R v Zhang
[2022] NZHC 3168
•30 November 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2020-004-806
[2022] NZHC 3168
THE KING v
YIKUN ZHANG, SHIJIA (COLIN) ZHENG, and HENGJIA (JOE) ZHENG
Hearing: 30 November 2022 Appearances:
P Wicks KC, K Hogan, and H Moore-Savage for the Crown J Katz KC and N Small for Mr Zhang
P Dacre KC for Mr Shijia (Colin) Zheng
R L Thomson and A Young for Mr Hengjia (Joe) ZhengSentencing:
30 November 2022
APPLICATION FOR DISCHARGE WITHOUT CONVICTION AND SENTENCING REMARKS OF GAULT J
Solicitors / Counsel:
Mr P Wicks KC, Mr J Dixon KC and Ms K Hogan, Barristers, Auckland Ms K Bannister and Ms H Moore-Savage, Serious Fraud Office, Auckland Mr J Katz KC, Ms L Lindsay and Ms N Small, Barristers, Auckland
Mr D Courtney (Mr Zhang’s instructing solicitor), Courtney & Co, Auckland
Mr B A Keown, Ms Z Farquhar and Mr D Scholes (for Mr Zhang), Bell Gully, Auckland Mr P Dacre KC and Ms W Andrews, Barristers, Auckland
Ms R L Thomson and Mr A Young, Barristers, Auckland
Ms J Pidgeon (Mr H Zheng and Mr S Zheng’s instructing solicitor), Pidgeon Judd Ltd, Auckland
R v ZHANG [2022] NZHC 3168 [30 November 2022]
[1] Mr Yikun Zhang, Mr Shijia (Colin) Zheng and Mr Hengjia (Joe) Zheng, following a Judge-alone trial in September you were found guilty of some charges and remanded for sentence today.1
[2] The guilty verdicts primarily relate to the offence of obtaining by deception in the context of donations to a political party, involving a fraudulent device, trick, or stratagem to deceive by providing sham names of purported donors below the $15,000 disclosure threshold in the Electoral Act 1993.
(a)Mr Zhang, you were found guilty of one charge of obtaining by deception in relation to a political donation to the National Party in June 2018.2 Although a conviction was entered on 5 October 2022, you have applied to be discharged without conviction.
(b)Mr Colin Zheng, you were found guilty of two charges of obtaining by deception, one in relation to a political donation to the National Party in June 2017 and one in relation to the donation to the National Party in June 2018.3
(c)Mr Joe Zheng, you were found guilty of one charge of obtaining by deception in relation to a political donation to the National Party in June 2018.4 You were also found guilty of one charge of providing false or misleading information to the Serious Fraud Office (SFO).5
[3] I will first outline the facts of your offending. Although these were set out in detail in my earlier reasons for verdicts judgment, I need to summarise them publicly today. I will then deal with Mr Zhang’s application for a discharge without conviction. Then I will explain the approach I am required to take in sentencing, which involves selecting a starting point for the offending and adjusting that starting point based on personal circumstances in order to determine an end sentence.
1 R v Zhang [2022] NZHC 2540 (verdicts) and [2022] NZHC 2541 (reasons for verdicts).
2 Crimes Act 1961, s 240(1)(a). Maximum penalty seven years’ imprisonment.
3 Crimes Act 1961, s 240(1)(a). Maximum penalty seven years’ imprisonment.
4 Crimes Act 1961, s 240(1)(a). Maximum penalty seven years’ imprisonment.
5 Serious Fraud Office Act 1990, ss 45(a) and (e). Maximum penalty one year’s imprisonment or a fine not exceeding $15,000.
Facts
June 2017 donation(s) to the National Party – Mr Colin Zheng6
[4] I turn to the facts, beginning with the donation to the National Party in June 2017, relevant to Mr Colin Zheng’s first offence.
[5] On 15 May 2017, you and Mr Zhang had dinner with Mr Jami-Lee Ross, then a Member of Parliament for the National Party. Mr Ross sought support from Mr Zhang through the Chao Shan General Association (Association). That is an Association of people in New Zealand from the Teochew or Chao Shan region of China. Mr Zhang was the founder and first Chairman of the Association. Mr Zhang speaks little English. You replied to Mr Ross indicating support for Mr Ross and the National Party. You did not discuss or offer any specific donation.
[6] The next day, Mr Zhang and his sister exchanged messages making arrangements to transfer $50,000 from China into your New Zealand bank account. You received this money on 18 May 2017.
[7] On 25 May 2017, Mr Ross emailed you the bank account details for the National Party Botany Electorate and outlined the rules for donations, including that any donation from a donor above $15,000 in one year will be declared publicly.
[8] In early June 2017, you contacted seven associates, being friends and family, to arrange transfers to the National Party. You provided them with the National Party Botany Electorate bank account details and requested their bank account details. You told four of these associates that Mr Zhang wanted to donate $100,000 to the National Party but the amount was too big and needed to be split into smaller amounts. You said you would transfer either $14,000 or $14,500 into each of their accounts, which they would then transfer into the National Party account.
[9] During this period, you also received deposits of $2,376 and $98,000 into your account from the New Zealand bank account of your father. You and your brother Mr Joe Zheng are signatories to that account. You messaged your father on 9 June
6 R v Zhang [2022] NZHC 2541 at [183]-[199].
2017 saying that you took the $98,000 to deposit it into a company you were involved with, which was not true.
[10] Between 1 and 12 June 2017, smaller amounts totalling $100,000 were transmitted from your bank account to the bank accounts of seven others and from those accounts into the bank account of the National Party Botany Electorate. The National Party obtained the benefit of the $100,000 donation.
[11] The seven different people were not donors. The payments merely went through their accounts. They were transmitters. Whether or not Mr Zhang contributed to the donation, you were a donor and you engaged in the stratagem whereby the
$100,000 donation was split into sums of money less than $15,000 by way of transfer into the bank accounts of the seven transmitters before being paid to, and retained by, the National Party. The transmitters’ bank transfers concealed the true position from the National Party. Later, you passed a list of names of the transmitters to Mr Ross. That list was false since they were not donors.
[12] You wanted to avoid public disclosure of your and/or Mr Zhang’s names. You must have known it was in breach of a legal obligation to provide a false list of names and amounts to Mr Ross for the National Party that concealed the true position. You must have known that you were not entitled to do so. This deceived the National Party Secretary and led to incorrect disclosure to the Electoral Commission and the public.
June 2018 donation(s) to the National Party – Mr Zhang, Mr Colin Zheng and Mr Joe Zheng7
[13] I turn to the donation to the National Party in June 2018, relevant to each of you.
[14] On 7 May 2018, following the sale and export of some wine to China by HLG Holding Ltd, a company in which both Mr Zhang and Mr Colin Zheng were ultimate shareholders, you, Mr Zhang, arranged with your sister to have the proceeds of sale of
7 R v Zhang [2022] NZHC 2541 at [292]-[308] and [310]-[313].
CNY494,050 transferred into her bank account in China by someone identified as ZHC.
[15] On 14 May 2018, Mr Zhang hosted a dinner at home for Mr Simon Bridges (then Leader of the National Party) and Mr Ross. Among others, Mr Colin Zheng also attended.
[16] On 21 May 2018, you both attended a National Party fundraising event which Mr Bridges also attended. You indicated to him that you wanted to donate $100,000 to the National Party. Mr Bridges did not know where that $100,000 was to come from specifically.
[17] The next day, you, Mr Colin Zheng, exchanged messages with Mr Zhang’s sister about transferring a sum of money from China to be remitted to HLG. She said that setting up the account may “involve hassles” so Mr Zhang had asked to “directly transfer it into our private account and we will deal with it later”.
[18] On 25 May 2018, Mr Ross sent Mr Colin Zheng a picture of the National Party Botany Electorate deposit slip.
[19] On 29 May 2018, Ms Zhang messaged Mr Colin Zheng saying she had added Mr Joe Zheng on WeChat and would ask him to open an account. The next day, she sent you, Mr Colin Zheng, a message with the exchange rate and you told her that Mr Zhang had said to transfer the money for the donation that day.
[20] Ms Zhang then exchanged messages with you, Mr Joe Zheng, about opening an IE Money account. On 31 May 2018, you received $108,463.23 into your New Zealand bank account via IE Money following Ms Zhang depositing CNY494,050, the amount of the sale proceeds of the wine, from a bank account in China. She confirmed the transfer to Mr Zhang.
[21] Also on 31 May 2018, Mr Joe Zheng messaged Mr Colin Zheng requesting the National Party bank account number, which he provided.
[22] Between 1 and 8 June 2018, you, Mr Joe Zheng, contacted seven associates, being friends and family, to arrange transfers via them to the National Party. You requested their bank account details and provided them with the National Party bank account details. Between 1 and 11 June 2018, funds totalling $98,000 were transmitted from your bank account to the bank accounts of the seven others and from those accounts into the bank account of the National Party Botany Electorate. You also transferred $2,050 directly from your account to the National Party bank account. The donation of $100,050 was funded from the proceeds of the sale of wine by HLG. The National Party obtained the benefit of the donation.
[23] On 8 June 2018, Mr Joe Zheng created a spreadsheet detailing seven (apparent) donations of $14,000 by the individuals listed and one of $2,050 by him, together with bank accounts, addresses and amounts. He then gave it to Mr Colin Zheng, who later passed it to Mr Ross.
[24] Mr Zhang, you must have known that the donation was being concealed. It was your donation, at least indirectly and in part. Whatever the motivation, you wanted to avoid public disclosure. Mr Colin Zheng, you used your brother to conceal the true position. You all must have known it was a breach of a legal obligation to provide false names and amounts that concealed the true donation position. You must have known that you were not entitled to do so. This deceived the National Party Secretary and led to incorrect disclosure to the Electoral Commission and the public.
SFO interviews – Mr Joe Zheng8
[25] Turning to the facts relevant to Mr Joe Zheng’s charge of providing false or misleading information to the SFO, you attended two compulsory interviews with the SFO – one on 3 December 2019 and one on 15 January 2020. You supplied the SFO with information knowing that it was false or misleading in a material particular. Specifically:
8 R v Zhang [2022] NZHC 2541 at [305]-[313].
(a)You said the $108,463.23 paid from Ms Zhang’s bank account into your account on 31 May 2018 was a deposit to ANCO Properties Development Ltd, a company you and Mr Colin Zheng work at, for building a house on the North Shore – but in fact, that money was the proceeds of the sale of wine by HLG.
(b)You said that around the time the money was transferred into your account, you drafted a building quotation contract to build a house on Ms Zhang’s land and it was signed – but in fact, there was no building quotation contract for a house on Ms Zhang’s land created or signed in May 2018. The building quotation contract was created on 16 August 2019, signed on 26 August 2019 and backdated 21 May 2018.
(c)You said the 21 May 2018 building quotation contract was lost, and when you discovered this in approximately August 2019 you created, signed and backdated another contract with the same amount on Mr Colin Zheng’s instructions – but in fact, as mentioned, there was no earlier building quotation contract to lose so the August 2019 document was not a replacement.
Mr Zhang’s application for discharge without conviction
[26]Mr Zhang, I now address your application for a discharge without conviction.9
[27] I must undertake a three-stage analysis.10 First, I need to identify the gravity of your offending, taking into account all aggravating and mitigating factors of your offending and your personal circumstances. Secondly, I must identify the direct and indirect consequences of conviction. Thirdly, I must determine whether those consequences are out of all proportion to the gravity of your offending. I must not
9 Although I entered a conviction on 5 October 2022 before this application was suggested, I noted in my minute of 13 October 2022 this did not preclude consideration of a discharge at sentencing: see R v Sarich CA407/04, 16 May 2005 at [30]; applied in Banerjee v New Zealand Police [2018] NZHC 2446 at [20].
10 Sentencing Act 2002, ss 106 and 107; R v Hughes [2008] NZCA 546; [2009] 3 NZLR 222; A (CA747/2010) v R [2011] NZCA 328 at [22]; R v Taulapapa [2018] NZCA 414 at [22]; Prasad v R [2018] NZCA 537 at [11]; Scott v R [2019] NZCA 261 at [79]; and Sok v R [2021] NZCA 252 at [40]-[41].
discharge you unless I am satisfied that those consequences are out of all proportion to the gravity of your offence.
Gravity of offending
[28] Your counsel, Mr Katz KC, submits that the gravity of your offending is low to moderate or at the low end of the spectrum – that while you knowingly permitted funds you had control over to be used for the 2018 National Party donation, knew how those funds were to be used and the illegality of doing so, you remained at arms-length from and had no knowledge of the mechanics of the stratagem. Mr Katz submits that your involvement was at a high level only and was not particularly sophisticated, there were no direct victims in terms of financial loss, the motivation was not to benefit you personally and you did not benefit, the period of offending was brief, there was no breach of trust and the actual impact has been minimal in that the National Party retained the funds.
[29] Mr Katz submits that there are no aggravating features of the offending but there are two personal mitigating factors. The first is your good character. You have no prior convictions. Having first come to New Zealand in 2000 and moved here permanently in 2011, you are highly regarded as a significant leader in the Chinese community. You were a founder and the first Chairman of the Association, a not-for- profit organisation, playing a leading role in its bid to host the 2019 international convention in New Zealand. You hold high office in the Teochew International Federation. You were awarded a Royal Honour in 2018. You have a significant reputation for generosity and philanthropy. I have read the many character references you have provided. You are a successful businessman and a director and/or shareholder of several companies.
[30] Further, Mr Katz submits that you have already suffered greatly. He points to evidence at trial that you were unable to visit your dying mother in China due to the SFO refusing to consent to a variation of your bail conditions. You and your family have faced intensive and, at times, intrusive media attention. This has especially affected your children, who have experienced bullying at school. As a result, two of your children now attend school in the United States. An updating affidavit from your
wife received yesterday indicates that you have now also arranged for your youngest child to start school in the US in January 2023.
[31] Mr Wicks KC, for the Crown, submits that your offending is moderately serious, involving deceitful conduct in relation to New Zealand’s electoral system which undermines public trust and confidence in the democratic process and avoids transparent treatment of large donations which the public have a right to know about. It is not a victimless crime. He submits the offending involved a well thought out fraudulent scheme in which you conspired together to bring about the plan. The Crown also says this was not the first time, given the finding in relation to the Labour Party in 2017. Mr Wicks also submits that you played a key role as orchestrator of the fraud. You were in a position of power and influence over Mr Colin and Joe Zheng, and your offending was not limited to allowing funds to be used.
[32] I accept that your offending did not involve personal financial benefit and that any donation may have been motivated by guanxi (relationship),11 but that does not explain or excuse concealment. I also assess your culpability solely by reference to the 2018 donation. I do not characterise you as a key orchestrator. But I largely accept the Crown’s other submissions regarding the nature of your offending. It is not victimless.12 While I would not characterise this as an aggravating feature, your offending involved deceitful conduct in relation to our electoral system which undermines public trust and confidence in the democratic process and the public’s right to know about large political donations.
[33] There was an element of planning. You acted together with Mr Colin and Joe Zheng. You must have known the donation was being concealed. You wanted to avoid public disclosure. You had knowledge of the steps they took to conceal the donation even though you did not know of every detail.
[34] In these circumstances, and taking into account your personal mitigating factors that I have acknowledged, I consider the offending moderate in seriousness.
11 As explained in the affidavit from Professor Paul Clark; see further at [36] below.
12 Compare R v Singh [2014] NZHC 209 at [12] (involving voter enrolments).
Consequences of conviction
[35] Now, I must ascertain the direct and indirect consequences of conviction; that is, consequences with a real and appreciable risk of occurring if you are convicted.13 Mr Katz submits that a conviction is likely to adversely impact you in two ways.
[36] First, it will significantly impact your standing in the New Zealand-Chinese community. Your affidavit says that if your conviction is maintained, it will have a negative impact on the Association as well as the Teochew International Federation, of which you are Vice Chairman and Executive Vice Chairman. You say that if your conviction is sustained you will be forced to resign from these roles, which will have a significant impact on and bring great shame to the Association. This is reinforced by Mr Samountry, the Association’s Operational Manager. There is also evidence addressing the consequences of your conviction through a cultural lens. Professor Clark, a professor of Chinese at the University of Auckland, explains mianzi (face), which he considers is best understood as a Chinese equivalent to the Māori concept of mana. He says that losing mianzi produces a great sense of shame, especially for someone as influential as you. Dr Chen, a research fellow in the New Zealand Asia Institute at the University of Auckland, says in her affidavit that your Chinese Teochew community will regard the finding of guilt on a charge of dishonesty as the ultimate fall from grace and that you will feel this impact much more keenly than if you were a member of another community.
[37] The second consequence Mr Katz refers to is that a conviction will prevent you from travelling to the United States. Since your two children moved there to attend school in August 2020, you have been unable to visit them due to your bail conditions. They have only visited New Zealand during their summer breaks. Your wife is concerned they may be unable to visit as often in the next two years due to their heavy workload. They intend to go to university in the US. Next year, your youngest child will also begin attending school in the US and it is expected he will attend university there too. You and your wife hope to travel there at the end of this year to help him settle in and spend time with your children already in the US. You also say that you
13 DC(CA47/2013) v R [2013] NZCA 255 at [43]; Edwards v R [2015] NZCA 583 at [24]; and
R v Taulapapa [2018] NZCA 414 at [22].
have business interests in the US (a trading company you established in California in 2018) and had discussed with your US attorney that you would like to apply for residency there.
[38] You have a current visa permitting entry to the US but this expires on 8 October 2023. Mr Wong, your immigration attorney in California, gives his opinion that there is “the very strong probability” you will be denied a further visa to enter the United States. He also considers you would definitely not be issued with any immigrant visa.
[39] Mr Wicks submits these are the ordinary consequences flowing from conviction, and that your concerns about your social and cultural standing appear to arise more from your offending rather than from your conviction. As for the effects on travel, he submits that a conviction will not prevent your children from visiting you in New Zealand. He further submits that any travel to the US for business purposes is at this stage hypothetical, and this is not a case where your employment prospects will suffer if you cannot travel for work. Ms Hogan addressed these issues orally.
[40] In relation to your standing in the New Zealand-Chinese community, I accept that you are highly regarded as a significant leader in the community. There are many letters of support. I also acknowledge the expert cultural evidence I have mentioned relating to the impact. However, a distinction must be drawn between the consequences of your conviction being sustained and the consequences of the investigation and of your offending that have already occurred.14 I consider the evidence of the impact on your standing in the New Zealand-Chinese community is insufficient to indicate the impact is a consequence of your conviction rather than a consequence of your offending. In any event, impact on your standing in the community is an ordinary consequence of a conviction for such offending.
[41] There is insufficient evidence of impact of the conviction on your construction business, even though you have received a letter requiring your resignation as a
14 See recently Sok v R [2021] NZCA 252; Anufe v Police [2021] NZCA 253; Zhu v R [2021] NZCA 254; Parata v Police [2022[ NZHC 2623; and the earlier case of Tiwari v Police [2014] NZHC 2509.
director, unless the Court orders otherwise.15 Nor is it suggested you have already had to resign from your positions in the Teochew International Federation.
[42] I turn to the effect of a conviction on your ability to travel to the United States. I accept that is desirable particularly since you have children there (even though your decision was prompted by the charges and the trial, and your children should still be able to visit New Zealand at least during their summer breaks). The evidence indicates that you travel on a New Zealand passport and come within the visa waiver programme. You have a current visa permitting entry to the US until 8 October 2023. Thereafter, however, I accept that there is at least a real and appreciable risk that you will need to disclose your conviction if it remains in effect and that you will be denied a further visa. However, the evidence does not address whether, if a discharge is given, you will still need to disclose the fact that the offence was committed and face the risk of being denied entry in any event. It is the consequences of the conviction that are in issue, rather than the charge or guilty verdict. Mr Katz acknowledged the distinction. The Court is concerned not to put itself in the position of purporting to decide what information should be disclosed to another country’s immigration authorities. In that sense, the evidence does not sufficiently indicate a real and appreciable risk that the conviction will result in denied entry. Such evidence is ordinarily expected.16 There is also insufficient evidence in relation to your stated desire to seek residency in the US (where it appears a conditional bar applies for five years in the case of convictions). Finally, there is insufficient evidence that your US business interests will be adversely affected. There is no evidence you are required to travel to the US for business.
Whether consequences are out of all proportion
[43] I now address the third stage of the analysis, which is to ask whether the consequences are out of all proportion to the gravity of the offence. This means there
15 Letter from the Companies Office.
16 Edwards v R [2015] NZCA 583 at [26]-[27]. In Vela v R [2010] NZCA 440, the Court of Appeal observed that any decision by US authorities would be based on full knowledge of the offending. See also Bain v New Zealand Police [2020] NZHC 582 at [24], indicating that a “vacatur” of the conviction would be required (describing a procedure used in the US to remove a conviction).
must be a significant disproportionate consequence; consequences must do more than simply outweigh the gravity of the offending.17
[44] Mr Katz submits that the test is satisfied and I should exercise my discretion to discharge without conviction. However, given my conclusions about the limited evidence of the consequences of conviction as opposed to the offending, I do not consider they are out of all proportion to the moderate seriousness of your offending. Even assuming there is a real and appreciable risk that conviction will preclude entry to the US, I would not consider such a consequence is out of all proportion in your family circumstances.
[45] Therefore, I must decline your application for discharge without conviction and proceed with sentencing. I will address your counsel’s alternative submission that it is appropriate to convict and discharge you as part of the sentencing assessment.
Approach to sentencing
[46] I now outline my approach to sentencing. I must have regard to the purposes and principles of sentencing as set out in the Sentencing Act 2002.18 The relevant purposes of sentencing in this case include: to hold each of you accountable for the harm you have done to the community; to promote a sense of responsibility for and acknowledgement of that harm; to denounce your conduct; to deter you and other persons from committing the same or a similar offence; and to assist in your rehabilitation and reintegration. For each of you, I must consider the gravity of your offending and your degree of culpability, looking at the seriousness of the type of offence in comparison with other offences. Finally, I must keep in mind the need for consistency between sentences for similar offending, and the need to impose the least restrictive sentence appropriate in the circumstances.
[47] As indicated, I will select a starting point for the offending and adjust that starting point based on personal circumstances in order to determine an end sentence.
17 See Smyth v R [2017] NZCA 530 at [12], cited recently in J (CA32/2021) v R [2021] NZCA 690 at [20].
18 Sentencing Act 2002, ss 7 and 8.
Mr Zhang
Starting point
[48] There is no guideline judgment for sentencing in cases of obtaining by deception because of the wide range of circumstances in which this kind of offending can occur. Each case must be considered on its facts. This is a novel case, as there are no available previous New Zealand cases of obtaining by deception in relation to election donations. Indeed, only one case of electoral fraud has been identified in New Zealand, R v Singh, which involved forged voter enrolments by a candidate running in a local election and several others acting independently.19 There is also R v Banks, a case of a candidate knowingly transmitting a false return of electoral expenses.20
[49] More generally, the Court of Appeal has said that culpability in fraud related cases should be assessed by reference to the circumstances and such factors as:21
(a)the nature of the offending;
(b)its magnitude and sophistication;
(c)the type, circumstances and number of victims;
(d)the motivation for the offending;
(e)the amounts involved;
(f)the losses;
(g)the period over which the offending occurred;
19 R v Singh [2014] NZHC 209 (charges of using forged documents; Crimes Act 1961, s 257(1)(c); maximum penalty 10 years’ imprisonment – starting point 18 months’ imprisonment for the two more serious offenders including the candidate).
20 R v Banks [2014] NZHC 1807 (charge of transmitting a return of electoral expenses knowing it to be false; Local Electoral Act 2001, s 134(1); maximum penalty two years’ imprisonment – starting point six months’ imprisonment).
21 R v Varjan CA97/03, 26 June 2003 at [22]; approved in McGregor v R [2015] NZCA 565 at [13] and Rako v R [2015] NZCA 463 at [10].
(h)the seriousness of breaches of trust; and
(i)the impact on victims.
[50] In this case, the Crown submits, and I agree, that the following are aggravating features of your offending:
(a)Extent of the harm. The public collectively suffers an injury when people circumvent laws requiring fairness and transparency in political donations. The integrity of donation laws is important. Maintaining public confidence in elections is critical for democracy. Without it, the legitimacy of democratic institutions is harmed. Parliament sets the disclosure thresholds for donations, with the public having a right to know details of donations above the thresholds. A donation of over
$100,000 significantly exceeded the disclosure thresholds.
(b)Premeditation and planning. After deciding to donate, you engaged in a fraudulent stratagem which included using transmitters to transfer smaller sums to the National Party. It was not highly sophisticated, but it required organisation and the involvement of multiple transmitters to conceal the identity of the true donor. You acted together with others. As indicated, I assess your culpability, Mr Zhang, solely by reference to the 2018 donation.
[51]There are no mitigating features of your offending.
[52] The Crown acknowledges, and I agree, that obtaining by deception cases involving a benefit to the offender in the vicinity of $100,000 are not analogous here. The Crown submits, however, that your offending Mr Zhang is more culpable than the offending in Singh because it was premeditated and sophisticated, you and your co- offenders were far from naïve, and your deception was effective. Mr Wicks also submits that your offending was more serious than the offending in FMA v Honey,
which involved insider tipping.22 The Crown submits the appropriate starting point for you is 18 months’ imprisonment.
[53] Mr Katz submits that your offending was similar to the three lesser offenders in Singh, each convicted of one charge of falsifying documents, where the Court adopted starting points of between 200 and 300 hours of community work. In written submissions Mr Katz proposed a starting point of 300 hours’ community work, but this morning he acknowledged a starting point of 12 months’ imprisonment may be appropriate.
[54] As I have already concluded, your offending Mr Zhang was moderate in seriousness. You had knowledge of the steps to conceal the donation even though you did not know of every detail. I consider your offending was more serious than that of the lesser offenders in Singh but not as serious as Mr Singh, the candidate. In Banks, the Judge distinguished between electoral fraud and dishonesty albeit in an electoral context.23 A case of voter enrolment fraud could affect the electoral result, as could a breach of electoral expenses provisions,24 but undisclosed donations also harm the integrity of the system (given the relationships that may be implied). I note the lower starting point in Banks, but I consider that your offending is more serious.
[55] I also note the Electoral Act 1993 contains analogous offences in relation to splitting party donations or contributions to party donations, but they only apply to splitting between bodies corporate.25 They provide that a person involved in such splitting is guilty of a corrupt practice and liable on conviction to either or both of a term of imprisonment not exceeding two years and a fine not exceeding $40,000.26
22 FMA v Honey [2017] NZDC 12793 (charge of information insider advising or encouraging trading; Financial Markets Conduct Act 2013, s 243; maximum penalty five years’ imprisonment
– starting point 12 months’ imprisonment).
23 R v Banks [2014] NZHC 1807 at [29].
24 In Banks, Wylie J said it is strongly arguable that a breach in relation to the expenses cap is a more serious breach than a breach of the disclosure requirements relating to electoral donations because a breach of the electoral expenses provisions could affect the electoral result: at [29].
25 Section 207LA.
26 If not a constituency candidate, party secretary, or registered promoter: s 224.
[56] Overall, in the circumstances and having regard to the comparisons referred to, I consider that the appropriate starting point for your offending Mr Zhang is 15 months’ imprisonment.
Personal aggravating and mitigating factors
[57] There are no aggravating factors personal to you warranting an uplift to this starting point.
[58] There are, however, mitigating factors. Mr Katz seeks a discount for the personal factors relied on and referred to in relation to your application for discharge. The Crown acknowledges that a discount is available for your previous good character and positive role in the New Zealand-Chinese community, but submits that the discount should be modest, pointing to your comments in the pre-sentence report that are said to display a lack of acceptance and insight into your offending. The Crown also submits that the discount should be tempered by my earlier finding of your involvement in the fraudulent stratagem in relation to the Labour Party donation in 2017. But I have not accepted that.
[59] I have already acknowledged your previous good character and leading role in the New Zealand-Chinese community. I add that many members of the Association have signed a letter seeking leniency. Your attitude to the report writer and in your affidavit precludes a separate discount for remorse but one is not sought. Mr Katz also indicated this morning there may have been some linguistic misunderstanding with the pre-sentence report writer. I do not consider that assessment should reduce your discount for previous good character. I also accept that your offending has already had a significant impact on you and your family, particularly because of the media interest in the case.
[60] In those circumstances, I allow a combined discount of 25 per cent, that is, nearly four months. This adjusts the starting point down to 11 months’ imprisonment.
Non-custodial sentence
[61] In these circumstances, as the Crown acknowledges, I can consider a non-custodial sentence. I need to decide whether a sentence of imprisonment is the least restrictive sentence appropriate in the circumstances.
[62] The sentencing principles of denouncing your offending and deterrence are important in this case. But I do not consider that a sentence of imprisonment is the least restrictive sentence appropriate given the moderate seriousness of your offending and your low risk of reoffending. Nor do I consider that a sentence of home detention is the least restrictive sentence or appropriate.
[63] Mr Katz has requested that I consider whether it is appropriate to convict and discharge you on the basis that the Court can be satisfied that a conviction is sufficient penalty in itself.27 However, as Mr Wicks submits, this is not an appropriate option here as it does not sufficiently address the sentencing purposes of denunciation and deterrence that are important in this electoral context.28
[64] I consider that a sentence of community detention combined with community work is appropriate in your case. This is the sentence recommended in the pre- sentence report and one which will allow you to continue your work. Even though you present a low risk of reoffending, I am satisfied a sentence of community detention is required given the nature of your offending and the need to achieve the sentencing purposes of holding you accountable, promoting a sense of responsibility, denunciation and deterrence.29 A daily curfew from 10:00 pm to 6:00 am is appropriate.
Result
[65]Mr Zhang, please stand.
27 Sentencing Act 2002, ss 108 and 109.
28 R v Singh [2014] NZHC 209 at [11]. See Geoff Hall Hall’s Sentencing (online ed, LexisNexis) at [SA109.1] identifying some of the situations in which a conviction and discharge is appropriate.
29 Sentencing Act 2002, s 69C(1).
[66] On the charge of obtaining by deception, I sentence you to four months’ community detention, with a daily curfew from 10:00 pm to 6:00 am, and 200 hours’ community work.
[67]Please sit.
Mr Colin Zheng
Starting point
[68] Mr Colin Zheng, I turn to the starting point for your offending. Your offending involved concealment of two separate donations, one in 2017 and one in 2018. But I assess your culpability by reference to these two donations only.
[69] The aggravating factors I have outlined already, the extent of the harm and some planning, also apply to you. The Crown characterises you as Mr Zhang’s “right- hand man” and “architect” of the deception.
[70]There are no mitigating features of your offending.
[71] The Crown submits that your offending warrants a global starting point for the two charges of two years’ imprisonment.
[72] As Mr Dacre KC submits, the gravity of your offending falls between that of the main and lesser actors in Singh. He proposes a global starting point of 12 months’ imprisonment.
[73] Given your role in the donation splitting which was broadly equivalent to that of Mr Zhang – albeit he was your senior – you were more hands on and involved in the detail – and the two charges, together with the comparisons I have referred to, I consider that a global starting point of 21 months’ imprisonment is appropriate for your offending.
Personal aggravating and mitigating factors
[74]There are no aggravating factors personal to you requiring an uplift.
[75] You are also entitled to a discount for previous good character and standing in the community, particularly the New Zealand-Chinese community since you came to New Zealand for high school. You have no previous convictions. You followed Mr Zhang as Chairman of the Association in December 2017. Your letters of support describe you as humble, generous and compassionate. I have already referred to the many members of the Association seeking leniency in a letter that relates to you as well as Mr Zhang. You too are a successful businessman with a reputation as a philanthropist. As Mr Dacre submits, your fall from grace is a punishment in itself, particularly given the media interest in the trial, and there is greater potential for rehabilitation where community involvement and good character bears witness to a reduced probability of reoffending.30 Mr Dacre also acknowledges that you have let your family down.
[76] He highlights your cultural background and suggests this may assist the Court in understanding the reasons behind your offending.31 In the cultural report prepared by Mr Patrick Au,32 there is reference to fostering relationships of trust among your networks (guanxi, which describes strong relationships involving moral obligations, and to exchanging favours (renqing)). You say that your offending occurred because you wanted to return a favour to the political parties who had written letters supporting the Association’s bid to host the international convention of Teochew associations in 2019. When asked to donate money, you agreed; expecting that high-profile politicians would reciprocate by attending the convention.
[77] I accept the donation may have been motivated by these concepts but, as I have said in relation to Mr Zhang, that does not explain or excuse concealment. It therefore does not indicate a link between your background and your offending.
[78] However, having regard to the matters referred to I allow a combined discount of 20 per cent, that is, over four months. This adjusts your starting point down to 16 and a half months’ imprisonment.
30 R v Finlay [2007] NZCA 553.
31 With reference to Deng v Zheng [2022] NZSC 76, which I mentioned in my reasons judgment at [23].
32 Sentencing Act 2002, s 27.
Non-custodial sentence
[79] In your case too, I consider a non-custodial sentence is appropriate and home detention is not required, for essentially the same reasons. Mr Dacre fairly seeks an end sentence of community detention with a punitive aspect and acknowledges that this may be combined with community work. I consider that a sentence of community detention combined with community work is also appropriate in your case. This is the sentence recommended in the pre-sentence report and one which will allow you to continue your work. Even though you present a low risk of reoffending, I am satisfied a sentence of community detention is required given the nature of your offending and the need to achieve the sentencing purposes of holding you accountable, promoting a sense of responsibility, denunciation and deterrence.33 Again, a daily curfew from 10:00 pm to 6:00 am is appropriate.
Result
[80]Mr Colin Zheng, please stand.
[81] On the two charges of obtaining by deception, I sentence you to five months’ community detention, with a daily curfew from 10:00 pm to 6:00 am, and 250 hours’ community work.
[82]You may sit down.
Mr Joe Zheng
Starting point
[83] Mr Joe Zheng, I turn to the starting point for the obtaining by deception. Again, I assess your culpability by reference to the 2018 donation and not any earlier conduct.
[84] The aggravating factors I have outlined already, the extent of the harm and some planning, also apply to you. You were not a donor but you were involved in the detailed concealment steps. But I accept that you were acting on the instructions of,
33 Sentencing Act 2002, s 69C(1).
and out of a sense of obligation to, your brother. The concept of guanxi is relevant, as is the familial obligation referred to in Mr Au’s separate cultural report relating to you. Otherwise, there are no mitigating features of this offending.
[85] In these circumstances, and by comparison with your co-offenders, I consider a starting point of eight months’ imprisonment is appropriate for your obtaining by deception charge.
[86] Your offending also includes the offence of providing false or misleading information to the SFO. You lied to the SFO about the source of the funds used for the 2018 donation.
[87] The Crown refers to cases of supplying false or misleading information to the SFO in which starting points of three to six months’ imprisonment were adopted.34
[88] The Crown seeks a cumulative sentence of six months’ imprisonment, albeit this morning Mr Wicks acknowledged the relevance of totality and personal circumstances even to the cumulative sentence. Ms Thomson submits that a cumulative sentence is inappropriate and that a concurrent sentence should be imposed.
[89] Although the SFO charge arises from the investigation into the donation charges, I consider the offences are not substantially the same.35 In Lock v R,36 relied on by Ms Thomson, the Court of Appeal made a cumulative sentence of lying to the SFO concurrent but really as a way of achieving a result that might have occurred had he been properly advised to plead guilty. In any event, a cumulative sentence for the SFO charge also needs to reflect totality and any adjustment for personal circumstances.
34 R v Child & Courtney HC Auckland T000708, 21 June 2002; SFO v Hewitt & Porter DC Auckland CRI-2004-098-005317, 21 December 2005; SFO v West DC Auckland CRI-2003-004-44116, 7 April 2005; Lock v R [2019] NZCA 473.
35 R v Moore [1974] 1 NZLR 417 (CA); Rea v Police CA86/74, 17 February 1974; and see R v Clarke [1982] 1 NZLR 654 (CA).
36 Lock v R [2019] NZCA 473 at [35].
[90] I accept there was some confusion around dates during the first interview. At the second interview, however, you stood by what you had said in the first interview when given an opportunity to tell the truth.37
[91] Having regard to totality, I consider a starting point of four months’ imprisonment would be appropriate for the charge of misleading the SFO, making a cumulative starting point of 12 months’ imprisonment.
Personal aggravating and mitigating factors
[92]There are no aggravating factors personal to you warranting an uplift.
[93] You are also entitled to a discount for your previous good character since you came to New Zealand at age 16. You have no previous convictions and I have read a number of letters of support. I have already taken into account your sense of duty to your brother. You are a follower. I accept too the trial and media coverage have had an impact on you.
[94] I have already taken into account the cultural considerations referred to in Mr Au’s report.
[95] Overall, I allow a combined discount of 15 per cent. This adjusts the eight month starting point down to six and a half months’ imprisonment and the four month starting point down to three months’ imprisonment, that is, cumulatively nine and a half months’ imprisonment.
Non-custodial sentence
[96] In your case too, I consider a non-custodial sentence is appropriate and home detention is not required, essentially the same reasons. Ms Thomson seeks a sentence of community work. I consider that a sentence of community detention combined with community work is appropriate in your case. This is the sentence recommended in the pre-sentence report and one which will allow you to continue your work. As with Mr Zhang and Mr Colin Zheng, even though you present a low risk of
37 R v Zhang [2022] NZHC 2541 (reasons for verdicts) at [624]-[631].
reoffending, I am satisfied a sentence of community detention is required given the nature of your offending and the need to achieve the sentencing purposes of holding you accountable, promoting a sense of responsibility, denunciation and deterrence.38 A daily curfew from 10:00 pm to 6:00 am is appropriate.
Result
[97]Mr Joe Zheng, please stand.
[98] On the charge of obtaining by deception, I sentence you to two months’ community detention, with a daily curfew from 10:00 pm to 6:00 am, and 100 hours’ community work.
[99] On the charge of providing false or misleading information to the SFO, I sentence you to one month’s community detention, with a daily curfew from 10:00 pm to 6:00 am, and 50 hours’ community work, to be served cumulatively.
[100]You may all stand down.
Gault J
38 Sentencing Act 2002, s 69C(1).
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