Concealing involvement leads to fraud and corruption charges

Concealing involvement in companies leads to fraud and corruption charges

The Serious Fraud Office (SFO) has today laid charges in the Manukau District Court against two former employees of Thermakraft Industries (NZ) Ltd (Thermakraft).
  
Peter Sanele (55), a former factory manager at Thermakraft, faces two charges of dishonestly taking or using a document in relation to Macpallets Ltd (Macpallets). Macpallets was a company which supplied pallets and other packaging materials to Thermakraft. It is alleged that Macpallets received more than $200,000 from false invoices which Mr Sanele arranged to be issued by Macpallets to Thermakraft.
  
Mr Sanele and Mark Treadwell (61), a former director and shareholder at Thermakraft, are jointly charged with obtaining by deception in relation to JMP Transport Ltd (JMP). Mr Sanele and Mr Treadwell are also charged under section 5 of the Secret Commissions Act for failing to disclose a pecuniary interest in a contract in relation to JMP. The SFO alleges that Mr Sanele and Mr Treadwell set up JMP to provide transport services to Thermakraft, using their positions at Thermakraft to ensure JMP was preferred over other cartage suppliers. They failed to tell Thermakraft about their involvement in JMP. JMP received payments of more than $480,000 from Thermakraft for cartage services and Mr Sanele and Mr Treadwell each received $90,000 from JMP purportedly for consulting services, which they also concealed from Thermakraft.

SFO Director, Julie Read said, "The SFO alleges that the concealment of the defendants' interest in the suppliers constitutes a fraud on Thermakraft. Conduct of this kind can have a corrosive impact on the integrity of a company and the SFO is committed to ensuring that this sort of behaviour does not take hold in the New Zealand business environment."

The defendants have been remanded on bail without plea and will reappear in the Manukau District Court on 21 October.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Thermakraft Industries (NZ) Ltd has been operating in New Zealand since 1987. It is based in East Tamaki and sells a range of building products throughout New Zealand and worldwide.

Macpallets was set up in 2008 to manufacture and supplies new and recycled pallets.

JMP Transport was incorporated in 2012 and supplies transport freight services.

Crimes Act offences

Section 228 Dishonestly taking or using document
Every one is liable to imprisonment for a term not exceeding 7 years who, with intent to obtain any property, service, pecuniary advantage, or valuable consideration,-
(a) dishonestly and without claim of right, takes or obtains any document; or
(b) dishonestly and without claim of right, uses or attempts to use any document.

Section 240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,-
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.

(2) In this section, deception means-
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and-
  (i) knows that it is false in a material particular; or
  (ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.

Secret Commissions Act Offences

Section 5 Duty of agent to disclose pecuniary interest in contract
(1) Every agent is guilty of an offence who makes a contract on behalf of his principal and fails to disclose to his principal, at the time of making the contract or as soon as possible thereafter, the existence of any pecuniary interest which the agent has in the making of the contract, unless to the knowledge of the agent the existence of such pecuniary interest is already known to his principal.

(2) For the purposes of this section any pecuniary interest which a parent, husband, wife, civil union partner, de facto partner, child, or partner of the agent has in the making of the contract shall be deemed to be the pecuniary interest of the agent, unless he proves that he had no knowledge of that interest at the time when he made the contract.

(3) For the purposes of this section an agent shall not be deemed to have any pecuniary interest in the making of a contract by reason merely of the fact that he or any person mentioned in the last preceding subsection is a shareholder in an incorporated company having more than 20 members.

About the SFO

The SFO was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO's role is the detection, investigation and prosecution of serious or complex financial crime. The SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:

• business and investor confidence in our financial markets and economy
• public confidence in our justice system and public service
• New Zealand's international business reputation.

The SFO operates three operational teams; the Evaluation and Intelligence team along with two investigative teams.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part 2 of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

In considering whether a matter involves serious or complex fraud, the Director may, among other things, have regard to:

• the suspected nature and consequences of the fraud and/or;
• the suspected scale of the fraud and/or;
• the legal, factual and evidential complexity of the matter and/or;
• any relevant public interest considerations.

The SFO's Annual Report 2014 sets out its achievements for the past year, while the Statement of Intent 2014-2018 sets out the SFO's strategic goals and performance standards. Both are available online at www.sfo.govt.nz