R v Jacobs Group

Supreme Court of NSW|2024-07-29|Before: Harrison CJ, Adamson J

JUDGMENT

HIS HONOUR: Jacobs Group (Australia) Pty Ltd ("Jacobs"), formerly known as Sinclair Knight Merz Pty Ltd ("SKM") pleaded guilty on 3 September 2020 to three offences of conspiring to bribe a foreign public official contrary to ss 11.5(1) and 70.2(1)(a)(iv) of the Criminal Code (Cth). Jacobs was sentenced for these offences by Adamson J (as her Honour then was) on 9 June 2021: R v Jacobs Group (Australia) Pty Ltd [2021] NSWSC 657. The Crown's appeal against the sentences imposed by her Honour was dismissed by the Court of Criminal Appeal on 11 July 2022: R v Jacobs Group (Australia) Pty Ltd [2022] NSWCCA 152. On 2 August 2023, the High Court of Australia allowed the Crown's appeal and set aside the order of the Court of Criminal Appeal in so far as it dismissed the appeal against sentence for sequence 3. The High Court remitted the matter to that Court for redetermination of that part of the Crown's appeal under s 5D of the Criminal Appeal Act 1912: The King v Jacobs Group (Australia) Pty Ltd formerly known as Sinclair Knight Merz Pty Ltd [2023] HCA 23; (2023) 97 ALJR 595. The Court of Criminal Appeal thereafter remitted the matter to me for resentencing with respect to sequence 3: R v Jacobs Group (Australia) Pty Ltd [2023] NSWCCA 280.
As will already be apparent, the journey taken by this matter before coming to me has been relatively long and involved. The parties have the extensive reasons and recitation of complex facts in Adamson J's sentencing judgment, as well as the judgments of the Court of Criminal Appeal and the High Court. It was in those circumstances that I indicated to the parties at the conclusion of the sentencing hearing that I proposed to proceed upon the basis that the factual and legal framework, with reference to which I am required to sentence Jacobs, is more than adequately set out in these judgments and that in the interests of economy and efficiency I would avoid any unnecessary repetition. This approach is all the more appropriate having regard to the fact that neither Jacobs nor the Crown has taken issue with any of Adamson J's findings of fact and both parties expressly endorsed them. Having regard to that position, and having analysed her Honour's findings, as well as having compared them to the agreed facts, I propose to adopt them except where indicated. It follows for present purposes that upon any consideration of what follows, a familiarity with her Honour's judgment and that of the Court of Criminal Appeal is assumed.

Jacobs stands to be sentenced upon the basis of agreed facts. These are to be found in two documents respectively entitled Statement of Facts and Supplementary Statement of Facts, each filed with the Court on 13 April 2021 and forming part of Exhibit A of the Crown Tender Bundle at pages 16 - 62 inclusive. The facts specifically referable to sequence 3 are in the Supplementary Statement of Facts at paragraphs 85 to 140 inclusive.

Comment

Before proceeding further it is instructive to observe, considering that the parties accept all of Adamson J's findings of fact, that apart from the obvious and significant fact that I am exercising an independent sentencing discretion afresh, there are in effect only two significant matters that make my task different to that which confronted her Honour. The first is that the applicable maximum penalty for sequence 3 to which I must have regard is $30,391,062, not $11M as understood by her Honour. The significance of a maximum penalty when arriving at a proper sentence is referred to later in these reasons.
The second consists in the conclusion of the Court of Criminal Appeal that her Honour erred in placing emphasis upon the desirability of encouraging self-reporting of corporate misconduct when allowing a sentence discount as well as when determining the notional starting point for the fine to be imposed. Her Honour had dealt with this issue at [181], [184] and [187] of her sentencing judgment as follows: "[181] While a usual purpose of a sentence is to punish the offender, denounce its conduct and deter the commission of like offences, this sentence is required to fulfil a further, and perhaps even more important purpose: to encourage those companies who learn of offending within their own operations to disclose it, even though it might otherwise never be revealed and even though it might, as in the present case, lead to the company and its officers and employees being prosecuted for an offence which would otherwise have gone unnoticed by the investigating authorities. This purpose can be achieved through rewarding the company for its wholly exemplary and extraordinary assistance by applying a substantial discount to the sentence that would otherwise be imposed. … [184] An important objective of the criminal law is to prevent crime. An effective way of preventing foreign bribery, and the conspiracies which facilitate such bribery, is to encourage self-reporting by the companies of their human agents who engage in it. Whether the mechanism is a DPA or a discount for past and future assistance, or an exercise of the prosecutorial discretion in accordance with the Guidelines not to prosecute, the reward must be real in order to constitute an incentive to self-report and assist, including in the prosecution of the company's human agents. … [187] The purpose of general deterrence is to deter others from committing the same or a similar crime. This is commonly regarded as being best achieved by the imposition of a punishment on the wrongdoer. But in the present case, for the reasons given above, the prevention of this particular crime is more readily advanced by rewarding the self-reporting company, who assists the investigating and prosecuting authorities, rather than by punishing it with a substantial fine, with all the opprobrium associated with such a penalty. Nonetheless, I have taken into account the need to deter others from committing similar crimes, as well as the need to encourage corporations such as the company to self-report."
The Chief Justice explained the Court of Criminal Appeal's decision at [121] to [124] as follows: "[121] The Crown submitted that general deterrence required a substantial fine, with the opprobrium that would attach to such a penalty, and at a level that 'not only stripped the respondent of its profits from the offending but outstripped them'. The complaint was that the fine imposed for sequence 3 in fact left a substantial portion of the agreed benefit derived by SKM from its unlawful conduct with the respondent, and that this could scarcely operate as any kind of general deterrent to potential wrongdoers. The Crown submitted that there was no deterrence at all in such an outcome and thus that the sentencing judge's reference to having taken general deterrence into account was mere lip service to an important consideration in the context of white collar offences. In this context, reference was made to Director of Public Prosecutions (Cth) v Gregory (2011) 34 VR 1; [2011] VSCA 145 at [53] where it was said by the Victorian Court of Appeal that '[i]n seeking to ensure that proportionate sentences are imposed the courts have consistently emphasised that general deterrence is a particularly significant sentencing consideration in white collar crime' and that: 'general deterrence is likely to have a more profound effect in the case of white collar criminals. White collar criminals are likely to be rational, profit seeking individuals who can weigh the benefits of committing a crime against the costs of being caught and punished'. [122] The Crown went on to submit that: 'The message to others needed to be simple: where you resort to these concealed and not easily detected crimes, however you have allowed that to occur through your deficient systems, you will suffer a heavy fine when it comes to light. No matter how exemplary your self-reporting, you will still feel the sting of allowing these serious wrongs to come to pass. The fine should hurt. It should not be a cost of doing business. It should not leave you enjoying any of your profits from wrongdoing.' [123] There is, in my opinion, force in the Crown's attack on [187] of the sentencing judgment where, in the context of general deterrence, the sentencing judge returned to the notion of 'rewarding' a self-reporting company that she had introduced in [181] of her sentencing judgment, as reproduced at [119] above. Any such reward is to be effectuated by the giving of a generous discount from the sentence that would otherwise have been imposed. To reduce that notional sentence and the importance of the consideration of general deterrence, as the primary judge appears to have done in SJ [187] by reference to the desirability of encouragement of good conduct, is to run the risk of double counting. That would account for the instinctively surprising outcome that the fine imposed upon the respondent in respect of sequence 3 was significantly less than the agreed benefit it obtained as a result of the admitted offending conduct. It should be noted that there was no agreement as to the value of the benefit (if any) obtained in relation to sequences 1 and 2. [124] An ultimate penalty of $1,350,000, referable to a maximum of $11 million, for an offence assessed by the sentencing judge to have been at the mid-range of objective seriousness, and which left the wrongdoing company with a net benefit from the transaction of several hundred thousands of dollars in respect of sequence 3, suggests either that the importance of general deterrence has been given effect to in name only or that the sentencing discretion has miscarried so as to result in an inadequate penalty, or both. I accept the Crown's submission that: 'What the sentencing judge had in mind [at SJ 184]] seems to have influenced not only the selection of discounts at the very upper end of what was available in the discretion, but also the selection of starting points for the fines - for offending whose objective seriousness was in the mid-range.' This was in my view and with respect to the sentencing judge in error, in relation to the penalties imposed for sequences 1, 2 and 3."
Notwithstanding these comments, the Court of Criminal Appeal declined to intervene and vary the sentence: see s 5D(1) Criminal Appeal Act 1912. The Chief Justice clearly explained that decision at [126] - [128] as follows: "[126] The conclusion reached in [124] above would ordinarily call for a resentencing of the respondent in accordance with Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37. However, this is a Crown appeal, the principles relating to which have been referred to at [104]-[105] above, and the mere identification of error in the sentencing process does not in and of itself justify the imposition of a new sentence. As the respondent submitted, once ground one is dismissed: 'the circumstances of this case are highly fact-specific and in that sense, idiosyncratic, in the artificial structuring of Sequence 3 (which was a continuance of Sequence 2) to take advantage of the new maximum penalty and in the extraordinary circumstances of self-disclosure and ongoing assistance. These aspects are peculiar, and the case thus offers little by way of precedential value.' [127] I agree. [128] The fact that the case offers little by way of precedential value was a matter emphasised by French CJ and Gageler J as a reason not to exercise the s 5D discretion in CMB at [37]. There is also to be taken into account the Crown's candid submission that the arguments advanced on appeal were 'refinements' on the arguments advanced at first instance. While matters of degree may be involved and a close parsing of differences is an arid exercise, this concession tends against a variation of the sentence imposed below."
In addition to the need for me to have regard to these specific relevant matters, the legislative source of applicable sentencing principles is Part 1B of the Crimes Act. Section 16A provides relevantly as follows: 16A Matters to which court to have regard when passing sentence etc. - federal offences (1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court: (a) the nature and circumstances of the offence; … (c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character - that course of conduct; … (e) any injury, loss or damage resulting from the offence; … (f) the degree to which the person has shown contrition for the offence: (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (g) if the person has pleaded guilty to the charge in respect of the offence: (i) that fact; and (ii) the timing of the plea; and (iii) the degree to which that fact and the timing of the plea resulted in any benefit to the community, or any victim of, or witness to, the offence; (h) the degree to which the person has cooperated with law enforcement agencies in the investigation of the offence or of other offences; (j) the deterrent effect that any sentence or order under consideration may have on the person; (ja) the deterrent effect that any sentence or order under consideration may have on other persons; (k) the need to ensure that the person is adequately punished for the offence; (m) the character, antecedents, age, means and physical or mental condition of the person; … (n) the prospect of rehabilitation of the person; …
Some of these matters are dealt with in what follows.

The nature and circumstances of the offence and whether the offence forms part of a course of conduct

Her Honour Adamson J dealt with these issues at [146] - [160] of her judgment. As her Honour noted, the choice by the prosecutor to charge conspiracy to cause an offer of a bribe to a foreign official, rather than the substantive offence of bribing a foreign official, enables the Crown to roll together the events which constituted a course of conduct. However, as her Honour also observed, it is necessary to ensure that Jacobs is not sentenced for the payment of bribes when the charge to which it has pleaded guilty is conspiracy. However, the maximum penalty for these offences is the same.
The period of the sequence 3 conspiracy was two years and four months from 20 February 2010 until 15 June 2012. It is sufficient to observe that the conduct which is the subject of sequence 3 is not a single isolated event, but continued for what I consider to be an extended period.

Injury, loss or damage resulting from the offence

The damage resulting from the offence cannot be known in empirical or calculable terms. That does not mean that it did not occur.
The material before me is replete with references to the widespread damage caused by bribery which was tendered without objection. For example, a publication 'The World Bank Notes - May 1998, number 4' includes the following: "Corruption's costs The growing body of theoretical and empirical research on the economic impact of corruption suggests that: • Bribery is widespread, but there are significant variations across and within regions. For example, survey responses suggest that Botswana and Chile have less bribery than many fully industrialised countries. • Bribery raises transactions costs and uncertainty in an economy. • Bribery leads to inefficient economic outcomes. It impedes long-term foreign and domestic investment, misallocates talent to rent-seeking activities, and distorts sectoral priorities and technology choices (by, for example, creating incentives to contract for large defense [sic] projects rather than rural health clinics specializing in preventive care). It pushes firms underground, undercuts the state's ability to raise revenues, and leads to ever-higher tax rates being levied on fewer and fewer taxpayers. This, in turn, reduces the state's ability to provide essential public goods, including the rule of law. A vicious circle of increasing corruption and underground economic activity can result. • Bribery is regressive, falling heavily on trade and service activities undertaken by small enterprises. • Corruption undermines the state's legitimacy."
Jacobs did not contend otherwise.

Remorse, contrition and rehabilitation

I accept that Jacobs' guilty plea, together with its actively demonstrated practical cooperation with authorities, bespeaks remorse and contrition for the offending on sequence 3.

Plea of guilty

The parties are agreed, and I am independently satisfied, that a discount of 25% is appropriate for Jacobs' early plea of guilty.

Cooperation with law enforcement agencies

Her Honour Adamson J described the assistance given to the authorities as "incomparable". The Australian Federal Police concluded, in its Letter of Assistance dated 7 May 2021, that the assistance provided by SKM and, from the time of acquisition, by Jacobs, could be described as of "high value". Federal Agent Crozier described Jacobs' conduct in his evidence at the sentence hearing before Adamson J as "best practice" and its assistance as of the highest quality. Jacobs also gave an undertaking to provide future assistance in the prosecution of individual officers.
The Crown did not take issue with her Honour's assessment of a 30% discount for past assistance and a 10% discount for future assistance. The Crown submitted that this result would not be disproportionate to the objective gravity of the offending for sequence 3 or an affront to community standards or otherwise manifestly inadequate. That later submission was to some extent informed by the thrust of remarks such as those of Latham J in R v Sukkar [2006] NSWCCA 92; (2006) 172 A Crim R 151 at [54]: "While there is no fixed tariff for assistance to the authorities, discounts customarily ranged between 20 percent and 50 percent. There have been comparatively rare cases where a discount in the order of 55 percent or 60 percent has been given. Generally speaking however, a discount of 50 percent is regarded as appropriate to assistance of a very high order. No doubt, that is in part a reflection of the principle that a discount for assistance must not produce a result which is disproportionate to the objective gravity of a particular offence and the circumstances of a particular offender."
It was submitted on behalf of the Crown by Mr Craddock SC that: "…these were very serious offences. True it is that the aftermath involves exemplary conduct on the part of senior management, the board of SKM and of Jacobs Group but these are serious offences, serious consequences and it is difficult to see cooperation clearly having predominance over other matters in section 16A(2)."
In contrast, Jacobs submitted that the assistance it provided over several years amounted in essence to a brief of evidence that permitted the Crown without more to mount the very prosecution of the charges to which Jacobs has pleaded guilty. In those circumstances, Jacobs submitted that the discount should be higher.
The differences between these submissions bear witness to the tension, when sentencing for federal offences, between the statutory exhortation in s 16A(1) of the Crimes Act on the one hand and the ability of the sentencing tribunal to give full effect to the sentencing discretion both when assessing the applicable discount for assistance and choosing an undiscounted starting point for the sentence on the other hand. It must be recognised that these things have the potential to pull in different directions.
The maximum penalty and the objective seriousness of the offending are significant contributors to the choice or assessment of an undiscounted sentence and attract particular attention for that reason. It ought also to go without saying that the choice of a starting point should not as a matter of logic or principle, and apart from a statutory requirement, be influenced by separate considerations informing the assessment of the quantum of any discounts for assistance or a guilty plea that may later be applied. However, notwithstanding these matters, the statutory command in s 16A(1), that in determining the sentence to be passed in respect of any person for a federal offence, a court must impose a sentence that is of a severity appropriate in all the circumstances of the offence, potentially creates significant difficulties.
Section 16A(1) is similar, but not identical, to the Crimes (Sentencing Procedure) Act 1999 (NSW), s 23(3) which is in these terms: "23 Power to reduce penalties for assistance provided to law enforcement authorities … (3) A lesser penalty that is imposed under this section in relation to an offence must not be unreasonably disproportionate to the nature and circumstances of the offence."
The decision of Sukkar, referred to earlier, involved sentencing for a federal offence and did not contain any reference to s 23(3) of the Crimes (Sentencing Procedure) Act.
Section 16AC(1)-(2) of the Crimes Act requires the Court, if it reduces the sentence by reason of the offender's undertaking to co-operate with law enforcement agencies relating to an offence, to state that the sentence has been reduced for that reason and specify the sentence that would have been imposed but for that reduction. Clearly enough, that provision is directive and mechanical but not substantive and so does not assist in resolving the current tension.
As potentially offensive to the application of instinctive synthesis and the exercise of an unfettered sentencing discretion as it may on one view appear to be, I take the import of s 16A(1) to be that the words "the sentence to be passed" contained in the expression "in determining the sentence to be passed… in respect of any person for a federal offence" must be a reference to the final sentence imposed on the offender after the application of any discounts.

Specific deterrence

I do not consider that there is any need to incorporate any element of specific deterrence in the determination of a proper sentence in this case. I note her Honour's reference to the Crown's acceptance, re-embraced before me, that Jacobs "has made very significant changes to company policies and procedures in order to prevent a recurrence of offending of a like nature". The extent to which Jacobs assisted and cooperated with the law enforcement agencies gives an unambiguous insight into the likelihood that any similar offending will ever be repeated.

General deterrence

General deterrence, in contrast, must figure prominently in the assessment of what is a proper sentence in this case. The parties spoke with one voice on this issue.
For abundant caution, and in the interests of transparency, I should indicate that s 16A(1) would appear in my opinion also to have work to do in respect of this aspect of determining a proper sentence. In other words, the significance of general deterrence would not be adequately recognised if the requirement to impose a sentence that is of a severity appropriate in all the circumstances to deter like offenders were given mere lip service.

Delay

Jacobs submitted that delay in its prosecution was a matter of significance and should be accorded equivalent weight. Mr Walker SC, on behalf of Jacobs, submitted that the unresolved question lasting several years, about whether or not the company would be prosecuted, created a climate of corporate uncertainty which had the potential to frustrate decision making and the ability to govern. Although there is no evidence of whether or how this disruption actually affected the company in any demonstrable or practical way, I take the burden of the submission to be that it suffered presumptive prejudice from the fact that Jacobs remained under a cloud at least between 31 August 2012 and 2017 in total amounting to approximately three years of unexplained delay during that time.
I expressed the tentative view in the course of the sentencing hearing that delay in the absence of proof of some tangible effect upon Jacobs did not seem to me to be a significant factor in this case. I consider that my tentative view was correct. That is not to say that it should be given no weight. It does mean that I would not be prepared to treat it as a factor warranting the imposition of a significantly reduced sentence.
Having regard to the fact that the cases in this area of sentencing law and practice are almost universally directed to the effect of delay on natural persons, they have not been particularly instructive for my purposes. However, if the delays in this case caused actual disruption and prejudice to Jacobs, at least some evidence of the actual impact upon Jacobs' corporate operations, supported by its relevant financial statements, would have been helpful. In expressing the matter in that way, I am not suggesting that some inference adverse to Jacobs should be drawn. Rather, it is simply that my ability to give content to the effect of delay must remain a matter of assumption or generality.

Conclusion

In my opinion, the sequence 3 offending lies in the middle of the range of objective seriousness for offences of this kind. I acknowledge immediately that, as with any such assessment, there is an unavoidable element of arbitrariness involved. More particularly is this so in the present case when no list or schedule of acceptable comparators is available. However, the systematic and organised methods adopted by those SKM officers concerned to encourage and conceal the illicit payments means that this offending was neither casual nor unique.
The maximum penalty to which Jacobs is exposed by reason of its offending is not inconsiderable. It necessarily serves as a marker of the outer limits of the disapprobation with which the parliament views such offences. That does not mean, however, that a conclusion that the offending falls in the middle of a notional range of objective seriousness equates to a penalty that is half the maximum. I take account of the fact that Jacobs has no history of prior offending, has exceedingly good prospects of not reoffending and has a high commercial profile in the commercial and geographical location where the offence was committed. The latter consideration enhances the likelihood that its conviction and sentence will operate as a general deterrent in an environment where bribes and illicit payments to secure or retain contracts would appear to be notoriously common.
Some evidence suggests that Jacobs will have recourse to what has been described as an escrow account made up of retained portions of sale proceeds of individual shareholders pending completion of these proceedings. The existence of such a retention fund could pull in more than one direction when assessing the extent to which any fine imposed by me would operate as suitable or effective punishment, retribution and denunciation of the offending conduct. That is so to the extent that shareholders who were neither involved in the acts that constituted the offence nor condoned or approved of what occurred will apparently be required to fund or to contribute to any fine that is imposed upon the company.
In my assessment, the competing considerations that attend that circumstance should and must be put to one side. Apart from subjective factors that legitimately inform the sentencing exercise, the serendipitous nature of how any such fund may have come into existence, or who may be the ultimate contributors to the penalty I intend to impose upon Jacobs, are irrelevant matters and I propose to disregard them.
I need not repeat the series of praiseworthy epithets that have been used to describe Jacobs' self-reporting and its extensive and extended cooperation with the authorities to which reference has already been made. I specifically adopt her Honour's analysis in this respect. Alike with general deterrence, the beneficial and educative notoriety that attends the wider dissemination of the disincentive for others to offend in a similar manner should also attach to the publication of the benefits that commend uncovering and confessing corruption of this kind. However, as the Court of Criminal Appeal has clearly indicated, the notion of "rewarding" the offender for its commendable cooperation should not be seen as a countervailing factor to general deterrence nor as a matter at the other end of a continuum that effectively robs the sentence of any real deterrent effect.
In the same manner as that adopted by her Honour, I propose to allow a discount of 25% for the company's plea of guilty. I also propose to allow a combined discount of 40% for the company's past assistance and undertaking to assist in the future. In that respect, I gratefully adopt her Honour's description of these matters at [191], "which make the present a truly extraordinary case of self-reporting of a practically undetectable crime and the provision of substantial assistance to the investigating and prosecuting authorities, without which it would have been almost impossible to bring either the company or the individual accused … to justice". That should be understood as a description of the value of the conduct. As I have attempted to make clear, it should not be understood as a matter that counter-balances, far less reduces, the importance of the need for general deterrence.
No lesser discount than that arrived at by her Honour can in my estimation accurately reflect the exemplary nature of Jacobs' conduct. However, any greater discount, as sought by Jacobs, would potentially, if not certainly, dilute the deterrent effect of the sentence and offend the statutory exhortation in s 16A(1) of the Act.
I indicate that, of the 40% I propose to allow for assistance, 30% is for the past assistance and 10% is for the undertaking pursuant to s 16AC of the Crimes Act to give future assistance.
Also, in accordance with the approach adopted by her Honour, I propose to apply the 25% discount to the starting point for the fine and apply the discount for assistance to the resultant figure.
The fine that I would have imposed but for the plea of guilty and discount for assistance is $7,500,000. I allow a discount of 25% for the plea of guilty, with the consequence that the fine is reduced to $5,625,000. Applying the combined discounts of 30% and 10% to that figure produces a result of $3,375,000. That is the fine to be imposed.

Orders

For the reasons given above, I make the following order: 1. Jacobs Group (Australia) Pty Ltd is convicted of sequence 3. 2. In respect of sequence 3, I impose a fine of $3,375,000.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 August 2024

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