R v Thompson CA75/96 [1996] NZCA 398 (14 August 1996)

Last Updated: 13 December 2021

_{THOMPSON Graeme Allan v R}

_{Status Court of Appeal Judgments (Archive)}

Court of Appeal

75/96

14 Aug 1996

Eichelbaum CJ - Gault J - Heron J

Appellant: Graeme Allan THOMPSON Respondent: The Queen

Coram No.: 3

Appellant's Counsel: R B Squire QC P M James

Respondent's Counsel: B Stanaway(24 May) N M Crutchley & M T Davies (10 July) Filing date: 18 Mar 96

Hearing Year: 1996

Keytitles: Criminal Law, Offences, Property, Fraud, Sentencing, Gravity of Offending, Consequences of conduct, Appeals against conviction, Grounds, Summing up, Error of law, Good character

Statutes: Crimes Act 1961 -

Orig. Sentence: 6.5 years imprisonment

Judgments: 7596

Criminal Law - Fraud - Sentence.

Chief Executive of public company concurred in misrecording of loan draw downs and published false annual reports over three years misrepresenting financial position of the company. Appeal against convictions on the ground of misdirections as to character evidence and the evidence of co - offender granted immunity rejected. "Concurring" in s 252 Crimes Act not limited to conduct before or concurrent with false entries. Sentence of 6.5 years upheld.

Appeal against conviction and sentence dismissed.

IN THE COURT OF APPEAL OF NEW ZEALAND C.A.75/96

_{THE QUEEN}

v

_{GRAEME ALLEN THOMPSON}

_{Coram: Eichelbaum CJ}

Gault J

Heron J

_{Hearing: 24 May 1996 (at Christchurch) and 10 July 1996 (at Wellington)}

_{Counsel: R B Squire QC and P M James for Appellant}

B Stanaway (on 24 May) and N M Crutchley and M T Davies (on 10 July) for Crown

_{Judgment: 14 August 1996}

_{JUDGMENT OF THE COURT DELIVERED BY GAULT J}

Graeme Allen Thompson was tried in the High Court at Christchurch on 16 charges of fraudulent conduct as a

director of Fortex Group Ltd. He was convicted on 12 counts, acquitted on four and sentenced to imprisonment for six and a half years. He appeals against his conviction and sentence.

The appellant was the Managing Director of the company. He was the only executive director. He was characterised by the Crown as the founder and driving force of the company which, although it was publicly listed, was treated by him as his own. He had a determination that it should succeed and become the leading company in the New Zealand meat industry.

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He was charged with (Counts 1-4), and convicted of, fraudulently concurring in omitting to record in the company's

general ledger four draw downs during 1991 of loans with the result that the liabilities of the company were

understated by the amounts concerned (in total $US3.5 million). The amounts were recorded as company income. He was charged with (Count 5), but not convicted of, similarly concurring, also in 1991, in the making of a false entry increasing export debtors by $NZ1,379,946.82 being the amount of a false invoice. The result of these accounting steps (which it came to be accepted had been taken) was that as at the balance date of 31 August 1991 the consolidated balance sheet understated liabilities by approximately $7 million and the consolidated revenue statement for the year overstated profit by approximately $7 million. The sixth count, on which he was convicted, was that with intent to defraud he published the 1991 Annual Report knowing it to be false.

Counts 7 - 10, on which there were convictions were further charges of fraudulently concurring in the omission properly to record loan draw downs but within the 1992 year. The total of these undisclosed liabilities was $US5.5 million. Count 11 charged a further false entry inflating export debtors on the basis of false invoices totalling

$NZ2,158,117.22. There was no conviction on this count nor on Count 12 charging fraudulent overstatement of stock values as at 31 August 1992 to the extent of $684,353.

The false accounting in the 1992 year - again which were all accepted as having occurred - meant that as at 31

August 1992 the consolidated balance sheet now understated liabilities by approximately $14 million and the consolidated revenue statement overstated profit by approximately $10 million. Count 13 charged fraudulent publishing of the 1992 annual report knowing it to be false and the appellant was convicted on this.

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The remaining counts related to the 1993 year. Count 14 related to a further undisclosed loan draw down of

$US2.6 million (conviction) Count 15 charged a further overstatement of stock value of $3,815,932 (acquittal) and Count 16 charged the fraudulent publication of the annual report understating liabilities by approximately $19 million and understating the loss for the year by approximately $5 million (conviction).

The acceptance that the evidence established the false accounting meant that when the case was presented to the jury the outstanding issues were whether the appellant knew and concurred in the entries and omissions and had the necessary intent to defraud. He gave evidence and sought to convince the jury that, his position in the company notwithstanding, he did not know of the loan draw downs, the false invoices inflating sales and the changes of coding of stock so as to inflate the true values. The Crown case he faced included evidence (inter alia) of the appellant's personal dealings with the various bankers in negotiating the original loans and subsequently, statements made by the appellant to fellow directors when the inevitable disclosures began which were well capable of being regarded as incriminating and other documentary evidence including his own diary pointing to knowledge of the level of the company indebtedness. The Crown case also included evidence given by two of the company managers who had admitted involvement in the frauds and who told the jury they acted upon the appellant's directions. The Crown also pointed to the implausibility of the appellant maintaining that he did not know the detail of the company's indebtedness until February 1994 even though he was obliged to concede he had

become aware of a problem with a "mis-coded loan" in January 1992 and involved himself in a scheme to rectify

this by the funding of a "market clearing account" with $2 of the profit on each sheep processed - although the sum accumulated subsequently was used for other purposes with the appellant's approval.

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In the face of what was plainly a strong Crown case the appellant maintained, although he had not so contended earlier when confronted with the true picture, that responsibility was entirely that of his subordinate manager Mr Mullen for all of the bank loan draw downs and the false recording of them. He also cast the blame for the inflation of debtors and the stock values upon Mr Mullen and another manager Mr Linn. The appellant succeeded to the extent that the jury were not satisfied beyond reasonable doubt that he concurred in falsifying invoices to inflate the export debtors (Counts 5 and 10) or falsely overstating the stock values (Counts 12 and 15).

The appeal against conviction was presented on the ground that the appellant was denied the right to have his case fairly considered by the jury because of material misdirections in the Judge's summing-up. The argument related to the directions on three aspects; the evidence of good character, the evidence given by Mr Linn who had been granted immunity from prosecution, and the interpretation of s 252 Crimes Act 1961 prescribing the offence for which the appellant was convicted on Counts 1 - 4, 7 - 10 and 14.

At the trial the only witnesses apart from the appellant called by the defence were seven acquaintances of the appellant, some of whom had been employees of the company. Each expressed his personal view of the honesty and integrity of the appellant in his experience. In the summing-up the Judge referred to that evidence in the following passage:

It is obvious from what I have said that the real issues before you relate to honesty. You have heard from a number of character witnesses who consider Thompson and said Thompson is a man of unusually open and full and frank honesty. Well I have to say to you that those witnesses have not like you heard the evidence in this case. Even in his own mouth he has not been fully frank and open. In considering his character generally that is a matter that is before you. You may have regard to the unchallenged evidence of his friend and co-director Nichol to whom on 21 February 1994 he said that he, Thompson, had betrayed Nichol and he told him however of only one of the five undisclosed loans and continued the next day to assert that that was

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the total extent of the problem. You will think on what he said to his co-director and friend Campbell to whom he practically admitted he had been dishonest because the meat industry required dishonesty. You will also perhaps pay some lesser regard in relation to honesty to the evidence of Mullen, if you accept it, that following Mullen's third interview with the Serious Fraud Office he had a conversation with Thompson, presumably before Thompson was to have another interview, and he told Thompson that the Serious Fraud Office knew of all the undisclosed loans to which he said Thompson expressed surprise and concern and said he would have to go to his brother-in-law and solicitor because he had not disclosed the full extent to him. None of those matters alone can be relied on to

establish the guilt of Mr Thompson of the crimes with which he is charged but you may consider them when you are

considering the evidence that was called by his friends and former employees as to his full and frank honesty generally.

Mr Squire submitted that as the case was put to the jury a major issue was credibility and therefore the accused was entitled to have the case, including his own evidence, considered by the jury with the benefit of a full direction as to the significance of the evidence of his good character. The conventional direction in such circumstances is to the effect that the evidence is relevant to the assessment to be made of the credibility of the accused and the likelihood that a person with such a character would have committed the offences (propensity). Although acknowledging that at the time there was no decision of this Court making such direction mandatory, Mr Squire relied upon decisions in England including R v Berrada (Note) (1989) 91 Cr App R 131, R v Vye [1993] 3 All ER 241 and R v Aziz [1996] 1 AC 41 . Since then the decision in R v Falealili CA519/95 judgment 13 August 1996 has been delivered. That lays down for the future that it should become the general practice to give an appropriate direction when evidence of the previous good character of the accused has been adduced.

In giving the conventional direction a Judge may, if the circumstances of the case so justify, qualify it as by adding reference to the fact that even persons of good character do commit offences, and there will be circumstances in which the point is

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reached where quite justified qualifications make the direction meaningless. This was recognised by Lord Steyn with whom the other Law Lords agreed in Aziz.

A good starting point is that a judge should never be compelled to give meaningless or absurd directions. And cases occur from time to time where a defendant, who has no previous convictions, is shown beyond doubt to have been guilty of serious criminal behaviour similar to the offence charged in the indictment. A sensible criminal justice system should not compel a judge to go through the charade of giving directions in accordance with R v Vye in a case where the defendant's claim to good character is spurious. I would therefore hold that a trial judge has a residual discretion to decline to give any character directions in the case of a defendant without previous convictions if the judge considers it an insult to common sense to give directions in accordance with R v Vye. I am reinforced in thinking that this is the right conclusion by the fact that after R v Vye the Court of Appeal in two separate cases ruled that such a residual discretion exists: see R v H [1994] Crim LR 205 and R v Zoppola- Barraza [1994] Crim LR 833.

That brings me to the nature of the discretion. Discretions range from the open-textured discretionary powers to narrowly circumscribed discretionary powers. The residual discretion of a trial judge to dispense with character directions in respect of a defendant of good character is of the more limited variety. Prima facie the directions must be given. And the judge will often be able to place a fair and balanced picture before the jury by giving directions in accordance with R v Vye and then adding words of qualification concerning other proved or possible criminal

conduct of the defendant which emerged during the trial. On the other hand, if it would make no sense to give

character directions in accordance with R v Vye, the judge may in his discretion dispense with them.

The present case cannot be placed in the same category as that exemplified by Lord Steyn, but it must be a matter of degree in the circumstances of each case.

The significance of character evidence will not be the same in every case. The issues of credibility and propensity may virtually coincide as in the present case but they may diverge in other cases. In this case the issue was the honesty or dishonesty of the appellant, that is honesty or dishonesty in the charged offending and honesty or dishonesty in the giving of his evidence denying knowledge of the loan draw downs

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and their treatment in the company's books. It would have been obvious to the jury, as the Judge pointed out, that the evidence that he was, in the experience of acquaintances and employees, an honest man would have been directed to establishing that he should be believed and would not have engaged in the crimes of alleged dishonesty.

Accordingly we do not accept that the failure to give the conventional direction in this case gave rise to any miscarriage of justice. The jury clearly approached the case with caution as is reflected by the verdicts, and we do not see any different result would have followed from the inclusion of the conventional direction as to good character in the circumstances.

A subsidiary argument advanced by Mr Squire was that of lack of balance in this part of the summing-up. He submitted:

... the emphasis which the trial Judge put on the various matters which might have been regarded as detracting from the worth of the character evidence without the balance of the positive aspects had the effect of unfairly minimising the evidence to the disadvantage of the accused.

It is, of course, open to a trial Judge to express a view on the evidence so long as it is made clear that findings of

fact are for the jury. We consider that the comments made by the Judge in drawing attention to matters which the jury could set against the evidence of good character were within his province.

The second aspect on which it was said the jury were misdirected relates to the evidence of Mr Linn. He was the company marketing manager. His evidence was directed primarily to charges on which the appellant was acquitted. However he did give evidence also bearing upon the knowledge of the appellant of one of the loan draw downs. In relation to that the Judge said in the summing-up:

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In cross-examination [Linn] acknowledged that that recollection could have arisen from what he was told by the

Serious Fraud Office at interview and he acknowledged that in that respect he may have mixed what he was claiming to be a totally independent memory with what he had been told.

On the Judge's direction then the Linn evidence was of limited value in relation to the convictions now under appeal. Nevertheless it was there as general support for the credibility of Mr Mullen the finance manager who by the time of the trial had pleaded guilty and been sentenced in respect of his part in the offending including the mis- recording of the loans. In that respect Mr Squire directed his fire particularly at the statement in the summing-up:

There is some considerable corroboration of Mr Mullen's evidence in the evidence of Mr Linn if you believe him.

The Judge went on to refer to Mr Linn's evidence of having been present at informal meetings at which the market clearing account for which he was responsible was discussed with the appellant in such a way as to indicate knowledge by the appellant of one undisclosed loan. Since, as the Judge said, the intended use of the market clearing account to deal with the "mis-coded loan" was acknowledged by the appellant in his own evidence, the impact of this Linn evidence would not have been great. In developing his argument on this point Mr Squire sought to draw a distinction between evidence of knowledge by the appellant of "a problem in the accounts" which the market clearing account was to be used to rectify and knowledge of the undisclosed loan draw downs. Having regard to the evidence of the appellant's position and his attitude towards the company the distinction is unrealistic. It calls for acceptance that the appellant would have been content to agree to the course of rectification without ascertaining the true nature and magnitude of the problem.

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The Judge said that in a case of a conflict of testimony it is common for Judges to suggest to juries that they should look for corroboration, but it is unlikely that he was referring to corroboration in the now obsolete technical sense. Section 12B of the Evidence Act 1908 makes it clear that no corroboration of the evidence of an accomplice is necessary and it is not necessary for the Judge to warn of the absence of corroboration. The rule that the evidence of one accomplice cannot corroborate that of another accomplice no longer has application.

Mr Squire submitted that as the statement that the evidence of Mr Linn provided "considerable corroboration" of Mr Mullen's evidence was inaccurate in any event and in particular, so far as it concerned the charges on which there were convictions, this direction was misleading because of its broad terms without identification of the aspects in which the Linn evidence supported that of Mr Mullen.

It is significant that the Judge, in the passage said by Mr Squire to be most disadvantageous to the appellant, said:

You will give some consideration as to whether you believe Linn. If you believe Linn in his entirety it would be very

hard for you not really to believe all the vital things that Mr Mullen has said as to Thompson's guilt.

But the jury plainly did not believe Mr Linn in his entirety. If they had they would not have acquitted the appellant on the charges to which the Linn evidence was particularly directed.

We do not consider the Judge's references to the corroborative nature of Mr Linn's evidence were inappropriate having regard to the charges then to be considered by the jury - although we reiterate that the term corroboration is better avoided; R v

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Daniels [1986] 2 NZLR 106(L),113. Nor do we consider that this aspect of the summing-up gave rise to any miscarriage of justice.

The other criticism of the directions in relation to the Linn evidence was as to his immunity from prosecution. It was submitted that the summing-up did not sufficiently spell out to the jury that Mr Linn was escaping prosecution by giving evidence against Thompson, down-played the significance of Mr Linn's offending and did not sufficiently identify the incentive still operating for him to adhere to statements implicating Thompson earlier given to the Serious Fraud Office. This last contention rather assumes that Mr Linn had something to gain from implicating Thompson in the statements originally made to the Serious Fraud Office but Mr Squire was not able to identify what that might have been.

As to the first criticism the Judge did make reference to the:

... certificate which prevents the Crown from bringing these charges that have been brought against

Thompson against him. The Judge went on to state:

He has no certificate, however, to prevent any charge being brought against him for perjury if he should have committed that. But if you consider he has a purpose to serve which renders his evidence suspect then you must pay great attention before you accept it.

Plainly the warning was sufficient and was heeded. The jury acquitted on the charges to which Mr Linn's evidence was primarily directed.

It is true that the Judge did not, as in R v McDonald [1980] 2 NZLR 102,110, refer to the possibility that because of the terms of the immunity Mr Linn might feel compelled to adhere to earlier statements. But given the whole of the direction as to

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Mr Linn's evidence and the outcome there could not be said to have been any misdirection giving rise to injustice. The third claim to misdirection was as to the meaning of "concurs" in s 252. The section reads:

False accounting by officer or member of body corporate -

Every one is liable to imprisonment for a term not exceeding 7 years who, being a director or an officer or a member of any company, or body corporate, with intent to defraud, -

(a) Destroys, mutilates, alters, or falsifies any book, account, valuable security, or document belonging to the company or body corporate, or concurs in so doing; or

(b) Makes or concurs in making any false entry in, or omits or alters, or concurs in omitting or altering, any material particular from or in any such book, account, valuable security, or document.

The directions were:

It is important for you to note that the crime does not require proof that the accused actually made the omission or actually made the false entry. Indeed he is not charged with doing that and it is quite obvious from the evidence that he did not physically make the false entries and that it was not his function to write up the entries of loans in the books of the company in relation to the charges of omitting to enter. The crime is concurring in the false omission or the false entry as the case may be. Concurring, in its ordinary meaning, means agreeing with the happening of some event. It is really as simple as that. In the present case the main evidence on behalf of the Crown is that the accused did more than concur but in fact directed the omission of the entries or the making of the false entries. But in order to establish this crime the Crown does not have to go so far as that. The Crown must prove that the accused agreed to those events happening coupled with the necessary criminal event [Sic, sc intent].

...

There is a difficulty in having an exact time of a concurrence in an event of which the party has had no more participation than concurring. It need not necessarily be contemporaneous with the entry or omission, but it must be within a reasonable time of that date that is

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in the indictment which is the date on which the Crown says the false entries or omissions were made. The reasonable time is a matter for you but should be limited in this case to weeks or perhaps a month or two if you felt there was perhaps a risk of the managing director being out of the country for some material time, but certainly not years. A crime does not arise, and would not be within the context of this crime, if the knowledge did not occur until

years after the material time. To concur therefore in relation to time you have to be satisfied that the accused had

knowledge of the false entry or omission, then agreed with the conduct which has occurred, or in the event of prior knowledge, of course, is about to occur, but in each case coupled with a deliberate decision to leave the false position as it is and with the necessary intent that I have already defined to you I think at least three times.

We are presently concerned in this appeal with offences under para (b) of concurring in omission although the

Judge was dealing also with charges of concurring in making entries.

It was submitted that the word "concurs" carry meaning both of agreement or assent and of timing (as in concurrent). Even if that were correct, it would make no difference in this case since an omission is a continuing event and simultaneous assent to it may be given so long as it continues. We do not accept however that to concur in an act or event the assent must precede or be simultaneous with it. We see no reason to construe the section so as to make it a crime to assent to an entry before or at the time it is made yet not a crime to come upon it afterwards and assent to it in circumstances where there is a duty to correct it, the authority and ability to do so and, of course, the required intent to defraud. We are quite unable to accept the argument for the construction advanced and find no error in the Judge's direction.

The appeal against conviction is dismissed.

The appeal against sentence was argued immediately after the appeal against sentence by the co-offender Mullen. He had pleaded guilty to seven counts which were agreed as reflecting his criminal conduct over the three year period. They

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extended to implication in the forging of false invoices to inflate sales and the inflation of stock valuations of which Thompson was acquitted. In the case of both offenders the Judge viewed the fraudulently publishing of false annual reports in the three financial years as the most serious offending. He regarded the falsification of the primary records as simply the means of achieving the misleading annual figures that were published. We agree with that assessment.

The Judge also expressed the view when sentencing Mullen that he was less blameworthy than Thompson and was dominated by him.

Mr Squire for Thompson argued that an error of principle in the sentencing of Mullen, as had been submitted by his counsel, carried over to the sentencing of Thompson. It was contended that the Judge sentenced Mullen on an incorrect factual basis namely that the offending brought about the collapse of the company. We have rejected that on Mullen's appeal, as appears in the judgment to be delivered at the same time as this judgment, and it is unnecessary to repeat what is said there. Mullen was sentenced before the trial of Thompson so that by the time he came to sentence Thompson the Judge had heard the evidence and was even better placed to form a view of

the impact of the offending. Further, as Mr Squire was at pains to point out to us, Thompson's counsel at

sentencing, who had represented him at the trial, had made careful submissions as to the difficulty in assessing just what losses fairly could be said to have been caused by the offending as opposed to the poor trading performance of the company. It would be surprising indeed if the Judge, having heard those submissions, had entirely disregarded them and concluded that the offending caused the collapse. We have considered the remarks made by the Judge on the sentencing of each offender and we are quite satisfied he did not make any such finding. He did, of course, attribute very large losses by financiers and other creditors at the time of the collapse to the offending, but for the reasons given on the Mullen sentence appeal we do not consider that was erroneous. When sentencing Thompson the Judge said:

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There is over $40 million owing and irrecoverable to bankers and second secured creditors, $24 million to unsecured creditors and in addition 1,800 employees have lost their jobs. It is said that your dishonesty has not caused all those losses, and indeed it was submitted on your behalf that such losses were inevitable regardless of your offending.

To the extent that your criminal dishonesty has not caused all the losses I agree, but I am satisfied that it played a major part in those losses.

He elaborated on that and referred to matters that contributed to the company failure and some issue was taken with what he said particularly in relation to the timing of certain capital works. But those matters were not material to the assessment of the sentences and do not affect the view we have formed.

We are satisfied that it was open and appropriate for the Judge to take into account that there were secured and unsecured creditors who lost large sums upon the collapse who would not have dealt with the company had the true position been known. Sentencing for commercial fraud necessarily must proceed on a broad assessment of culpability in all the circumstances. It is not a mathematical exercise by reference to millions of dollars lost or misappropriated. There was however evidence from financiers that they would not have dealt with the company had they known its true position. Further, as the Judge recognised the difficulty of detection, the abuse of the reliance by the commercial community upon the accuracy of financial reporting and the temptation to conceal all call for deterrent sentences.

The Judge referred to the earlier cases of R v Gunthorp & Ors CA46/93 judgment 6 September 1993 and R v Rose [1990] NZCA 347; [1990] 2 NZLR 552(L) and considered sentences for the offences of fraudulently publishing the annual reports in each of the three years of two, three and three years imprisonment respectively were appropriate. Those sentences imposed cumulatively would have meant a sentence of eight years.

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This the Judge thought was too high and, taking account of the acquittals, he made a reduction to the total

sentence which he effected by reducing each of the cumulative sentences by six months. The sentences imposed for all of the other offences were ordered to be served concurrently so that the effective sentence for the totality of offending was six and a half years.

It was submitted that because Thompson was acquitted on the charges relating to the false invoices and false stock valuations, the Judge must now appear to have proceeded erroneously when sentencing Mullen for those offences on the factual basis that Mullen was dominated by Thompson. That the jury were not satisfied beyond reasonable doubt of Thompson's participation in that offending does not necessarily make it wrong for the Judge to have sentenced Mullen on that basis but, in any event, we do not see how that bears on the appropriate sentence of Thompson. He cannot be sentenced for offences of which he has been acquitted. It is not a ground for disturbing a sentence that it may be difficult to reconcile with another sentence that is said to have been wrongly based.

Mr Squire submitted that a number of factors led the Judge to take an adverse view of Thompson's culpability which resulted in an overall sentence that is unduly harsh. He referred to the offending, at least initially, having arisen from Thompson's false optimism and failure to accept reality rather than a desire for personal gain (though he had a large stake in the company which, surprisingly, he increased at a late stage). In this respect reliance was placed on the sentence of six months imprisonment in R v Burberry, High Court Christchurch, S53/88, 7 December

1988, Hardie Boys J for false company accounting designed to avert collapse. That was a very different case than that with which we are concerned. The magnitude of the falsifications, the period over which they were perpetrated and the denial of knowledge to the end put Thompson's case in an entirely different category.

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Mr Squire was critical also of the Judge's strong response to a plea for credit for Thompson's previous good character. The evidence of good character given at the trial already has been referred to as has the Judge's comment in his summing-up. At sentencing the Judge was presented with further written references from leading New Zealanders as to prior good character. The Judge's response to that was equally forthright and he declined to give any discount in penalty for good character. He said:

A great deal of the evidence in favour of your character has been evened out by what can only be described as your despicable conduct in giving evidence when on occasions when you might appear to be cornered you endeavoured to implicate in this criminal offending more than those charged. In this respect I refer chiefly to your entire management team but also your suggestion that the accountancy profession in general was responsible for false accounting and your suggestion that everyone in the meat industry had to be dishonest to survive. Your evidence indicates an arrogance and lack of remorse which does not assist your counsel's plea of mercy.

I have read the pre-sentence report from the probation officer. Insofar as you have supplied a certificate from your

accountant purporting to show your financial affairs it confirms again your attempt to mislead. Your counsel very

wisely did not refer to it but how on earth you could claim to have a tax loss of $748,000 (I said $748,000 but meant

$704,000) in respect of monies borrowed to purchase shares when your intention on purchasing shares was to build up your interest in the company simply is unbelievable.

Indeed I fear from your confidence or arrogance that it may not be long after your release that you will again be engaged in entrepreneurial activity. Your remarks in the pre-sentence report support that belief. By virtue of the provisions of s 382 of the Companies Act 1983 you are forbidden without the leave of the Court from being a director, manager, or officer of any company for a period of five years. There is power for the Registrar of Companies, the Liquidator, a shareholder or a creditor to apply to this Court that that period be extended to ten years. However, there is no such application before me.

As a result of further evidence given on appeal it now is clear that the comment in the pre-sentence report sourced with Thompson's accountant was erroneous and did not involve any attempt on the part of Thompson to mislead. However the information

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in the pre-sentence report that Thompson continued to believe that the company's difficulties would have been "solvable" had a number of important participants not lost nerve at a crucial time does show an arrogance and lack of remorse which the Judge also found to have been reflected in Thompson's evidence at his trial. Such a view was open to him. Mr Squire submitted that the Judge's expression "despicable conduct" overstated the position and referred us to evidence of other witnesses at the trial who implicated persons who had not been charged. Having read the evidence given by Thompson we have little difficulty in appreciating that he would have given a bad impression, and while we would not employ the same expression as the Judge, we agree that his conduct after disclosure became inevitable and during his trial significantly detracted from the evidence of his prior good character.

The assessment of an appropriate sentence for commercial fraud is not without difficulty - particularly where the offending is by a person of standing in the commercial community. Some of the relevant principles were mentioned in R v Gunthorp & Ors but, as said there, the circumstances will vary and there can be no set tariff. As mentioned, there are to be borne in mind the difficulty of detection and the reliance upon the accuracy of financial reporting which is vital to a credible securities market. The amount of direct and indirect losses flowing from the offending is relevant though quantum is not necessarily a true measure of criminality. Recourse to dishonesty because of inability of persons of standing to confront failure has been at the heart of much commercial fraud. We agree with the sentencing Judge that it is an arguable point whether such motivation is any less culpable than greed.

In Thompson's case the offending continued over a period of three years during which the true position of a publicly listed company was concealed by repeated deliberate acts of mis-recording loan draw downs so as to

report grossly inaccurate annual results. The verdicts mean the jury accepted that Thompson at least knew the true

position and concurred in it. As Chief Executive with the obligations of a director

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he has been found guilty of serious and repeated frauds over a considerable period. We are quite satisfied that the total sentences imposed were open and were appropriate.

The appeal against sentence also is dismissed.

_Solicitor

Saunders & Co, Christchurch, for Appellant

_{Crown Solicitor, Christchurch, for Crown}

Appellant's Counsel: R B Squire QC P M James

Respondent's Counsel: B Stanaway(24 May) N M Crutchley & M T Davies (10 July)

End of Document