R v CHAND [2020] NZHC 1077

R v CHAND [2020] NZHC 1077 [21 May 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECRI-2019-004-5696[2020] NZHC 1077THE QUEENvSUNIL CHANDHearing: 21 May 2020Appearances: B Dickey and R Williams for CrownA Kashyap for DefendantJudgment: 21 May 2020SENTENCING REMARKS OF LANG JSolicitors:Crown Solicitor, Auckland[1] Mr Chand, you have pleaded guilty to one charge of corruptly providing afinancial gift to an agent, Mr Rasila, without the consent of his principal, the AucklandCouncil (the Council).1 The maximum penalty for that offence is seven yearsimprisonment.[2] You applied to be discharged without conviction under s 106 of the SentencingAct 2002 but for reasons I will give in writing later today I decline to grant thatapplication. You have not established that the direct and indirect consequences of aconviction 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 summaryof facts. This reveals that Mr Rasila was employed by the Council as a procurementrelationship specialist between June 2012 and 28 April 2016. This role required himto maintain the Council's relationship with suppliers of goods and services, and inparticular, office supplies.[4] You and Mr Rasila have been friends for a long time, and at one stage bothworked for the same employer. Mr Rasila also boarded with your family for a periodof approximately six years between 2005 and 2011. You then maintained yourfriendship after Mr Rasila commenced working for the Council. During this periodyou went on to establish your own commercial printing and office stationery supplycompany, On Time Print Finishers Limited (On Time Print).[5] As part of its services, the Council supplies members of the public withproperty files for a fee. These contain information held by the Council that may be ofinterest to persons seeking to purchase or obtain information about properties in theAuckland area.[6] Up until 2015, the Council delivered its property files to recipients on compactdiscs. During that year the Council began investigating the possibility of deliveringinformation to recipients on USB devices. Mr Rasila was one of the Council's staff1 Secret Commissions Act 1910, ss 3(1) and 13.members responsible for investigating the proposed transition to USB devices. Upuntil that time his role at the Council had focussed on the maintenance of the Council'srelationship with a single supplier of office products. His involvement in theestablishment of a new contract for the supply of USB devices was therefore outsidethe normal course of his duties.[7] Mr Rasila knew from his involvement in the process that the contract for thesupply of USB devices would be awarded to the supplier who could supply them atthe cheapest price. Between September and December 2015 Mr Rasila undertook hisown investigations and obtained a quote for the supply of USB devices in bulk froman online wholesale company based in China. Mr Rasila then passed this on to youwith the suggestion that On Time Print should submit a quote to supply USB devicesto the Council. The understanding between you was that, if On Time Print securedthe contract, it would purchase USB devices from the Chinese company and on-sellthem to the Council for a profit.[8] In January 2016 you submitted a quote on behalf of On Time Print to supply22,000 USB devices to the Council. Between January and March 2016 Mr Rasila alsosought quotes from other suppliers, including your former employer and the companyfor whom he was responsible for maintaining the Council's relationship.[9] Mr Rasila provided the Council's management team with a spreadsheetshowing the quote from On Time Print as well as other quotes for the supply of devicesfor a greater sum than that submitted by On Time Print. He did not, however, advisethe management team of a quote he had obtained from the Chinese company. Nor didhe disclose he had obtained another lower quote from your former employer.[10] Not surprisingly, the Council's management team awarded the contract for thesupply of the devices to On Time Print as the lowest bidder. This meant the Councilpaid approximately $27,000 more than it would have done if it had been aware of theother 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 wasto forward you a draft contract for the supply of 22,000 USB devices to the Councilfor the sum of $152,250 (exclusive of GST). Both you and the Council signed thecontract, which required On Time Print to supply the devices in two equalconsignments.[12] Mr Rasila left the Council's employment at the end of April 2016. In August2016, 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 thecontract awarded to On Time Print. This amounted to approximately ten per cent ofthe original value of the contract.2 Mr Rasila requested payment of $7,500immediately, with the balance to be paid following delivery of the secondconsignment. 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 depositedthe bulk of the proceeds into his own bank account.Disputed fact[13] At the commencement of the hearing today I was required to hear anddetermine an issue that had arisen in relation to a disputed fact. This did not directlycontradict any statement made in the agreed summary of facts but, if accepted, it couldhave amounted to a mitigating factor for your offending.[14] In two affidavits filed in support of your application to be discharged withoutconviction you referred to meetings you had held with a Council employee in theprocurement division. His name was Mr Ulysis Alejandrino. You said that at ameeting on 20 December 2016 you told Mr Alejandrino of the request by Mr Rasilato be paid money. You categorised this discussion as the laying of a formal complaintwith the Council about what Mr Rasila had done.[15] The Crown did not accept your version of events. It contradicted materialcontained in a statement Mr Alejandrino had provided to the Serious Fraud Office in2 The value of the contract was ultimately reduced by approximately $12,000 after the Councilelected not to have its logo on the USB devices.December 2019. It was therefore necessary to hear evidence from both you andMr Alejandrino so I could determine the issue.[16] Mr Alejandrino was adamant that the meeting with you on 20 December 2016contained no element of complaint. His version of events was that you were seekingto determine whether he had received any part of the $7,500 payment you had alreadymade. Mr Alejandrino said you also asked whether the second payment of $7,500should be paid to Mr Rasila or to him. He said you indicated you preferred to makethe payment to him rather than to Mr Rasila.[17] I accept Mr Alejandrino's evidence on this point. He came across as a carefuland honest witness. He has also kept careful notes of his discussions with you andMr Rasila. He was able to cite dates and even to produce a receipt for the purchase ofcoffee on 20 December 2016. Furthermore, Mr Kashyap did not cross-examineMr Alejandrino on his evidence that you asked whether the second payment should bepaid to him rather than Mr Rasila. In addition, you accepted that Mr Alejandrino hadtold you he did not accept a cent in payment from suppliers and that it was wrong forthat to occur. You also accepted he told you he had not received any part of the firstpayment of $7,500.[18] The relevance of this issue is that, if your version of events was accepted, youwould be entitled to claim credit for the fact that you had disclosed the offending tothe Council by making a formal complaint. The end result is that I do not accept youever made any form of complaint. Rather, it appears that your meeting withMr Alejandrino and a subsequent telephone discussion with him were designed tofacilitate further business dealings between yourself and the Council. Clearly you didnot seem concerned at the prospect of making further payments to him or Mr Rasilaas at 20 December 2016. It follows that the starting point to be calculated for yoursentence 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 thesentence to be imposed on you. This reflects the sentence that is appropriate to reflectthe overall gravity of the offending but putting to one side aggravating and mitigatingfactors personal to the offender.[20] The culpability of your actions lies in the fact that persons who contract tosupply products to public bodies should never pay money to employees of thosebodies. It does not matter whether a payment is made before or after a contract hasbeen awarded. Either way, payments or gifts made in this context undermine the entireprocurement process. They cannot be tolerated because over time they come to beexpected both by those making the payments and those receiving them. With somerecent notable exceptions conduct such as this represents a form of corruption that hasnot been a feature of public authority administration in this country to date. The endresult if it continues is the loss of this country's reputation for honesty andtransparency in such administration. In addition, when such activity comes to light itcreates suspicion and mistrust in both the business community and the community asa whole. It calls into question the integrity and robustness of the processes adoptedby the public body in question and its employees in relation to the spending of moneyreceived from ratepayers.[21] Your counsel has submitted that your company made a minimal profit from thetransactions. As the arrangement originally stood, your company stood to make aprofit 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 ofMr Rasila. You were not the instigator of the offending and you were never subject tothe obligations imposed on public officials such as him. Furthermore, your decisionto make a payment to Mr Rasila was made at his request and well after your companyhad already been awarded the contract to supply the USB devices to the Council. Upuntil that point, depending on your level of knowledge about what Mr Rasila wastelling his fellow Council employees, you had arguably not committed any offence.[23] The Crown contends the starting point for your offending should be the sameas that for Mr Rasila, namely a sentence of 18 months to two years imprisonment. Iconsider this fails to reflect the distinguishing features of your offending to which Ihave referred.[24] Taking those factors into account I consider a starting point of 10 monthsimprisonment is appropriate.Aggravating factors[25] At 56 years of age you have no previous convictions. There are therefore noaggravating factors that require the starting point to be increased.Mitigating factors[26] I accept that you are genuinely remorseful for your actions. You sold thebusiness formerly operated by On Time Print in June 2017. You say you have now setup a new business venture that will import and sell office products, but this has beenplaced on hold because of the present proceedings. You are currently working as anUber driver to make ends meet.[27] I apply a 15 per cent discount to reflect your previous good character andremorse, together with a 25 per cent discount to reflect your early guilty plea. Theseresult in a reduction of four months from the starting point of ten monthsimprisonment. 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 convictionsand the prospect that you will not offend again in the future mean a custodial sentenceis 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 sentenceof home detention so as to enable you to continue your current occupation to meetyour family's needs. I therefore consider your offending can appropriately be met bya sentence of community detention.End sentence[30] Your residential address has been assessed as suitable for an electronicallymonitored 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 eachevening between the hours of 5 pm and 5 am. The community detention is to beelectronically monitored during those hours.[31] The other conditions on which you are to serve your sentence are those set outin the EM bail assessor's report dated 3 April 2020.Lang J