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5
Supreme Court 1 December 2006

R v Boulden

[2006] NSWSC 1274

Fraud & dishonesty
CRIMINAL PRACTICE AND PROCEDURE SENTENCING CORPORATIONS ACT CORPORATE DISHONESTY ALTERATION OF FINANCIAL RECORDS GENERAL DETERRENCE

Citation: R v Boulden [2006] NSWSC 1274
Court: Supreme Court of New South Wales
Date: 1 December 2006
Judge(s): Whealy J

Background

The offender was a qualified accountant who had worked as Financial Controller of the Corporate and Professional Insurance Division (CPID) of FAI General Insurance Company Limited, a subsidiary of the publicly listed FAI Insurances Limited. In January 1998, the offender requested that approximately $5.5 million in improper reductions be made to FAIG's liabilities in its electronic books of account. These reductions artificially inflated FAI's reported operating profit before tax for the half-year ending 31 December 1997, which was subsequently released to the Australian Stock Exchange.

The offender pleaded guilty on 2 June 2006 to one count of being privy to the fraudulent altering of the books of a company, contrary to s 590(1)(c)(iii) of the Corporations Act 2001 (Cth). The offence carried a maximum penalty of two years imprisonment. The matter came before Whealy J for sentence in November 2006.

  • What weight should general deterrence carry when sentencing for white-collar corporate dishonesty offences?
  • What was the appropriate sentencing outcome given the offender's subjective circumstances, including his guilty plea, demonstrated rehabilitation, and the fact that he acted at the direction of more senior personnel?
  • Whether a suspended sentence was appropriate, or whether a custodial sentence (including periodic detention) was required to reflect the objective seriousness of the offence?
  • What discount, if any, should be applied for the guilty plea, and how that discount should be reflected in the sentencing hierarchy?

Decision

Whealy J found that the offence was of mid-level criminality. The offender had not acted at the apex of the fraudulent conduct: his actions were taken at the prompting or direction of more senior personnel within the FAI Group. Nevertheless, the objective seriousness of the conduct was real. The fraudulent alterations led to the public reporting of an inflated profit figure to the ASX, with consequent implications for investors and market integrity.

On subjective matters, the court found a strong case in the offender's favour. He had pleaded guilty, demonstrated genuine rehabilitation over many years since the offending, and was assessed as very unlikely to reoffend. A pre-sentence report confirmed his suitability for periodic detention.

Whealy J rejected a suspended sentence as inadequate. The court emphasised that general deterrence carries particular weight in white-collar crime, and that the business community needed a clear message that courts will not tolerate offences of this kind. A fully suspended sentence would not adequately reflect the objective seriousness of the conduct.

The court sentenced the offender to 12 months imprisonment to be served by way of periodic detention, declining to make a recognizance release order. Following authority from Spigelman CJ in R v Thomson & Houlton, Whealy J noted that in some cases the discount for a guilty plea is properly reflected as a step down in the sentencing hierarchy rather than a reduction in the length of the sentence. This was treated as such a case.

Orders Made

  • The offender was convicted of being privy to the fraudulent altering of the books of a company, contrary to s 590(1)(c)(iii) of the Corporations Act 2001 (Cth).
  • Sentenced to 12 months imprisonment, to be served by way of Periodic Detention.
  • No recognizance release order was made.
  • The offender was directed to attend the Grafton Detention Centre by 4pm on Friday, 15 December 2006 to commence serving his Periodic Detention.

Key Takeaways

  • General deterrence carries substantial weight in sentencing for white-collar corporate dishonesty offences, and courts will treat a fully suspended sentence as generally inadequate to reflect the objective seriousness of such conduct.
  • Under the approach confirmed in R v Thomson & Houlton, a guilty plea discount need not always reduce the length of a sentence; in appropriate cases it may instead be reflected as a step down in the sentencing hierarchy, such as the choice of periodic detention over full-time custody.
  • Where an offender acted at the direction or prompting of more senior personnel, that circumstance may reduce the level of criminality attributed to them, but does not remove the need for a meaningful custodial response.
  • A strong subjective case, including rehabilitation over many years, low risk of reoffending, and willingness to facilitate justice, can justify a more lenient form of custody, provided the sentence still reflects the objective gravity of the offence.
  • Periodic detention was assessed as a sentencing option capable of adequately balancing the competing demands of general deterrence and recognition of an offender's demonstrated rehabilitation in a mid-level corporate dishonesty case.

Legislation and Cases Referenced

Legislation:
- Corporations Act 2001 (Cth), s 590(1)(c)(iii)
- Crimes Act (Commonwealth) 1914
- Crimes (Sentencing Procedure) Act 1999 (NSW)

Cases:
- R v Thomson & Houlton [2000] 49 NSWLR 383
- R v Rivkin [2004] NSWCCA 7
- R v Glenister (1980) 2 NSWLR 597
- R v Pantano (1990) 49 A Crim R 328
- R v Halabi (unreported, NSWCCA, 17 February 1992)
- R v Corner (unreported, NSWCCA, 19 December 1997)
- R v MAK; MSK [2006] NSWCCA 381
- R v Hodgson [2004] SASC 234
- R v Karhani (1990) 21 NSWLR 370
- R v Thomas (1997) 37 ATR 296
- R v Bugeja [2001] NSWCCA 196
- R v Simon (2003) 142 A Crim R 166
- R v Otto (2005) 157 A Crim R 525
- R v Rashid (unreported, NSWCCA, 7 April 1995)
- R v Zamagias [2002] NSWCCA 17