Auckland roading corruption conviction upheld by Court of Appeal

The Court of Appeal on Tuesday confirmed both the conviction and sentences in the Auckland roading contractors’ bribery and corruption case, Borlase v R [2017] NZCA 514, in a decision which underlines the firm line that both the courts – and prosecutors – are taking in recent years on bribery and corruption issues.

Bribery and corruption are risks that New Zealand public and private organisations need to ensure they have appropriate policies and procedures in place to manage and address.

Background and High Court decision

As now well-reported, the case involved bribes paid by Mr Borlase, a principal of engineering consultancy services firm Projenz Ltd, to Mr Noone (and Mr George) while Mr Noone was employed first at Rodney District Council and then at Auckland Transport.  Projenz successfully tendered for roading contracts with the Council and then Auckland Transport.  Over the course of seven years, Mr Noone – while a local body official – received undisclosed payments for non-existent ‘consultancy services’ to Projenz, as well as numerous gifts, from Mr Borlase on behalf of Projenz.  The total value of benefits received by Mr Noone was over $1.15 million.

In the High Court, both Mr Borlase and Mr Noone were convicted of charges under section 105 of the Crimes Act 1961, which relates to the bribery and corruption of an official.  Mr Borlase was sentenced to five years and six months’ prison for having given bribes to an official, and Mr Noone to five years’ prison for having accepted the bribes.[1]

The High Court decision remains a useful analysis of what are and are not likely to be acceptable forms of gratuities to officials – this aspect was not challenged on appeal.

Issues for the Court of Appeal

There were two issues for the Court of Appeal:

  1. Mr Borlase appealed his conviction, but on the sole ground that the Crown had not proved the element that Mr Borlase intended to influence Mr Noone to act improperly to Projenz’s advantage.  It was argued that proof of this was necessary because of the wording in section 105(2) of the Crimes Act stating that it is an offence to “corruptly give a bribe…with intent to influence any official in respect of any act or omission by him or her in his or her official capacity” (emphasis added).  The background to this was an absence of “outright bribery” in this case, i.e. where there is evidence of a direct relationship between a specific payment and a corresponding financial advantage to the payer.
  2. Both men appealed the length of their sentences, focussing most of their challenges on the starting points for calculation of the sentences.

Key aspects of Court of Appeal decision

Key aspects of the decision were:

On conviction

  • The Court of Appeal gave short shrift to the argument regarding the meaning and purpose of the “intent to influence” wording in section 105(2) advanced by Mr Borlase.  They considered it “contrary to the plain words”, and in strong language made clear their view that the purpose of the section is not to require proof of the additional element of an intention to influence the official to act in a certain way, whether proper or improper.  Nor did they consider that there is any need for an inquiry into “motives or consequential events”.
  • The Court of Appeal also re-emphasised that while “bribe” in terms of the Crimes Act is a morality-neutral term, the concept of impropriety is introduced via the word “corruptly”.  This is established by evidence of payment to an official of a financial benefit, knowing that its receipt is fundamentally inconsistent with the public official’s duties.
  • In this case, the “corruption” element existed because payments, additional to and outside of the official’s salary, were made to the official by Mr Borlase, via “bogus contractual arrangements designed to disguise their true nature”.  That was enough for the Court to conclude that both the official and payer knew that receipt of the benefits was fundamentally inconsistent with Mr Noone’s official duties, and therefore the parties acted corruptly.

On sentencing

  • The Court upheld both sentences, noting that while each offence might not be the most serious of its kind, the cumulative pattern of offending over the seven years demonstrated “criminality on a serious scale” and “generic and systemic corruption with a tendency to undermine confidence in the administration of public affairs”.
  • The Court did not agree that “outright bribery” will always be a greater evil than “long-term investment in the corruption of the public service to one’s commercial advantage”.
  • The correct inquiry in sentencing Mr Borlase as the payer of bribes is into what benefit he believed he was deriving from the corrupt arrangements; clearly it was one of real value.  All considered, this was clearly not just the minor provision of benefits for marketing or relationship management.

Overall, the tenor of the Court’s view on the Borlase and Noone relationship can be seen from its statement that it is implicit in this sort of arrangement that the payer’s intention is to influence the recipient to act improperly.  As the Court noted “Otherwise, it might be rhetorically asked, what would be the purpose of the payments?”  “It is trite that an astute businessman would not provide financial benefits on this scale unless he believed he was enjoying an appropriate return”.

What does this mean for New Zealand organisations?

This decision is as expected, and also reflected the tone of the Court of Appeal hearing itself. There will be little sympathy, or time given to legalistic arguments, against a backdrop of $1.15m of payments over seven years for sham, non-existent, undisclosed “consultancy services” (and gifts) to a public official.

The additional risk for those involved in corruption is the prospect of having assets seized under the Criminal Proceeds (Recovery) Act 2009, as Mr Borlase is presently facing the prospect of, and as also affecting a residential property in the Ngatata Love/Lorraine Skiffington case.

Even for lower-level corrupt payments, however, the risk of prosecution is high, as bribery and corruption remain “priority cases” for the Serious Fraud Office.  This is the case both for private and public sector corruption.

This reinforces that New Zealand public and private sector organisations need to continue to be alert to the risks of bribery and corruption, and have appropriate policies and procedures in place to identify and address them.

Please contact one of our experts if you would like more guidance on developing anti-bribery and corruption policies and procedures, training staff on them, or bribery and corruption issues generally.

Footnotes

[1] See R v Borlase and Noone [2016] NZHC 2970 and [2017] NZHC 236 per Fitzgerald J

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