R v George

[2016] NZHC 2067

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2015-044-1286 [2016] NZHC 2067

THE QUEEN

v

BARRIE KENNETH JAMES GEORGE

Hearing:	1 September 2016
Appearances:	B H Dickey and M S Gatland for Crown R Hollyman and H M Z Ford for Defendant
Sentence:	1 September 2016

SENTENCING REMARKS OF LANG J

R v GEORGE [2016] NZHC 2067 [1 September 2016]

[1]      Mr George, you appear for sentence today having pleaded guilty following a sentence indication hearing to two representative charges of corruption and bribery of an official.  At the sentence indication I heard extensive submissions from both the Crown and the defence regarding the nature of your offending.  I also reached conclusions regarding the level of culpability that the offending produced.  I do not propose to repeat those issues today.  My sentence indication will form part of these remarks and is to be read alongside them.

Background

[2]      It is sufficient to say that, between December 2005 and June 2012, you were employed by firstly Rodney District Council and then by Auckland Transport.  You were in a division that oversaw roading contracts undertaken by both those entities. This meant that you needed to work closely with independent roading contractors who had been engaged by the two organisations to carry out roading work on their behalf.

[3]      A particular culture developed within the organisations in which employees were encouraged to fraternise with the staff of the contractors.   This led to you regularly attending social events with members of their staff.  This developed to a situation where you accepted gifts from the roading contractor in the form of travel vouchers and liquor.  In total, the gifts that you received had a value of $103,580.

[4]      During 2012, you became concerned about what you considered to be an unsatisfactory ethical situation developing.  You went to your employer, Auckland Transport, and raised your concerns.  At that stage you did not directly indicate that you had received gifts yourself.  Nevertheless, an internal investigation followed and you cooperated fully in that.  Auckland Transport then involved the Serious Fraud Office and you cooperated fully in the investigation by the Serious Fraud Office as well.   During this investigation, you frankly acknowledged the fact that you had received the gifts.

[5]      As I indicated during the sentence indication hearing, offending of this type has numerous consequences.  Ratepayers of a city such as Auckland are entitled to proceed on the basis that public spending is rigorously scrutinised.  The difficulty

with accepting payments or gifts or any form of consideration from independent contractors is that the perception may arise that those contractors will be treated preferentially in the event that any dispute arises.  In your case there is no suggestion that that has occurred, but nevertheless, the public perception can be that contractors will be offered favours or treated preferentially in such situations.

[6]      This  leads  to  several  consequences.    First,  ratepayers  become  concerned about  the  manner  in  which  their  funds  are  being  spent.    Secondly,  other  staff members of the organisation feel, unfairly, that they are also to blame in some way or are being looked down upon by members of the community.   Thirdly, and importantly, in a case such as this the perception may arise that this type of practice is acceptable.   That is  particularly concerning in a situation where Auckland is developing rapidly and its infrastructure will no doubt be increasing rapidly in the near future.  An ethos or culture cannot be allowed to exist where contractors are permitted to believe that by placing gifts in the hands of Council employees they will in some way be viewed favourably.

Sentence indication

[7]      It is for that reason that the Court starts with a deterrent response, which in your case was a starting point of three years nine months imprisonment.

[8]      I was satisfied, however, that you have provided very significant assistance to the authorities.  First, you were the person who went to Auckland Council to raise your concerns.  Next, you cooperated fully in both forms of investigation.  You have now signed an evidential statement in which you have set out the evidence that you propose to give at the trial of your two co-defendants which is due to start later this month.  That is a significant degree of cooperation, and it is one that has come at considerable personal cost to you.  I allowed a discount of 11 months to reflect that factor.

[9]      The only other discount I gave during the sentence indication hearing was that to be given in respect of your guilty pleas.   I considered that a deduction of around 20 per cent, or seven months, was appropriate in respect of that factor.

Good character and remose

[10]     It is now necessary for me to consider the extent to which I should reduce the sentence further to reflect other factors.  These include your previous good character and the remorse that you have expressed.

[11]     You are 69 years of age.   You have led a blameless life to date.   You are clearly well-regarded in the community and by your new employer.  You are entitled to claim credit for that factor.   Secondly, I am satisfied that the remorse you have expressed throughout this investigation is genuine.   The Court is entitled to give effect to that as well.

[12]     I propose to reduce the sentence by a further six months to reflect that factor. This produces an end sentence of one year nine months imprisonment.

Home detention

[13]     In  any case where the  Court imposes a sentence of less  than two  years imprisonment it is required to consider whether to convert that sentence to a sentence of home detention.  In doing so, however, the Court must be satisfied that a sentence of home detention is consistent with the purposes and principles of sentencing contained in the Sentencing Act 2002.

[14]     In your case I am satisfied that it is.  All of the factors that have led to the discounts I have applied are equally relevant when determining whether or not a sentence of home detention is appropriate.  In addition, a sentence of home detention is going to have particular difficulties for you because it will effectively prevent you from continuing with your new-found occupation.  For these reasons I am satisfied that a sentence of home detention is appropriate.

Sentence

[15]     On each of the charges to which you have pleaded guilty, you are sentenced to ten months home detention.

[16]     You  may  serve  the  sentence  of  home  detention  in  accordance  with  the standard conditions set out in 80C of the Sentencing Act 2002.

[17]     Thank you.  Stand down.

Lang J

Solicitors:

Crown Solicitor, Auckland

NOTE: PUBLICATION OF THE JUDGMENT AND OF THE REQUEST FOR A SENTENCING INDICATION IN ANY NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY ACCESSIBLE DATABASE IS PROHIBITED BY SECTION 63 OF THE CRIMINAL PROCEDURE ACT

2011 UNTIL THE DEFENDANT HAS BEEN SENTENCED OR THE CHARGE DISMISSED.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2015-044-1286 [2016] NZHC 1730

THE QUEEN

v

BARRIE KENNETH JAMES GEORGE

Hearing:	28 July 2016
Appearances:	B H Dickey and M S Gatland for Crown R Hollyman and H M Z Ford for Defendant
Judgment:	28 July 2016

SENTENCE INDICATION OF LANG J

[18]     Mr George has sought a sentence indication in respect of two representative charges of corruption and bribery of an official laid under s 105(1) of the Crimes Act

1961.  The maximum sentence in respect of each charge is a term of imprisonment not exceeding seven years.  It is anticipated that if Mr George accepts the sentence indication, the Crown will offer no evidence in respect of remaining charges.   Mr George is due to stand trial before a Judge sitting without a jury on 19 September

2016.

[19]     A sentence indication is an indication of the sentence that the Court will impose in the event that Mr George enters a guilty plea within a very short period after the indication is given.   If the indication is not accepted, it has no further binding force.  In particular, the trial Judge will have no regard to it if Mr George is ultimately convicted and is sentenced following trial.

The charges

[20]     The  charges  were  laid  as  a  result  of  a  series  of  incidents  that  occurred between December 2005 and June 2012.  From December 2005 until mid-2010, Mr George was employed in various positions of responsibility by the Rodney District Council.  He had commenced employment with that entity in 1974 and by December

1975  he  was  the  Transport  Operations  Manager.     In  2007  he  became  the

Infrastructure Manager of Transport at the Council.

[21]     Mr George’s co-defendant, Mr Noone, was Mr George’s immediate superior. The offending began after a roading contractor began providing gifts to Mr George in his capacity as an employee of the Council.

[22]     In order to understand the charges, it is necessary to say something about the system that operated at the Rodney District Council during the period of the offending.  During that period Mr Noone was in charge of Mr George’s unit and he encouraged what has been described as a “collaborative” approach with independent contractors.  The Council engaged independent contractors to carry out roading and infrastructure work.  Mr Noone encouraged Council staff to work cooperatively with the independent contractors.  This led to a situation in which Council employees and staff members of the independent contractors socialised together frequently.  As a

result, the relationship between Council and the contractors’ employees became very

close.

[23]     The offending began at a work function in 2006 when the roading contractor presented Mr George with a travel voucher as a gift.   This was a generous gift because it enabled Mr George to travel to Thailand.  Mr Noone gave Mr George to understand that it was in order for him to accept the gift.  This was the first of many such incidents.  I infer that some of these were public as had been the first.  Others no doubt were made in private.  The end result was that Mr George received gifts having a total  value of  $103,580.   The gifts  took  the form  of travel  vouchers, entertainment and liquor.  All of the gifts took the form of items that Mr George could use for his personal enjoyment.

[24]     The roading contractor paid Mr George the sum of $57,293 whilst he was an employee of the Rodney District Council, with the balance being received whilst he was an employee of Auckland Transport.

[25]     When  Mr  George  took  up  employment  with  Auckland  Transport   in November 2010 he was engaged in a senior position.   Mr Noone was again his superior and again set the tone for the team.   The summary of facts provided for today’s hearing indicates that matters continued much in the same way at Auckland Transport as they had been occurring whilst Mr George was at Rodney District Council.

[26]     Two  significant  events  occurred  whilst  Mr  George  was  employed  by Auckland Transport.  These were large contracts awarded by Auckland Transport to the roading contractor from whom Mr George had been receiving gifts.  The Crown does not suggest that Mr George played any part in awarding the roading contractor these contracts.   Nevertheless, he was in the background and signed documents stating that he had no conflict of interest in the event that the roading contractor was awarded the contract.  This was plainly incorrect because, by that stage, Mr George had received numerous gifts from that roading contractor.

[27]     Throughout his time at Rodney District Council and Auckland Transport, Mr George was involved in oversight of contracts undertaken by the roading contractor. From time to time he was required to approve invoices.  He also drew up purchase orders in respect of work to be undertaken pursuant to the contracts.  The invoices were also required to be approved by one other staff member.

[28]     There is no suggestion in the summary of facts that either the Council or Auckland Transport suffered direct loss as a result of invoices being inflated or work not being undertaken  as  claimed.   As  I will  outline shortly,  the damage to  Mr George’s employers is on a wider basis than direct financial loss.

[29]     Matters  came to  a  head  in  late 2012.   At  that  time Mr George became concerned about the way in which Auckland Transport was managing its contracts with independent contractors.   He approached Auckland Transport and raised this general concern.  As I understand the position, he did not at that time raise directly the gifts that he had received from the roading contractor.  Auckland Transport then began a detailed internal investigation.   He cooperated fully with this.   The investigation went on over a considerable period.   During the course of the investigation Mr George revealed the benefits he had received from the roading contractor.

[30]     Once the internal investigation was well advanced, the Serious Fraud Office became involved.   Mr George was interviewed again by the Serious Fraud Office and, again, cooperated fully.  He has made a statement to the Serious Fraud Office and has indicated that if required to do so he will give evidence along the lines of the statement at the trial of his co-defendants.

Starting point

[31]     The first step in the sentencing process is to  select a starting point that reflects the factors relevant to this proceeding.

[32]     The Crown suggests that an appropriate starting point is between four and a half and five years imprisonment.   Counsel for Mr Geroge submits that a starting point of no more than three years imprisonment should be selected.

[33]     In selecting the starting point in this case it is necessary to have regard to a number of aggravating factors.  The first of these is that this offending occurred over a very lengthy period, some seven years.  It began in December 2005 and continued until 2012.   The second is that it occurred in relation to two separate entities, the Rodney District Council and Auckland Transport.   The third is that Mr George received a significant amount by virtue of his offending. As I have already recorded, he received benefits having a total value of $103,580.

[34]     Furthermore, Mr George was in a position of seniority and therefore of trust. For that reason his offending can be viewed to some extent as an abuse of trust or a breach  of  the trust  that  his  employers  placed  in  him.   The offending  was  also repetitive, because it involved the receipt of numerous gifts that took different forms. In addition, it involved an element of deception because Mr George did not disclose the gifts that he had received when he declared that he had no conflict of interest at various points to his employer.

[35]     Perhaps the most significant aggravating factor, however, is the harm that the offending has had the potential to cause.  As I have already indicated, there is no suggestion in the summary of facts that Rodney District Council or Auckland Transport suffered direct financial loss as a result of the offending.  The loss suffered by both entities, and indeed the entire country, goes much deeper than this.

[36]     Mr George’s offending took place whilst he was a public official entrusted with overseeing the expenditure of funds raised from ratepayers of the region. Ratepayers are entitled to expect that their funds are used properly, and that the manner in which funds are expended is subject to robust oversight.   Mr George’s offending calls into question both of those fundamental tenets.  When this offending becomes  public,  ratepayers  will  know  that  the  system  was  not  robust  because persons within it were prepared to take rewards for undertaking their roles within the system.

[37]     This has a widespread  effect.   First, it causes  loss of morale within the Council.   Other employees will feel let down and under suspicion that they are involved in similar types of offending.   The Council as a whole will come under

suspicion for not having robust processes.  Furthermore, the offending tarnishes New Zealand’s current reputation as a place where public corruption is virtually non- existent.

[38]     The suspicion arises in this case because Mr George was tasked with the oversight of the contracts.  The suspicion, whether it is correct or not, must be that in marginal cases he would exercise his judgment in favour of the roading contractor because of the benefits he had received.

[39]     In this context it is appropriate to refer to observations made by the Court of

Appeal in R v Nua.1   In that case the Court observed:

[20]     Theft of public funds by a public official is plainly serious enough, but it at least involves no more than an aberrant individual.  The successful bribing of a public official draws others into the web of corruption.  As the circle widens so does the insidiousness of the corruption and the encouragement for others to participate or copy.   The opportunities are unlimited and the temptations great.   As was said by Lord Templeman in delivering the judgment of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 NZLR 1 at p 3:

Bribery is an evil practice which threatens the foundations of any civilised society.

[40]     Council have referred several cases to me.   Mr Hollyman on Mr George’s

behalf urges me to follow the approach taken by the Court of Appeal in Field v R.2

In that case a Member of Parliament had been found guilty of charges under s 103 of the Crimes Act 1961.  He had used his position as a Member of Parliament to have work carried on properties that he owned by persons from overseas who sought assistance in the immigration process.  The sentencing Judge took a starting point of four years imprisonment on those charges, and then added an uplift of two years to reflect charges of attempting to pervert the course of justice.

[41]     The Court of Appeal observed that the sentencing Judge may have got the sentences the wrong way round, and that a starting point of around two years imprisonment may have been appropriate in respect of the bribery charges, whilst a

sentence of four years imprisonment may have been appropriate in respect of the charges of attempting to obstruct the course of justice.3

[42]     For that reason Mr Hollyman submits that a starting point of around two to three  years imprisonment is appropriate in this case.   He also distinguishes the present case from others in which officials have taken bribes in direct return for carrying out acts on behalf of the person giving the bribe.  He submits that this is a case in which Mr George received gratuities for carrying out his job.

[43]     The Crown refers me to R v Nua, to which I have already referred.  In that case a Customs Officer was approached by an importer of used motor vehicles.  The two men came to an agreement that for an appropriate consideration Mr Nua would allow the importer to import vehicles into the country without inspection or payment of goods and services tax (GST).   Over the next 15 months, Mr Nua allowed the importer to import 154 vehicles in 30 shipments.  None of the vehicles was inspected or subjected to the payment of GST.  By this means, commercially imported vehicles of high value entered the country without the payment of GST.  The net result was the loss of $293,000 in unpaid GST and the release of 154 unchecked vehicles into the New Zealand community.  The sentencing Judge in that case took a starting point of five years imprisonment.

[44]     I acknowledge that the Supreme Court in Field v R distinguished between cases involving direct bribery and those involving payment of gratuities.4   Gratuities cases are likely to be viewed less seriously, because they do not involve the carrying out (or not carrying out) of public functions for direct reward.  Nevertheless, I accept the submission for the Crown that there must come a time when the distinction between the two forms of offending becomes blurred.

[45]     I consider that this case is more serious than Field, because it occurred over a much greater period and involved greater sums of money.  In addition, it involved direct rewards being paid to Mr George.   It also has, in my view, the potential to cause more widespread damage.  There must be a real concern that other persons in

the position of the roading contractor in this case consider that public officials such as Mr George may be open to similar approaches in the future.  That is a matter of obvious concern given the rapid infrastructure growth that Auckland is experiencing at this time.

[46]     Having regard to those factors, I consider that an appropriate starting point is three years nine months imprisonment.

Aggravating factors

[47]     There are no aggravating factors that would operate to increase the starting point.

Mitigating factors

[48]     The only mitigating factors I am prepared to take into account at this stage are the extent to which Mr George has cooperated with the authorities and the discount to be afforded in respect of guilty pleas.

[49]     I have already indicated that Mr George cooperated fully in the investigation process and proposes to give evidence at the trial of his co-defendants.  That factor requires discrete recognition.   Although the Crown says it can prove the charges without Mr George’s assistance, it acknowledges that he will be able to provide constructive input and support for the Crown’s allegations at trial.

[50]     I  also  accept  that  when  Mr  George  approached  his  employer,  it  had significant detrimental effects for him personally in the workplace.  Those effects are continuing to be felt.

[51]     I propose to allow a discount of 11 months to reflect that factor.

[52]     Guilty pleas would not be entered at the earliest stage, but given Mr George’s cooperation with the authorities, they must always have been anticipated.  I propose to allow a discount of seven months, or around 20 per cent, for guilty pleas.

[53]     On my calculations this brings the end starting point to two years one month imprisonment without taking into account further mitigating factors such as Mr George’s age, previous good character and expressions of remorse.   Those factors can only properly be explored at sentencing when I will have the benefit of a pre- sentence report.

[54]     The indicated sentence is therefore two years one month imprisonment.

Result

[55]     There would appear to be no impediment to Mr George being a candidate for home detention provided the pre-sentence report reveals nothing untoward.  Given the lack of previous convictions and his age that would, at this stage, appear to be a likely outcome.

[56]     Mr Hollyman indicates that Mr George will be in a position tomorrow to advise  whether  he  not  he  accepts  the  sentence  indication.     He  is  to  file  a memorandum no later than 5 pm tomorrow advising whether Mr George accepts the indication.   If he does, Mr George will be arraigned at the criminal callover on Wednesday 3 August 2016 at 9 am.  He will then be remanded on bail on existing

terms to appear for sentence before me on 1 September 2016 at 3 pm.

Lang J

Solicitors:

Crown Solicitor, Auckland