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Guilty of multi-million dollar fraud charges

4 April 2014

Guilty of multi-million dollar fraud charges

Ronald Peter Rosenberg (72) and Sydney Lio Hunt (46) have been found guilty in the Wellington District Court today of charges amounting to $17 million of fraud.

The guilty verdicts were delivered by Judge Davidson following a four week judge alone trial where the pair faced 82 criminal charges of dishonestly using a document. The charges were laid by the Serious Fraud Office (SFO) in July last year following an investigation into retail gas supplier E-Gas Limited (E-Gas).

Mr Rosenberg is the former Managing Director and Mr Hunt the former General Manager of E-Gas. During the investigation, SFO investigators discovered that between April 2005 and October 2008 Mr Rosenberg and Mr Hunt deliberately under-reported the quantity of gas supplied to its retail customers by approximately 950,000 gigajoules (worth approximately $8.74 million, and penalties were avoided to the value of approximately $8.67 million).

SFO Director, Julie Read said, “Serious financial crime places a high cost on the New Zealand economy and affects all consumers. The SFO will continue to focus resources on these high impact areas and we encourage the business community to be aware of any areas of risk in their own industries.”

The charges carry a maximum sentence of seven years’ imprisonment and both defendants have been remanded on bail for sentencing on 29 May.

Background to investigation
Ronald Peter Rosenberg was the Managing Director/CEO and shareholder of E-Gas Limited.

Sydney Lio Hunt was the General Manager and shareholder of E-Gas Limited.

E-Gas was established in 2000 to supply gas to the retail market. In December 2010 the Serious Fraud Office received a complaint about possible inaccuracies between the amounts of gas E-Gas supplied to its customers compared to the amount of gas reported as being used, to gas wholesalers.

Under Gas Industry rules, retailers such as E-Gas are required to book in advance the amount of gas they expect to use in the coming year. Throughout that year, they are required to report actual usage. This is done by submitting data relating to the volume of gas retailers have charged their customers. If actual usage exceeds booked amounts, the retailer will be subject to penalties.

The SFO investigation showed that persons in control of E-Gas deliberately under-reported the quantity of gas supplied by E-Gas to its retail customers, and that they obtained a pecuniary advantage as a consequence. In this case the pecuniary advantage obtained includes gas sold but not paid for, and benefits in the form of avoided penalty payments.

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.

Role of the SFO
The Serious Fraud Office (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 operates three investigative teams:
• Fraud Detection & Intelligence;
• Financial Markets & Corporate Fraud; and
• Evaluation & Intelligence.

The SFO operates under two sets of investigative powers.

Part I 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 II 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…”

The SFO’s Annual Report 2013 sets out its achievements for the past year, while the Statement of Intent 2013-2016 sets out the SFO’s three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz

ENDS

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