Severity Appeal
131 The concurrent sentence imposed on each count was the maximum penalty of 5 years, comprising a minimum term of 3 years and an additional term of 2 years. Each of the offences arose out of the appellant forwarding the March 1989 accounts (or a draft thereof) to the banks and her oral or written statements as to those accounts to the banks. The appellant was the director responsible for organising credit facilities but she always acted at the behest of and under the direction of Mr Goldberg, the owner of the companies. He was the dominating force. She had staff under her.
132 The credit facilities involved large sums of money. She was not acting to secure financial advantages for herself but rather for the companies under Mr Goldberg's control. She was a salaried employee. That is not the only consideration. The Bank of Tokyo advanced $10 million.
133 The appellant had an understanding of her duties and obligations which was seriously deficient. She lacked honesty and failed to tell the true story, which she knew, to the bankers. She was prepared to deceive them and did so.
134 The judge correctly proceeded upon the basis that the appellant had no previous convictions. He noted the evidence from three persons of repute who spoke of her in the highest terms. They spoke of her reputation for honesty and integrity, her devotion to her family and friends and her loyalty.
135 In his report of 21 October 1998 Dr John Phillips wrote that she was a 49 year old woman married with a fifteen and a half year old son. She comes from a relatively protected and comfortably placed middle class background. She is of high average or better intelligence. She has a University degree in accounting. She told Dr Phillips that she remained relatively unaware of the major problems faced by the Goldberg Group until fairly late in her employment with that organisation. She described herself as a creature of habit. In effect she had worked for the one organisation most of her life. She felt that her life had been on hold for the 7 years prior to the trial. Dr Phillips concluded that there were strong obsessional features in her personality and that she has a strong need to control any situation in which she finds herself. A lengthy custodial sentence may lead to significant psychological symptoms or at worst a frank psychiatric disorder. She is likely to be very lonely in prison. Most of the female prisoners are much younger and have a very different social, economic and cultural background. The appellant is not interested in drugs.
136 The remuneration received by the appellant was modest. For example, for the year ended 30 June 1988 her taxable income was $64,777 and that for the year ended 30 June 1989 was $63,351. She did not receive generous bonuses, shares or options. Her remuneration did not match her responsibilities.
137 The judge observed that it was not possible to determine if the true and parlous state of the Goldberg Group had been disclosed in August 1989 and thereafter what actions the banks and other creditors could have taken, but it was not unreasonable to conclude that the continuation of lines of credit and the granting of new lines of credit must have had an adverse effect on the position of the creditors.
138 The judge concluded:
"Despite the positive matters adverted to I regard the need for general deterrence to be essential. Directors of large commercial organisations have a great social responsibility to act honestly and responsibly, particularly when dealing with lending institutions. Commercial dealings are based on the need for trust and breaches of that trust can have and have had significant effect on the economic health of the nation. These offences are individually to be regarded as amongst the worst examples of this class of criminal activity. The maximum penalty applicable, as I have said, is one of five years imprisonment. I regard it as appropriate to impose such maximum sentences on each on a concurrent basis in this case.
As indicated I bear in mind the lack of any contrition. I do find however special circumstances being the prisoner's previous good character, and the unlikelihood of further offences."
139 The appellant submitted that the sentences were manifestly excessive and that the judge failed adequately to take into account that there was no evidence of any advantage, financial or otherwise which was received by the appellant as a result of the impugned false statements. She was a mere functionary answerable to Mr A Goldberg, the effective owner of the company. She submitted that the sentence was outside the range for the subject offences and was one more appropriate to an offender who had made the false statements for substantial personal gain.
140 The appellant further contended that the offences did not reveal a "worst case" situation because the Crown neither established nor sought to establish that anyone had suffered financial loss, she had not received any personal financial benefit, she had no prior criminal history, there were strong subjective factors and the case did not require personal deterrence. Her conviction would preclude her from holding further Directorships in companies and from obtaining employment in fields in which she had worked.
141 It was not an ingredient of the offence that someone had suffered financial loss or received a personal benefit. It is, however, reasonable to conclude that loss was probably suffered at least by the Bank of Tokyo. It advanced $10 million.
142 The appellant submitted that the judge was influenced by irrelevant factors. There was, she argued, no evidence that she was the instigator of the round robin transaction. The judge accepted that. She was not charged in relation to the round robin transaction. The judge regarded it as a device to deceive. This was a correct description. From the judge's remarks, he regarded the transaction and some other matters as part of the context in which the offences occurred. She negotiated with the Banks knowing all about the transaction. I do not accept her submission that the judge dealt with her as if she was on trial for her participation in the round robin and for her role as a director of LTCL and LGL. Her directing role meant that she was the person with the knowledge to whom requests for information were directed. She responded to those requests.
143 The appellant submitted that in sentencing her the judge took into account irrelevant matters such as the appellant making no attempt to limit the issues and leaving most matters at large until her statement from the dock. The judge also referred to the procedural steps taken on her behalf including her initial pleas of guilty, her being given leave by the Court of Criminal Appeal to withdraw her pleas, the substitution of fresh charges and the failed application for a stay including a failed application or appeal from that refusal.
144 These were no more than observations designed to reform and shorten criminal trials and the reasons for the delay in the charges being finalised. For many years judges have dealt with matters of general importance in criminal trials in their remarks on sentence. This enables the community to become aware of deficiencies in the criminal justice system which need attention. The judge did not let these matters affect the sentences.
145 The appellant contended that the judge had attached undue weight to considerations of general deterrence and that this had led him to attach insufficient weight to the subjective factors and the special feature that she was in a subordinate position and had felt bound to carry out the instructions of the dominating Mr Goldberg. Reliance was placed on McDonald, (FCA), (1994) 71 A Crim R 370 at 380 and Corbett, (1991) 52 A Crim R 112 at 117. In the latter case the Court (Gleeson CJ, Priestley JA and Mathews J) said:
"…once it has been decided to inflict a significant gaol term, it is not likely to be useful, in fixing its precise length, to increase it by refusing to give due weight to factors such as a plea of guilty, previous good record, previous positive contribution to the community, real prospects of rehabilitation; the impact upon a prisoner's family, and the heavy weight of punishment inevitably involved in the loss of professional position and livelihood. These matters should be given real weight;, and it is only in the sense that the need for general deterrence will not normally allow them to reduce the sentence below a significant period of incarceration that it is right to speak of giving 'the greatest weight to the element of general deterrence'".
146 Corbett highlights the need for balance when dealing with general deterrence. Other matters favourable to a prisoner should not be ignored.
147 The Crown submitted that the judge was entitled to find that the appellant was much more than a mere functionary and held a position of considerable responsibility as one of the senior executives subordinate only to Mr Goldberg. I doubt if there is a great deal to be gained in trying to attach labels. What is clear is that the appellant had to carry out Mr Goldberg's instructions. This does not mean that she could not discuss matters with him, or use her own initiative. Her task was to obtain and maintain credit facilities in accordance with his instructions. He needed money to keep his companies going.
148 The Crown submitted that in making each of the three sentences concurrent the principle of totality was properly applied. The Crown emphasised correctly that general deterrence is of particular importance in sentencing for serious white collar crime. In the course of dealings seeking the provision of extremely large sums in credit facilities to a major corporate group, the banks were, the Crown contended, entitled to rely on the accuracy of the information which they received from the appellant in her capacity as a senior executive, subordinate only to Mr Goldberg. The appellant's false statements constituted an egregious abuse of this position of trust: Pantano (1990) 49 A Crim R 328 at 330 and 338. I agree.
149 The Crown correctly pointed out that the offences involved very large sums of money as to both the subject of the false statements ($240 million recorded as cash in the accounts) and the financial advantage sought (new facilities of $10 million and $20 million and continuation of existing facilities of $20 million and $50 million): Hawkins (1989) 45 A Crim R 430 at 435. Further, these offences disclosed a deliberate, co-ordinated and recurring course of deception.
150 The Crown submitted that having regard to the matters outlined in the preceding three paragraphs it was open to the judge to find that the offences were among the worst examples of this class of criminal activity. It contended that the appellant's subjective case was properly reflected in the finding of special circumstances and the proportional increase of the additional term.
151 The question of the correct sentence in the present case was and is a very difficult one. The materials leave me with the strong impression that the appellant was swept along by a dynamic entrepreneur with a dominating personality in a period of much activity and excitement. She had to do what she was told or resign. She became too pre-occupied with doing what he wanted, namely, to obtain money for his group of companies from the banks to achieve his personal ends. In this headlong rush, honesty and truthfulness were casualties. This is always a danger when the business methods employed sail too close to the wind. Her subordinate position was emphasised by her modest salary.
152 While the offences are serious I do not think they can fairly be regarded as amongst the worst type of offences of the kind in question warranting the maximum penalty. The setting in which they occurred, the dynamism and dominance of Mr Goldberg and the lack of any prospect of personal benefit or advantage cannot be ignored. There were also strong subjective factors. She had no prior convictions and was well thought of by people of good repute. She is now 50 years old, married with one child. Her career in the finance world has effectively been brought to an end. On the other hand credit facilities in large amounts were involved. The three offences occurred within a period of three months. General deterrence and the insistence upon honest conduct by company directors and executives is of prime importance.
153 I am persuaded that the sentences do not maintain the right balance between general deterrence and the other features of the case. To reflect the gravity of the offences which are a little below the worst type of cases a concurrent sentence of 4 years should be imposed on each count with a minimum term of two years three months. There are special circumstances. These include the appellant's previous good character, the unlikelihood of further offences and this being the appellant's first gaol sentence.
154 This case should stand as a stern warning to all company directors and company executives that they cannot simply go along with and implement the decisions of their superiors if their implementation involves them in dishonesty or making false statements to banks or others. Such directors and executives must refuse to engage in such conduct even if the result be that their services are terminated. Although that is hard, it is better than the alternative of a substantial period in gaol. The individual responsibility of each director and executive cannot be over emphasised. They should also realise that the Commonwealth Crown will prepare its case thoroughly making it hard to escape and that any trial is likely to be long and expensive.
155 I propose the following orders: