your Honour will have to fix a - - -

91      HER HONOUR:  A recognisance, a surety in relation to it, yes I understand that.  I'm pretty sure it is $1000.  This does not have to be paid unless there is a breach of the recognisance.  I'll make it a recognisance.  Where is it marked down as to when it starts?

92      MR BEALE:  I think we have to put that instead of.

93      HER HONOUR:  I'm not sure where, I wonder if your instructor could have a look please, to begin on 4 May - - -

94      MR BEALE: With the insert, there doesn't seem to be a space in the pro forma.

95      HER HONOUR:  No, I couldn’t see one, but as I understand - - -

96      MR BEALE:  Will just insert towards the end.

97      HER HONOUR:  In order for it to have the cumulative effect that I want it to have.

98      MR BEALE:  So if it reads, "the court has decided the accused be released forthwith if the accused complies with the condition of this order which commence on 4 May 2013.

99      HER HONOUR:  Four May 2013. 

100     MR BEALE:  Yes. 

101     MR TOVEY:  I'd seek Your Honour a stay of 90 days in respect of the payment of the fine.

102     HER HONOUR:  Certainly, yes, there is a stay of three months in relation to the fines, thank you. 

103     MR BEALE:  We've also put in that he must be of good behaviour for 18 months.

104     

HER HONOUR:  That's correct, thank you.  Do you agree to sign the order

Mr Condon in relation to the last charge, which is a - I'm sorry Mr Condon, could you stand up please sir.

105     OFFENDER:  Sorry.

106     HER HONOUR:  Sorry, I apologise.  On the third charge it's laid under federal legislation, which has a different regime of sentencing, and you are required to sign a recognisance to be of good behaviour, are you prepared to do that?

107     OFFENDER:  Yes.

108     HER HONOUR:  Thank you.

109     

MR HANNEBERY:  If I can be excused from the Bar table, I'll stand next to

Mr Condon.

110     HER HONOUR:  Yes, certainly.  Yes, thank you.  Yes I will - is there anything else that I need to do?

111     MR BEALE:  No Your Honour.

112     HER HONOUR:  Thank you very much, I will stand down until 11 o'clock, thank you.

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