R v Chand

[2020] NZHC 1077

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2019-004-5696

[2020] NZHC 1077

THE QUEEN

v

SUNIL CHAND

Hearing:	21 May 2020
Appearances:	B Dickey and R Williams for Crown A Kashyap for Defendant
Judgment:	21 May 2020

SENTENCING REMARKS OF LANG J

Solicitors:

Crown Solicitor, Auckland

R v CHAND [2020] NZHC 1077 [21 May 2020]

[1]    Mr Chand, you have pleaded guilty to one charge of corruptly providing a financial gift to an agent, Mr Rasila, without the consent of his principal, the Auckland Council (the Council).1 The maximum penalty for that offence is seven years imprisonment.

[2]    You applied to be discharged without conviction under s 106 of the Sentencing Act 2002 but for reasons I will give in writing later today I decline to grant that application. You have not established that the direct and indirect consequences of a conviction are out of all proportion to the gravity of your offending.

The offending

[3]    The facts on which you are to be sentenced are contained in an agreed summary of facts. This reveals that Mr Rasila was employed by the Council as a procurement relationship specialist between June 2012 and 28 April 2016. This role required him to maintain the Council’s relationship with suppliers of goods and services, and in particular, office supplies.

[4]    You and Mr Rasila have been friends for a long time, and at one stage both worked for the same employer. Mr Rasila also boarded with your family for a period of approximately six years between 2005 and 2011. You then maintained your friendship after Mr Rasila commenced working for the Council. During this period you went on to establish your own commercial printing and office stationery supply company, On Time Print Finishers Limited (On Time Print).

[5]    As part of its services, the Council supplies members of the public with property files for a fee. These contain information held by the Council that may be of interest to persons seeking to purchase or obtain information about properties in the Auckland area.

[6]    Up until 2015, the Council delivered its property files to recipients on compact discs. During that year the Council began investigating the possibility of delivering information to recipients on USB devices. Mr Rasila was one of the Council’s staff

1      Secret Commissions Act 1910, ss 3(1) and 13.

members responsible for investigating the proposed transition to USB devices. Up until that time his role at the Council had focussed on the maintenance of the Council’s relationship with a single supplier of office products. His involvement in the establishment of a new contract for the supply of USB devices was therefore outside the normal course of his duties.

[7]    Mr Rasila knew from his involvement in the process that the contract for the supply of USB devices would be awarded to the supplier who could supply them at the cheapest price. Between September and December 2015 Mr Rasila undertook his own investigations and obtained a quote for the supply of USB devices in bulk from an online wholesale company based in China. Mr Rasila then passed this on to you with the suggestion that On Time Print should submit a quote to supply USB devices to the Council. The understanding between you was that, if On Time Print secured the contract, it would purchase USB devices from the Chinese company and on-sell them to the Council for a profit.

[8]    In January 2016 you submitted a quote on behalf of On Time Print to supply 22,000 USB devices to the Council. Between January and March 2016 Mr Rasila also sought quotes from other suppliers, including your former employer and the company for whom he was responsible for maintaining the Council’s relationship.

[9]    Mr Rasila provided the Council’s management team with a spreadsheet showing the quote from On Time Print as well as other quotes for the supply of devices for a greater sum than that submitted by On Time Print. He did not, however, advise the management team of a quote he had obtained from the Chinese company. Nor did he disclose he had obtained another lower quote from your former employer.

[10]   Not surprisingly, the Council’s management team awarded the contract for the supply of the devices to On Time Print as the lowest bidder. This meant the Council paid approximately $27,000 more than it would have done if it had been aware of the other quotes. Furthermore, On Time Print stood to make a profit of approximately

$57,000 from the sale of the USB devices to the Council under the contract.

[11]   One of Mr Rasila’s last acts before leaving the employment of the Council was to forward you a draft contract for the supply of 22,000 USB devices to the Council for the sum of $152,250 (exclusive of GST). Both you and the Council signed the contract, which required On Time Print to supply the devices in two equal consignments.

[12]   Mr Rasila left the Council’s employment at the end of April 2016. In August 2016, after On Time Print had delivered  the  first  consignment  of  USB  devices, Mr Rasila approached you and asked for a payment of $15,000 for facilitating the contract awarded to On Time Print. This amounted to approximately ten per cent of the original value of the contract.2 Mr Rasila requested payment of $7,500 immediately, with the balance to be paid following delivery of the second consignment. You drew a cheque payable on the company’s account for the sum of

$7,500 and handed this to Mr Rasila. Mr Rasila then cashed the cheque and deposited the bulk of the proceeds into his own bank account.

Disputed fact

[13]   At the commencement of the hearing today I was required to hear and determine an issue that had arisen in relation to a disputed fact. This did not directly contradict any statement made in the agreed summary of facts but, if accepted, it could have amounted to a mitigating factor for your offending.

[14]   In two affidavits filed in support of your application to be discharged without conviction you referred to meetings you had held with a Council employee in the procurement division. His name was Mr Ulysis Alejandrino. You said that at a meeting on 20 December 2016 you told Mr Alejandrino of the request by Mr Rasila to be paid money. You categorised this discussion as the laying of a formal complaint with the Council about what Mr Rasila had done.

[15]   The Crown did not accept your version of events. It contradicted material contained in a statement Mr Alejandrino had provided to the Serious Fraud Office in

2      The value of the contract was ultimately reduced by approximately $12,000 after the Council elected not to have its logo on the USB devices.

December 2019.    It was therefore necessary to hear evidence from both  you and  Mr Alejandrino so I could determine the issue.

[16]   Mr Alejandrino was adamant that the meeting with you on 20 December 2016 contained no element of complaint. His version of events was that you were seeking to determine whether he had received any part of the $7,500 payment you had already made. Mr Alejandrino said you also asked whether the second payment of $7,500 should be paid to Mr Rasila or to him. He said you indicated you preferred to make the payment to him rather than to Mr Rasila.

[17]   I accept Mr Alejandrino’s evidence on this point. He came across as a careful and honest witness. He has also kept careful notes of his discussions with you and Mr Rasila. He was able to cite dates and even to produce a receipt for the purchase of coffee on 20 December 2016.  Furthermore,  Mr Kashyap  did  not  cross-examine Mr Alejandrino on his evidence that you asked whether the second payment should be paid to him rather than Mr Rasila. In addition, you accepted that Mr Alejandrino had told you he did not accept a cent in payment from suppliers and that it was wrong for that to occur. You also accepted he told you he had not received any part of the first payment of $7,500.

[18]   The relevance of this issue is that, if your version of events was accepted, you would be entitled to claim credit for the fact that you had disclosed the offending to the Council by making a formal complaint. The end result is that I do not accept you ever made  any  form  of  complaint.  Rather,  it  appears  that  your  meeting  with Mr Alejandrino and a subsequent telephone discussion with him were designed to facilitate further business dealings between yourself and the Council. Clearly you did not seem concerned at the prospect of making further payments to him or Mr Rasila as at 20 December 2016. It follows that the starting point to be calculated for your sentence cannot include any credit for the fact that you brought the offending to light.

Starting point

[19]   The first stage in the sentencing process is to select a starting point for the sentence to be imposed on you. This reflects the sentence that is appropriate to reflect

the overall gravity of the offending but putting to one side aggravating and mitigating factors personal to the offender.

[20]   The culpability of your actions lies in the fact that persons who contract to supply products to public bodies should never pay money to employees of those bodies. It does not matter whether a payment is made before or after a contract has been awarded. Either way, payments or gifts made in this context undermine the entire procurement process. They cannot be tolerated because over time they come to be expected both by those making the payments and those receiving them. With some recent notable exceptions conduct such as this represents a form of corruption that has not been a feature of public authority administration in this country to date. The end result if it continues is the loss of this country’s reputation for honesty and transparency in such administration. In addition, when such activity comes to light it creates suspicion and mistrust in both the business community and the community as a whole. It calls into question the integrity and robustness of the processes adopted by the public body in question and its employees in relation to the spending of money received from ratepayers.

[21]   Your counsel has submitted that your company made a minimal profit from the transactions. As the arrangement originally stood, your company stood to make a profit of approximately $57,000. I do not consider that to be a minimal profit.

[22]   I accept, however, that your offending is significantly less serious than that of Mr Rasila. You were not the instigator of the offending and you were never subject to the obligations imposed on public officials such as him. Furthermore, your decision to make a payment to Mr Rasila was made at his request and well after your company had already been awarded the contract to supply the USB devices to the Council. Up until that point, depending on your level of knowledge about what Mr Rasila was telling his fellow Council employees, you had arguably not committed any offence.

[23]   The Crown contends the starting point for your offending should be the same as that for Mr Rasila, namely a sentence of 18 months to two years imprisonment. I consider this fails to reflect the distinguishing features of your offending to which I have referred.

[24]   Taking those factors into account I consider a starting point of 10 months imprisonment is appropriate.

Aggravating factors

[25]   At 56 years of age you have no previous convictions. There are therefore no aggravating factors that require the starting point to be increased.

Mitigating factors

[26]   I accept that you are genuinely remorseful for your actions. You sold the business formerly operated by On Time Print in June 2017. You say you have now set up a new business venture that will import and sell office products, but this has been placed on hold because of the present proceedings. You are currently working as an Uber driver to make ends meet.

[27]   I apply a 15 per cent discount to reflect your previous good character and remorse, together with a 25 per cent discount to reflect your early guilty plea. These result in a reduction of four months from the starting point of ten months imprisonment. This results in an end sentence of six months imprisonment.

[28]   As in the case of Mr Rasila, I am satisfied your lack of previous convictions and the prospect that you will not offend again in the future mean a custodial sentence is not required. The Crown also accepts that this is so.

[29]   Given your lesser role in the offending, I am prepared to go below a sentence of home detention so as to enable you to continue your current occupation to meet your family’s needs. I therefore consider your offending can appropriately be met by a sentence of community detention.

End sentence

[30]   Your residential address has been assessed as suitable for an electronically monitored sentence. You are therefore sentenced to six months community detention. I direct that you are to be subject to a curfew at the nominated home address each

evening between the hours of 5 pm and 5 am. The community detention is to be

electronically monitored during those hours.

[31]   The other conditions on which you are to serve your sentence are those set out in the EM bail assessor’s report dated 3 April 2020.

Lang J