R v Milne (No 6)

[2010] NSWSC 1467

CITATION:	R (Cth) v Milne (No. 6) [2010] NSWSC 1467
HEARING DATE(S):	2 December 2010
JUDGMENT DATE :	17 December 2010
JUDGMENT OF:	Johnson J at 1
DECISION:	Michael John Milne, in relation to each of the counts of which you were found guilty by the jury, an order was made on 2 December 2010 convicting you of each offence. In relation to the first count (the ss.400.3(1) offence), you are sentenced to imprisonment for a term of seven years to date from 17 December 2010 and to expire on 16 December 2017. In relation to the second count (the s.135.1(1) offence), you are sentenced to imprisonment for a term of three years and six months to date from 17 December 2015 and to expire on 16 June 2019. A non-parole period is fixed of four years and nine months to date from 17 December 2010 and to expire on 16 September 2015.
CATCHWORDS:	CRIMINAL LAW - sentencing after trial - money laundering (s.400.3(1) Criminal Code (Cth)) - dishonestly obtain gain from Commonwealth (s.135.1(1) Criminal Code (Cth)) - money laundering offence involved creation and misuse by Offender in 2004 and 2005 of sophisticated offshore structure - dishonest obtaining offence involved deception by Offender of accountants preparing tax returns in 2005 and 2006 - false return lodged in November 2006 - grossly understated capital gain on disposal of shares - loss to revenue of at least $1.9 million in capital gains tax - assessment of overlapping criminality - avoidance of double punishment - substantial aspects of criminality in each offence - need for substantial sentence for each offence - objectively serious offences - importance of general deterrence - partly cumulative sentences appropriate
LEGISLATION CITED:	Criminal Code (Cth) Crimes Act 1914 (Cth) Proceeds of Crime Act 2002 (Cth) Criminal Procedure Act 1986
CATEGORY:	Sentence
CASES CITED:	R v Isaacs (1997) 41 NSWLR 374 Cheung v The Queen [2001] HCA 67; 209 CLR 1 The Queen v Olbrich [1999] HCA 54; 199 CLR 270 R (Cth) v Milne (No. 1) [2010] NSWSC 932 Greaves v R [2010] EWCA Crim 709 Pearce v The Queen [1998] HCA 57; 194 CLR 610 R v Langdon [2004] VSCA 205; 11 VR 18 at 39 Ryan v The Queen [2001] HCA 21; 206 CLR 267 R v Rivkin [2004] NSWCCA 7 R v Williams [2005] NSWSC 315; 152 A Crim R 548 R v Huang [2007] NSWCCA 259; 174 A Crim R 370 R v Guo and Anor [2010] NSWCCA 170 Siganto v The Queen [1998] HCA 74; 194 CLR 656 Cameron v The Queen [2002] HCA 6, 209 CLR 339 Hili v The Queen; Jones v The Queen [2010] HCA 45 Power v The Queen [1974] HCA 26; 131 CLR 623 Deakin v The Queen [1984] HCA 31; 58 ALJR 367 Bugmy v The Queen [1990] HCA 18; 169 CLR 525 R v Wing Cheung Li [2010] NSWCCA 125 R v Nguyen [2010] NSWCCA 226 R v Adler [2005] NSWSC 274 R v Nguyen [2006] NSWCCA 369; 166 A Crim R 124 Director of Public Prosecutions (Cth) v Rowson [2007] VSCA 176
PARTIES:	Regina (Cth) (Crown) Michael John Milne (Offender)
FILE NUMBER(S):	SC 2008/269487; 2008/54586
COUNSEL:	Mr P Hastings QC; Mr D Jordan (Crown) Mr L Robberds QC; Mr M Wigney SC; Mr M Polden (Offender)
SOLICITORS:	Commonwealth Director of Public Prosecutions (Crown) Johnson Winter & Slattery (Offender)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
CRIMINAL LIST

Johnson J

17 December 2010

2008/269487; 2008/54586 Regina (Cth) v Michael John Milne (No. 6)

REMARKS ON SENTENCE

1 JOHNSON J: On 18 October 2010, the Offender, Michael John Milne, entered pleas of not guilty to one count of money laundering contrary to s.400.3(1) of the Criminal Code (Cth) and one count of doing an act with the intention of dishonestly obtaining a gain from the Commonwealth contrary to s.135.1(1) of the Criminal Code (Cth).

2 On 19 November 2010, the jury returned verdicts of guilty on both counts in the indictment. A sentencing hearing proceeded on 2 December 2010, when the matter was adjourned until today for imposition of sentence. The Offender has remained on conditional bail since the jury returned verdicts of guilty on 19 November 2010.

Principles Concerning Fact Finding on Sentence

3 It falls to me as the trial Judge to determine punishment and, for that purpose, to make findings of fact relevant to sentencing. My view of the facts must be consistent with the verdicts of the jury, and findings of fact I make against the Offender must be arrived at beyond reasonable doubt: R v Isaacs (1997) 41 NSWLR 374 at 377-378; Cheung v The Queen [2001] HCA 67; 209 CLR 1 at 12-13 [13]-[14]. The Court may not take facts into account on sentence, in a way that is adverse to the interests of the Offender, unless those facts have been established beyond reasonable doubt. On the other hand, if there are matters which the Offender relies upon in mitigation of penalty, it is enough if those matters are proved by the Offender on the balance of probabilities: The Queen v Olbrich [1999] HCA 54; 199 CLR 270 at 281 [27]-[28].

The Offences

4 Count 1 of the indictment alleged that the Offender, between about 30 April 2004 and about 30 September 2005, at Sydney in the State of New South Wales and elsewhere dealt with property, intending that the property, namely a parcel of shares, would become an instrument of crime, in that it would be used to facilitate the commission of an offence by Barat Advisory Pty Limited (“Barat Advisory”) and at the time of the dealing, the value of the property was $1,000,000.00 or more.

5 The maximum penalty for this offence is imprisonment for 25 years: s.400.3(1) Criminal Code (Cth).

6 Count 2 of the indictment alleged that the Offender, on or about 13 November 2006 at Sydney in the State of New South Wales did, with the intention of dishonestly obtaining a gain from the Commonwealth, cause to be lodged an income tax return in the name of Barat Advisory for the year ending 30 June 2005 containing false information, namely that the net capital gain from the sale of shares in Admerex Limited (“Admerex”) was $4,597.00.

7 The maximum penalty for this offence is imprisonment for five years: s.135.1(1) Criminal Code (Cth).

Evidence at the Trial and at the Sentencing Hearing

8 The Crown called a number of witnesses to give evidence at the trial, and in addition, tendered a substantial volume of documentary material.

9 During the course of the Crown case at trial, a number of documents were tendered for the Offender and became Defence exhibits. The Offender did not give evidence at the trial, nor was any witness called in the Defence case.

10 At the sentencing hearing, the Crown relied upon evidence given at the trial, and no additional evidence was tendered on sentence.

11 A number of testimonials, which bore upon the Offender’s subjective circumstances and prior good character, were tendered in the Defence case on sentence. Reference will be made to these testimonials later in these remarks.

12 Senior counsel for the Crown and the Offender made written and oral submissions on sentence, including submissions concerning findings of fact which should be made by reference to the evidence and the issues in the trial, consistent with the verdicts of the jury.

Facts of Offences

13 The Offender was born in November 1955. The evidence at trial, supported by the testimonial evidence on sentence, indicates that the Offender has been, over many years, a successful businessman.

14 Fact finding on sentence will involve a number of findings concerning activities of the Offender and his company, Barat Advisory, over a period of time extending from 2003 to 2006. Most of these events are not in dispute and were summarised in a flowchart (Trial Exhibit A) provided to the jury. In addition, extensive factual admissions were made by the Offender for the purpose of the trial (Trial Exhibit B). Further, there was the evidence of Mr Shaun Mark, a financial analyst, concerning the tracing of funds through various accounts and summarising, in schedules, share transactions and the movement of monies and purchases made with those funds. Mr Mark prepared the flowchart and a volume of documents were tendered through him (Trial Exhibit C6). His oral evidence further explained the flowchart, schedules and summaries which he had prepared, and linked them to a series of primary documents. Mr Mark was not cross-examined at trial. His evidence was not contested.

15 The principal issues at the trial concerned the conclusions which ought be reached by reference to the body of essentially uncontested documentary evidence, particularly in the light of oral evidence from certain Crown witness.

16 What follows in this part of the remarks on sentence is a detailed recital of relevant evens between 2003 and 2006. Thereafter, I will make specific findings of fact in areas of controversy, before moving to other areas requiring findings for the purpose of imposition of sentence.

Barat Advisory Obtains a Shareholding in Admerex

17 On or around 16 January 2003, the Offender entered into a Mandate Agreement with Sinitus Treuhand AG (“Sinitus”) concerning Clairmont Holdings & Finance Limited (“Clairmont Holdings & Finance”).

18 Sinitus was a Swiss financial services company. Urs Meisterhans was a partner in Sinitus. As will be seen, Mr Meisterhans was a significant participant in events connected to the offences. He was not called to give evidence at the trial. Clairmont Holdings & Finance was a company incorporated in the British Virgin Islands.

19 The Mandate Agreement provided that, in return for a fee to be paid by the Offender, Sinitus would act as directors and/or officers of Clairmont Holdings & Finance, and would act exclusively on instructions received from the Offender or his attorney. On this basis, the Offender controlled Clairmont Holdings & Finance.

20 In or around May 2003, the Offender was introduced to Kim Goodall. Mr Goodall had previously been involved in a Swiss software development company known as Temenos Group AG (“Temenos”). Mr Goodall was a Crown witness at the trial, whose evidence on a number of issues was strongly challenged by the Defence.

21 As at 21 May 2003, Global Technology Limited (“GTL”) was owed a debt of approximately $11 million by Global Technology Australasia Limited (“GTAL”). GTL was a company registered in South Africa and was the holding company of GTAL, which was a publicly listed company registered in Australia. GTAL had no funds to pay the debt.

22 As part of a complex series of negotiations, on 21 May 2003, GTL and Clairmont Holdings & Finance signed a Debt Assignment Agreement.

23 Pursuant to the Debt Assignment Agreement, on 21 May 2003, GTL sold this debt (referred to at [21]) to Clairmont Holdings & Finance for one dollar, payable if and when demanded. Consequently, GTAL owed a debt of approximately $11 million to Clairmont Holdings & Finance. The total amount of the assigned debt ultimately turned out to be $7,902,152.02.

24 On 8 July 2003, the Offender was appointed as an executive director and acting chief executive officer of GTAL and its subsidiaries.

25 On 10 July 2003, GTAL changed its name to Admerex.

26 On 15 August 2003, on instructions from the Offender, Baret Advisory Pty Limited was registered with the Australian Securities and Investments Commission. The name of this company was changed to “Barat Advisory Pty Limited” on 24 November 2003. From the time of its incorporation, the Offender has been the sole director and shareholder of Barat Advisory. Accordingly, the Offender was, at all relevant times, the controlling mind of Barat Advisory.

27 In or around October 2003, the Offender and Mr Goodall decided to acquire approximately $7.9 million of the debt owed by Admerex to Clairmont Holdings & Finance.

28 On 18 November 2003, Clairmont Holdings & Finance sold $2,236,459.00 of the debt owed to it by Admerex to Barat Advisory. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003 (at that time said to be in the sum of approximately $11 million), before GTAL changed its name to Admerex.

29 In consideration for obtaining the debt owed by Admerex in the sum of $2,236,459.00, Barat Advisory was required to pay $1.5 million to Clairmont Holdings & Finance by 20 November 2003.

30 Barat Advisory did not pay the $1.5 million it owed to Clairmont Holdings & Finance as consideration for its acquisition of the debt owed by Admerex in the sum of $2,236,459.00.

31 On 18 November 2003, Clairmont Holdings & Finance sold $5,665,692.00 of the debt owed to it by Admerex to Atticus Investments Assets Inc (“Atticus”), a company operated by Mr Goodall. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003, before GTAL changed its name to Admerex.

32 In consideration for obtaining the debt owed by Admerex in the sum of $5,665,692.00, Atticus was required to pay $3.8 million to Clairmont Holdings & Finance by 20 November 2003, and such a payment was made on or around 20 November 2003.

33 On 24 November 2003, Mr Goodall was appointed as a director of Admerex, and he continued thereafter to be a director of Admerex.

34 On 19 December 2003, Barat Advisory opened bank account number [A] with the Commonwealth Bank of Australia (“the Barat Advisory CBA Account”). This bank account was opened at the direction of the Offender, in his capacity as the sole director and shareholder of Barat Advisory. Barat Advisory operated the Barat Advisory CBA Account during the period from 19 December 2003 until 19 November 2007. The Offender was the only person authorised to operate the Barat Advisory CBA Account.

35 Barat Advisory also operated bank account number [B] with St George Bank (“the Barat Advisory St George Account”).

36 On 30 April 2004, an allotment of 55,911,475 shares in Admerex was issued to Barat Advisory, at a value of four cents per share, to repay the debt of $2,236,459.00 owed by Admerex to Barat Advisory. As will be seen, the steps taken by the Offender concerning this parcel of shares constituted a central issue in the trial.

37 On 30 April 2004, an allotment of 141,642,300 shares in Admerex was issued to Atticus, at four cents per share, to repay the debt of $5,665,692.00 owed by Admerex to Atticus.

38 The issue of Admerex shares on 30 April 2004, in order to repay the debts owed by Admerex to Barat Advisory and Atticus, was the subject of an independent expert’s report, which concluded that the issue of shares was fair and reasonable to other Admerex shareholders, and was approved at an annual general meeting of Admerex shareholders on 30 April 2004.

39 On 7 January 2005, the Offender resigned as a director of Admerex.

Creation of the Stichting Groups

40 In or around May 2004, the Offender approached a lawyer, Anne Harley, to seek advice in relation to the 55,911,475 Admerex shares which were issued to Barat Advisory on 30 April 2004. For ease of reference, I will call these the “55 Million Admerex Shares”. The Offender had met Ms Harley in 2000, and she provided professional advice to him from time to time thereafter. Ms Harley was a Crown witness at the trial. The Offender sought advice from Ms Harley as to how the 55 Million Admerex Shares could be moved offshore and placed within a structure to facilitate the sale of those 55 Million Admerex Shares to offshore investors. Tax advantages from this were the subject of discussion between Ms Harley and the Offender.

41 Ms Harley was then a partner, with expertise in taxation law, in the legal firm Atanaskovic & Hartnell.

42 In response to the Offender’s request for advice, Ms Harley developed an offshore structure which used offshore companies and entities known under Dutch law as “stichtings”. Ms Harley had previously used the stichting group structure for another client.

43 The offshore structure developed by Ms Harley consisted of five stichtings and five offshore companies (“the Stichting Group”).

44 The five stichtings established by Ms Harley were known, respectively, as:

(a) Stichting Black;

(b) Stichting Badinage;

(c) Stichting Adelaar;

(d) Stichting Aurelius, and

(e) Stichting Wijsheid.

45 These five stichtings were established on 11 June 2004, and were administered on behalf of the Offender by a Dutch administration services company known as Citco Nederland BV (“Citco”).

46 The five offshore companies were:

(a) Challinor Equities Limited (“Challinor Equities”);

(b) Schlossman Partners Limited (“Schlossman Partners”);

(c) Thouvanel Investments (Asia Pacific) Limited (“Thouvanel Investments”);

(d) Metevier Securities International Limited (“Metevier Securities”), and

(e) Vaillendourf Europe Limited (“Vaillendourf Europe”).

47 These companies were incorporated in St Vincent and the Grenadines by Mr Meisterhans, at the request of Ms Harley, on 3 June 2004. Mr Meisterhans was appointed as a director of each of these companies.

48 Each stichting was the sole shareholder of one of the offshore companies:

(a) Stichting Black was the sole shareholder of Challinor Equities;

(b) Stichting Badinage was the sole shareholder of Schlossman Partners;

(c) Stichting Adelaar was the sole shareholder of Thouvanel Investments ;

(d) Stichting Aurelius was the sole shareholder of Metevier Securities, and

(e) Stichting Wijsheid was the sole shareholder of Vaillendourf Europe.

49 Each Stichting Group was in similar form, and was established by documentation which was essentially the same in content and purpose.

50 By way of example, the Stichting Group comprising Stichting Adelaar and Thouvanel Investments was established on the basis of the following documentation:

(a) Deed of Establishment of Stichting Adelaar dated 11 June 2004 - the Deed of Establishment provided for the creation of Stichting Adelaar under Dutch law.

(b) Master Investment Futures Agreement and Form of Confirmation between the Offender and Stichting Adelaar dated 11 June 2004 - under the Master Investment Futures Agreement and Form of Confirmation:

(i) The termination date was 1 July 2005.


(ii) Although the termination date was 1 July 2005, it was anticipated when the Master Investment Futures Agreement was entered into, as part of the Stichting Group structure, that the termination date would be extended for a further period, not exceeding 10 years.

(iii) On 1 March 2005 of each year until the termination date, the Offender was obliged to pay Stichting Adelaar the shortfall, if any, between the dividend paid or payable by Thouvanel Investments to Stichting Adelaar in respect of the financial year immediately preceding that date, and the amount equivalent to 10% of the committed capital of Thouvanel Investments.

(iv) On the termination date, the Offender was obliged to pay Stichting Adelaar the amount equivalent to 10% of the committed capital of Thouvanel Investments.

(v) As the committed capital of each stichting was US$100.00, the Offender’s maximum exposure in relation to each annual payment and termination payment was US$10.00.

(vi) On the termination date, Stichting Adelaar was obliged to pay the Offender the amount equivalent to 99% of the value of the shares held by Stichting Adelaar in Thouvanel Investments.

(vii) The Offender was not entitled to any payment by Stichting Adelaar or Thouvanel Investments, and was not entitled to any of the assets of Stichting Adelaar or Thouvanel Investments, until after the termination date.


(c) Management Contract between Stichting Adelaar, Thouvanel Investments and the Offender entered into on or around 11 June 2004 - under the Management Contract, the Offender was required to arrange a manager for Thouvanel Investments who would be responsible for the investment decisions and performance of Thouvanel Investments.

(d) Deed of Charge between the Offender and Stichting Adelaar dated 11 June 2004 - under this Deed of Charge, Stichting Adelaar could not deal with, sell or otherwise dispose of or part with possession of the shares it held in Thouvanel Investments, unless it had prior written consent of the Offender. This Deed of Charge also prohibited Stichting Adelaar from creating any interest or encumbrance in relation to the shares it held in Thouvanel Investments, other than an encumbrance in favour of the Offender, unless it had prior written consent of the Offender.

(e) Deed of Charge between the Offender and Thouvanel Investments entered into on or around 11 June 2004 - under this Deed of Charge, Thouvanel Investments could not deal with, sell or otherwise dispose of or part with any of its property, unless it had prior written consent of the Offender. This Deed of Charge also prohibited Thouvanel Investments from creating any interest or encumbrance in relation to any of its property, other than an encumbrance in favour of the Offender, unless it had prior written consent of the Offender.

51 As noted above, each Stichting Group was governed by equivalent documentation. As such, the Offender was not entitled to any of the assets of any of the Stichting Groups, until after the termination date of 1 July 2005.

52 In the period from May to August 2004, Ms Harley explained to the Offender, both orally and in writing, that:

(a) there would be tax payable on the initial disposal of the shares, but during the term of the arrangement there would be no tax liability;

(b) he would not be entitled to any asset of any Stichting Group, until after the termination of the Stichting Group structure;

(c) for both company law and taxation purposes, neither the stichtings nor the Stichting Group companies were associated;

(d) none of the Stichting Group companies was required to lodge a substantial shareholder notice and subsequent disposals of Admerex shares by the Stichting Group companies would, so long as Admerex remained listed on the Australian Stock Exchange, be free of capital gains tax;

(e) any payment he would receive upon the termination of the Stichting Group structure would be subject to capital gains tax in Australia if that payment represented a capital gain on the value of the assets which had been held in that Stichting Group; and

(f) the Stichting Group companies were required to act independently of the Offender and independently of each other.

53 On or around 11 June 2004, the Offender signed a document in relation to each of the five stichtings entitled “Re: Declaration of Source of Funds” which identified him to be the beneficial owner of funds used to establish the stichtings, and of funds which may from time to time be transferred into the names of the stichtings.

54 The Offender was also identified as the beneficial owner of assets in documentation which opened accounts, on or around 15 June 2004, in the name of each of the Stichting Group companies with a Swiss Bank known as EFG Bank AG (“EFG Bank”). These accounts were opened by Mr Meisterhans, who was also nominated as the sole signatory in relation to each of these accounts.

55 In relation to this documentation, which identified the Offender as the beneficial owner of assets within the Stichting Group, Ms Harley gave evidence that, in her opinion, the Offender had no such beneficial ownership, and that the documentation which identified the Offender as the beneficial owner was only provided at the insistence of Citco and EFG Bank.

56 However, the guilty verdicts indicate that the jury was satisfied that the Offender intended that Barat Advisory would retain the beneficial interest in the 55 Million Admerex Shares after they were transferred to the Stichting Group companies on or around 11 June 2004. I will return to this topic later in these remarks.

Transfer of 55 Million Admerex Shares to the Stichting Group

57 On or around 11 June 2004, the Offender signed five documents entitled “Standard Transfer Form for Non-Market Transactions” on behalf of Barat Advisory. These documents stated that, on 11 June 2004, Barat Advisory transferred the 55 Million Admerex Shares to the five Stichting Group companies in five parcels of shares, at a value of five cents per share, as follows:

(a) transfer of 12,000,000 Admerex shares to Challinor Equities for consideration of $600,000.00;

(b) transfer of 11,900,000 Admerex shares to Schlossman Partners for consideration of $595,000.00;

(c) transfer of 11,500,000 Admerex shares to Thouvanel Investments for consideration of $575,000.00;

(d) transfer of 9,411,475 Admerex shares to Metevier Securities for consideration of $470,573.75, and

(e) transfer of 11,100,000 Admerex shares to Vaillendourf Europe for consideration of $555,000.00.

58 The total stated consideration for these five parcels of shares, which in total comprised the 55 Million Admerex Shares, was $2,795,573.75.

59 On or around 11 June 2004, the Offender signed a document entitled “Change of Director’s Interest Notice” which stated that the Offender had disposed of his indirect interest, as the sole shareholder of Barat Advisory, in the 55 Million Admerex Shares. This document stated that the 55 Million Admerex Shares had been disposed of on 11 June 2004 at five cents per share. It also indicated that the transfer of the 55 Million Admerex Shares had been an “off market sale”.

60 On or around 15 June 2004, the Offender signed a document entitled “Notice of Ceasing to be a Substantial Shareholder”, which stated that Barat Advisory had sold the 55 Million Admerex Shares on 11 June 2004 for consideration of $2,795,573.75.

61 On or around 18 June 2004, the Offender instructed Peter Carney, who was the company secretary of Admerex, to make arrangements with Ms Harley for the placement of the 55 Million Admerex Shares with ANZ Nominees Limited (“ANZ Nominees”). The 55 Million Admerex Shares were to be held on behalf of the five Stichting Group companies in an ANZ Nominees account operated by EFG Bank.

62 On or around 25 June 2004, 55 Million Admerex Shares were placed in an ANZ Nominees account operated by EFG Bank, to be held on behalf of the five Stichting Group companies. The 55 Million Admerex Shares were held by ANZ Nominees on behalf of the five EFG Bank accounts operated by the Stichting Group companies, as follows:

(a) 12,000,000 Admerex shares were held on behalf of the Challinor Equities EFG Bank Account;

(b) 11,900,000 Admerex shares were held on behalf of the Schlossman Partners EFG Bank Account;

(c) 11,500,000 Admerex shares were held on behalf of the Thouvanel Investments EFG Bank Account;

(d) 9,411,475 Admerex shares were held on behalf of the Metevier Securities EFG Bank Account, and

(e) 11,100,000 Admerex shares were held on behalf of the Vaillendourf Europe EFG Bank Account.

63 It was understood by Ms Harley that these parcels of the Admerex Shares were transferred on the basis of vendor finance loans from Barat Advisory to each of the Stichting Group companies.

64 While he was in Switzerland in June 2004, the Offender said to Mr Goodall that he had sold the 55 Million Admerex Shares to give himself a tax position in Australia, that capital gains tax would be payable on that disposal, but that he did not have a tax liability on any further increase in the value of the Admerex Shares.

65 On 16 November 2006, the Offender signed financial statements for Barat Advisory for the financial year ended 30 June 2004 (“the 2004 Barat Advisory Financial Statements”) which were prepared on instructions from the Offender by the accounting firm Grant Thornton Services (NSW) Pty Limited (“Grant Thornton”). By signing the 2004 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory’s financial position as at 30 June 2004.

66 On 16 November 2006, the Offender also signed financial statements for Barat Advisory for the financial year ended 30 June 2005 (“the 2005 Barat Advisory Financial Statements”) which were similarly prepared on instructions from the Offender by Grant Thornton. By signing the 2005 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory’s financial position as at 30 June 2005.

67 The statements of the Barat Advisory CBA Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

68 Likewise, the statements of the Barat Advisory St George Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

69 Neither the 2004 Barat Advisory Financial Statements nor the 2005 Barat Advisory Financial Statements record any debt owed to Barat Advisory by any of the Stichting Group companies for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

70 The guilty verdicts indicate that the jury was satisfied that the transfer of the 55 Million Admerex Shares to the Stichting Group companies, on or around 11 June 2004, involved the transfer of the legal title only. The beneficial ownership of the shares remained with Barat Advisory. This occurred in circumstances where the Offender was the controlling mind of Barat Advisory and of each of the Stichting Group companies, with Mr Meisterhans (a director of each of the five companies) acting as the Offender’s agent for that purpose. It was the Offender’s intention that the Stichting Group companies would hold the 55 Million Admerex Shares on trust for Barat Advisory. By its verdicts, the jury accepted the Crown submission that the Offender was effectively dealing with himself, on both sides of the table, as it were, to bring about this result.

Opening of SwissFirst Bank AG Account 6009 in The Name of Admerex (Ireland) Limited and Transfer of Five Million Temenos Shares to SwissFirst Bank AG

71 On 1 April 2004, Admerex (Ireland) Limited (“Admerex (Ireland)”) was incorporated in Ireland. The Offender was appointed as one of the directors of Admerex (Ireland).

72 In or around November 2004, Admerex started to explore a capital raising transaction involving a Swiss bank known as SwissFirst Bank AG (“SwissFirst Bank”).

73 It was anticipated that, as part of this capital raising transaction, Admerex (Ireland) would provide to SwissFirst Bank five million shares in Temenos. The five million Temenos shares, to be provided by Admerex (Ireland) as security to SwissFirst Bank, were owned by Mr Goodall.

74 On or around 7 December 2004, Mr Goodall signed documentation to open a bank account with SwissFirst Bank in the name of Admerex (Ireland). This bank account was identified as SwissFirst Bank account number 6009 (“SwissFirst Bank Account 6009”).

75 On 8 December 2004, Mr Goodall gave instructions for five million Temenos shares, owned by him, to be transferred to SwissFirst Bank, as security for a loan by SwissFirst Bank to Admerex (Ireland) in accordance with the terms of the proposed capital raising transaction.

76 On 10 December 2004, Admerex entered into a letter of intent with SwissFirst Bank (“Letter of Intent”). The Letter of Intent set out the basis upon which Admerex and SwissFirst Bank would be interested in structuring a capital raising transaction. As part of this proposed transaction, SwissFirst Bank was to provide a bridge loan to Admerex (Ireland). The bridge loan would be secured by five million Temenos shares, owned by Mr Goodall, to be assigned and transferred to SwissFirst Bank by Admerex (Ireland).

77 On 14 December 2004, Mr Goodall sent an email to the directors of Admerex, including the Offender, expressing concern about the lodging of his five million Temenos shares with SwissFirst Bank.

78 On 15 December 2004, after discussions with the Offender and others, Mr Goodall agreed to proceed with the transfer of his five million Temenos shares to SwissFirst Bank.

79 On 17 December 2004, Ms Harley contacted SwissFirst Bank and acknowledged that the documentation to open SwissFirst Bank Account 6009, which nominated Mr Goodall and the Offender as signatories to the account, was inaccurate. Ms Harley instructed Mr Meisterhans to destroy this documentation and provided Mr Meisterhans with replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories for SwissFirst Bank Account 6009. This replacement documentation was signed by the Offender.

80 On or around 24 December 2004, the five million Temenos shares owned by Mr Goodall were transferred to SwissFirst Bank as security for the bridge loan to Admerex (Ireland), in accordance with the Letter of Intent. The five million Temenos shares were placed in a SwissFirst Bank holding account identified as account number 7900 (“SwissFirst Bank Account 7900”).

81 The SwissFirst Bank transfer documentation records the cost price of the Temenos shares to be 9.4 Swiss Francs (“CHF”) each, as at the time of the transfer into SwissFirst Bank Account 7900 on 24 December 2004. This was approximately equivalent to $10.71 per share. On this basis, the cost price of the five million Temenos shares at that time was approximately equivalent to $53,550,000.00.

82 On or around 27 December 2004, SwissFirst Bank Account 6009 was opened on the basis of the replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories.

83 On or around 10 August 2005, the signatories to SwissFirst Bank Account 6009 were changed to Mr Goodall and Mr Carney.

84 On or around 14 September 2005, SwissFirst Bank Account 6009 was closed on instructions from Mr Goodall and Mr Carney, on behalf of Admerex (Ireland).

Opening of Challinor Equities SwissFirst Bank Account 6048 and Swap of 48 Million Admerex Shares for One Million Temenos Shares

85 On 30 January 2005, the Offender travelled to Switzerland on behalf of Admerex and Admerex (Ireland) to renegotiate with SwissFirst Bank the capital raising transaction described in the Letter of Intent.

86 Events which occurred in early February 2005 were of central importance to the offences. The liability to pay capital gains tax arose at this time.

87 On or around 2 February 2005, while he was in Switzerland, the Offender telephoned Mr Goodall from Zurich. The Offender told Mr Goodall that the capital raising deal was going to be changed and that the security provided by Admerex (Ireland) would only need to be three million Temenos shares, not five million Temenos shares as was previously required under the Letter of Intent.

88 During this telephone conversation, the Offender told Mr Goodall that Mr Goodall would get eight million Temenos shares back, and said he (the Offender) would take one million Temenos shares for 49 million Admerex shares. Mr Goodall replied “Okay, the deal needs to be renegotiated and we’ll discuss it when we get back”. This was the share swap, which the jury was satisfied constituted a contract for disposal of at least 48 Million Admerex shares, and thus a capital gains tax event. As will be seen, the Offender (with the aid of Mr Meisterhans) was soon acting in a manner consistent with there being such an arrangement, with transactions occurring concerning the one million Temenos shares, and funds being directed for the use of the Offender.

89 On 2 February 2005, Admerex (Ireland) and SwissFirst Bank agreed to terminate the Letter of Intent. The agreement to terminate the Letter of Intent was signed by the Offender, on behalf of Admerex (Ireland), and was authorised by Mr Goodall.

90 On 2 February 2005, Admerex (Ireland) sent a security delivery order which instructed SwissFirst Bank to transfer one million Temenos shares to a safe custody account with SwissFirst Bank in the name of Challinor Equities, in accordance with the termination of the Letter of Intent. The security delivery order also instructed SwissFirst Bank to transfer another one million Temenos shares to EFG Bank, also in accordance with the termination of the Letter of Intent. The security delivery order was signed by Mr Meisterhans.

91 On 2 February 2005, Challinor Equities wrote to SwissFirst Bank providing documentation to open an account in the name of Challinor Equities with SwissFirst Bank. The letter, which was also signed by Mr Meisterhans, indicated that, as had been discussed, the account was to be opened so that it could hold the one million Temenos shares which were to be transferred by SwissFirst Bank to Challinor Equities following the termination of the Letter of Intent.

92 On 2 February 2005, account number 6048 was opened with SwissFirst Bank in the name of Challinor Equities (“Challinor Equities SwissFirst Bank Account”). Mr Meisterhans was nominated as one of the authorised signatories to the Challinor Equities SwissFirst Bank Account, together with two other directors of Sinitus. The Offender was identified as the beneficial owner of the assets held in the Challinor Equities SwissFirst Bank Account, but was not nominated as a signatory to the account.

93 On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 into the Challinor Equities SwissFirst Bank Account.

94 On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 to EFG Bank.

95 The effect of the transactions described above was that, as a result of the termination of the Letter of Intent, SwissFirst Bank released two million of the five million Temenos shares owned by Mr Goodall, which had previously been required to secure the bridge loan to Admerex (Ireland) under the Letter of Intent. Of the two million Temenos shares which were released, one million Temenos shares were transferred to the Challinor Equities SwissFirst Bank Account. The remaining one million Temenos shares were transferred to EFG Bank to be held on behalf of Mr Goodall.

96 The SwissFirst Bank transfer documentation indicated that the cost price of the Temenos shares was CHF9.4 per share, as at the time they were placed into the Challinor Equities SwissFirst Bank Account. On this basis, the cost price of the one million Temenos shares was equivalent to approximately $10,141,331.00 as at 3 February 2005.

97 The account opening documentation for the Challinor Equities SwissFirst Bank Account stated that the starting inventory for the account was one million Temenos shares valued at CHF8.8 million. On this basis, the value of the one million Temenos shares was equivalent to $9,494,012.30 as at 3 February 2005.

98 On 3 February 2005, Temenos shares traded on the Swiss stock exchange at a value of between CHF7.85 and CHF8.09 per share. On this basis, one million Temenos shares were valued on the Swiss stock exchange at the equivalent of between approximately $8,469,090.00 and $8,728,018.00 as at 3 February 2005.

99 In exchange for the transfer on 3 February 2005 of the one million Temenos shares into the Challinor Equities SwissFirst Bank Account, the Offender arranged for 48 Million Admerex shares to be held, on behalf of Mr Goodall, in accounts in the names of Stichting Group companies, as follows:

(a) 11,900,000 Admerex shares were held by ANZ Nominees on behalf of the Schlossman Partners EFG Bank Account;

(b) 11,500,000 Admerex shares were held by ANZ Nominees on behalf of the Thouvanel Investments EFG Bank Account;

(c) 13,500,000 Admerex shares were held by ANZ Nominees on behalf of the Metevier Securities EFG Bank Account (comprising the 9,411,475 shares initially transferred on 25 June 2004 and 4,088,525 shares transferred from Challinor Equities on 7 February 2005); and

(d) 11,100,000 Admerex shares were held by ANZ Nominees on behalf of the Vaillendourf Europe EFG Bank Account.

100 On 3 February 2005, Admerex shares traded on the Australian Stock Exchange at a value of between 17.5 cents and 19 cents per share. On this basis, the 48 Million Admerex shares were valued on the Australian Stock Exchange at between $8,400,000.00 and $9,120,000.00, as at 3 February 2005.

101 On or around 14 September 2005, arrangements were made for the 48 Million Admerex shares to be transferred so that they were held on behalf of a third party. These arrangements were made on instructions from Mr Goodall.

Transfer of Shares and Funds from the Challinor Equities SwissFirst Bank Account

102 As explained in detail above, on 3 February 2005, one million Temenos shares were transferred into the Challinor Equities SwissFirst Bank Account.

103 Between 3 February 2005 and 14 June 2005, all of these one million Temenos shares were sold and the proceeds were deposited to the Challinor Equities SwissFirst Bank Account. The only funds deposited to that account were from the sale of the Temenos shares, interest received, or the proceeds of sale of shares purchased with the proceeds of sale of Temenos shares.

104 A table of the sale and purchase of shares in the Challinor Equities SwissFirst Bank Account was attached to Trial Exhibit B (as Appendix 1). The average sale price of the Temenos shares was CHF7.78 per share. This was approximately equivalent to $8.28 per share.

105 The funds from the sale of the Temenos shares were soon being deployed by the Offender, with the aid of Mr Meisterhans, to make purchases or payments to serve his own interests.

106 On 7 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer 160,000 Euros (“EUR”) from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Art et Antiquites” in Paris. The payment instruction explained that the transfer was to cover a purchase of a painting by the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF249,865.06. This was approximately equivalent to $266,352.27.

107 On 16 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$72,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Exclusive Resorts LLC - Member Deposits”. The payment instruction explained that the transfer was to cover membership of the Offender. The transfer was made on 17 February 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF86,785.40. This was approximately equivalent to $93,147.36.

108 On 3 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $1,000,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was “on account of Clairmont”. The transfer was made on 7 March 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF924,525.17. As a result of the transfer, $999,967.48 (being $1,000,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 7 March 2005.

109 On 29 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $2,500,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was “on account of Clairmont”. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF2,321,775.05. As a result of the transfer, $2,499,967.63 (being $2,500,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 30 March 2005.

110 In relation to this transfer of $2,500,000.00 to the Barat Advisory CBA Account on 29 March 2005, an employee of SwissFirst Bank sent an email to Mr Meisterhans asking for the background to the transfer. In an email dated 29 March 2005, Mr Meisterhans replied:

“As with the last transfer, this is concerning a return of capital in form of a credit to the company of Michael, i.e. Barat. He buys with it real estate property in Sydney.”

111 On 22 April 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$313,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Exclusive Resorts LLC - Member Deposits”. The payment instruction explained that the transfer was to cover the remaining payment for the membership of the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF369,834.47. This was approximately equivalent to $401,993.99.

112 On 24 May 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,367.23 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 26 May 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF11,555.02. This was approximately equivalent to $12,329.30.

113 On 4 July 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance from the Challinor Equities SwissFirst Bank Account to an account with UBS AG in Zurich (“UBS Bank”), being account number [C] in the name of Challinor Equities (“Challinor Equities UBS Bank Account”). The transfer was made on 5 July 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF3,270,004.00. This was approximately equivalent to $3,348,355.52.

114 On 26 August 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR29,300.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Galerie Ariane Dandois SA” in Paris. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF45,879.82. This was approximately equivalent to $48,401.54.

115 On 7 September 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR13,066.24 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Citco Amsterdam”. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 9 September 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF20,447.85. This was approximately equivalent to $21,380.02.

116 On 2 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance (except CHF100,000.00) from the Challinor Equities SwissFirst Bank Account to the Challinor Equities UBS Bank Account. The transfer was made on 3 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF400,004.00. This was approximately equivalent to $414,254.35.

117 On 16 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR6,068.39 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 18 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF9,533.94. This was approximately equivalent to $9,945.69.

118 On 19 December 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,861.55 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 21 December 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF12,812.79. This was approximately equivalent to $13,403.90.

119 As a result of the transfers of funds from the Challinor Equities SwissFirst Bank Account, the balance on that account as at 31 December 2007 was CHF78,736.09. This was approximately equivalent to $81,490.47.

120 The total value of the Temenos shares sold from the Challinor Equities SwissFirst Bank Account was CHF7,935,362.30. This was approximately equivalent to $8,441,970.12.

121 The total amount of funds transferred from the Challinor Equities SwissFirst Bank Account was CHF7,723,022.57. This was approximately equivalent to $8,129,563.94.

Bank Accounts Operated by Barat Advisory

122 Barat Advisory operated the Barat Advisory CBA Account during the period from 19 December 2003 to 19 November 2007. The Offender was the only person authorised to operate the Barat Advisory CBA Account.

123 The deposits into the Barat Advisory CBA Account included the following transfers of funds from Challinor Equities:

(a) On 7 March 2005, a deposit was made in the amount of $999,967.48 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit recorded that it was made as a result of an international transfer of $1,000,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as SwissFirst Bank. The details of payment were recorded as “on account of Clairmont” .

(b) On 30 March 2005, a deposit was made in the amount of $2,499,967.63 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $2,500,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as SwissFirst Bank. The details of payment were not recorded.

(c) On 4 August 2005, a deposit was made in the amount of $249,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $250,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” .

(d) On 16 September 2005, a deposit was made in the amount of $499,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $500,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” , “by order of Clairmont” .

(e) On 28 October 2005, a deposit was made in the amount of $249,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $250,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “by order of Clairmont” , “on account of Clairmont” .

(f) On 25 November 2005, a deposit was made in the amount of $199,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $200,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” .

(g) On 14 December 2005, a deposit was made in the amount of $149,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $150,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont”, “by order of Clairmont” .

(h) On 10 January 2006, a deposit was made in the amount of $749,992.50 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $750,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont”, “by order of Clairmont” .

124 The total of the transfers of funds from Challinor Equities to Barat Advisory, set out above, was $5.6 million. The total of the deposits which were consequently received into the Barat Advisory CBA Account was $5,599,902.61 (being $5.6 million less bank transfer fees).

Bank Accounts and Facilities Operated by the Offender

125 During the period from 1 January 2003 to 31 December 2007, the Offender operated the following accounts with St George Bank:

(a) executive mortgage account number [D] in the name of Michael J Milne;

(b) fixed rate loan account number [E] in the name of Michael J Milne;

(c) business cheque account number [F] in the name of Michael J Milne;

(d) call deposit account number [G] in the name of Michael J Milne;

(e) commercial bill facility in the amount of $695,000.00; and

(f) commercial bill facility in the amount of $4,000,000.00.

Receipt and Use of Proceeds of Sale of One Million Temenos Shares Deposited into the Challinor Equities SwissFirst Bank Account

126 The Offender and Barat Advisory received the majority of the proceeds of the sale of the one million Temenos shares deposited into the Challinor Equities SwissFirst Bank Account, including $5,599,902.61 deposited into the Barat Advisory CBA Account in the period from 7 March 2005 to 10 January 2006.

127 The following assets were purchased, or partly purchased, with the proceeds of the sale of the one million Temenos shares deposited into the Challinor Equities SwissFirst Bank Account:

(a) purchase on or around 7 February 2005 by the Offender of a painting from Art et Antiquites, Paris, for the amount of EUR160,000.00 (approximately equivalent to $266,352.27);

(b) deposit on or around 7 March 2005 in the amount of $200,000.00 for the purchase by the Offender’s wife of a residential property in Neutral Bay, New South Wales for $4.7 million;

(c) purchase on or around 11 March 2005 by Barat Advisory of the yacht known as “Black Snake” for the amount of $270,000.00;

(d) stamp duty on or around 24 March 2005 in the amount of $269,492.00 for the purchase by the Offender’s wife of the residential property in Neutral Bay (referred to at (b) above);

(e) payment on or around 24 March 2005 of $100,000.00 for jewellery purchased by Barat Advisory;

(f) payment on or around 15 April 2005 of $454,052.94 to repay an overdraft in the sum of $452,781.68 on St George Bank fixed rate loan account number [E] in the name of the Offender;

(g) payment on or around 15 April 2005 of $1,526,235.77 to repay an overdraft in the sum of $1,521,375.71 on St George Bank executive mortgage account number [D] in the name of the Offender;

(h) deposit on or around 15 April 2005 of $409,743.73 into St George Bank call deposit account number [G] in the name of the Offender, in order to meet the conditions of finance to be provided by St George Bank for the purchase by the Offender’s wife of the residential property at Neutral Bay;

(i) membership fees on or around 17 February 2005 and 22 April 2005 for the Offender with Exclusive Resorts in the amount of US$385,000.00 (approximately equivalent to $495,141.35);

(j) purchase on or around 29 August 2005 of artwork or other items from Galerie Ariane Dandois SA, Paris, for the amount of EUR29,300.00 (approximately equivalent to $48,401.54);

(k) payment on or around 27 September 2005 to Philip Bacon Galleries as the deposit on the purchase by Barat Advisory of the painting “The New School” by Jeffrey Smart;

(l) payment on or around 7 October 2005 of $390,000.00 to Philip Bacon Galleries for the purchase by Barat Advisory of the painting “The New School” by Jeffrey Smart, and

(m) payment on or around 27 October 2005 of $71,534.61 by Barat Advisory to Bentley Sydney, either to pay out finance on a 2003 Bentley Arnage or as a deposit or other payment for a 2005 Bentley Continental Flying Spur.

128 When police executed a search warrant at the Offender’s home on 28 February 2008, the painting “The New School” was observed hanging above the fireplace.

Preparation and Lodgement of Tax Returns for Barat Advisory and the Offender

129 The events referred to in this part of the narrative relate directly to the second count.

130 In May 2005, the Offender became a client of Grant Thornton whom he retained to prepare financial statements and tax returns for Barat Advisory for 2004, 2005 and 2006, and outstanding tax returns for himself.

131 By its verdict on the second count, the jury was satisfied beyond reasonable doubt that in the period from May 2005 to November 2006, the Offender deliberately and dishonestly failed to tell the Grant Thornton accountants the truth concerning the share swap on or around 3 February 2005, and the very substantial capital gain which flowed to his company, Barat Advisory, as a result.

132 On or around 27 May 2005, the Offender met with Mr William Shew, a director of Grant Thornton. At that meeting, Mr Shew sought information from the Offender in relation to his financial affairs and the financial affairs of Barat Advisory. The Offender said that assets, including art (referred to as the “Clairmont Collection”) were funded by loans from Clairmont which were secured over the residential property at Neutral Bay, with interest capitalising at 3.5% to be repaid from capital growth on that property. Mr Shew’s notes of the meeting included the following:

(a) the Offender was not an investor in Australia and had “no financial footprint” ;

(b) the Offender has “sophisticated offshore structures - 20 years” ; and

(c) the Offender was funded by loans from an offshore entity described as “Clairmont” .

133 Shortly after this meeting, the Offender provided Grant Thornton with a folder of documents which included information in relation to banking records and share transactions.

134 On 30 June 2005, the Offender met with Mr Shew and Mr Stephen Thurn, a senior manager of Grant Thornton. Mr Shew and Mr Thurn sought more information in order to prepare tax returns for Barat Advisory and the Offender. At this meeting, the Offender referred to tax advice he had received from Ms Harley and said that he had received a number of loans from overseas.

135 On 13 July 2005, Mr Thurn prepared a file note based upon his review of the folder of materials which had been provided to Grant Thornton by the Offender. The file note included reference to the purchase by Barat Advisory of 105,000 Admerex shares on 13 September 2004. It also included reference to a Clearing House Electronic Subregister System (“CHESS”) document which referred to an “adjustment” of 55,911,475 Admerex shares “off” on 25 June 2004. The CHESS statement was provided to Mr Thurn by the Offender.

136 On 1 September 2005, Mr Shew prepared a file note which identified agenda items, including missing information and “unknowns” in relation to Barat Advisory. Mr Shew was not sure if this file note related to a meeting with the Offender, or to agenda items which he suggested Mr Thurn should raise when he met with the Offender.

137 On 13 September 2005, the Offender met with Mr Thurn who sought more information in relation to the CHESS statement which referred to the “adjustment” of 55,911,476 Admerex shares. At this meeting Mr Thurn also queried the Offender in relation to payments which had been received by Barat Advisory. The Offender informed Mr Thurn as follows:

(a) a payment on 24 February 2005 of $200,000.00 from Admerex to Barat Advisory was a loan from Challinor Equities, which was a Swiss investment bank;

(b) a payment on 7 March 2005 of $999,967.48 was a loan from Challinor Equities, which was associated with the Rothschild Bank family in Zurich; and

(c) a payment on 30 March 2005 of $2,499,967.63 was a loan from Challinor Equities, which was associated with the Rothschild Bank family in Zurich.

138 The next record of a meeting between the Offender and Grant Thornton is a file note taken by Mr Shew dated 25 September 2006. At that meeting, Mr Shew again asked for information from the Offender in relation to the financial affairs of Barat Advisory and any share transactions that had been undertaken by Barat Advisory.

273 I fix a non-parole period of four years and nine months to date from 17 December 2010 and to expire on 16 September 2015.

274 I am required by law to explain to you the effect of this sentencing order. You need to understand that the effect of that order is that you will serve a period of imprisonment of not less than four years and nine months and, if a parole order is made on or after 17 September 2015, you will also serve a period under supervision in the community, called the “parole period”, so as to complete the overall sentence of eight years and six months. If a parole order is made, it will be subject to conditions, and it may be amended or revoked. In particular, it may be revoked if you fail without reasonable excuse to fulfil those conditions, in which event you may be returned into custody, pending further review and possible re-release, depending upon your behaviour and response to any rehabilitation opportunities which may be offered whilst you are in custody.

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