Ground 2 - second ground of statutory appeal: alleged error by the magistrate in reaching a conclusion as to satisfaction of the dual criminality requirement
77 This ground of appeal concerns the requirement imposed by s 19(2)(c) of the Extradition Act that, in determining eligibility for surrender, the magistrate be satisfied that dual criminality has been established. That is, the magistrate needed to be satisfied that, if the conduct alleged to have been engaged in by Mr Liem in Indonesia had taken place in New South Wales on 23 January 2017, it would have constituted an "extradition offence".
78 The term "extradition offence" is defined in s 5 of the Extradition Act as an offence against a law of Australia or part of Australia for which the maximum penalty is at least 12 months' imprisonment. Section 10(3) of the Extradition Act provides, for the purposes of s 19(2)(c), that if the conduct consists of two or more acts or omissions, regard may be had to all or only one or some of them, and that any difference in offence denomination or categorisation is to be disregarded.
79 It was submitted on behalf of Mr Liem that the magistrate had erred in reaching a positive conclusion as to the dual criminality requirement on the basis of the "duly authenticated statement in writing setting out the conduct constituting the offence" provided by Indonesia, this relevantly being the extradition request itself and the annexed and incorporated police report. The arguments made by counsel for Mr Liem in relation to the two classes of offences for which extradition was sought were as follows:
(1) In relation to the alleged money laundering offence, it was submitted that Indonesia did not contend that the applicant was eligible for extradition based on any like offence under Australian law. It was submitted that the use to which the moneys were put, or the conduct alleged by Indonesia (as set out in the conduct statement), would only be of evidentiary or sentencing relevance if an offence in respect of the conduct leading to the obtaining of the moneys was made out under New South Wales law. Indonesia could not, however, "suggest that later use of the funds is conduct forming an essential element of either Fraud or Breach of Director's Duties". It was therefore submitted that the conduct statement did not go to the essential elements of any like money laundering offence or its equivalent in Australian law. Rather, it went to a factor that was supposedly irrelevant for the present purposes of the dual criminality determination, being the later use of the moneys obtained.
(2) In relation to the alleged embezzlement offence, it was submitted on behalf of Mr Liem that the conduct statement failed to make out an essential element of the offences of fraud and breach of directors' duties - namely, acting with fraudulent or dishonest intent - and that the conduct statement did not necessarily support that inference. It was also asserted that the additional elements of the directors' duties offence were not alleged within the conduct statement. It was submitted that the conduct statement failed to suggest that Mr Liem made deceptive representations prior to obtaining the moneys, such that the nexus in the fraud offence between deception and the obtaining of the moneys was absent.
80 In support of those submissions, the applicant referred to the test articulated by Weinberg J in Timar at [64] as to:
… whether the document relied upon sets out the essential elements of each offence for which the surrender is sought, clearly identifies the provisions of the foreign law creating the offence and the maximum penalty prescribed for a breach thereof and gives sufficient particularity to ensure that the requested State and the person whose surrender is sought are left in no doubt as to the basis upon which the requisition is made.
81 The submissions for Mr Liem cited several further authorities to suggest that although a decision-maker is permitted to draw inferences as to what is alleged, whether this can be done to the requisite standard would depend on the precise conduct alleged and its context. In particular, in relation to the drawing of inferences as to the mens rea element of an extradition offence, reliance was placed on O'Donoghue v Ireland [2009] FCAFC 184; 263 ALR 392 at [46]-[49]. Particular reliance was placed on the requirement stated in O'Donoghue at [46] that drawing such an inference must be based on "a fair reading of the materials with regard to the serious consequences attaching to extradition". Reliance was also placed on the proposition restated in O'Donoghue at [48] that an arrest warrant should make it sufficiently clear that a state of mind necessary to constitute an extradition offence did exist, without needing to specify the state of mind expressly.
82 Mr Liem also relied on Assange v Swedish Prosecution Authority [2011] EWHC 2849 at [57] (applied at [76] of that judgment), wherein the High Court of England and Wales stated that while it was not necessary to identify in the description of the conduct the mental element or mens rea required under the law of the jurisdiction from which extradition was sought, merely enabling an inference to be drawn as to the existence of that state of mind was not enough. Rather, the material must "impel" the inference that the alleged acts were committed with the requisite mens rea, in the sense of being the only reasonable inference to be drawn from the facts alleged. It was submitted that this reasoning was consistent with Zoeller v Federal Republic of Germany (1989) 23 FCR 282 and Linhart v Elms [1988] FCA 205, and that, given the serious consequences attached to extradition, the existence of the essential element of mens rea should not be a matter of speculation in determining the dual criminality requirement.
83 It was therefore submitted on behalf of Mr Liem, in relation to the embezzlement offence, that there was insufficient particularity in the material before the magistrate as to the essential element of mens rea (in that the existence of the requisite mens rea was not the only reasonable conclusion available) and, further, that a requisite actus reus element was not made out. For those reasons, the applicant submitted that the dual criminality element in relation to the embezzlement offence had not been made out, and the magistrate had therefore erred in concluding positively as to the dual criminality requirement being made out on this offence, as well as in relation to the money laundering offence.
84 In response, the respondents submitted, orally and/or in writing, that the arguments advanced on behalf of Mr Liem mischaracterised the dual criminality requirement as necessitating a direct equivalence between the Indonesian offences for which the applicant's extradition was sought, and the Australian offences relied on by the magistrate. It was submitted that Mr Liem had sought to correlate:
(1) the Indonesian money laundering offence directly with the Australian fraud offence; and
(2) the Indonesian embezzlement offence directly with the Australian breach of directors' duties offence.
The respondents submitted that what was actually required was "duality of criminality in substance". Rather than comparing offences, the correct approach was to make a comparison between "the conduct itself" and "the offence under the law in force in New South Wales" (emphasis in the written submissions for the respondents).
85 The respondents submitted that the approach of duality of criminality in substance (rather than in form) resolved Mr Liem's contention that the requisite mens rea of fraudulent or dishonest intent had not been made out in relation to the embezzlement offence. Furthermore, the respondents submitted that Mr Liem's argument as to insufficient particularity of mens rea in the embezzlement offence ignored a "myriad of facts" in the conduct statement that provided both evidence and inferences as to the applicant's dishonesty, to a standard sufficient to satisfy the mens rea elements of the NSW laws. Reliance was placed in this regard on the terms of s 192E of the Crimes Act 1900 (NSW) and s 184 of the Corporations Act 2001 (Cth), which are considered below. The respondents further submitted that little weight should be placed by this Court on Assange, given its concern with a wholly different statutory regime and the fact that it does not reflect Australian authority on the operation of s 19(2)(c) of the Extradition Act.
86 By way of reply submissions for Mr Liem, it was asserted that the respondents' characterisation of the applicant's approach to the dual criminality issue was erroneous, and that the true submission of the applicant was that "when the conduct statement is assessed against suggested offences applying in NSW dual criminality is not made out". This was said to be the process of comparison required by the Extradition Act.
87 The reply submissions for Mr Liem also sought to dismiss the respondents' suggestion that a "myriad of facts" was available in the conduct statement from which to draw evidence or inference as to mens rea. It was reiterated that the conduct statement does not give "sufficient particularity to ensure that the requested State and the person whose surrender is sought are left in no doubt as to the basis upon which the requisition is made", citing Klepp v Gibb (1988) 81 ALR 383 at 393.
88 The question of dual criminality comes down to an assessment of whether the conduct alleged to have been engaged in by Mr Liem, if carried out in New South Wales on 23 January 2017, would have constituted an offence under either of the offence provisions relied upon by the respondents, disregarding labels and characterisation, namely:
(1) fraud, contrary to s 192E of the Crimes Act 1900 (NSW); or
(2) breach of directors' duties, contrary to s 184 of the Corporations Act 2001 (Cth),
including in relation to the subsequent use of the money that was obtained.
89 The terms of s 192E of the Crimes Act are relevantly as follows:
192E Fraud
(1) A person who, by any deception, dishonestly:
(a) obtains property belonging to another, or
(b) obtains any financial advantage or causes any financial disadvantage,
is guilty of the offence of fraud.
Maximum penalty: Imprisonment for 10 years.
…
90 The written submissions for Indonesia before the magistrate on this offence were as follows (maintaining original footnotes in the text):
66. The terms "deception" and "dishonestly" are central to the operation of this offence.
67. "Deception" is defined in s 192B. It is the intention inducing of a state of mind which the accused knows does not accord with fact.28 A deception may be by words or conduct.
68. "Dishonesty" is defined s 4B of the Crimes Act to mean "dishonest according to the standards of ordinary people and known by the defendant to be dishonest according to the standards of ordinary people."
69. The deception must be the effective cause of obtaining the money or financial advantage, as, "…it is an essential ingredient of the offence created by that section that the cause of the payment of the money (or handing over of the valuable thing or the giving of the financial advantage) was the deception used by the accused."29
70. The deception must operate on the mind of the person to whom it is directed.30 It is irrelevant whether the person deceived has the ability to discover the truth of the facts behind the deception. The deception employed must precede the obtaining.
71. Numerous witnesses give accounts that the Respondent stated he would furnish and complete the relevant documents and approvals in accordance with PT. IKI's processes, but never did so.31 Such statements were made to Mrs Marlin and Mrs Vinawati, and preceded his obtaining the cheques. The statements did not reflect the Respondent's true intention, which was to use the cheques to fund the establishment of his other businesses. As a result, the Respondent plainly obtained a financial advantage for himself.
28 Corporate Affairs Commission v Papoulias (1989) 20 NSWLR 503 at 506.
29 R v Ho (1989) 39 A Crim R 145 at 147.
30 R v Laverty [1970] 3 All ER 432; R v Kovacs [1974] 1 WLR 370; R v Davies [1982] 1 All ER 513.
31 Attachment C, Indonesia National Police progress report, page 12, paragraph 6; page 16, paragraph 6; page 50, paragraph 5.
91 The written submissions for Mr Liem before the magistrate were as follows (maintaining original footnotes in the text):
No Statement of Deception Causation of the Obtaining
81. It is further an essential ingredient of the offence against section 192E that a deception by the accused was an actual operative cause of the payment of money or handing over of a valuable thing.4
82. The conduct statement does not allege a deception of anyone, let alone one sufficiently causatively related to the obtaining of a benefit such as to amount to the commission of a fraud offence contrary to section 192E.
4 R v Ho (1989) 39 A Crim R 145, R v Clarkson [1987] VR 962
92 The magistrate was entitled to accept the submissions for Indonesia and reject those for Mr Liem. The alleged conduct by Mr Liem was that he secured the payment of money to him by persuading employees to do as he asked. By doing so, he was implicitly representing that the money was required for a proper purpose of the company, when in fact, on the case sought to be brought against him, it was for his own purposes. The gravamen of the alleged conduct was deception. It constituted the necessary causal connection between his conduct and the receipt of the money. He is alleged thereby to have obtained property belonging to the company, being money derived from the cash cheques, or otherwise obtained a financial advantage, again being the money derived from the cash cheques.
93 The relevant state of mind is that of dishonesty. If Mr Liem was proven to have engaged in the alleged conduct in New South Wales, a strong, if not inescapable, inference was that this was done dishonestly. There is nothing in the material to suggest any benign state of mind in what presents on its face as a reasonably flagrant fraud. An important aspect of emphatically showing that state of mind would be proof of personal receipt or use of the money to which he had no entitlement, both of which were asserted in the request material. The apparent availability of that evidence also goes to showing the obtaining of the property or financial advantage. The suggestion that mens rea could not be demonstrated is therefore impossible to accept. This is a matter of ordinary and reasonable inference, not speculation.
94 The terms of s 184(1) and (2) of the Corporations Act are as follows:
184 Good faith, use of position and use of information - criminal offences
Good faith - directors and other officers
(1) A director or other officer of a corporation commits an offence if they:
(a) are reckless; or
(b) are intentionally dishonest;
and fail to exercise their powers and discharge their duties:
(c) in good faith in the best interests of the corporation; or
(d) for a proper purpose.
Note: Section 187 deals with the situation of directors of wholly-owned subsidiaries.
Use of position - directors, other officers and employees
(2) A director, other officer or employee of a corporation commits an offence if they use their position dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
95 The written submissions for Indonesia before the magistrate on this offence were as follows (maintaining footnotes from the original text):
75. The obligation to act in good faith requires directors to not misappropriate the company's assets for themselves, including, for example, by paying company money into a personal account.32
76. In relation to the conduct allegedly engaged in by the Respondent, he was at all relevant times a "director" of PT. IKI and was a member of its board of directors. The Indonesia National Police progress report, which is Attachment C of the Extradition Request, states that the Respondent used his position to obtain cash cheques from Mrs Marlin and Mrs Vinawati. He did not comply with PT. IKI's process for issuing those cheques. The cheques were then deposited into his accounts, and the funds were used to establish his other businesses.
77. For those reasons the conduct allegedly engaged in by the Respondent would amount to the offence of misuse of position, contrary to s 184 of the Corporations Act.
32 See eg, Nicholls v The Queen [2016] VSCA 300.
96 The written submissions for Mr Liem before the magistrate were as follows:
83. The Applicant further submits that the conduct statement would amount to an offence contrary to section 184 of the Corporations Act 2001(Cth), which creates an offence and states:
[Text of s 184(1) of the Corporations Act 2001 (Cth) - reproduced above at [94]]
84. This submission fails on the simple basis that the conduct statement does not allege:
• Recklessness
• Intentional dishonesty
• An exercise of power/discharge of duty not in good faith in the best interests of the corporation
• An exercise of power/discharge of duty not for a proper purpose
97 Again, the magistrate was entitled to accept the submissions for Indonesia and reject those for Mr Liem. The conduct alleged to have been engaged in by Mr Liem entails him using his position as President Director of PT. IKI to procure the drawing of cash cheques for very large sums of money over 134 transactions. The material clearly discloses at least an implied allegation that in doing so, he actively exercised his powers and discharged his duties in a manner that was obviously absent good faith, not in the best interests of the company and did not entail any apparent proper purpose. The material necessarily implies that he failed to observe the proper exercise of powers and discharge of duties. The state of mind in doing so unavoidably could and most likely would be inferred to be dishonest, and intentionally so. It went well beyond any concept of recklessness. This, again, was not a matter of speculation, but rather a reasonable inference to draw. An aspect of the conduct in obtaining the money either by him or to his benefit goes to the proof of both the physical and fault elements of the offence, such that the conduct alleged to constitute money laundering in Indonesia in this case falls within the ambit of the s 184(1) offence.
98 For completeness, and by parity of reasoning, the conduct alleged to have been engaged in by Mr Liem also constituted him obtaining an advantage for himself or others and doing so intentionally. Again, an inference of dishonesty is inescapable, with the conduct alleged going well beyond the lesser offence of doing so while being reckless as to the result.
99 While specific reference was not made to domestic money laundering offences, which are designed to capture dealing with money that is the product of criminal activity without needing to show participation in that prior illegal conduct, reliance could also have been placed on at least the lowest level of money laundering offending as a federal offence, being s 400.9(1) and (1A) of the Criminal Code (Cth). Those provisions make it an offence to deal with money or other property where it is reasonable to suspect that the money or property is the proceeds of crime. If the aggregate value of the money or property is less than $100,000, the maximum penalty includes imprisonment for two years. If the aggregate value is $100,000 or more, the maximum penalty includes imprisonment for three years. Thus, although the money laundering aspect was effectively covered as part of the fraud and directors' duties offences, they also amply made out domestic federal money laundering offences as well.
100 It follows that there is little reason to doubt that if Mr Liem had engaged in the conduct described in the extradition materials at the time the request was made, he would have committed both of the offences relied upon by the respondents, including as to mens rea. Accordingly, there was no error on the part of the magistrate in being satisfied as to dual criminality being established.
101 It follows that ground 2, the second ground of the statutory appeal, must fail.