The
Court of Appeal dismissed an appeal by former E-Gas chief executive Ronald
Peter Rosenberg against his sentence for fraud of three years’ imprisonment and
reparations of $400,000 describing the sentence as being lenient. Benefits to E-Gas following the fraud were
estimated at $17.4 million.
Mr Rosenberg was convicted in April 2014 on 41
charges of dishonestly using a document in relation to under-reported gas usage
over a four year period up to 2008. As a
“non-incumbent” gas retailer, E-Gas was required to report customer usage to
each area’s incumbent default retailer.
The default retailer had to pay the wholesale price for gas passing
through the metered “gate” for its area, collecting payment from non-incumbent
retailers for gas on-sold to their customers within its area. It had to bear the cost of any inaccurate,
incomplete or dishonest reporting by non-incumbent retailers.
Mr Rosenberg and fellow E-Gas director Sydney
Hunt manipulated customer records for E-Gas to understate gas usage,
under-reporting nearly one million
gigajoules of gas used over a four year period.
This resulted in a $17.4 million windfall for E-Gas.
On conviction for fraud: Mr Rosenberg was
sentenced to three years’ imprisonment and ordered to pay reparations of
$400,000; Mr Hunt was sentenced to three and a half years’ imprisonment with no
order for reparations since he was bankrupt.
Mr Rosenberg appealed the order for reparations
stating the sentencing judge had not taken into account the financial contribution
he made by giving up potential legal claims he had against E-Gas.
The Court of Appeal was told Mr Rosenberg
controlled a company called Multi Gas (NZ) Ltd which held security over E-Gas
assets for a claimed debt of some $7.58 million. An out-of-court settlement between Mr
Rosenberg and the liquidators of E-Gas saw Mr Rosenberg surrender legal rights
he claimed against E-Gas. This
settlement increased the payout for E-Gas unsecured creditors from sixteen
cents in the dollar to about 67 cents in the dollar. Mr Rosenberg said this benefit is in the
nature of reparations and the court ordered $400,000 reparations should be
reduced.
At sentencing, Mr Rosenberg declared personal
net assets of $383,170. He lived in a
$3.2 million home owned by his wife’s family trust.
The Court of Appeal observed that a sentence of
three years’ imprisonment could be regarded as merciful given the extent of the
fraud (which was estimated to benefit Mr Rosenberg personally to the tune of at
least $9.75 million), its sustained deliberate and systematic nature, and the
associated damage caused the gas supply system.
He undoubtedly deserved an unusually significant credit for his
outstanding contribution to the community, particularly professional and
religious groups, as well as recognition for his age (then aged 73) and his
ill-health, the court said.
Reparations can still be ordered when
defendants have made an out-of-court settlement with those they have injured,
the court ruled. In this case, the
settlement was not in the nature of a payment of cash from savings by a
remorseful defendant, but rather the settlement of contested litigation claims,
the court said. If the claim had gone to
trial, the result might have been worse for Mr Rosenberg.
The Court of Appeal said the amount of
reparations ordered at $400,000 was high, but the sentence as a whole is not
manifestly excessive. We have no doubt,
said the court, that the sentencing judge was putting together the most lenient
package that he could for Mr Rosenberg, given his understandable sympathy for
him.
Rosenberg
v. R – Court of Appeal (26.03.15)
15.025