Fraud against Mighty River Power receives jail time and home detention

Fraud against Mighty River Power receives jail time and home detention

A pair who committed fraud against one of New Zealand's largest power companies have been sentenced in the Auckland High Court today.

Paul Kenneth Rose and Jane Clare Rose were found guilty in March this year of Crimes Act charges of ‘Obtaining by deception' following a Serious Fraud Office prosecution. The victim, Mighty River Power Limited, had undertaken an internal investigation in November 2012 before the matter was referred to the SFO.

Paul Rose was sentenced to three years and two months' imprisonment and Jane Rose was sentenced to nine months of home detention.

The multi-million dollar fraud related to procurement for the Company's Southdown power station.

Paul Rose was employed as an Electrical Engineer at the Southdown power station. He organised for companies to be set up in the name of Jane Rose (and that of a former partner) to conceal his interest in, and connection to, these companies. He then used these companies to invoice Mighty River Power, first on his own, and later with the assistance of Jane Rose. Mighty River Power was not aware of Paul Rose's interest in these companies and he did not declare the conflict of interest. Payments of approximately $2.2 million were paid to the companies by Mighty River Power.

Director of the Serious Fraud Office, Julie Read said, "We are pleased that our investigation and prosecution has led to punishment for these attempts to deliberately deceive an employer. Mighty River Power is a significant contributor to the New Zealand economy and the SFO places a great deal of importance on our contribution to maintaining the reputation of New Zealand as a safe place to do business."

Paul Rose's offending took place between March 2006 and December 2012 and Jane Rose was involved over a period of time between February 2010 and December 2012.

ENDS

For further media information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Mighty River Power Limited is an electricity retailer and generator, which operates the Waikato Hydro System, five geothermal power stations in the Central North Island and a gas and steam-fired station at Southdown in Auckland. 

Paul Kenneth Rose was employed at the Southdown (Penrose) power station in Auckland from November 2001 to December 2012, initially as an Instrumentation and Electrical Technician and subsequently as an Electrical Engineer. Part of Paul Rose's role was to identify what equipment was required to be ordered, or services to be provided, for the operation of the plant.

Crimes Act offences

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.

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 2015 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