R v Wells
[2017] VSC 575
•25 SEPTEMBER 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
S CI 2016 0184
| THE QUEEN |
| v |
| BARRY JOHN WELLS |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 23 AUGUST 2017 |
DATE OF SENTENCE: | 25 SEPTEMBER 2017 |
CASE MAY BE CITED AS: | R v Wells |
MEDIUM NEUTRAL CITATION: | [2017] VSC 575 |
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CRIMINAL LAW – Sentence – Conspiracy to defraud the State of Victoria – Receiving secret commission – Awarding government contracts in excess of $17M to related companies with conflict of interest – Offences occurred over seven year period – Key player – Plea of guilty - Undertaking to give evidence against co-offenders – Other mitigating circumstances – Total effective sentence 9 years with a minimum of 6 years and 3 months.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr K T Armstrong, with Mr A J D Sharp | John Cain, Solicitor for Public Prosecutions |
| For the Accused | Mr M Thomas | Furstenberg Law |
HIS HONOUR:
Mr Barry Wells, on 30 June 2017 you pleaded guilty to one charge that, contrary to Common Law, between 1 January 2007 and 9 January 2014, you conspired with six others[1] to defraud the State of Victoria in the awarding of works contracts. The maximum penalty for this offence is 15 years imprisonment.[2]
[1]Albert Ooi, Michael De La Torre, Andrew Ooi, Darrel Salter, Andrew Hayes and Graham Davis; each of whom are subject to separate proceedings arising out of these events.
[2]Crimes Act 1958, s 320.
You also pleaded guilty to three charges of receiving a secret commission contrary to s 176(1) of the Crimes Act 1958. The maximum penalty for this offence is 10 years imprisonment.[3]
[3]Crimes Act 1958, s 176(2).
The second count charged that, between 20 January 2011 and 31 July 2011, you corruptly received a secret commission from Andrew Hayes and Graham Davis of Grand Earthworks Pty Ltd while an agent for the Department of Transport, being goods and services valued at $56,010.03. This is what is termed a rolled-up charge as it includes a number of discrete transactions.
The third count, also a rolled-up charge, alleged that, between 29 April 2011 and
6 August 2012, you corruptly received a secret commission from Darrel Salter of Consalter Pty Ltd while an agent for the Department of Transport, being five cheques totalling $74,632.
The fourth count charged that, between 19 November 2013 and 9 January 2014, you corruptly received a secret commission from Darrel Salter of Consalter Pty Ltd while an agent for the Department of Transport, being monies in the sum of $6,000.
Your offending arose out of your employment variously with the Victorian Government’s Department of Infrastructure (‘DOI’), the Department of Transport (‘DOT’) and Public Transport Victoria (‘PTV’), and it spanned a period of seven years. The charges arose from an investigation named ‘Operation Fitzroy’ by the Independent Broad-Based Anti-corruption Commission (‘IBAC’) into allegations of corrupt activities in procurement in the Victorian Government’s Transport departments. The facts and circumstances on which you are being sentenced were described in depth in the prosecution opening on plea. I incorporate that document into these reasons by reference and direct that a copy of it be retained on the court file. You admitted the relevant facts set out by the prosecution in that document.[4]
[4]For convenience, throughout these reasons, I will use abbreviations and initials when referring to corporate entities and Government departments.
In summary, the DOI and DOT employed you from 13 April 2006 and PTV from April 2012. Throughout that time, you were the ‘Manager, Bus and Regional Infrastructure’ responsible as a project manager for civil works and infrastructure projects, including the construction of bus stops and railway station car parks. Along with your principal co-offender, Mr Albert Ooi, (‘Ooi’) you were involved in a senior executive role responsible for project management and for awarding Victorian government contracts for civil works projects. You conspired to defraud the State of Victoria by awarding works contracts, or recommending contractors for such work, to contractors in whom you held an undisclosed interest. You participated in the review of tenders for the selection of contractors. You were usually the project manager for works, and you also authorised payment to contractors for works completed across projects.
In essence, government policies and procedures designed to ensure an open and fair competitive system for awarding government works contracts were corrupted. In your duties you were required to act impartially and to declare any conflict of interest. You consistently and dishonestly failed to declare your conflicts of interest and received considerable personal financial benefit.
Ooi was a prosecution witness. He was also employed by DOI and DOT respectively from October 2004 to January 2012, and was a contractor to DOT and PTV from January 2012 until January 2013. On 14 February 2017, he pleaded guilty to one charge of conspiracy to defraud, contrary to common law, and one charge of receiving a secret commission contrary to s 176(1) of the Crimes Act 1958, and undertook to assist the prosecution of co-offenders. He provided what prosecutors described as a full, frank, and valuable account that corroborated the prosecution case and provided additional details about the involvement of the ‘second tier’ offenders.[5] On 6 April 2017 I sentenced Ooi to a total effective sentence of 8 years imprisonment, with a non-parole period of 6 years.[6]
[5]Salter, Andrew Ooi, Hayes and Davis.
[6]R v Albert Ooi [2017] VSC 157. On 30 August 2017, leave to appeal this sentence was granted, Albert Hoe Ooi v R [2017] VSCA 221.
Michael de la Torre, a co-conspirator who was a prosecution witness, also pleaded guilty. He was sentenced in the County Court to a three year community corrections order on 11 charges of obtaining financial advantage by deception between February 2008 and December 2009, relating to 31 contracts at a total value of close to $4 million. The sentencing judge described him as a key figure at the bottom of a sophisticated conspiracy. He also undertook to assist the prosecution of co-offenders.[7]
[7]DPP v De La Torre [2016] VCC 1896. Two further offenders, Mr Furphy and Mr Huggard, have been sentenced in the Magistrates’ Court for related offending, with Mr Furphy pleading guilty to making a false document and Mr Huggard pleading guilty to one charge of creating a false document and two charges of giving a secret commission. Both were fined $20,000 without conviction.
Proceedings against the remaining co-conspirators on the first charge remain extant.[8]
[8]Darrel Salter has pleaded guilty to one charge of conspiracy to defraud and two charges of giving to an agent a secret commission. His plea is scheduled to be heard on 28 September 2017. Graham Davis pleaded guilty in the County Court on 11 August 2017 to one charge of conspiracy to defraud in the same terms as the charge to which Wells pleaded guilty but limited to a lesser period and four charges of giving a secret commission that correlate with charge two on the Wells indictment. Mr Andrew Ooi and Mr Andrew Hayes have pleaded not guilty and each will face trial in the County Court in early 2019.
From 2007 to 2014, in concert with Ooi, you masterminded a fraudulent scheme to award transport works to various businesses which you covertly controlled with the assistance of compliant family members or business associates. The forensic financial witnesses identified various corporate vehicles and other individuals participating in the conspiracy by corruptly receiving and performing transport works contracts. Businesses that you and Ooi controlled were: Property Services Network, PWIC Pty Ltd, De La Torre Consultancy Group Pty Ltd, Red Consultancy Group (‘RCG’), Global Works Management Pty Ltd (‘GWM’) and Redback Civil Pty Ltd (‘Redback’). I will refer to these businesses as the ‘managed entities’. Family members and associates connected with the managed entities included your stepson Justin Wells, Albert Ooi’s son, Andrew Ooi, and his stepson Michael De La Torre.
You had authority to approve contracts under $20,000. Contracts of greater value, but under a threshold - $100,000, later $150,000 - required either a quotation or tender process depending on the value of the contract. With each process you participated in the assessment of those quotes or tenders. You were able to determine which contractors would be invited to quote and to exploit the requirement that quotations be provided from contractors acting independently of each other. When contracts exceeded the threshold, tenders were publicly advertised seeking expressions of interest. Expressions of interest required an assessment report and a recommendation that you prepared and forwarded for authorisation. Such assessment reports typically required that you reveal any conflicts of interest and you did not complete them honestly.
The tender applicants were interviewed and, typically, along with one or more other public servants you and Ooi comprised the interview panel. When an outside consultant was engaged in the tender review process you arranged for the RCG to be appointed, permitting the conspiracy to maintain control of the review process.
You also had access to two computerised management systems. The ‘Contract Management System’ was used to track project funding and project management and the ‘Oracle’ system was used to record financial documentation and money transfers.
The managed entities were mostly incapable of carrying out contract works and sub-contracted the work to other companies managed by co-accused and other associates including Darrel Salter, Andrew Hayes and Graham Davis. The related sub-contractors were Consalter Pty Ltd, Grand Earthwork Pty Ltd and Global Works Civil Pty Ltd. You and Ooi also corruptly arranged for transport works contracts to be awarded to these companies. Other sub-contractor businesses that performed works contracts awarded to the managed entities included Tactile Australia Pty Ltd and Country Works Pty Ltd. You benefitted from awarding work to the related sub-contractors through the receipt of corrupt payments and free services provided by Hayes, Davis and Salter in return for the awarded works. The payments and services that Hayes, Davis, and Salter provided are the subject of charges 2, 3 and 4 on the indictment.
Ooi handled the administration of the conspiracy. He set up and controlled the various companies and businesses used to avoid detection of the movement of moneys in and out of the managed entities and related sub-contractors. Other companies that were used were GWM Management Services Pty Ltd, HGO Management Services Pty Ltd and AMA & Associates Pty Ltd. The money moved through these companies was used for Ooi’s own benefit, but a proportion was paid to you for your own benefit. You, on the other hand, had primary control over day-to-day operational matters.
In late 2006, you and Ooi took control of a cleaning and maintenance business called Property Services Network (‘PSN’) run by Ooi’s stepson, Michael De La Torre. Ooi took control of the PSN bank account. PSN entered into a partnership agreement with HGO Management Services Pty Ltd (‘HGO’), which Ooi controlled. Ownership of PSN was split 90% to HGO and 10% to De La Torre. This agreement enabled PSN to provide services in infrastructure construction works, including bus stops and bus shelters, to the DOI. PSN subcontracted the bulk of the work to businesses operated by one Greg Morrissey - Country Works and Tactile Australia - which employed Darrel Salter.
By these arrangements you and Ooi covertly controlled PSN, and could shift money from government contracts awarded to it. De La Torre was a compliant family member with a surname that did not reveal his connection to you and Ooi. Between 1 January 2007 and 10 August 2009, PSN was awarded 32 civil works contracts totalling $1,175,053.50. With Ooi, you prepared the quotes that were submitted in the name De La Torre, and you were the contract manager for 31 of those contracts. Your interests and the personal relationships were not declared. Approximately $600,000 from such works was paid into bank accounts owned or controlled by you and Ooi.
De La Torre Consultancy Group Pty Ltd was another company you used as a managed entity to spread the allocation of works contracts to avoid suspicion. That company was awarded a contract valued at $97,788.90, which you managed. $59,187.90 was transferred into accounts in the name of Ooi.
Andrew Ooi registered RCG on 3 August 2008. It was set up to act as an intermediary in the tender process. You awarded directly to RCG six contracts, totalling $20,350, to review eight tenders. GWM, incorporated on 21 January 2008, was the principal managed entity through which the fraud operated. GWM received DOT civil works contracts valued at $2,070,842.80 on the recommendation of RCG. Andrew Ooi used the alias ‘Andrew Yi’, for the purposes of disguising the family connection. RCG’s tender review contracts enabled you and Ooi to control tender allocation that permitted numerous lucrative contracts to be awarded to managed entities, with the false appearance of independent assessment of the tenders through the use of a consultant.
After GWM was covertly established by yourself and Ooi, various family members and associates were installed as nominal directors and shareholders to disguise your association with it while you worked for DOI, DOT and subsequently PTV. The appointed directors, including your stepson Justin Wells, and Ooi’s stepson Michael De La Torre, were shadow directors who had no actual control over the business. GWM had some capacity to perform contracts and you exercised primary control over its day-to-day operation while Ooi was responsible for its financial management. It would become the principal managed entity through which you and Ooi operated your conspiracy. Between 21 January 2008 and 9 January 2013, GWM was awarded more than 70 government works contracts totalling $8,538,993.22.[9]
[9]When sentencing Albert Ooi, I was informed GWM was awarded a total of 92 government work contracts totally $8,538,993.22.
In 2009, you set up a business called BAG Racing to operate your greyhound breeding and racing enterprise. A substantial proportion of the profits from the conspiracy were paid to BAG Racing to fund the greyhound business. Your home in Romsey included a greyhound breeding and training facility. You lived in accommodation built within a shed associated with the greyhound business.
GWM Management Services Pty Ltd, by a management agreement with GWM, charged it exorbitant management fees, a device to shift proceeds from government contracts out of GWM. GWM Management Services also operated BAG Racing which required a continual cash input from GWM and Redback.
Darrell Salter became increasingly involved in your affairs. In 2009, on a contract to upgrade 250 bus stops in the Melbourne metropolitan region, you engaged Salter to provide contract management services. You continued to work with Salter to secure work for Redback and Global Works Civil. Salter was engaged as a design and costing engineer that permitted you and Ooi to control the allocation of DOT and PTV contracts to the managed entities.
One dealing particularly demonstrates how your conspiracy operated. In late 2010, Salter’s company Consalter Pty Ltd (‘Consalter’) in partnership with GWM tended for, and won, a $2.3 million contract for the design and construction of 430 bus stops in Melbourne. You worked closely with Salter in developing the tender response for that contract as well as developing other engineering design services, tenders and quotes. GWM’s representative, nominated on the joint tender, was Andrew Hayes, who owned Grand Earthworks, which subcontracted to GWM to undertake the civil construction works in that project. With Ooi, you participated in the assessment and recommendation of the tender submitted by the Consalter/GWM partnership, including formally interviewing Salter during the tender evaluation in your role as an assessing public servant. None of these relationships and interests were declared.
GWM was also successful in its tender for the Lonsdale Street Bus Interchange, a contract valued at $769,890.33. With Ooi and his son Andrew you evaluated the tender. No relationships or interests were declared. In a similar fashion, GWM won a contract valued at $495,190.70 for the construction of the Kangaroo Flat railway station car park and a contract valued at $805,762.10 for upgrading 250 bus stops in South Gippsland. You would draft quotes and invoices to submit to yourself and your official capacity. Quotes prepared for GWM were assisted by Consalter’s engineering estimates and information was provided to De La Torre for departmental tender interviews where you would sit on the interview panel.
In addition to the more than $8.5 million paid by government departments, GWM received a further $1,019,929.74 from associated businesses,[10] on subcontracts of works awarded by you.
[10]Furphy's Foundry Pty Ltd, Grand Earthworks Pty Ltd and Tactile Australia Pty Ltd.
To further conceal your activities and the movement of profits between GWM and other managed entities, and to allow proceeds to be shifted out of GWM and accessed by you and Ooi, a complex arrangement, using various company trust structures and management/service agreements, was employed.
Forensic financial analysis identified, from more than 70 contracts awarded to GWM and additional work subcontracted:
(a) five payments, totalling $78,885 were paid to accounts related to you including $19,000 to your home loan account and $49,885 to your family superannuation account;
(b) 41 payments, totalling $528,270.67, into accounts in the name of Ooi;
(c) payments totalling $771,821 into accounts in the name of GWM Management Services; and
(d) 22 payments, totalling $524,125 to accounts in the name of HGO Management Services.
GWM made payments totalling $550,077.57 to third parties for your benefit including eight withdrawals, totalling $472,908 deposited into a Commonwealth Bank account in the name of SD McKay, the builder for your house at Romsey.
The benefits that were derived from the profits of GWM also included a loan from GWM to GWM Management Services Pty Ltd for $750,000 on which no repayments were made, building works and improvements at your and Ooi’s properties, fuel cards and vehicles funded by GWM, including a Mercedes Benz valued at $82,500 for your benefit, and, with the use of false invoices, payment for items including a $3,300 deposit on jet skis, a $15,600 piano, a vehicle lease and a $24,585 payment for your use, and a vehicle lease and $11,000 payment for Ooi.
On 31 August 2012, Hayes and Davis purchased GWM from you and Ooi for $107,062.30. The money was deposited by Ooi into an account in his name, and he gave you $30,000 in cash in November-December 2013.
RCG was also awarded four design and construct contracts at a total value of $183,518 that were subcontracted to GWM. You were the manager of those contracts and authorised some payments but your association with RCG remained hidden. When in mid-2010 your superiors discovered who Andrew Yi actually was, you falsely reported to your superior that you were unaware of the relationship and that Ooi had no involvement in any of the contracts assessed by Yi. $203,868 was identified as paid into RGC’s bank account and $144,594 was paid out to other managed entities.
You and Ooi also registered, and used, PWIC Pty Ltd (‘PWIC’) to avoid the appearance of GWM being awarded an unusually large amount of work. You installed one Gerry O’Neill as the director and he signed a confidentiality undertaking that demonstrated your awareness of the dishonesty involved in this arrangement. He actually took no part in its affairs. PWIC had no employees and no capacity to complete works contracts awarded to it, which were sub-contracted to other managed entities. Between 17 June 2009 and 2 December 2009, PWIC was awarded a total of four DOT civil works contracts, each valued over $200,000 and requiring tender or an expression of interest. RCG provided consultancy services for two of the contracts, relating to the construction of bus bays in Myrtleford and Beechworth, with you, Ooi and his son Andrew (again using the false surname ‘Yi’) making up three quarters of the assessment panel.
PWIC received a total of $1,153,845.20. Forensic analysis discovered payments totalling $116,963 to Ooi and your related entities and a payment of $30,000 for a shed for your benefit.
Grand Earthworks Pty Ltd (‘GE’) and Global Works Civil Pty Ltd (‘GWC’) were two of the related subcontractors that were awarded government contracts in their own right and subcontracts from your managed entities. These companies were set up with your co-accused Hayes and Davis as directors and, in the case of GWC, shareholders. With Ooi, you assisted Hayes and Davis in establishing these entities in order to award DOT and PTV civil works contracts to them, and create the appearance of fair competition with your other managed entities. Again, Hayes and Davis signed confidentiality undertakings that evidence your awareness of the dishonesty in these arrangements.
Between 23 June 2011 and 9 January 2014, GE was awarded 26 DOT and PTV civil works contracts totalling $3,180,689 in value from which those companies received $2,291,049.12. Between 2 August 2012 and 9 January 2014, GWC was awarded a total of 10 PTV civil works contracts to the value of $1,135,790. You drew up tenders and quotes submitted by these companies with Ooi. On occasions Hayes and Salter were also involved. You also participated in recommendations and tender assessments. Neither your interests in these companies nor your relationships with the other operatives were revealed in tender applications. The profits made from contracts that you awarded to GE and GWC allowed Davis and Hayes to finance the purchase of GWM in August 2012 that I earlier noted. As directors of GE, Davis and Hayes provided you with benefits and your receipt of these benefits comprises the basis for charge two of receiving secret commissions. I will come back to those charges.
Redback was another managed entity that you and Ooi established in October 2011. It was registered with Davis in apparent control, but actually controlled by Ooi. Redback was incorporated when you were transitioning your fraudulent activities away from GWM, before you sold it to Davis and Hayes. Again, your motive was to give the impression of fair competition between companies tendering for government work. You awarded DOT and PTV contracts to Redback and assisted with project management.
Between 20 October 2011 and 9 January 2014, Redback was awarded a total of 36 DOT and PTV contracts worth $949,750. An intercepted telephone conversation with Salter shows your involvement in the quote that resulted in a contract awarded to Redback for 39 bus stops in Point Cook. You provided a favourable assessment report for Redback where contracts were of a value that required it without declaring your conflict of interest. That you were aware of the conflict of interest involved in using Redback was evident from email communications.
Ooi handled financial management of Redback, which received $668,085 from 36 government contracts. It received a further $525,089 from related subcontractors. There were substantial financial transactions between Redback and GE and between Redback and GWM. Together with Ooi, you used Redback’s accounts for personal expenses including mobile phones and vehicles. Forensic analysis identified numerous payments totalling $307,081 into accounts controlled by you and Ooi.
Returning to your friend and associate Darrel Salter, in September 2009 he registered Consalter which provided engineering services to DOT and PTV directly, which was work that you arranged and awarded, as well as to the related managed entities and sub-contractors GWM, Redback, GE and GWC. Salter actively assisted you in the corrupt awarding of 17 contracts to the related managed entities and subcontractors as well as to Consalter. Consalter ultimately received $1,746,022. Forensic analysis demonstrated that Consalter received $1,308,844 in contractual payments from DOT and PTV. It received payments from the $2.3 million DOT tender partnership between GWM and from the managed entities and related sub-contractors in respect of various works and services contracts totalling $437,178.
From Salter, you received payments and the benefit of services. Forensic accounting identified 5 payments totalling $74,632 made from accounts associated with Salter to accounts that you control. These payments are set out in annexure B to the indictment in relation to charge 3. Documents discovered by investigators identified apparent reconciliations of funds being described as owing to you and payments said to have been made on your behalf. These documents identify requests from Salter that Tactile Australia pay invoices related to work or services at your home.
By your plea of guilty to charge 4 on the indictment, you have admitted that you corruptly received $6000 paid to you by Salter to influence you to show favour to Consalter and Tactile Australia. In intercepted telephone conversations on 19 November 2013 regarding PTV contracts in Portland and Point Cook, you discussed with Salter receiving cash payments from him. There was evidence of cash withdrawals from Salter’s bank account soon after. A search under warrant on 9 January 2014 uncovered a cash bundle secured by a rubber band hidden in your fridge. Part of that cash bundle is the subject of charge 4.
Construction of the shed and another house that was also on your Romsey property, and designed by Salter as a benefit he provided to you, was paid for by the managed entities and related subcontractors. Two pergolas attached to the house were paid for by GE, as were general landscaping supplies and the tiling around the pool. I have already referred to the involvement of Hayes, Davis and GE as subcontractors on government projects. The works and materials provided by GW were valued at $56,101.03 and are the subject of charge 2.
By your plea of guilty you accept that the gift of goods, services and money that you received from the related subcontractors was intended to, and did, influence you to show favour to GE, Consalter, and Tactile Australia in awarding government contracts, and you continued to award contracts to those companies following your receipt of these gifts.
Much of your conduct, so far described, was revealed by interception of mobile phone conversations. Multiple occasions were identified when you discussed with Ooi and Salter quotes that were to be submitted to you at PTV, arranged for Ooi and Salter to deliver cash to you, discussed which of the managed entities would be awarded contracts, and discussed quotation pricing to spread the award of contracts between the managed entities.
As is readily apparent from the full prosecution opening and the foregoing summary, I am satisfied that your offending was well-orchestrated, devious, and sustained. It became more sophisticated over time by, for example, the later use of supposedly independent tender assessment processes that you controlled, allowing a double payment – first a financial reward for consulting on the tender process followed by the profits from the valuable contracts that were awarded to managed entities.
You accept that the total value of government contracts awarded to the managed entities and related subcontractors during the period of the conspiracy was $17,170,898.85.
You personally obtained substantial financial benefits from your illegal activities. By the forensic evidence that you accept, the prosecution calculated that you received profits of $1,375,153.91. The limitations in the basis of that calculation were explained by the evidence of a senior forensic accountant relied on in support of a pecuniary penalty order and you consent to that order being made. It is not a calculation of the total value of the benefits that you obtained from your fraudulent conduct, being limited to detected documented transactions where there is sufficient information to identify source and application of funds. You concede, as did Ooi, that you and he intended to share profits equally but it seems that, from what forensic analysis attributed to Ooi as his receipts, the joint intention may not have been implemented. It now appears that because of his control over the movement of management and consulting fees between managed entities, Ooi received in the order of $1 million more than you. Those circumstances, as I understood them when sentencing Ooi, suggested that the gains collectively made by the conspiracy exceeded $4.5 million.
In your case, I cannot proceed on that basis because I am not satisfied beyond reasonable doubt what the collective benefit derived from the conspiracy actually was. I am satisfied that the collective profit identified by forensic accountants as taken by you and Ooi was at least a figure of approximately $3.7 million. On the evidence I cannot make any finding to the requisite standard as to how much the conspiracy netted above that figure.
From the opposite perspective, it has not been possible to calculate the loss to the State occasioned by your offending conduct. It was not contended by the prosecution that the relevant infrastructure works were not carried out or were not carried out to an appropriate standard. Although your offending conduct meant the process for awarding government works contracts was uncompetitive, it cannot be established that the Government paid higher prices for the relevant works to the various entities and sub-contractors than it otherwise would have paid. Had it been otherwise, the loss to the State might have been an aggravating factor of your offending. I do not sentence you on that basis.
I will sentence you on the basis that you intended to, and believed that you did, share equally in the proceeds, and you received not less than $1.375 million in a fraudulent conspiracy that netted not less than $3.7 million.
The Crown submitted that your conduct was a serious example of a conspiracy to defraud and your counsel conceded that description was appropriate. I agree. Your offending was a very serious example of a conspiracy to defraud. It resulted in arrangements that were clearly contrary to Government procurement processes and rules regarding conflicts of interest, processes and rules of which you were well aware. Fundamentally your offending relied, on the one hand, on your authority to award, or recommend awarding, and to manage works contracts on behalf of the Department, and on the other hand, Ooi’s knowledge and expertise as to the setup and management of various commercial structures to hide your offending and extract the profits.
What is clear is that you controlled the process of quotation and tendering as well as the process of evaluation and recommendation. You controlled the margins where the profit lay. The criminal conspiracy effectively undermined the public service procurement policies that are designed to protect the revenue and ensure that government contracting works are put out at the most competitive available price. Honest contractors would have been dissuaded from participating. As such, your crime involved corruption of the trust that citizens of this State place in public servants that taxpayer funds will be honestly expended and accounted for in the public interest. Corruption of this kind strikes at the heart of our civilised democracy.
Your offending was over a period of some seven years, a very long time to engage in sustained dishonesty. Your crimes were committed with a sophisticated degree of orchestration and planning that involved you taking advantage of your senior position of trust and your influence within the public service to defraud the State of Victoria. You did not act alone. Your crimes involved others cooperating together, and you were one of the central figures, a leader in the criminal operation. I am satisfied beyond reasonable doubt that you were one of two directing minds of the conspiracy and you directed others down the line as to how the scheme was to be executed.
You were motivated by personal greed. The quantum of the financial advantage you dishonestly accrued was very significant. As I have noted already, the value of works and other contracts that passed through your hands during your offending were very substantial.
Your offending, by receiving the secret commissions that are the subjects of charges 2 - 4, was also, as your counsel conceded, serious examples of that crime. In maintaining the sophisticated and extended nature of the conspiracy, you required the assistance of others. Those from whom you received secret commissions played a key role in the implementation of the conspiracy because your managed entities were mostly not capable of performing the awarded contracts. It was necessary that you obtain the cooperation of others and that there be more than one subcontractor to avoid attracting suspicion to the conspiracy. These were rolled up-charges and were not isolated acts of dishonesty.
Receiving a secret commission confirmed the corrupt nature of your relationship with your subcontractors which was an important part of the conspiratorial strategy that you and Ooi adopted. The comparatively modest value of the secret commissions received was not a true indicator of the culpability of your offending on these charges, which was not simply incidental conduct to the criminal conspiracy. You were the one who bore the obligations of trust and responsibility in handling government contracts, a fact that I do not doubt was clear to those who paid you. As I have noted, they obtained rewarding roles in the conspiracy and the charges against each of them have not been completely dealt with. Ooi did not participate directly in the circumstances of charges 2–4.[11]
[11]Wells did not directly participate in the circumstances of the receiving secret commissions charge to which Ooi pleaded guilty.
The prosecution submitted, and your counsel accepted, that you ought be sentenced on the basis that you were an equal offender with Ooi in terms of your roles as co-architects and administrators of the corrupt and fraudulent scheme I have described. You were both involved over the entire period of offending, intended to share the profits equally, and shared the key roles of awarding and managing contract work and financial administration of those contracts and companies respectively that enabled the scheme to operate.
I am satisfied that you and Ooi were the two key figures at the top of this sophisticated conspiracy. When sentencing Ooi, I concluded that his culpability must be viewed as somewhat, although not by a significant degree, lower than yours.I am satisfied that you and Ooi played different roles in a business team and were accountable to the same manager. Ooi was on a lower pay grading. However, you had the purchase order responsibility and control of the codes for use in the departmental software approval programs, albeit that you permitted Ooi to use your codes. Although I was then, and remain now, satisfied that Ooi’s culpability was not entirely equal to your culpability, I am persuaded that the distinction between your respective moral culpability is slight and does not warrant, on that basis alone, that I should impose a higher sentence on you. Although you both played different roles in the conspiracy, each of those roles was instrumental to the organisation and execution of it. Finally, and importantly, you exerted considerable influence over the other co-conspirators, including your son, Justin Wells. There is no doubt that, together with Ooi you were the masterminds.
You have pleaded guilty to what is commonly called ‘white collar crime’. That characterisation identifies a number of important sentencing considerations.[12] Your motivation to engage in criminal conduct recognised how easy it was for you to corrupt a position of trust to earn enormous rewards. Together with Ooi, you abused a position of high authority in the Victorian Public Service and I am satisfied that you did so assuming that discovery or proof of your wrongdoing was unlikely. Your motivation was greed or personal gain, and you engaged in a carefully calculated course of conduct over a long period that involved repeated deliberate acts of dishonesty and substantial amounts of money that corrupted the systems protecting the public purse.
[12]DPP v Bulfin [1998] 4 VR 114; recently approved of in Dyason v The Queen (2015) 251 A Crim R 366.
You held a position that made such criminal conduct possible and permitted you the ability to disguise or camouflage your offending. You thought you would get away with it and but for investigation by a specialist corruption commission you might have. Detection was difficult and the investigation of your crime was lengthy and very expensive. Had you not pleaded guilty, your trial and proof of your offending may have presented challenges to the prosecution. As I said, these are common features in white collar offending.
The position that you found yourself in was not unique. Those who sit in control of expenditure, procurement and tender processes in government departments and corporations are trusted to exercise that power in an honest and independent manner. The temptations for personal enrichment by dishonest means are well recognised and arise not infrequently. Particularly in circumstances where your offending was motivated by pursuit of personal gain, the need to impose a sentence that has a significant general deterrent effect on others facing similar temptations is very strong.
These considerations, in my view, require that the element of general deterrence is a particularly important sentencing objective for your crimes, both in relation to the total effective sentence and the non-parole period; together with a requirement for strong denunciation of such conduct by the sentencing court. Public shaming by media publicity in the course of an investigation is not the same as the formal denunciation of a sentencing court following admission of guilt.
General deterrence of persons contemplating corporate or white collar criminality requires not so much a significantly long head sentence but a sentence under which the offender spends a substantial term in actual custody by virtue of the non-parole period. It is inappropriate to fix an unduly short non-parole period that would, in your case, be subversive of the goal of general deterrence.
Moreover, in white collar cases generally, and in your case, your previously good character is not to be generally regarded as significant a mitigating factor as it is in other cases. At 51 years of age with no prior convictions or outstanding matters, I accept that you were of previously good character and demonstrated a strong work ethic. You have not offended again since these matters came to light and have accepted your guilt and offered to assist the prosecuting authorities. Persons of poor character are usually not employed in responsible positions in the Victorian Public Service.
Your rehabilitation prospects are clearly favourable and the rehabilitative effect of a prison sentence will doubtless be very substantial. Your counsel submitted that you are extremely unlikely to ever offend again. It is likely that you will have neither the desire nor the opportunity to offend again but the rehabilitation purpose is not so prominent in the sentencing objectives in your case. Future protection of the community does not rank as highly as a sentencing objective as it does for other crimes. As I have noted, these matters play a lesser role in mitigation of sentence for white-collar crimes.
In my view, the principal sentencing objectives in your case are those of general deterrence, punishment and denunciation.
Your counsel rightly acknowledged that given the seriousness of your offending it is appropriate that a term of imprisonment be imposed. As I have already explained to you, I consider that a very substantial term of imprisonment before eligibility for parole is warranted. However, on your behalf your counsel has pressed four particular matters that I accept warrant mitigation of the sentence that I might otherwise have imposed. These matters are first, your plea of guilty and your remorse for your offending. Second, your undertaking to give evidence against other co-accused at their trial and your cooperation with prosecuting authorities. Third, the extent of ex-curial punishment. Fourth, the punitive impact of delay between the discovery of your offending and receiving your sentence.
You did not indicate an intention to plead guilty very early in the process that followed the laying of charges. However, the process by which your crimes were investigated which led to the laying of charges differed from the traditional procedure. You were subjected initially to a private hearing where you made limited concessions, and subsequently a public hearing, before IBAC. In these processes you were compulsorily interrogated. Nevertheless you did confess your guilt under oath at the later public examinations. That you did so can be taken into account in assessing remorse and rehabilitation prospects, but the so-called confession that you made was not admissible against you at a trial and, when assessing your remorse, cannot carry the force of a voluntary confession.
The explanation for your failure to promptly negotiate to plead guilty was your application for a permanent stay of the prosecution, including an interlocutory appeal against my refusal to grant that stay. To some extent, that conduct must ameliorate giving full force to your plea as reflecting early and genuine remorse. For parity purposes, I note that the application was a significant difference between the road that you took to a plea of guilty and that taken by Ooi.
That said, in the particular circumstances of the investigation of your crimes I am prepared to accept that, viewed in its totality, your conduct, prior to being charged, in confessing your involvement in the offending and, following the rejection of your application, in pleading guilty to these charges does reflect a degree of genuine remorse for your conduct. In evaluating your remorse I also take into account your preparedness to assist the prosecution and your consent to the proposed pecuniary penalty order and an order that assets that have been restrained be available to satisfy that order. I accept that there is significant utilitarian benefit in your plea of guilty because you have saved the community to expense of a lengthy and complicated trial.
The discount for a plea of guilty is a very important matter. The law recognises that such a guilty plea normally justifies a high, or considerable, discount. I take into account in your favour recognition of the credit you ought to receive for pleading guilty. Our system of criminal justice relies on a large proportion of accused persons pleading guilty, and the benefits to you of doing so will not be illusory.
You entered the witness box and gave me an undertaking to assist in the prosecution of your co-offenders by giving evidence against them. In support of your undertaking you have made a substantial statement to investigators. Its value is necessarily limited because of the timing. When you gave that undertaking and made that statement only Mr Andrew Ooi and Mr Hayes remained facing a jury. Your principal co-offender had already pleaded guilty and made a statement implicating you and others. The extent to which your cooperation and your statement will provide any significant assistance to the prosecution in respect of the remaining trial and pleas may not be substantial. I do not overlook the nature of the investigative process and the information that was obtained prior to charges being laid but I bear in mind the evidentiary value of the undertaking and statement.
A sentencing discount may be given to an accused who gives information or evidence to assist in the prosecution of others.[13] The discount is to be applied even if other offenders subsequently plead guilty, and I am not required to enter into a detailed examination to ascertain objectively the extent to which information provided was effective.[14]
[13]R v Johnston (2008) 186 A Crim R 345, 350 [18] (Nettle JA). The discount depends on the circumstances.
[14]Scerri v R (2010) 206 A Crim R 1, 9 [35]-[36] (Maxwell P and Buchanan JA).
The prosecution accepted that there was value in your statement and I accept that your undertaking reflects genuine cooperation with the prosecution in relation to the remaining trial accused. I also accept that you have made full and frank disclosure of the matters that are within your knowledge.
The law recognises the need to encourage others to assist the authorities in the investigation and prosecution of criminal behaviour and the need to do justice having regard to the particular circumstances of the case, including by way of a sentence discount, to an individual who has done so.[15] Parliament has implemented a new legislative response in the case of public corruption through the Independent Broad-based Anti-corruption Commission Act 2011 (‘IBAC Act’). The work of investigative authorities is now assisted by coercive examination and other measures, which is a relevant circumstance in assessing the appropriate discount for assistance of this nature.
[15]Malvaso v The Queen (1989) 168 CLR 227, 239 (Deane and McHugh JJ).
I propose to discount to some extent the sentence that I would have otherwise imposed but for your willingness to give evidence against your co-offenders. I am not required to identify precisely the extent of that discount. I direct that your undertaking to give this evidence be noted in the court records.
Turning to your background, you were born in Traralgon in 1965, the youngest of four. Your father worked in automotive parts eventually becoming a director of Repco. Your family settled in Melton where you completed your primary school education. You completed your secondary education as a border at St Patrick’s College Ballarat. During that time your parents separated. Initially you were employed at Repco. You moved on to employment with Ansett Airlines as a passenger service officer.
During your time with Ansett, you completed a degree in airline operations and management at Swinburne University followed by a business management degree through Queensland University. You worked your way to a position of considerable responsibility with Ansett as its Duty Operations Manager, International and Domestic, managing the operations of a large number of aircraft and a staff of approximately 60.
In around 2001 you became involved in setting up for Ansett, to be sold as a going concern, what is now Rex Airlines. Once that airline was up and running, you took employment at Mayne Logistics, to restructure the logistical side of the Armaguard department. Then in 2005, you took up a position with the Department of Transport to set up VLine’s operations for the 2006 Commonwealth Games. From that role you moved to Bus and Regional Services within successive transport departments, a position you held in 2007 until your dismissal in November 2014.
You married in 1983, taking on, as your own, your wife’s son from a previous relationship and you had two further children. You were actively involved in your children’s upbringing, but as a consequence of your offending your marriage has finally and irretrievably broken down and you have become estranged from your children, matters that cause you considerable distress.
Over three years have passed since your offending first came to light.[16] The relevance of that delay is that it may, of itself, have a punitive aspect that does not depend on whether there is a satisfactory explanation for it.[17] There is natural anxiety occasioned to a person suspected of, or charged with, the commission of an offence carrying a considerable risk of imprisonment until the matter is finally disposed of and you have been subject to ongoing strain and uncertainty.
[16]Mr Wells was first examined in relation to his conduct by IBAC on 1 April 2014.
[17]R v Merrett (2007) 14 VR 392, 400 [34] (Maxwell P); Day v R [2011] VSCA 243, [17] (Nettle JA).
The prosecution disagreed that there has been an undue delay in the circumstances, pointing to the complexity of the investigation. It submitted that the case has proceeded at a normal pace that cannot be characterised as being an undue delay in the relevant sense. Search warrants were executed on 9 January 2014. Charges were laid by IBAC on 9 June 2015. You were committed for trial on 9 December 2016. Ooi pleaded guilty on 16 February 2017. On 21 June 2017, the Court of Appeal dismissed your application for leave to appeal and you were arraigned and pleaded guilty on 30 June 2017.
I agree with the prosecution that, given the sophisticated nature of the offending involved, the case has progressed at a normal rate. While I might wish for greater expedition, resources are not unlimited. Further, I do not accept that you have seriously struggled with this delay. In connection with the issue of parity between co-offenders, it is clear that Ooi suffered through delay to a more significant extent than you have.
Finally, your counsel submitted that there were two circumstances of ex-curial punishment of which I ought to take account in mitigation. First, following an enforced leave of absence on the discovery of your offending, you resigned from your employment in approximately July 2015 and since that time you have only been able to obtain sporadic menial employment and you are currently unemployed. Given your offending, this is unsurprising. Secondly, you received considerable publicity from your public examination before IBAC, which your counsel urged me to regard as a powerful public shaming of you. I note that Ooi also received publicity although perhaps not as extensive as yours. Being more robust of character, you may have coped better than he did with that publicity. In any event, that such publicity is an intended consequence of a public examination seems clear from the provisions of the IBAC Act.[18]
[18]The nature of the statutory scheme under the IBAC Act was noted by the Court of Appeal on the interlocutory appeal – Marvin Soto v The Queen [2017] VSCA 147R.
The law recognises that justice should be even handed, so that the differences between sentences imposed upon co-offenders should not be such as to give rise to a justifiable sense of grievance on the part of the offender who receives the heavier sentence.[19] The law strives for an appropriate relativity of sentences between co-offenders, taking into account the differences between the offenders and their role in the offending.[20]
[19]Lowe v R (1984) 154 CLR 606, 623 (Dawson J).
[20]Kelly v R [2011] VSCA 10, [5] (Redlich and Weinberg JJA). This principle extends to cases in which offenders are party to a common criminal enterprise, but are not charged with the same offence: R v Farrugia (2011) 32 VR 140, 146 [22]-[23].
There are clear and substantial differences in your role in this criminal conspiracy that require that you receive a far sterner sentence than any of the second and third tier participants. Nevertheless, I have considered the relativity of the sentence imposed on Mr De La Torre, along with the sentences given to two other related offenders,[21] in coming to the appropriate disposition in your case.
[21]Two further offenders, Mr Furphy and Mr Huggard, have been sentenced in the Magistrates’ Court for related offending, with Mr Furphy pleading guilty to making a false document and Mr Huggard pleading guilty to one charge of creating a false document and two charges of giving a secret commission. Both were fined $20,000 without conviction. One of the secret commission charges against Mr Huggard related to him giving Mr Ooi the secret commission that founds charge 2 on the present indictment.
Of much greater relevance is the issue of parity between the sentence I imposed on Ooi and the sentence to be imposed on you. There is a basis for some disparity but strong grounds exist for substantial parity as I have noted throughout these sentencing remarks. You have pleaded guilty to three charges of receiving secret commissions, Ooi pleaded guilty to one. Those charges involve additional participants and a greater value of benefits. Ooi pleaded guilty at an earlier time and his offer of assistance to the prosecution was of greater value at the time that it was made. Ooi suffered greater psychological distress following the discovery of the conspiracy and the principles in Verdins had some application in respect of the assessment of the onerous effect of a term of imprisonment on him that is not the case with you.
On the other hand, although you were equally responsible and indispensable to the conspiracy, a key indicator of moral turpitude, Ooi helped himself to almost double what forensic investigators identify as received by you. The prosecution accepted that your co-operation with them, although at a later time, may be of greater value in the prosecution of the outstanding charges against Andrew Ooi. To the extent that denunciation is advanced by the pre-charge investigative interrogation and the public shaming that accompanied it, you appear to have borne the brunt of more extensive public opprobrium.
As required by the Sentencing Act 1991,[22] I have had regard to current sentencing practices. Offending of the kind and complexity of your conduct is relatively rare. I have considered a number of cases on white collar crimes that included conspiracy to defraud, fraudulent book keeping, and other offences.[23] I have also considered the statistics compiled by the Sentencing Advisory Council for conspiracy to defraud contrary to common law.[24] According to the Council’s statistics compiled from July 2010 to June 2015 the median period of imprisonment imposed was three years.[25]
[22]Sentencing Act 1991, s 5(2)(b).
[23]The Judicial College of Victoria Sentencing Manual at Chapter 32.14.6.3 summarises deception cases before the Victorian Supreme Court of Appeal from 2013 to present, current as at February 2017, only some of which are relevant. See specifically Aitchison v The Queen [2015] VSCA 348; Lim v The Queen [2013] VSCA 148; Smith v The Queen [2012] VSCA 187; Day v The Queen [2011] VSCA 243; DPP (Cth) v Page [2006] VSCA 224. In the trial division, see R v Johnson [2014] VSC 175; R v Murray [2011] VSC 513; R v Chan(2010) 79 ACSR 189.
[24] type="1">
As I have said, your crimes were very serious, complex, and sophisticated, encompassing multiple co-offenders and businesses. To satisfy your greed for 7 years, you abused the trust placed in public servants by the community. Your role was central and I consider that the objectives of general deterrence, punishment and denunciation must be given significant weight when imposing a sentence upon you. Your prior good character and good prospects for rehabilitation are matters deserving of lesser emphasis. You have been responsible for fraud on a grand scale, deserving of a condign punishment. Only a significant sentence of imprisonment will suffice. The sentence I am about to pass is designed in part to punish your criminality, denounce your conduct and deter potentially like-minded others. Those contemplating fraud on this scale must understand that a long term of imprisonment awaits them.
Ultimately, I must fix a sentence which is just in all the circumstances of your case and is not more severe than is necessary to achieve those purposes.[26] In so doing, I carefully considered each of the matters to which I have referred. I have also carefully considered all that has been said on your behalf, particularly by your counsel in urging mitigation of penalty to the extent feasible in your case, even if I have not specifically referred to it.
[26]Sentencing Act 1991, s 5(3).
Please stand, Mr Wells.
On charge 1 - conspiracy to defraud contrary to Common Law - you are sentenced to 7 years and 6 months imprisonment. That is the base sentence. On charges 2–4, –receiving a secret commission contrary to s 176(1) of the Crimes Act 1958 – you are sentenced to 1 year imprisonment on each charge.
Considering the totality of your offending and bearing in mind the principle of parsimony, I will order some cumulation of the sentences on charges 2-4 with the base sentence. Those charges represent a different harm caused by offending of a different type to the first charge, although related to it and with overlapping features. I direct that six months of each sentence on charges 2 and 3 be served cumulatively on the sentences on all other charges and that 3 months of the sentence on charge 4 be served cumulatively on the sentences on all charges.
The result is a total effective sentence of 8 years and 9 months imprisonment. I direct that you serve a minimum term of 6 years and 3 months imprisonment before you are eligible for parole. As you were on bail from your arrest until I heard your plea on 23 August 2017, I declare that each of those sentences commences today and that you have served 33 days of pre-sentence detention.
Pursuant to s 6AAA of the Sentencing Act 1991, I declare that, but for your plea of guilty,[27] I would have imposed on you a total sentence of 11 years and 6 months imprisonment with a minimum of 8 years and 6 months to serve before being eligible for parole.
[27]Had Mr Wells not pleaded guilty he would not have offered to assist in the investigation and prosecution of his co-offenders.
Finally, I have made the pecuniary penalty order sought by the Director of Public Prosecutions, and not opposed by you, in the sum of $1,375,153.91. The penalty order was sought in respect of profits derived from the commission of your offences and is restitutionary not punitive and consequently was not taken into account in my sentencing considerations.[28]
[28]Sentencing Act 1991, s 5(2A)(d).
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