R (Cth) v Milne (No. 6)

JOHNSON J : On 18 October 2010, the Offender, Michael John Milne, entered pleas of not guilty to one count of money laundering contrary to s.400.3(1) of the Criminal Code (Cth) and one count of doing an act with the intention of dishonestly obtaining a gain from the Commonwealth contrary to s.135.1(1) of the Criminal Code (Cth) .

On 19 November 2010, the jury returned verdicts of guilty on both counts in the indictment. A sentencing hearing proceeded on 2 December 2010, when the matter was adjourned until today for imposition of sentence. The Offender has remained on conditional bail since the jury returned verdicts of guilty on 19 November 2010. Principles Concerning Fact Finding on Sentence

It falls to me as the trial Judge to determine punishment and, for that purpose, to make findings of fact relevant to sentencing. My view of the facts must be consistent with the verdicts of the jury, and findings of fact I make against the Offender must be arrived at beyond reasonable doubt: R v Isaacs (1997) 41 NSWLR 374 at 377-378; Cheung v The Queen [2001] HCA 67; 209 CLR 1 at 12-13 [13]-[14]. The Court may not take facts into account on sentence, in a way that is adverse to the interests of the Offender, unless those facts have been established beyond reasonable doubt. On the other hand, if there are matters which the Offender relies upon in mitigation of penalty, it is enough if those matters are proved by the Offender on the balance of probabilities: The Queen v Olbrich [1999] HCA 54; 199 CLR 270 at 281 [27]-[28]. The Offences

Count 1 of the indictment alleged that the Offender, between about 30 April 2004 and about 30 September 2005, at Sydney in the State of New South Wales and elsewhere dealt with property, intending that the property, namely a parcel of shares, would become an instrument of crime, in that it would be used to facilitate the commission of an offence by Barat Advisory Pty Limited (“Barat Advisory”) and at the time of the dealing, the value of the property was $1,000,000.00 or more.

The maximum penalty for this offence is imprisonment for 25 years: s.400.3(1) Criminal Code (Cth) .

Count 2 of the indictment alleged that the Offender, on or about 13 November 2006 at Sydney in the State of New South Wales did, with the intention of dishonestly obtaining a gain from the Commonwealth, cause to be lodged an income tax return in the name of Barat Advisory for the year ending 30 June 2005 containing false information, namely that the net capital gain from the sale of shares in Admerex Limited (“Admerex”) was $4,597.00.

The maximum penalty for this offence is imprisonment for five years: s.135.1(1) Criminal Code (Cth). Evidence at the Trial and at the Sentencing Hearing

The Crown called a number of witnesses to give evidence at the trial, and in addition, tendered a substantial volume of documentary material.

During the course of the Crown case at trial, a number of documents were tendered for the Offender and became Defence exhibits. The Offender did not give evidence at the trial, nor was any witness called in the Defence case.

At the sentencing hearing, the Crown relied upon evidence given at the trial, and no additional evidence was tendered on sentence.

A number of testimonials, which bore upon the Offender’s subjective circumstances and prior good character, were tendered in the Defence case on sentence. Reference will be made to these testimonials later in these remarks.

Senior counsel for the Crown and the Offender made written and oral submissions on sentence, including submissions concerning findings of fact which should be made by reference to the evidence and the issues in the trial, consistent with the verdicts of the jury. Facts of Offences

The Offender was born in November 1955. The evidence at trial, supported by the testimonial evidence on sentence, indicates that the Offender has been, over many years, a successful businessman.

Fact finding on sentence will involve a number of findings concerning activities of the Offender and his company, Barat Advisory, over a period of time extending from 2003 to 2006. Most of these events are not in dispute and were summarised in a flowchart (Trial Exhibit A) provided to the jury. In addition, extensive factual admissions were made by the Offender for the purpose of the trial (Trial Exhibit B). Further, there was the evidence of Mr Shaun Mark, a financial analyst, concerning the tracing of funds through various accounts and summarising, in schedules, share transactions and the movement of monies and purchases made with those funds. Mr Mark prepared the flowchart and a volume of documents were tendered through him (Trial Exhibit C6). His oral evidence further explained the flowchart, schedules and summaries which he had prepared, and linked them to a series of primary documents. Mr Mark was not cross-examined at trial. His evidence was not contested.

The principal issues at the trial concerned the conclusions which ought be reached by reference to the body of essentially uncontested documentary evidence, particularly in the light of oral evidence from certain Crown witness.

What follows in this part of the remarks on sentence is a detailed recital of relevant evens between 2003 and 2006. Thereafter, I will make specific findings of fact in areas of controversy, before moving to other areas requiring findings for the purpose of imposition of sentence. Barat Advisory Obtains a Shareholding in Admerex

On or around 16 January 2003, the Offender entered into a Mandate Agreement with Sinitus Treuhand AG (“Sinitus”) concerning Clairmont Holdings & Finance Limited (“Clairmont Holdings & Finance”).

Sinitus was a Swiss financial services company. Urs Meisterhans was a partner in Sinitus. As will be seen, Mr Meisterhans was a significant participant in events connected to the offences. He was not called to give evidence at the trial. Clairmont Holdings & Finance was a company incorporated in the British Virgin Islands.

The Mandate Agreement provided that, in return for a fee to be paid by the Offender, Sinitus would act as directors and/or officers of Clairmont Holdings & Finance, and would act exclusively on instructions received from the Offender or his attorney. On this basis, the Offender controlled Clairmont Holdings & Finance.

In or around May 2003, the Offender was introduced to Kim Goodall. Mr Goodall had previously been involved in a Swiss software development company known as Temenos Group AG (“Temenos”). Mr Goodall was a Crown witness at the trial, whose evidence on a number of issues was strongly challenged by the Defence.

As at 21 May 2003, Global Technology Limited (“GTL”) was owed a debt of approximately $11 million by Global Technology Australasia Limited (“GTAL”). GTL was a company registered in South Africa and was the holding company of GTAL, which was a publicly listed company registered in Australia. GTAL had no funds to pay the debt.

As part of a complex series of negotiations, on 21 May 2003, GTL and Clairmont Holdings & Finance signed a Debt Assignment Agreement.

Pursuant to the Debt Assignment Agreement, on 21 May 2003, GTL sold this debt (referred to at [21]) to Clairmont Holdings & Finance for one dollar, payable if and when demanded. Consequently, GTAL owed a debt of approximately $11 million to Clairmont Holdings & Finance. The total amount of the assigned debt ultimately turned out to be $7,902,152.02.

On 8 July 2003, the Offender was appointed as an executive director and acting chief executive officer of GTAL and its subsidiaries.

On 10 July 2003, GTAL changed its name to Admerex.

On 15 August 2003, on instructions from the Offender, Baret Advisory Pty Limited was registered with the Australian Securities and Investments Commission. The name of this company was changed to “Barat Advisory Pty Limited” on 24 November 2003. From the time of its incorporation, the Offender has been the sole director and shareholder of Barat Advisory. Accordingly, the Offender was, at all relevant times, the controlling mind of Barat Advisory.

In or around October 2003, the Offender and Mr Goodall decided to acquire approximately $7.9 million of the debt owed by Admerex to Clairmont Holdings & Finance.

On 18 November 2003, Clairmont Holdings & Finance sold $2,236,459.00 of the debt owed to it by Admerex to Barat Advisory. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003 (at that time said to be in the sum of approximately $11 million), before GTAL changed its name to Admerex.

In consideration for obtaining the debt owed by Admerex in the sum of $2,236,459.00, Barat Advisory was required to pay $1.5 million to Clairmont Holdings & Finance by 20 November 2003.

Barat Advisory did not pay the $1.5 million it owed to Clairmont Holdings & Finance as consideration for its acquisition of the debt owed by Admerex in the sum of $2,236,459.00.

On 18 November 2003, Clairmont Holdings & Finance sold $5,665,692.00 of the debt owed to it by Admerex to Atticus Investments Assets Inc (“Atticus”), a company operated by Mr Goodall. This debt was part of the debt acquired by Clairmont Holdings & Finance on 21 May 2003, before GTAL changed its name to Admerex.

In consideration for obtaining the debt owed by Admerex in the sum of $5,665,692.00, Atticus was required to pay $3.8 million to Clairmont Holdings & Finance by 20 November 2003, and such a payment was made on or around 20 November 2003.

On 24 November 2003, Mr Goodall was appointed as a director of Admerex, and he continued thereafter to be a director of Admerex.

On 19 December 2003, Barat Advisory opened bank account number [A] with the Commonwealth Bank of Australia (“the Barat Advisory CBA Account”). This bank account was opened at the direction of the Offender, in his capacity as the sole director and shareholder of Barat Advisory. Barat Advisory operated the Barat Advisory CBA Account during the period from 19 December 2003 until 19 November 2007. The Offender was the only person authorised to operate the Barat Advisory CBA Account.

Barat Advisory also operated bank account number [B] with St George Bank (“the Barat Advisory St George Account”).

On 30 April 2004, an allotment of 55,911,475 shares in Admerex was issued to Barat Advisory, at a value of four cents per share, to repay the debt of $2,236,459.00 owed by Admerex to Barat Advisory. As will be seen, the steps taken by the Offender concerning this parcel of shares constituted a central issue in the trial.

On 30 April 2004, an allotment of 141,642,300 shares in Admerex was issued to Atticus, at four cents per share, to repay the debt of $5,665,692.00 owed by Admerex to Atticus.

The issue of Admerex shares on 30 April 2004, in order to repay the debts owed by Admerex to Barat Advisory and Atticus, was the subject of an independent expert’s report, which concluded that the issue of shares was fair and reasonable to other Admerex shareholders, and was approved at an annual general meeting of Admerex shareholders on 30 April 2004.

On 7 January 2005, the Offender resigned as a director of Admerex. Creation of the Stichting Groups

In or around May 2004, the Offender approached a lawyer, Anne Harley, to seek advice in relation to the 55,911,475 Admerex shares which were issued to Barat Advisory on 30 April 2004. For ease of reference, I will call these the “55 Million Admerex Shares” . The Offender had met Ms Harley in 2000, and she provided professional advice to him from time to time thereafter. Ms Harley was a Crown witness at the trial. The Offender sought advice from Ms Harley as to how the 55 Million Admerex Shares could be moved offshore and placed within a structure to facilitate the sale of those 55 Million Admerex Shares to offshore investors. Tax advantages from this were the subject of discussion between Ms Harley and the Offender.

Ms Harley was then a partner, with expertise in taxation law, in the legal firm Atanaskovic & Hartnell.

In response to the Offender’s request for advice, Ms Harley developed an offshore structure which used offshore companies and entities known under Dutch law as “stichtings” . Ms Harley had previously used the stichting group structure for another client.

The offshore structure developed by Ms Harley consisted of five stichtings and five offshore companies (“the Stichting Group”).

The five stichtings established by Ms Harley were known, respectively, as: (a) Stichting Black; (b) Stichting Badinage; (c) Stichting Adelaar; (d) Stichting Aurelius, and (e) Stichting Wijsheid.

These five stichtings were established on 11 June 2004, and were administered on behalf of the Offender by a Dutch administration services company known as Citco Nederland BV (“Citco”).

The five offshore companies were: (a) Challinor Equities Limited (“Challinor Equities”); (b) Schlossman Partners Limited (“Schlossman Partners”); (c) Thouvanel Investments (Asia Pacific) Limited (“Thouvanel Investments”); (d) Metevier Securities International Limited (“Metevier Securities”), and (e) Vaillendourf Europe Limited (“Vaillendourf Europe”).

These companies were incorporated in St Vincent and the Grenadines by Mr Meisterhans, at the request of Ms Harley, on 3 June 2004. Mr Meisterhans was appointed as a director of each of these companies.

Each stichting was the sole shareholder of one of the offshore companies: (a) Stichting Black was the sole shareholder of Challinor Equities; (b) Stichting Badinage was the sole shareholder of Schlossman Partners; (c) Stichting Adelaar was the sole shareholder of Thouvanel Investments ; (d) Stichting Aurelius was the sole shareholder of Metevier Securities, and (e) Stichting Wijsheid was the sole shareholder of Vaillendourf Europe.

Each Stichting Group was in similar form, and was established by documentation which was essentially the same in content and purpose.

By way of example, the Stichting Group comprising Stichting Adelaar and Thouvanel Investments was established on the basis of the following documentation: (a) Deed of Establishment of Stichting Adelaar dated 11 June 2004 - the Deed of Establishment provided for the creation of Stichting Adelaar under Dutch law. (b) Master Investment Futures Agreement and Form of Confirmation between the Offender and Stichting Adelaar dated 11 June 2004 - under the Master Investment Futures Agreement and Form of Confirmation: (i) The termination date was 1 July 2005. (ii) Although the termination date was 1 July 2005, it was anticipated when the Master Investment Futures Agreement was entered into, as part of the Stichting Group structure, that the termination date would be extended for a further period, not exceeding 10 years. (iii) On 1 March 2005 of each year until the termination date, the Offender was obliged to pay Stichting Adelaar the shortfall, if any, between the dividend paid or payable by Thouvanel Investments to Stichting Adelaar in respect of the financial year immediately preceding that date, and the amount equivalent to 10% of the committed capital of Thouvanel Investments. (iv) On the termination date, the Offender was obliged to pay Stichting Adelaar the amount equivalent to 10% of the committed capital of Thouvanel Investments. (v) As the committed capital of each stichting was US$100.00, the Offender’s maximum exposure in relation to each annual payment and termination payment was US$10.00. (vi) On the termination date, Stichting Adelaar was obliged to pay the Offender the amount equivalent to 99% of the value of the shares held by Stichting Adelaar in Thouvanel Investments. (vii) The Offender was not entitled to any payment by Stichting Adelaar or Thouvanel Investments, and was not entitled to any of the assets of Stichting Adelaar or Thouvanel Investments, until after the termination date. (c) Management Contract between Stichting Adelaar, Thouvanel Investments and the Offender entered into on or around 11 June 2004 - under the Management Contract, the Offender was required to arrange a manager for Thouvanel Investments who would be responsible for the investment decisions and performance of Thouvanel Investments. (d) Deed of Charge between the Offender and Stichting Adelaar dated 11 June 2004 - under this Deed of Charge, Stichting Adelaar could not deal with, sell or otherwise dispose of or part with possession of the shares it held in Thouvanel Investments, unless it had prior written consent of the Offender. This Deed of Charge also prohibited Stichting Adelaar from creating any interest or encumbrance in relation to the shares it held in Thouvanel Investments, other than an encumbrance in favour of the Offender, unless it had prior written consent of the Offender. (e) Deed of Charge between the Offender and Thouvanel Investments entered into on or around 11 June 2004 - under this Deed of Charge, Thouvanel Investments could not deal with, sell or otherwise dispose of or part with any of its property, unless it had prior written consent of the Offender. This Deed of Charge also prohibited Thouvanel Investments from creating any interest or encumbrance in relation to any of its property, other than an encumbrance in favour of the Offender, unless it had prior written consent of the Offender.

As noted above, each Stichting Group was governed by equivalent documentation. As such, the Offender was not entitled to any of the assets of any of the Stichting Groups, until after the termination date of 1 July 2005.

In the period from May to August 2004, Ms Harley explained to the Offender, both orally and in writing, that: (a) there would be tax payable on the initial disposal of the shares, but during the term of the arrangement there would be no tax liability; (b) he would not be entitled to any asset of any Stichting Group, until after the termination of the Stichting Group structure; (c) for both company law and taxation purposes, neither the stichtings nor the Stichting Group companies were associated; (d) none of the Stichting Group companies was required to lodge a substantial shareholder notice and subsequent disposals of Admerex shares by the Stichting Group companies would, so long as Admerex remained listed on the Australian Stock Exchange, be free of capital gains tax; (e) any payment he would receive upon the termination of the Stichting Group structure would be subject to capital gains tax in Australia if that payment represented a capital gain on the value of the assets which had been held in that Stichting Group; and (f) the Stichting Group companies were required to act independently of the Offender and independently of each other.

On or around 11 June 2004, the Offender signed a document in relation to each of the five stichtings entitled “Re: Declaration of Source of Funds” which identified him to be the beneficial owner of funds used to establish the stichtings, and of funds which may from time to time be transferred into the names of the stichtings.

The Offender was also identified as the beneficial owner of assets in documentation which opened accounts, on or around 15 June 2004, in the name of each of the Stichting Group companies with a Swiss Bank known as EFG Bank AG (“EFG Bank”). These accounts were opened by Mr Meisterhans, who was also nominated as the sole signatory in relation to each of these accounts.

In relation to this documentation, which identified the Offender as the beneficial owner of assets within the Stichting Group, Ms Harley gave evidence that, in her opinion, the Offender had no such beneficial ownership, and that the documentation which identified the Offender as the beneficial owner was only provided at the insistence of Citco and EFG Bank.

However, the guilty verdicts indicate that the jury was satisfied that the Offender intended that Barat Advisory would retain the beneficial interest in the 55 Million Admerex Shares after they were transferred to the Stichting Group companies on or around 11 June 2004. I will return to this topic later in these remarks. Transfer of 55 Million Admerex Shares to the Stichting Group

On or around 11 June 2004, the Offender signed five documents entitled “Standard Transfer Form for Non-Market Transactions” on behalf of Barat Advisory. These documents stated that, on 11 June 2004, Barat Advisory transferred the 55 Million Admerex Shares to the five Stichting Group companies in five parcels of shares, at a value of five cents per share, as follows: (a) transfer of 12,000,000 Admerex shares to Challinor Equities for consideration of $600,000.00; (b) transfer of 11,900,000 Admerex shares to Schlossman Partners for consideration of $595,000.00; (c) transfer of 11,500,000 Admerex shares to Thouvanel Investments for consideration of $575,000.00; (d) transfer of 9,411,475 Admerex shares to Metevier Securities for consideration of $470,573.75, and (e) transfer of 11,100,000 Admerex shares to Vaillendourf Europe for consideration of $555,000.00.

The total stated consideration for these five parcels of shares, which in total comprised the 55 Million Admerex Shares, was $2,795,573.75.

On or around 11 June 2004, the Offender signed a document entitled “Change of Director’s Interest Notice” which stated that the Offender had disposed of his indirect interest, as the sole shareholder of Barat Advisory, in the 55 Million Admerex Shares. This document stated that the 55 Million Admerex Shares had been disposed of on 11 June 2004 at five cents per share. It also indicated that the transfer of the 55 Million Admerex Shares had been an “off market sale” .

On or around 15 June 2004, the Offender signed a document entitled “Notice of Ceasing to be a Substantial Shareholder” , which stated that Barat Advisory had sold the 55 Million Admerex Shares on 11 June 2004 for consideration of $2,795,573.75.

On or around 18 June 2004, the Offender instructed Peter Carney, who was the company secretary of Admerex, to make arrangements with Ms Harley for the placement of the 55 Million Admerex Shares with ANZ Nominees Limited (“ANZ Nominees”). The 55 Million Admerex Shares were to be held on behalf of the five Stichting Group companies in an ANZ Nominees account operated by EFG Bank.

On or around 25 June 2004, 55 Million Admerex Shares were placed in an ANZ Nominees account operated by EFG Bank, to be held on behalf of the five Stichting Group companies. The 55 Million Admerex Shares were held by ANZ Nominees on behalf of the five EFG Bank accounts operated by the Stichting Group companies, as follows: (a) 12,000,000 Admerex shares were held on behalf of the Challinor Equities EFG Bank Account; (b) 11,900,000 Admerex shares were held on behalf of the Schlossman Partners EFG Bank Account; (c) 11,500,000 Admerex shares were held on behalf of the Thouvanel Investments EFG Bank Account; (d) 9,411,475 Admerex shares were held on behalf of the Metevier Securities EFG Bank Account, and (e) 11,100,000 Admerex shares were held on behalf of the Vaillendourf Europe EFG Bank Account.

It was understood by Ms Harley that these parcels of the Admerex Shares were transferred on the basis of vendor finance loans from Barat Advisory to each of the Stichting Group companies.

While he was in Switzerland in June 2004, the Offender said to Mr Goodall that he had sold the 55 Million Admerex Shares to give himself a tax position in Australia, that capital gains tax would be payable on that disposal, but that he did not have a tax liability on any further increase in the value of the Admerex Shares.

On 16 November 2006, the Offender signed financial statements for Barat Advisory for the financial year ended 30 June 2004 (“the 2004 Barat Advisory Financial Statements”) which were prepared on instructions from the Offender by the accounting firm Grant Thornton Services (NSW) Pty Limited (“Grant Thornton”). By signing the 2004 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory’s financial position as at 30 June 2004.

On 16 November 2006, the Offender also signed financial statements for Barat Advisory for the financial year ended 30 June 2005 (“the 2005 Barat Advisory Financial Statements”) which were similarly prepared on instructions from the Offender by Grant Thornton. By signing the 2005 Barat Advisory Financial Statements, the Offender declared that they gave a true and fair view of Barat Advisory’s financial position as at 30 June 2005.

The statements of the Barat Advisory CBA Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

Likewise, the statements of the Barat Advisory St George Account do not show any payment to Barat Advisory by any of the Stichting Group companies in consideration for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

Neither the 2004 Barat Advisory Financial Statements nor the 2005 Barat Advisory Financial Statements record any debt owed to Barat Advisory by any of the Stichting Group companies for the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004.

The guilty verdicts indicate that the jury was satisfied that the transfer of the 55 Million Admerex Shares to the Stichting Group companies, on or around 11 June 2004, involved the transfer of the legal title only. The beneficial ownership of the shares remained with Barat Advisory. This occurred in circumstances where the Offender was the controlling mind of Barat Advisory and of each of the Stichting Group companies, with Mr Meisterhans (a director of each of the five companies) acting as the Offender’s agent for that purpose. It was the Offender’s intention that the Stichting Group companies would hold the 55 Million Admerex Shares on trust for Barat Advisory. By its verdicts, the jury accepted the Crown submission that the Offender was effectively dealing with himself, on both sides of the table, as it were, to bring about this result. Opening of SwissFirst Bank AG Account 6009 in The Name of Admerex (Ireland) Limited and Transfer of Five Million Temenos Shares to SwissFirst Bank AG

On 1 April 2004, Admerex (Ireland) Limited (“Admerex (Ireland)”) was incorporated in Ireland. The Offender was appointed as one of the directors of Admerex (Ireland).

In or around November 2004, Admerex started to explore a capital raising transaction involving a Swiss bank known as SwissFirst Bank AG (“SwissFirst Bank”).

It was anticipated that, as part of this capital raising transaction, Admerex (Ireland) would provide to SwissFirst Bank five million shares in Temenos. The five million Temenos shares, to be provided by Admerex (Ireland) as security to SwissFirst Bank, were owned by Mr Goodall.

On or around 7 December 2004, Mr Goodall signed documentation to open a bank account with SwissFirst Bank in the name of Admerex (Ireland). This bank account was identified as SwissFirst Bank account number 6009 (“SwissFirst Bank Account 6009”).

On 8 December 2004, Mr Goodall gave instructions for five million Temenos shares, owned by him, to be transferred to SwissFirst Bank, as security for a loan by SwissFirst Bank to Admerex (Ireland) in accordance with the terms of the proposed capital raising transaction.

On 10 December 2004, Admerex entered into a letter of intent with SwissFirst Bank (“Letter of Intent”). The Letter of Intent set out the basis upon which Admerex and SwissFirst Bank would be interested in structuring a capital raising transaction. As part of this proposed transaction, SwissFirst Bank was to provide a bridge loan to Admerex (Ireland). The bridge loan would be secured by five million Temenos shares, owned by Mr Goodall, to be assigned and transferred to SwissFirst Bank by Admerex (Ireland).

On 14 December 2004, Mr Goodall sent an email to the directors of Admerex, including the Offender, expressing concern about the lodging of his five million Temenos shares with SwissFirst Bank.

On 15 December 2004, after discussions with the Offender and others, Mr Goodall agreed to proceed with the transfer of his five million Temenos shares to SwissFirst Bank.

On 17 December 2004, Ms Harley contacted SwissFirst Bank and acknowledged that the documentation to open SwissFirst Bank Account 6009, which nominated Mr Goodall and the Offender as signatories to the account, was inaccurate. Ms Harley instructed Mr Meisterhans to destroy this documentation and provided Mr Meisterhans with replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories for SwissFirst Bank Account 6009. This replacement documentation was signed by the Offender.

On or around 24 December 2004, the five million Temenos shares owned by Mr Goodall were transferred to SwissFirst Bank as security for the bridge loan to Admerex (Ireland), in accordance with the Letter of Intent. The five million Temenos shares were placed in a SwissFirst Bank holding account identified as account number 7900 (“SwissFirst Bank Account 7900”).

The SwissFirst Bank transfer documentation records the cost price of the Temenos shares to be 9.4 Swiss Francs (“CHF”) each, as at the time of the transfer into SwissFirst Bank Account 7900 on 24 December 2004. This was approximately equivalent to $10.71 per share. On this basis, the cost price of the five million Temenos shares at that time was approximately equivalent to $53,550,000.00.

On or around 27 December 2004, SwissFirst Bank Account 6009 was opened on the basis of the replacement documentation which nominated the Offender and Mr Meisterhans as the authorised signatories.

On or around 10 August 2005, the signatories to SwissFirst Bank Account 6009 were changed to Mr Goodall and Mr Carney.

On or around 14 September 2005, SwissFirst Bank Account 6009 was closed on instructions from Mr Goodall and Mr Carney, on behalf of Admerex (Ireland). Opening of Challinor Equities SwissFirst Bank Account 6048 and Swap of 48 Million Admerex Shares for One Million Temenos Shares

On 30 January 2005, the Offender travelled to Switzerland on behalf of Admerex and Admerex (Ireland) to renegotiate with SwissFirst Bank the capital raising transaction described in the Letter of Intent.

Events which occurred in early February 2005 were of central importance to the offences. The liability to pay capital gains tax arose at this time.

On or around 2 February 2005, while he was in Switzerland, the Offender telephoned Mr Goodall from Zurich. The Offender told Mr Goodall that the capital raising deal was going to be changed and that the security provided by Admerex (Ireland) would only need to be three million Temenos shares, not five million Temenos shares as was previously required under the Letter of Intent.

During this telephone conversation, the Offender told Mr Goodall that Mr Goodall would get eight million Temenos shares back, and said he (the Offender) would take one million Temenos shares for 49 million Admerex shares. Mr Goodall replied “Okay, the deal needs to be renegotiated and we’ll discuss it when we get back” . This was the share swap, which the jury was satisfied constituted a contract for disposal of at least 48 Million Admerex shares, and thus a capital gains tax event. As will be seen, the Offender (with the aid of Mr Meisterhans) was soon acting in a manner consistent with there being such an arrangement, with transactions occurring concerning the one million Temenos shares, and funds being directed for the use of the Offender.

On 2 February 2005, Admerex (Ireland) and SwissFirst Bank agreed to terminate the Letter of Intent. The agreement to terminate the Letter of Intent was signed by the Offender, on behalf of Admerex (Ireland), and was authorised by Mr Goodall.

On 2 February 2005, Admerex (Ireland) sent a security delivery order which instructed SwissFirst Bank to transfer one million Temenos shares to a safe custody account with SwissFirst Bank in the name of Challinor Equities, in accordance with the termination of the Letter of Intent. The security delivery order also instructed SwissFirst Bank to transfer another one million Temenos shares to EFG Bank, also in accordance with the termination of the Letter of Intent. The security delivery order was signed by Mr Meisterhans.

On 2 February 2005, Challinor Equities wrote to SwissFirst Bank providing documentation to open an account in the name of Challinor Equities with SwissFirst Bank. The letter, which was also signed by Mr Meisterhans, indicated that, as had been discussed, the account was to be opened so that it could hold the one million Temenos shares which were to be transferred by SwissFirst Bank to Challinor Equities following the termination of the Letter of Intent.

On 2 February 2005, account number 6048 was opened with SwissFirst Bank in the name of Challinor Equities (“Challinor Equities SwissFirst Bank Account”). Mr Meisterhans was nominated as one of the authorised signatories to the Challinor Equities SwissFirst Bank Account, together with two other directors of Sinitus. The Offender was identified as the beneficial owner of the assets held in the Challinor Equities SwissFirst Bank Account, but was not nominated as a signatory to the account.

On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 into the Challinor Equities SwissFirst Bank Account.

On 3 February 2005, SwissFirst Bank confirmed that, as instructed by Mr Meisterhans, it had transferred one million Temenos shares from SwissFirst Bank Account 7900 to EFG Bank.

The effect of the transactions described above was that, as a result of the termination of the Letter of Intent, SwissFirst Bank released two million of the five million Temenos shares owned by Mr Goodall, which had previously been required to secure the bridge loan to Admerex (Ireland) under the Letter of Intent. Of the two million Temenos shares which were released, one million Temenos shares were transferred to the Challinor Equities SwissFirst Bank Account. The remaining one million Temenos shares were transferred to EFG Bank to be held on behalf of Mr Goodall.

The SwissFirst Bank transfer documentation indicated that the cost price of the Temenos shares was CHF9.4 per share, as at the time they were placed into the Challinor Equities SwissFirst Bank Account. On this basis, the cost price of the one million Temenos shares was equivalent to approximately $10,141,331.00 as at 3 February 2005.

The account opening documentation for the Challinor Equities SwissFirst Bank Account stated that the starting inventory for the account was one million Temenos shares valued at CHF8.8 million. On this basis, the value of the one million Temenos shares was equivalent to $9,494,012.30 as at 3 February 2005.

On 3 February 2005, Temenos shares traded on the Swiss stock exchange at a value of between CHF7.85 and CHF8.09 per share. On this basis, one million Temenos shares were valued on the Swiss stock exchange at the equivalent of between approximately $8,469,090.00 and $8,728,018.00 as at 3 February 2005.

In exchange for the transfer on 3 February 2005 of the one million Temenos shares into the Challinor Equities SwissFirst Bank Account, the Offender arranged for 48 Million Admerex shares to be held, on behalf of Mr Goodall, in accounts in the names of Stichting Group companies, as follows: (a) 11,900,000 Admerex shares were held by ANZ Nominees on behalf of the Schlossman Partners EFG Bank Account; (b) 11,500,000 Admerex shares were held by ANZ Nominees on behalf of the Thouvanel Investments EFG Bank Account; (c) 13,500,000 Admerex shares were held by ANZ Nominees on behalf of the Metevier Securities EFG Bank Account (comprising the 9,411,475 shares initially transferred on 25 June 2004 and 4,088,525 shares transferred from Challinor Equities on 7 February 2005); and (d) 11,100,000 Admerex shares were held by ANZ Nominees on behalf of the Vaillendourf Europe EFG Bank Account.

On 3 February 2005, Admerex shares traded on the Australian Stock Exchange at a value of between 17.5 cents and 19 cents per share. On this basis, the 48 Million Admerex shares were valued on the Australian Stock Exchange at between $8,400,000.00 and $9,120,000.00, as at 3 February 2005.

On or around 14 September 2005, arrangements were made for the 48 Million Admerex shares to be transferred so that they were held on behalf of a third party. These arrangements were made on instructions from Mr Goodall. Transfer of Shares and Funds from the Challinor Equities SwissFirst Bank Account

As explained in detail above, on 3 February 2005, one million Temenos shares were transferred into the Challinor Equities SwissFirst Bank Account.

Between 3 February 2005 and 14 June 2005, all of these one million Temenos shares were sold and the proceeds were deposited to the Challinor Equities SwissFirst Bank Account. The only funds deposited to that account were from the sale of the Temenos shares, interest received, or the proceeds of sale of shares purchased with the proceeds of sale of Temenos shares.

A table of the sale and purchase of shares in the Challinor Equities SwissFirst Bank Account was attached to Trial Exhibit B (as Appendix 1). The average sale price of the Temenos shares was CHF7.78 per share. This was approximately equivalent to $8.28 per share.

The funds from the sale of the Temenos shares were soon being deployed by the Offender, with the aid of Mr Meisterhans, to make purchases or payments to serve his own interests.

On 7 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer 160,000 Euros (“EUR”) from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Art et Antiquites” in Paris. The payment instruction explained that the transfer was to cover a purchase of a painting by the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF249,865.06. This was approximately equivalent to $266,352.27.

On 16 February 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$72,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Exclusive Resorts LLC - Member Deposits” . The payment instruction explained that the transfer was to cover membership of the Offender. The transfer was made on 17 February 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF86,785.40. This was approximately equivalent to $93,147.36.

On 3 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $1,000,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was “on account of Clairmont” . The transfer was made on 7 March 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF924,525.17. As a result of the transfer, $999,967.48 (being $1,000,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 7 March 2005.

On 29 March 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer $2,500,000.00 from the Challinor Equities SwissFirst Bank Account to the Barat Advisory CBA Account. The payment instruction stated that this transfer was “on account of Clairmont” . The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF2,321,775.05. As a result of the transfer, $2,499,967.63 (being $2,500,000.00 less bank transfer fees) was deposited into the Barat Advisory CBA Account on 30 March 2005.

In relation to this transfer of $2,500,000.00 to the Barat Advisory CBA Account on 29 March 2005, an employee of SwissFirst Bank sent an email to Mr Meisterhans asking for the background to the transfer. In an email dated 29 March 2005, Mr Meisterhans replied: “As with the last transfer, this is concerning a return of capital in form of a credit to the company of Michael, i.e. Barat. He buys with it real estate property in Sydney.”

On 22 April 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer US$313,000.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Exclusive Resorts LLC - Member Deposits” . The payment instruction explained that the transfer was to cover the remaining payment for the membership of the Offender. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF369,834.47. This was approximately equivalent to $401,993.99.

On 24 May 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,367.23 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 26 May 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF11,555.02. This was approximately equivalent to $12,329.30.

On 4 July 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance from the Challinor Equities SwissFirst Bank Account to an account with UBS AG in Zurich (“UBS Bank”), being account number [C] in the name of Challinor Equities (“Challinor Equities UBS Bank Account”). The transfer was made on 5 July 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF3,270,004.00. This was approximately equivalent to $3,348,355.52.

On 26 August 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR29,300.00 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Galerie Ariane Dandois SA” in Paris. The transfer was made on that day, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF45,879.82. This was approximately equivalent to $48,401.54.

On 7 September 2005, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR13,066.24 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of “Citco Amsterdam” . The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 9 September 2005, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF20,447.85. This was approximately equivalent to $21,380.02.

On 2 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer the entire CHF balance (except CHF100,000.00) from the Challinor Equities SwissFirst Bank Account to the Challinor Equities UBS Bank Account. The transfer was made on 3 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF400,004.00. This was approximately equivalent to $414,254.35.

On 16 January 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR6,068.39 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 18 January 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF9,533.94. This was approximately equivalent to $9,945.69.

On 19 December 2006, Challinor Equities sent a payment instruction, signed by Mr Meisterhans, which instructed SwissFirst Bank to transfer EUR7,861.55 from the Challinor Equities SwissFirst Bank Account to a bank account in the name of Citco Amsterdam. The payment instruction explained that the transfer was to cover servicing fees. The transfer was made on 21 December 2006, resulting in the Challinor Equities SwissFirst Bank Account being debited in the amount of CHF12,812.79. This was approximately equivalent to $13,403.90.

As a result of the transfers of funds from the Challinor Equities SwissFirst Bank Account, the balance on that account as at 31 December 2007 was CHF78,736.09. This was approximately equivalent to $81,490.47.

The total value of the Temenos shares sold from the Challinor Equities SwissFirst Bank Account was CHF7,935,362.30. This was approximately equivalent to $8,441,970.12.

The total amount of funds transferred from the Challinor Equities SwissFirst Bank Account was CHF7,723,022.57. This was approximately equivalent to $8,129,563.94. Bank Accounts Operated by Barat Advisory

Barat Advisory operated the Barat Advisory CBA Account during the period from 19 December 2003 to 19 November 2007. The Offender was the only person authorised to operate the Barat Advisory CBA Account.

The deposits into the Barat Advisory CBA Account included the following transfers of funds from Challinor Equities: (a) On 7 March 2005, a deposit was made in the amount of $999,967.48 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit recorded that it was made as a result of an international transfer of $1,000,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as SwissFirst Bank. The details of payment were recorded as “on account of Clairmont” . (b) On 30 March 2005, a deposit was made in the amount of $2,499,967.63 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $2,500,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as SwissFirst Bank. The details of payment were not recorded. (c) On 4 August 2005, a deposit was made in the amount of $249,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $250,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” . (d) On 16 September 2005, a deposit was made in the amount of $499,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $500,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” , “by order of Clairmont” . (e) On 28 October 2005, a deposit was made in the amount of $249,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $250,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “by order of Clairmont” , “on account of Clairmont” . (f) On 25 November 2005, a deposit was made in the amount of $199,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $200,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont” . (g) On 14 December 2005, a deposit was made in the amount of $149,995.00 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $150,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont”, “by order of Clairmont” . (h) On 10 January 2006, a deposit was made in the amount of $749,992.50 with the reference “Challinor Equities L” . The AUSTRAC report in relation to this deposit records that it was made as a result of an international transfer of $750,000.00. The ordering customer was recorded as Challinor Equities, and the ordering institution was recorded as UBS Bank. The details of payment were recorded as “on account of Clairmont”, “by order of Clairmont” .

The total of the transfers of funds from Challinor Equities to Barat Advisory, set out above, was $5.6 million. The total of the deposits which were consequently received into the Barat Advisory CBA Account was $5,599,902.61 (being $5.6 million less bank transfer fees). Bank Accounts and Facilities Operated by the Offender

During the period from 1 January 2003 to 31 December 2007, the Offender operated the following accounts with St George Bank: (a) executive mortgage account number [D] in the name of Michael J Milne; (b) fixed rate loan account number [E] in the name of Michael J Milne; (c) business cheque account number [F] in the name of Michael J Milne; (d) call deposit account number [G] in the name of Michael J Milne; (e) commercial bill facility in the amount of $695,000.00; and (f) commercial bill facility in the amount of $4,000,000.00. Receipt and Use of Proceeds of Sale of One Million Temenos Shares Deposited into the Challinor Equities SwissFirst Bank Account

The Offender and Barat Advisory received the majority of the proceeds of the sale of the one million Temenos shares deposited into the Challinor Equities SwissFirst Bank Account, including $5,599,902.61 deposited into the Barat Advisory CBA Account in the period from 7 March 2005 to 10 January 2006.

The following assets were purchased, or partly purchased, with the proceeds of the sale of the one million Temenos shares deposited into the Challinor Equities SwissFirst Bank Account: (a) purchase on or around 7 February 2005 by the Offender of a painting from Art et Antiquites, Paris, for the amount of EUR160,000.00 (approximately equivalent to $266,352.27); (b) deposit on or around 7 March 2005 in the amount of $200,000.00 for the purchase by the Offender’s wife of a residential property in Neutral Bay, New South Wales for $4.7 million; (c) purchase on or around 11 March 2005 by Barat Advisory of the yacht known as “Black Snake” for the amount of $270,000.00; (d) stamp duty on or around 24 March 2005 in the amount of $269,492.00 for the purchase by the Offender’s wife of the residential property in Neutral Bay (referred to at (b) above); (e) payment on or around 24 March 2005 of $100,000.00 for jewellery purchased by Barat Advisory; (f) payment on or around 15 April 2005 of $454,052.94 to repay an overdraft in the sum of $452,781.68 on St George Bank fixed rate loan account number [E] in the name of the Offender; (g) payment on or around 15 April 2005 of $1,526,235.77 to repay an overdraft in the sum of $1,521,375.71 on St George Bank executive mortgage account number [D] in the name of the Offender; (h) deposit on or around 15 April 2005 of $409,743.73 into St George Bank call deposit account number [G] in the name of the Offender, in order to meet the conditions of finance to be provided by St George Bank for the purchase by the Offender’s wife of the residential property at Neutral Bay; (i) membership fees on or around 17 February 2005 and 22 April 2005 for the Offender with Exclusive Resorts in the amount of US$385,000.00 (approximately equivalent to $495,141.35); (j) purchase on or around 29 August 2005 of artwork or other items from Galerie Ariane Dandois SA, Paris, for the amount of EUR29,300.00 (approximately equivalent to $48,401.54); (k) payment on or around 27 September 2005 to Philip Bacon Galleries as the deposit on the purchase by Barat Advisory of the painting “The New School” by Jeffrey Smart; (l) payment on or around 7 October 2005 of $390,000.00 to Philip Bacon Galleries for the purchase by Barat Advisory of the painting “The New School” by Jeffrey Smart, and (m) payment on or around 27 October 2005 of $71,534.61 by Barat Advisory to Bentley Sydney, either to pay out finance on a 2003 Bentley Arnage or as a deposit or other payment for a 2005 Bentley Continental Flying Spur.

When police executed a search warrant at the Offender’s home on 28 February 2008, the painting “The New School” was observed hanging above the fireplace. Preparation and Lodgement of Tax Returns for Barat Advisory and the Offender

The events referred to in this part of the narrative relate directly to the second count.

In May 2005, the Offender became a client of Grant Thornton whom he retained to prepare financial statements and tax returns for Barat Advisory for 2004, 2005 and 2006, and outstanding tax returns for himself.

By its verdict on the second count, the jury was satisfied beyond reasonable doubt that in the period from May 2005 to November 2006, the Offender deliberately and dishonestly failed to tell the Grant Thornton accountants the truth concerning the share swap on or around 3 February 2005, and the very substantial capital gain which flowed to his company, Barat Advisory, as a result.

On or around 27 May 2005, the Offender met with Mr William Shew, a director of Grant Thornton. At that meeting, Mr Shew sought information from the Offender in relation to his financial affairs and the financial affairs of Barat Advisory. The Offender said that assets, including art (referred to as the “Clairmont Collection” ) were funded by loans from Clairmont which were secured over the residential property at Neutral Bay, with interest capitalising at 3.5% to be repaid from capital growth on that property. Mr Shew’s notes of the meeting included the following: (a) the Offender was not an investor in Australia and had “no financial footprint” ; (b) the Offender has “sophisticated offshore structures - 20 years” ; and (c) the Offender was funded by loans from an offshore entity described as “Clairmont” .

Shortly after this meeting, the Offender provided Grant Thornton with a folder of documents which included information in relation to banking records and share transactions.

On 30 June 2005, the Offender met with Mr Shew and Mr Stephen Thurn, a senior manager of Grant Thornton. Mr Shew and Mr Thurn sought more information in order to prepare tax returns for Barat Advisory and the Offender. At this meeting, the Offender referred to tax advice he had received from Ms Harley and said that he had received a number of loans from overseas.

On 13 July 2005, Mr Thurn prepared a file note based upon his review of the folder of materials which had been provided to Grant Thornton by the Offender. The file note included reference to the purchase by Barat Advisory of 105,000 Admerex shares on 13 September 2004. It also included reference to a Clearing House Electronic Subregister System (“CHESS”) document which referred to an “adjustment” of 55,911,475 Admerex shares “off” on 25 June 2004. The CHESS statement was provided to Mr Thurn by the Offender.

On 1 September 2005, Mr Shew prepared a file note which identified agenda items, including missing information and “unknowns” in relation to Barat Advisory. Mr Shew was not sure if this file note related to a meeting with the Offender, or to agenda items which he suggested Mr Thurn should raise when he met with the Offender.

On 13 September 2005, the Offender met with Mr Thurn who sought more information in relation to the CHESS statement which referred to the “adjustment” of 55,911,476 Admerex shares. At this meeting Mr Thurn also queried the Offender in relation to payments which had been received by Barat Advisory. The Offender informed Mr Thurn as follows: (a) a payment on 24 February 2005 of $200,000.00 from Admerex to Barat Advisory was a loan from Challinor Equities, which was a Swiss investment bank; (b) a payment on 7 March 2005 of $999,967.48 was a loan from Challinor Equities, which was associated with the Rothschild Bank family in Zurich; and (c) a payment on 30 March 2005 of $2,499,967.63 was a loan from Challinor Equities, which was associated with the Rothschild Bank family in Zurich.

The next record of a meeting between the Offender and Grant Thornton is a file note taken by Mr Shew dated 25 September 2006. At that meeting, Mr Shew again asked for information from the Offender in relation to the financial affairs of Barat Advisory and any share transactions that had been undertaken by Barat Advisory.

On or around late September or early October 2006, Colin Samuel, a manager at Grant Thornton, took over from Mr Thurn the task of preparing tax returns for Barat Advisory and the Offender. For that purpose, Mr Samuel continued to seek information from the Offender and from the Offender’s bookkeeper.

On 5 October 2006, Mr Samuel sent an email to the Offender and his bookkeeper which attached incomplete draft profit and loss statements and ledgers for Barat Advisory. The email included a request by Mr Samuel for a list of share transactions by Barat Advisory for the period from 1 July 2003 to 30 June 2006.

Later that day, the Offender sent an email to Mr Samuel which attached information in relation to share transactions by Barat Advisory for the period from 10 October 2005 until 16 August 2006. This information made no reference to the Admerex Shares.

On 6 October 2006, Mr Samuel sent an email to the Offender and his bookkeeper seeking details of share transactions by Barat Advisory for the financial year ended 30 June 2005.

On 19 October 2006, Mr Samuel sent an email to the Offender which noted that, as discussed, Grant Thornton continued to have queries for the financial year ended 30 June 2005. This email repeated Mr Samuel’s request for details of share transactions by Barat Advisory during the financial year ended 30 June 2005, and included the following statement: “We note on 7 March 2005 there was a deposit of $1,000,000 which you previously said related to Clairmont.”

Later that day, the Offender sent an email to Mr Samuel asking for a meeting to discuss the queries raised in Mr Samuel’s email of 19 October 2006. This meeting was later scheduled to take place on 31 October 2006.

On 25 October 2006, Mr Samuel received an email from Bell Potter Securities, which attached a printout of share transactions by Barat Advisory for the period from 1 January 2004 to 25 October 2006. That printout made no reference to the Admerex Shares. The 55 Million Admerex Shares had been transferred by means of an off-market transaction.

On 27 October 2006, Mr Shew sent an email to the Offender, which attached notes provided by Mr Samuel, in preparation for the meeting which was to occur on 31 October 2006. The email advised that more information was required to support tax returns by the Offender and Barat Advisory, and suggested that the Offender should build a timeline of events and transactions. The email included the following queries: (a) “You borrow money from overseas to fund your lifestyle - what is the security?” (b) “Clairmont Loans – we require a confirmation letter from Clairmont advising that the loan is not actually with Barat Advisory but is with Michael Milne” .

On 31 October 2006, the Offender met with Mr Shew and Mr Samuel. At that meeting, the Offender provided a timeline which was primarily related to the Offender’s personal affairs and confirmed the Offender’s instructions that he funded his lifestyle with loans received from Clairmont.

On the basis of the information provided by the Offender, Grant Thornton prepared the following documentation: (a) the 2004 Barat Advisory Financial Statements; (b) a draft resolution of the Offender adopting the 2004 Barat Advisory Financial Statements in his capacity as the sole director of Barat Advisory; (c) an income tax return for Barat Advisory for the financial year ended 30 June 2004 (“the 2004 Barat Advisory Income Tax Return”); (d) the 2005 Barat Advisory Financial Statements; (e) a draft resolution of the Offender adopting the 2005 Barat Advisory Financial Statements in his capacity as the sole director of Barat Advisory, and (f) an income tax return for Barat Advisory for the financial year ended 30 June 2005 (“the 2005 Barat Advisory Income Tax Return”).

These documents were provided to the Offender under cover of a letter from Mr Shew dated 10 November 2006, and were also provided by email from Mr Samuel. The covering letter included the following statement: “Please read the financial statements carefully. The Director’s statement that you sign states that you believe that the accounts are a true reflection of the financial position of the company and that the company can pay its debts as and when they fall due. We wish to remind you that we have not audited the financial statements of the company. Ultimate responsibility for the accuracy of the accounts and tax return rests with you as director.”

On or around 13 November 2006, Grant Thornton received the 2004 Barat Advisory Income Tax Return and the 2005 Barat Advisory Income Tax Return, both signed by the Offender. As instructed by the Offender, the 2004 Barat Advisory Income Tax Return and the 2005 Barat Advisory Income Tax Return were then lodged electronically with the Australian Taxation Office (“ATO”).

In the 2004 Barat Advisory Income Tax Return, the Offender declared that: (a) the total taxable income of Barat Advisory for the financial year ended 30 June 2004 was a loss of $7,375.00, and (b) the net capital gain derived by Barat Advisory in the financial year ended 30 June 2004 was $9.00.

In the 2005 Barat Advisory Income Tax Return, the Offender declared that: (a) the total taxable income of Barat Advisory for the financial year ended 30 June 2005 was $17,323.00, and (b) the net capital gain derived by Barat Advisory in the financial year ended 30 June 2005 was $4,597.00, realised on the sale of Admerex shares which were acquired on 13 September 2004 at a cost of $14,862.00 and sold on 15 October 2004 for $19,459.00.

The jury was satisfied that the declaration that only $4,597.00 in net capital gain was derived by Barat Advisory from the sale of Admerex shares was a deliberately false statement made dishonestly by the Offender. As will be seen, the true net capital gain derived was between $6.5 million and $8.2 million.

In June 2007, Grant Thornton prepared financial statements and income tax returns for Barat Advisory for the financial year ended 30 June 2006. The Barat Advisory income tax return for the financial year ended 30 June 2006 was lodged with the ATO on or around 14 June 2007. That income tax return did not disclose any capital gain derived by Barat Advisory on the sale of the 55 Million Admerex Shares or any portion of the Admerex Shares.

In or around January 2008, Grant Thornton prepared financial statements and income tax returns for Barat Advisory for the financial year ended 30 June 2007. The Barat Advisory income tax return for the financial year ended 30 June 2007 was lodged with the ATO on or around 15 January 2008. That income tax return did not disclose any capital gain derived by Barat Advisory on the sale of the 55 Million Admerex Shares or any portion of the Admerex Shares.

No tax return lodged with the ATO in relation to the income of the Offender, personally, contained any declaration of a net capital gain referable in any way to any sale of shares in Admerex by Barat Advisory.

The Offender deliberately and dishonestly failed to tell Grant Thornton and Mr Shew, Mr Thurn and Mr Samuel about the disposal of the 48 Million Admerex shares, on or about 3 February 2005, in order to avoid the payment by Barat Advisory of tax on the net capital gain arising from that disposal. Tax payable on Capital Gain Arising from Disposal of the 48 Million Admerex Shares

As noted above, the transfer of the 55 Million Admerex Shares to the Stichting Group companies on or around 11 June 2004 involved the transfer of the legal title only. The beneficial ownership to the shares remained with Barat Advisory in circumstances where the Offender was the controlling mind of each of the Stichting Group companies, and it was his intention that the Stichting Group companies would hold the 55 Million Admerex Shares on trust for Barat Advisory.

The disposal of the 48 Million Admerex shares in exchange for one million Temenos shares, on or about 3 February 2005, resulted in a net capital gain to Barat Advisory, as follows: - Capital Proceeds of between $8,469,090.00 and $10,141,331.00 - Less Cost Base of $1,920,000.00 - Net Capital Gain of between $6,549,090.00 and $8,221,331.00

Accordingly, at the company tax rate of 30%, Barat Advisory ought to have paid tax in the amount of between approximately $1,964,727.00 and $2,466,399.00 on the net capital gain.

As a result of his dishonest and deliberate course of conduct, the Offender and his company, Barat Advisory, had the use of a sum exceeding $1.9 million, which rightfully was payable to the Commonwealth to be used in the interests of the Australian community. Summary of Findings of Fact Concerning the First and Second Counts

It is appropriate now to draw together, from this detailed narrative, specific findings to be made concerning the two counts in the indictment, consistent with the verdicts of the jury. Written directions were given to the jury concerning tax law, the elements of the two offences and the matters which the Crown had to prove beyond reasonable doubt before the jury could convict the Offender (Trial MFIs 27 and 40). What follows will take into account those matters explained to the jury orally and in writing, which shed light upon the necessary findings of the jury culminating in a verdict of guilty on each count.

Competing submissions were made at the sentencing hearing concerning the creation of the Stichting Group structure in 2004. It was submitted for the Offender, both before the jury at trial and before me on sentence, that the setting up of the Stichting Group structure by Ms Harley was not part of a plan by the Offender to evade the payment of capital gains tax on the sale of the 55 Million Admerex Shares. It was submitted for the Offender at trial and on sentence that what was driving Ms Harley’s work prior to 11 June 2004 was the Offender’s desire to have something in place before a meeting in early June 2004, all of this being in the context of possible takeover interest by Admerex in Temenos. Both at the trial and on sentence, the Crown submitted that the establishment of the Stichting Group structure was primarily tax driven, and was not for the purposes of takeover or merger with Temenos. The Crown submitted at trial and on sentence that the genesis of the Offender’s desire to make favourable tax arrangements lay with the so-called windfall in 2003 where, for $1.00, he and his company, Barat Advisory, obtained a multi-million dollar benefit.

I pause at this stage to record a number of specific findings. I am satisfied beyond reasonable doubt of the following factual matters: (a) the term “windfall” is apt to describe the substantial benefit which the Offender obtained in 2003 for a modest outlay of $1.00 - the need to take action, in his own interest, for tax purposes arising from this windfall, lay behind the events which followed; (b) the Offender’s approach to Ms Harley for advice, which culminated in the Stichting Group structure, was primarily tax driven; Ms Harley was a tax law specialist; the Offender’s motivation in causing, through Ms Harley, the creation of the Stichting Group structure, was to obtain a tax benefit for himself and Barat Advisory; (c) from January 2003, the Offender and Mr Meisterhans knew of the existence of each other through the role played by Sinitus in the business and corporate affairs of the Offender - it was Ms Harley’s understanding that she introduced the Offender to Mr Meisterhans in the week commencing 7 June 2004 in Zurich, but that meeting must be understood against the background of a commercial relationship existing between Sinitus (and Mr Meisterhans) on the one hand, and the Offender on the other hand since early 2003; (d) although Ms Harley believed that the Stichting Group structure, as intended to be put in place by her, would see both the legal and the beneficial ownership in the 55 Million Admerex Shares passing from Barat Advisory to the five overseas companies, this understanding was based upon the Offender acting in a manner which was entirely consistent with the arrangement as intended by Ms Harley - however, the Offender did not act in this way and this sheds light upon his state of mind when the arrangements were put in place in June 2004; (e) the Offender did not wish to lose control over the 55 Million Admerex Shares being directed into the Stichting Group structure in June 2004 - the documents signed by him and by Mr Meisterhans, which identified the Offender as the “beneficial owner” of the shares, reflected the true position at that time in the mind of the Offender - this inference is fortified by steps taken by the Offender concerning those shares thereafter, and his association with Mr Meisterhans for that purpose; (f) at the time of the creation of the Stichting Group structure in June 2004, it was the intention of the Offender that he, through Barat Advisory, maintain beneficial ownership of the 55 Million Admerex Shares, and thus control over those shares, at a time when the legal title passed to the five overseas companies; (g) the Offender was, at the same time, and at relevant times in 2004 and 2005, the controlling mind of Barat Advisory and the controlling mind of the five overseas companies, which the Offender effectively controlled through Mr Meisterhans, and it was the Offender’s intention that the five overseas companies would hold the 55 Million Admerex Shares on trust for Barat Advisory. First Count

The verdict of the jury in relation to the first count means that the jury accepted that the Offender exchanged, in February 2005, the 48 Million Admerex shares for one million shares in Temenos, with the intention of facilitating the evasion of capital gains tax payable on the disposal of the 48 Million Admerex shares.

Likewise, it follows from the verdict that the jury accepted the prosecution case that the Offender sought to maximise the financial benefits to be derived from the allocation of the 55 Million Admerex Shares to Barat Advisory as the result of the debt for equity swap in satisfaction of the debt acquired from GTL, by establishing arrangements in which capital gains tax would not be paid on the proceeds of the subsequent disposal of the Admerex shares.

It is important to keep in mind that the offence contained in the first count was alleged to have been committed between about 30 April 2004 and about 30 September 2005, an extended period of time. Following the erection of the Stichting Group structure in June 2004, a capital gains tax event occurred on or about 3 February 2005 arising from the share swap. The factual matters which constitute the money laundering offence include a series of steps taken by the Offender, one after the other, over a period of months, involving intentional criminal wrongdoing on the part of the Offender, and an intention on his part that the shares would be used to facilitate the commission of an offence by Barat Advisory.

Although it was Ms Harley’s proposal that the Stichting Group structure be used, in her view in a proper way, it was not the intention of the Offender to use the Stichting Group structure in that way. His misuse of the Stichting Group structure was part of the factual matrix leading to the verdict of guilty on the first count.

The jury accepted that Barat Advisory did not dispose of the beneficial ownership of the 55 Million Admerex shares on 11 June 2004 when the shares were transferred to the five Stichting Group companies. The jury also accepted that the 48 Million Admerex shares were disposed of, in the course of the exchange of one million Temenos shares on or about 3 February 2005.

It is consistent with the verdict that the jury found that the transfer of only the legal title to the 55 Million Admerex Shares to the five overseas companies was for the purpose of establishing a position which would enable the subsequent disposal by Barat Advisory of the beneficial ownership of the shares, in circumstances in which it would be easier to avoid paying capital gains tax.

It is consistent with the verdict that the Offender took the opportunity, when it presented itself on 3 February 2005, to exchange 48 Million Admerex shares for one million Temenos shares, in circumstances where he believed that the Stichting Group structure would conceal Barat Advisory’s beneficial ownership of the 48 Million Admerex shares, and facilitate the non-disclosure of that capital gain in order to avoid the payment of tax.

The Offender’s actions involved a systematic and deliberate course of conduct, intended to obtain a capital gains tax advantage for Barat Advisory.

The Offender is guilty of the offence in the first count without regard being had to his deliberate deception of the Grant Thornton accountants, and his ultimate dishonest act in causing to be lodged, in November 2006, an intentionally false tax return for Barat Advisory. That said, the fact that the Offender acted in a deliberate and dishonest way in his dealings with the Grant Thornton accountants and by causing to be lodged a knowingly false tax return, sheds light upon the Offender’s motivation in the period between April 2004 and September 2005, when the money laundering offence was committed.

Ultimately, the Offender’s reliance (in submissions) upon Ms Harley’s belief concerning the transfer of legal and beneficial ownership and her understanding concerning capital gains tax consequences, provides no real assistance to him. This is because the evidence revealed, and the jury accepted, that what the Offender actually did with respect to the 55 Million Admerex Shares, the five stichtings and the Stichting Group companies did not, in truth and reality, involve putting into effect the elements of the scheme devised by Ms Harley.

The evidence reveals that, soon after the share swap on or about 3 February 2005, steps were taken by the Offender and Mr Meisterhans to sell parcels of the one million Temenos shares, with the proceeds returning ultimately to Australia to be used to the benefit of the Offender in the acquisition of real property and other items including a yacht, a motor vehicle and works of art.

In my view, the verdicts indicate acceptance by the jury of the Crown case theory that, at all relevant times, the Offender exercised control over the 55 Million Admerex Shares, 48 Million of which came to be swapped on or around 3 February 2005 for one million Temenos shares, the proceeds of the sale of which were then directed to the benefit of the Offender. Second Count

The verdict of guilty in relation to the second count means that the jury was satisfied that the Offender dishonestly failed to include the capital gain from the disposal of the 48 Million Admerex shares in the income tax return of Barat Advisory for the year ended 30 June 2005. It follows that the Offender was found to have deliberately withheld information from the Grant Thornton accountants, notwithstanding the various efforts made by them to ascertain the facts relating to the financial dealings of the Offender and Barat Advisory, and the true circumstances surrounding the disposal of the 48 Million Admerex shares, in order to avoid the payment by Barat Advisory of capital gains tax.

The Offender intended to obtain a gain for Barat Advisory from the Commonwealth, by Barat Advisory keeping the capital gain derived from the disposal of 48 Million Admerex shares, and by Barat Advisory, not paying tax on that capital gain.

The jury was directed (Trial MFI40, paragraph 48) that the Crown must prove that the inference that the Offender acted dishonestly by deliberately not telling the accountants this information was the only reasonable inference available from the evidence, and that it was not sufficient for the Crown to prove that any omission or failure by the Offender to provide this information to the accountants was inadvertent or negligent or was based on an honest belief that he was entitled to rely on the advice of Ms Harley.

Accordingly, the jury’s verdict leads to the stark conclusion that the conduct of the Offender in his dealings with the Grant Thornton accountants, over a period of months, was dishonest and deliberate, culminating in the signing by the Offender of the relevant return, to be lodged with the ATO, containing that false statement.

The dishonest statement was false in a gross respect in that the net capital gain from the sale of the Admerex shares was not $4,597.00, but a sum of at least $6.5 million. The Overlapping Criminality and Double Punishment Issues

In R (Cth) v Milne (No. 1) [2010] NSWSC 932, I refused a Defence application for a permanent stay of the prosecution, based upon an argument that it was an abuse of process for the Offender to stand trial on an indictment containing the two counts of which he has now been found guilty. In the course of so ruling, I said at [174]: “If the Accused is convicted on both counts, it will be necessary for the Court, in accordance with the principles in Pearce v The Queen and the Victorian authorities referred to above, to determine an appropriate sentence on each count without double punishment of the Accused, and then to consider issues of concurrency, cumulation and totality. This constitutes the law’s response to circumstances where possible injustice may result from double punishment for separate offences which have overlapping factual aspects. In my view, the issues agitated by the Accused on this application may be accommodated at the sentencing phase in the event that the Accused is convicted on both counts.”

The Offender has now been found guilty of both counts and it is necessary for the Court to consider and apply the matters referred to in my earlier judgment. In doing so, I have regard to the principles summarised in that judgment. The resolution of similar issues was considered in the United Kingdom by the Court of Appeal (Criminal Division) in Greaves v R [2010] EWCA Crim 709 at [24]. Submissions Concerning Overlapping Criminality and Double Punishment

The Crown accepted that there was overlap between the Offender’s criminality in relation to the two counts so that this is a case in which, after first determining the appropriate penalty for each offence, the Court must consider questions of cumulation, concurrence, and totality. The Crown accepted that, to the extent that both counts had common elements, the Offender should not be punished twice for those common elements. However, the Crown submitted that the sentences should properly reflect any additional criminality which arises from any particular count. The assessment of common elements, and any additional criminality arising from any particular count, should be assessed as a matter of common sense, not as a matter of semantics: Pearce v The Queen [1998] HCA 57; 194 CLR 610 at [40]-[50]. The Crown submitted that if one count adds “something more” , or provides further “remnants of criminality” , this should be reflected on sentence: Greaves v R at [24(g)]; R v Langdon [2004] VSCA 205; 11 VR 18 at 39 [117].

The Crown submitted that the money laundering charge is directed to separate, earlier, conduct in which the Offender arranged for, and misused, an elaborate and sophisticated offshore structure in order to facilitate, at some future time, the evasion of capital gains tax arising from the disposal of the 48 Million Admerex shares in exchange for one million Temenos shares on or around 3 February 2005. The s.135.1(1) charge is directed to the subsequent conduct of the Offender when, on 13 November 2006, the tax return for Barat Advisory was lodged without disclosing the capital gain on that disposal of shares.

Accordingly, the Crown submitted that the money laundering offence involved significant additional criminality, over and above the criminality involved in the Offender’s subsequent lodgement of the false tax return, and that such additional criminality should be reflected in the sentences to be imposed on the Offender.

Senior counsel for the Offender submitted that there are no remnants of criminality in the money laundering offence which add to the culpability of the Offender’s conduct involved in the second count. It was submitted that the offences are not freestanding, insofar as there is an intimate link between the two counts, in that the money laundering offence was the means by which the dishonest obtaining offence was facilitated. It was submitted that the money laundering offence added nothing to the dishonest obtaining offence, so that there should be no separate sentence imposed for the money laundering offence, or that such a sentence should be entirely concurrent with the sentence imposed for the second count.

In the event that the Court was to reject the submission that there was no element of additional criminality involved in the money laundering count, it was submitted for the Offender that any additional criminality was minimal. It was submitted that a consecutive sentence should not be imposed on the money laundering count.

It was submitted for the Offender that if the Court found that any additional criminality in the money laundering offence was more than minimal, then the maximum penalty of imprisonment for five years for the dishonest obtaining offence was relevant, because the seriousness of the substantive offence in the second count ought reflect on the seriousness of the money laundering offence in the first count. Whilst the maximum sentence for the second count does not, in principle, operate as a limit on the total sentence which may be imposed, the Offender submitted that, in the circumstances of this case, any additional criminality which the Court may find within the money laundering offence, did not warrant adding to the primary offence, so as to bring the aggregate total for both offences above the maximum sentence for the second count.

Having regard to the fact that the conduct involved in the money laundering count was co-extensive with and subsidiary to (in that it was intended to facilitate) the substantive offence in the second count, it was submitted for the Offender that this is not a case warranting a separate sentence on the money laundering count, which itself exceeds the maximum penalty of five years’ imprisonment available on the second count.

Senior counsel for the Offender disputed the Crown submission that the Offender had arranged for, and misused, an elaborate and sophisticated offshore structure in order to facilitate the evasion of capital gains tax. It was submitted that the Stichting Group structure was not elaborate and sophisticated, and it was emphasised that it was Ms Harley’s idea to create such a structure. Conclusion Concerning Overlapping Criminality and Double Punishment

The task of the Court is to ensure that there is no double punishment of the Offender, with this outcome to be achieved by assessment of the criminality reflected in each offence, and the fixing of a sentence for each offence, and then by application of the principles of cumulation, concurrency and totality: R (Cth) v Milne (No. 1) at [119]. The Court should adopt a common sense approach to the assessment of criminality with respect to each offence, without the use of excessive subtleties and refinements, in determining whether the same acts are common to the two offences and whether there are remnants of criminality in one of the offences, which are not present in the other. The focus must be upon the elements of the two offences (and their differences) as well as the factual matters relied upon in evidence which bears upon proof of those elements: R (Cth) v Milne (No. 1) at [137].

In the course of refusing the permanent stay application in R (Cth) v Milne (No. 1) , I said at [170]: “I accept the submissions of the Crown that there are significant additional features with respect to the areas of alleged criminality lying within the first and second counts. With respect to the money laundering charge, the alleged conduct of the Accused with respect to the Stichting Group is an elaborate additional feature. With respect to the dishonest obtaining charge, I accept the Crown submission that there was effectively a second phase of conduct, commencing with alleged communications between the Accused and his accountants which culminated in the lodging of the allegedly false return.”

The conclusion expressed in that paragraph of my pretrial judgment was based upon the material and submissions placed before the Court on that application. Having seen and heard the evidence unfold at the trial, I am fortified in the conclusion which I reached at the pretrial stage.

There is a clear overlap between the two offences. However, the offence contained in the first count, in my view, involved significant additional criminality to be assessed, for sentencing purposes, apart from the criminality involved in the second count. The conduct of the Offender in erecting the Stichting Group structure, with the assistance of Ms Harley, was always intended by the Offender to have favourable tax consequences for him and Barat Advisory. However, the conduct of the Offender went beyond the implementation of the model advised by Ms Harley. The Offender utilised and misused Ms Harley’s model, in a way which involved Mr Meisterhans acting as the agent of the Offender and at his direction in a number of respects, all of which was intended to ensure that the Offender maintained practical control over the 55 Million Admerex Shares in and after June 2004. The Offender intended to take advantage of the Stichting Group structure, when an opportunity presented itself, by using the 55 Million Admerex Shares over which he maintained control, to benefit himself and Barat Advisory and to evade the capital gains consequences which he expected to apply.

It is correct to say that capital gains tax was payable because of the CGT Event on or around 3 February 2005 when the share swap occurred, so that this event was linked to the false statement made in the Barat Advisory tax return lodged in November 2006. However, this does not mean that these aspects ought all be included under the umbrella of criminality surrounding the second count. I am satisfied beyond reasonable doubt that the Offender did erect an elaborate and sophisticated offshore structure as submitted by the Crown. This process involved an elaborate rerouting of shares, and ultimately funds, to assist the intentional wrongdoing of the Offender contained in the first count.

In my view, it would be wrong to approach the sentencing of the Offender upon the basis that all the circumstances which bear upon his criminal conduct in the period from April 2004 to November 2006 should all be placed under the umbrella of criminality surrounding the second count. There is, in my view, a substantial element of additional criminality revealed with respect to the first count, so that a significant sentence ought be imposed for that crime.

Of course, it will be necessary for the Court to have regard to principles of concurrency, cumulation and totality in the imposition of sentence. However, I am satisfied that the sentences which I will pass do not give rise to any injustice to the Offender because of double punishment for separate offences. Rather, the sentences to be imposed will reflect the criminality for each offence, with the final total sentence reflecting the total criminality revealed in the offences for which the Offender was found guilty by the jury. The Offender’s Subjective Circumstances

As previously mentioned, the Offender was born in November 1955. He has no prior convictions.

A number of testimonials were tendered at the sentencing hearing from the following persons: (a) Liesa Milne, the Offender’s wife; (b) Mr Ronald Cotton; (c) Ms Kerrie-Ann Rosati; (d) Dr Robert Hampshire; (e) Mr Danny Simmons; (f) Mr Wayne Bellman; (g) Mr Lance Sacks.

The authors of the testimonials were not required for cross-examination.

All testimonials refer to the Offender’s successful career in business over many years, in circumstances which are described as being honest and honourable. The evidence reveals the Offender to be a hard-working man who has provided well for his family.

The impact upon the Offender’s family of his arrest and charging, and now his conviction for these offences, has been substantial. The Offender has been married for 30 years and has two children, a son aged 20 years and a daughter aged 17 years. The authors of the testimonials describe the Offender as a very caring husband and father, and a good friend. There is reference to the adverse consequences affecting the Offender’s family as a result of his present circumstances.

I accept that the Offender is a man of good character. I accept that his prospects of reoffending are very low. The Offender’s prospects of rehabilitation are good. Factors Under s.16A Crimes Act 1914 (Cth)

Section 16A(1) Crimes Act 1914 (Cth) requires the Court to impose a sentence that is of a severity appropriate in all the circumstances of the offence.

Section 16A(2) requires the Court, in addition to any other matters, to take into account certain specified matters as are relevant and known to the Court.

Section 16A(2)(a) requires the Court to take into account the nature and circumstances of the offences.

The nature and circumstances of the offences are reflected in the findings of fact which I have made above. These findings reflect the seriousness of each offence. I am satisfied that the second count constitutes a very serious example of a dishonest obtaining offence. I am also satisfied that the first count represents a serious example of a money laundering offence, involving the establishment and misuse of a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax.

Section 16A(2)(c) requires the Court to consider whether the offences form part of a course of conduct consisting of a series of criminal acts of a same or similar character and, if so, to take into account that course of conduct. I am satisfied that these offences were committed in the context of a course of conduct between 2004 and 2006 which I have outlined earlier.

Section 16A(2)(e) requires the Court to take into account any injury, loss or damage resulting from the offence. There was a substantial loss to the revenue as a result of the offences, with the Commonwealth being deprived of capital gains tax in a sum of at least $1,964,727.00.

Section 16A(2)(f) requires the Court to take into account the extent to which the Offender has shown contrition for the offences. The Offender has shown no contrition for the offences.

Section 16A(2)(fa) requires the Court to take into account the extent to which the Offender has failed to comply with any orders or obligations about pretrial disclosure, or ongoing disclosure, in proceedings relating to the offence. I accept that the Offender fully complied with pretrial disclosure requirements.

Section 16A(2)(h) requires the Court to take into account the degree to which the Offender has co-operated with law enforcement agencies in the investigation of the offences or of other offences. Senior counsel for the Offender accepted that, apart from the manner in which he conducted himself when a search warrant was executed at his home, he has not co-operated with law enforcement agencies in the investigation of the offences or of other offences.

Section 16A(2)(j) requires the Court to take into account the deterrent effect that any sentence under consideration may have on the Offender. I am satisfied that the sentences to be imposed will have an appropriate effect, by way of specific deterrence, on the Offender.

Section 16A(2)(k) requires the Court to take into account the need to ensure that the person is adequately punished for the offences. I am satisfied that the sentences to be imposed will have this effect.

Section 16A(2)(m) requires the Court to take into account the character, antecedents, age, means and physical or mental condition of the Offender. I accept that the Offender has been a person of good character and has no criminal convictions. He is 55 years of age. A number of assets of the Offender are subject to a forfeiture application under the Proceeds of Crime Act 2002 (Cth) . There are no physical or mental conditions of the Offender to be taken into account.

The Crown submitted that less weight should be afforded on sentence to the Offender’s prior good character. The Crown pointed to the line of authority which says that less weight will be given to prior good character if, but for that good character, the Offender would not have been in a position to commit the offence. Although accepting that this principle did not apply strictly to this case, the Crown submitted, by analogy, that the Offender would not have been able to act in the way he did if he had not been a person of good character.

It was submitted for the Offender that he was entitled to call in aid on sentence his prior good character in accordance with the principles in Ryan v The Queen [2001] HCA 21; 206 CLR 267 at 275, and that the line of authority referred to by the Crown had no application because the Offender did not use his good character to place himself into a position to sell the shares and to not declare the capital gain.

The offences for which the Offender is to be sentenced are not offences involving, for example, misuse of his office as a director under the Corporations Law. The Offender has been convicted of offences of money laundering and dishonest obtaining under the general criminal law. That said, the offences were inextricably involved with his position as the sole director (and the controlling mind) of Barat Advisory. There was evidence before the jury that Ms Harley assured several European entities that the Offender was a successful businessman, and a man of good character, as part of the processes which saw the erection of the Stichting Group structure and banking arrangements at the European end. In this way, it might be said that the Offender’s good character assisted him in the commission of the offences.

Generally speaking, good character is of lesser significance on sentence for white-collar crimes, since it is that factor which normally places the offender in a position whereby he is able to commit the offence: R v Rivkin [2004] NSWCCA 7 at [410]; R v Adler [2005] NSWSC 274 at [51]; R v Williams [2005] NSWSC 315; 152 A Crim R 548 at 579 [60]-[61].

There is a basis upon which the Offender’s good character may be given less weight in this case, because it assisted him to be in a position to commit, in particular, the money laundering offence. I will give weight to his good character on sentence. It is necessary, as well, to recognise the need for a very significant element of general deterrence in the imposition of sentence. As Wood CJ at CL said in R v Williams at 579 [61], the need for general deterrence may displace, to some degree, the benefit which might otherwise attach to prior good character. With these considerations in mind, I will have regard to the Offender’s prior good character for the purpose of sentence.

Section 16A(2)(n) requires the Court to have regard to the Offender’s prospects of rehabilitation. I am satisfied that the Offender’s prospects of rehabilitation are good.

Section 16A(2)(p) requires the Court to take into account the probable effect that any sentence under consideration would have on any of the Offender’s family or dependants. It is the regrettable and almost invariable consequence of the imprisonment of a father that adverse consequences will result to his family from that imprisonment. At common law, the hardship experienced by family members as a result of imprisonment of an offender must be exceptional before it can be given substantial weight. The requirement for exceptional hardship has been held to apply to s.16A(2)(p): R v Nguyen [2006] NSWCCA 369; 166 A Crim R 124 at 128-130 [21]-[29].

The testimonials before the Court demonstrates that the probable effect that any sentences will have on the Offender’s family and dependants will be substantial. I propose to take these matters into account on sentence. Other Sentencing Factors

The Crown contends that general deterrence is especially important in this case: R v Huang [2007] NSWCCA 259; 174 A Crim R 370 at 381 [36]; R v Guo and Anor [2010] NSWCCA 170 at [91]. For the Offender, it was not disputed that appropriate weight must be given to the principle of general deterrence.

I accept the Crown submission that particular weight must be given to general deterrence in this case. With the advantages of his considerable resources and his experience and expertise in business and finance, the Offender established and misused a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax. The conviction of the Offender, and the imposition of appropriate sentences, should operate to strongly deter other persons who may also have the capacity to engage in similar conduct, from committing such offences.

The Courts have a significant responsibility to protect the integrity of the revenue system by imposing punishments for deliberate dishonesty which are likely to deter others who may otherwise be tempted to indulge in the type of conduct committed by the Offender: Director of Public Prosecutions (Cth) v Rowson [2007] VSCA 176 at [24].

Further, I accept that the imposition of appropriate sentences will assist in sending the message to the community that the relevant Commonwealth authorities will seek to enforce taxation obligations, in relation to all taxpayers, including those of substantial means and resources.

I accept the submission for the Offender that the convictions will make it more difficult for him to operate commercially, to obtain employment and to visit overseas for the purpose of employment and I take this into account on sentence.

It was submitted for the Offender that he had facilitated the course of justice by making admissions for the purposes of the trial, and by agreeing to the tender of Crown exhibits and not disputing the evidence of Mr Mark. It was submitted that this resulted in the Crown not being required to call a number of witnesses and served to reduce the duration of the trial by about three weeks. It was submitted that this conduct of the Offender should be taken into account to considerably reduce the sentences which would otherwise be appropriate.

The Crown submitted that all that the Offender had done was what an accused person is expected to do in the context of a criminal trial. The Crown submitted further that the approach of the Offender at trial had operated in his favour as well, by reducing the length of the trial, and thus his own legal expenses.

I am satisfied that the Offender took steps to facilitate the course of justice in a number of respects concerning the trial. It is true that the Offender pressed a number of pretrial applications which were the subject of my judgment on 19 August 2010 in R (Cth) v Milne (No. 1) . It is also true that, in one significant respect, the Offender achieved a measure of success in his objection to the tender of Mr Mark’s report dated 3 June 2010.

Given the date when the indictment was filed, the pretrial case management provisions now contained in ss.134-149F Criminal Procedure Act 1986 did not apply to this trial: R (Cth) v Milne (No. 1) at [3]-[4]. Following the delivery of my judgment on 19 August 2010, the legal representatives for the Crown and the Offender engaged in substantial discussions which reduced, in a number of significant respects, the issues to be determined at the trial. Agreement was reached concerning the relevant tax law directions and the number of witnesses were reduced. Substantial volumes of documents were tendered by the Crown, in an orderly fashion, without objection by the Offender at trial. Further, as mentioned earlier, a flowchart summarising many events, prepared by Mr Mark, was tendered without objection (Trial Exhibit A). Mr Mark gave evidence concerning many documents and the movement of shares and monies, without challenge and without cross-examination.

A convicted person is not to be penalised for having insisted on his right to trial: Siganto v The Queen [1998] HCA 74; 194 CLR 656 at 663 [22]. The question is whether the Offender is entitled to credit on sentence for the way in which he, and his legal representatives, prepared for and conducted the trial.

I accept that the Offender’s approach to this trial, and a number of practical steps taken by him to narrow the issues for trial, should be taken into account in his favour on sentence, because these measures have facilitated the course of justice in the trial. There is some analogy between the utilitarian benefit arising from a plea of guilty which means that a trial is avoided and the community is spared the need for a trial.

The Offender’s approach to this trial should see some benefit to him on sentence, upon the pragmatic and objective ground that his approach to the trial has demonstrated a willingness to facilitate the course of justice, and to reduce the cost and the demands upon the community by significantly shortening the trial itself. The principles in Cameron v The Queen [2002] HCA 6, 209 CLR 339 at 343-344 may be called in aid by the Offender, in the analogous circumstances which I have identified.

I do not see that the fact that the Offender also achieved some benefit, through the saving of legal expenses, should operate to deprive him of credit for the utilitarian benefits arising from his approach.

The recital of factual and legal issues earlier in these remarks reveals the complexities of the matter, and the potential for an unco-operative accused person to extend and complicate the trial. Instead, the Offender took a positive and practical approach to the trial, in the manner which I have outlined. In my view, this served the interests of justice and permitted the jury to come to terms with the real issues in dispute in the trial without significant delay.

I propose to give the Offender appropriate credit for his approach to the trial. Some Additional Factors Bearing on Sentence

In a decision handed down on 8 December 2010, the High Court of Australia laid down a number of principles applicable to the sentencing of Commonwealth offenders, in the context of tax fraud offences: Hili v The Queen; Jones v The Queen [2010] HCA 45.

In particular, the Court determined (at [13], [36]-[38]) that there was no judicially determined norm for a period of mandatory imprisonment under Commonwealth legislation in the order of 60%-66% (or otherwise) of the prescribed maximum penalty. Part 1B Crimes Act 1914 (Cth) is the fundamental starting point, and that Part makes exhaustive provision for setting non-parole periods and recognisance release orders (at [29]). In sentencing a Commonwealth offender, it is wrong to begin with an assumed percentage, and then seek to identify special circumstances justifying a departure from it in calculating a minimum term (at [44]).

The Court observed (at [40]) that s.16A(1) Crimes Act 1914 (Cth) provides that a court must impose a sentence or make an order that of a severity appropriate in all the circumstances of the case, and what is the “severity appropriate” is to be determined having regard to the principles identified in Power v The Queen [1974] HCA 26; 131 CLR 623; Deakin v The Queen [1984] HCA 31; 58 ALJR 367 and Bugmy v The Queen [1990] HCA 18; 169 CLR 525. A critical consideration is to determine the period of imprisonment that justice requires an offender must serve in custody (at [41]). In the cases before the High Court, the deterrent and punitive effects of sentences for serious tax fraud were to be reflected, both in the head sentence and also in fixing a non-parole period (at [41]).

The plurality in the High Court observed that the inadequacy of the sentences imposed at first instance in that case was evident from consideration of all the matters that were relevant to fixing a sentence (including the minimum term) of a severity appropriate in all the circumstances of the offence, and that the chief considerations which there pointed to inadequacy were the nature of the offending, and the sentences that had been imposed in cases most closely comparable with those cases (at [62]). The plurality referred to a number of features of the tax fraud offences before the Court (at [63]): “The applicants' offending was sustained over a long time. It was planned, deliberate and deceitful, requiring for its implementation the telling of many lies. The applicants acted out of personal greed. The amount of tax evaded was not small. Detection of offending of this kind is not easy. Serious tax fraud, which this was, is offending that affects the whole community. As was pointed out in Ruha [[2010] QCA 10 at [45]] , the sentences imposed had to have both a deterrent and a punitive effect, and those effects had to be reflected in the head sentences and the recognizance release orders that were made.”

The Crown and the Offender before me made written submissions by reference to the matters referred to by the High Court in the preceding paragraph. The Crown submitted that these considerations apply equally to the present case, in a manner adverse to the Offender. It was submitted for the Offender that a number of the matters referred to by the High Court did not apply to the Offender.

I bear in mind that it is the provisions contained in Part 1B Crimes Act 1914 (Cth) , including s.16A(1) and (2), together with other relevant sentencing principles, to which the Court must give attention in determining appropriate sentences to be passed for the Offender’s crimes. However, the factors identified by the High Court judgment (in the passage cited at [243] above) constitute a helpful distillation of matters arising for consideration in the context of sentence for tax fraud offences. It is useful to express conclusions by reference to them.

Was the offending here “sustained over a long time” ? For reasons explained earlier, I am satisfied that the Offender’s course of criminal conduct extended over a significant period of time between 2004 and 2006. Contrary to the Defence submission, this is not a case where no offence was committed until the Offender caused the Barat Advisory income tax return to be lodged in November 2006. That act was the culmination of the course of criminal conduct which had extended over a lengthy period of time before then.

The Offender’s course of criminal conduct may be characterised appropriately as being planned, deliberate and deceitful, requiring for its implementation a sustained period of deception by the Offender of the Grant Thornton accountants, culminating in the operative lie to the ATO contained in the Barat Advisory tax return filed in November 2006.

I am satisfied that the Offender was acting out of personal greed in the commission of the offences. There is no evidence of hardship affecting his conduct, and the proceeds flowing to him in 2005 and 2006 (including the sum of at least $1.9 million which was payable substantially as tax) were utilised essentially for the purchase of luxury items and real estate.

The amount of capital gains tax evaded was very substantial, exceeding $1.9 million.

It is accurate to state that detection of offending of the kind committed by the Offender is not easy. This bears upon the need for general deterrence.

Likewise, it is apt to state, in the circumstances of this case, that serious tax fraud of this type affects the whole community in a detrimental way.

The sentences to be imposed upon the Offender must have both a deterrent and a punitive effect, and those effects must be reflected in the head sentences and the minimum term to be fixed.

I am not satisfied that there is any other sentencing case which is closely comparable to that of the Offender. In reaching this view, I have had regard to the submissions of the Crown by reference to other sentencing decisions for money laundering offences under s.400 Criminal Code , for dishonest obtaining offences under s.135.1 Criminal Code and for cases falling within the broad description of Operation/Project Wickenby sentencing decisions.

I bear in mind what was said by the High Court in Hili v The Queen; Jones v The Queen (at [53]-[54]) with respect to the use of other sentencing decisions and statistics.

Sentencing decisions for money laundering offences may provide assistance by way of statements of general sentencing principle for this class of offence, but not (at least at present) by way of identification of a range of sentence: R v Guo and Anor at [86].

Consideration of statements of general sentencing principles with respect to money laundering offences involve consideration of a number of factors: R v Wing Cheung Li [2010] NSWCCA 125 at [41]; R v Guo and Anor at [87]-[91]; R v Nguyen [2010] NSWCCA 226 [58]-[59]. In reciting these factors, I record my acceptance of the Crown submissions, and rejection of the Defence submissions, made by reference to them.

Firstly, it is necessary to reach an exact appreciation of what the Offender did, the acts he performed, and with what authority he acted and over what period of time. I accept that, in this case, the Offender utilised the advantages of his considerable resources, experience and expertise in business and finance, and established and misused a sophisticated offshore structure for the specific purpose of avoiding the payment by Barat Advisory of a substantial amount of tax. This course of conduct commenced in June 2004 and continued until November 2006.

Secondly, it is necessary to have regard to the total value of the money or property involved. In this case, the 48 Million Admerex shares, which the Offender dealt with, intending that they would become an instrument of crime, were valued at between $8.4 million and $9.12 million.

Thirdly, it is necessary to consider whether the money or property belonged to the Offender or to another. In this case, the 48 Million Admerex shares were owned by Barat Advisory, a company for which the Offender was the sole shareholder and director and of which he was the controlling mind.

Fourthly, it is necessary to consider the degree of planning or deceit that led to the commission of the offence. In this case, there was a significant degree of planning and deceit. Consistent with the verdicts of the jury, the Offender misused the Stichting Group structure, contrary to the advice of Ms Harley from June 2004 onwards. On 3 February 2005, the Offender dealt with the 48 Million Admerex shares, intending that they would be used to facilitate the commission of an offence which involved him, at some time in the future, dishonestly obtaining a financial gain by causing Barat Advisory to lodge an income tax return that contained false information, because it did not include about the capital gain that Barat Advisory made when it swapped the 48 Million Admerex shares for one million Temenos shares on or around 3 February 2005.

Fifthly, it is necessary to consider whether actual loss resulted, and the extent of that loss. In this case, the amount of tax which was not paid, but which ought to have been paid, was no less than $1,964,727.00.

Sixthly, it is necessary to consider the precise nature of the proved belief of the Offender. In this case, by 3 February 2005, the Offender had formed the intention that the 48 Million Admerex shares would be used to facilitate, at some time in the future, the evasion of tax on the capital gain derived from the exchange for one million Temenos shares.

In light of these findings, I am satisfied that the Offender’s conduct involved serious criminality, and that his offences should be characterised as serious examples of money laundering and tax evasion. Determination of Appropriate Sentences

The maximum penalty for the Offender’s money laundering offence under s.400.3(1) Criminal Code is imprisonment for 25 years. A wide range of conduct may be caught by this offence. It is necessary to consider the particular circumstances of the case at hand. In this case, I am satisfied that the Offender’s money laundering offence is a serious example of criminality of this type. There are significant aspects of criminality referrable to this offence, which are not covered by sentence to be passed for the second count.

The maximum penalty for an offence under s.135.1(1) Criminal Code is imprisonment for five years. It will be apparent from the findings which I have made, that I do not accept the Defence argument that the Offender should be sentenced upon the basis that his criminality wholly or substantially lies under the umbrella of criminality relevant to the s.135.1(1) offence. There are significant aspects of his criminality which must be addressed on sentence for the money laundering offence.

I have had regard to the objective circumstances of the offences and the subjective circumstances of the Offender to which reference has been made, including factors to be taken into account under s.16A(2). The sentences to be imposed upon the Offender must contain strong elements to reflect the need for general deterrence and retribution.

In all the circumstances of the case, I am satisfied that the sentence which the Court must impose for the money laundering offence, is one of imprisonment for seven years.

I am satisfied that the sentence which the Court must impose for the dishonest obtaining offence is a sentence of imprisonment for three years and six months.

I turn to the issue of concurrency, cumulation and totality. In my view, it would be erroneous to make the sentences completely concurrent. Having regard to my findings, a level of cumulation is appropriate. I propose to order that the sentences be concurrent as to two years, and cumulative as to one year and six months. Accordingly, the total period of imprisonment to be imposed will be one of eight years and six months.

As the sentences for the two offences, in the aggregate, exceed three years, it is necessary that the Court fix either a single non-parole period in respect of the sentences or make a recognizance release order: s.19AB(1) Crimes Act 1914 (Cth) . I propose to fix a single non-parole period. The non-parole period should provide for mitigation of the punishment of the Offender in favour of his rehabilitation through conditional freedom, once the Offender has served the minimum time that the Court determines justice requires that he must serve, having regard to all the circumstances of his offence: Power v The Queen at 629. The necessary deterrent and punitive effects of sentences must be reflected in the determination of the minimum term, as well as the head sentence: Power v The Queen at 628; Hili v The Queen; Jones v The Queen at [41].

I am satisfied that the appropriate course is to set a single non-parole period of four years and nine months to date from today. I am satisfied that this is the minimum period that the Offender should spend in prison having regard to all the elements of punishment, including the objective seriousness of his crimes, specific and general deterrence, denunciation and the Offender’s subjective circumstances, including his good prospects of rehabilitation.

Michael John Milne, in relation to each of the counts of which you were found guilty by the jury, I made an order on 2 December 2010 convicting you of each offence. In relation to the first count (the ss.400.3(1) offence), I sentence you to imprisonment for a term of seven years to date from 17 December 2010 and to expire on 16 December 2017. In relation to the second count (the s.135.1(1) offence), I sentence you to imprisonment for a term of three years and six months to date from 17 December 2015 and to expire on 16 June 2019.

I fix a non-parole period of four years and nine months to date from 17 December 2010 and to expire on 16 September 2015.

I am required by law to explain to you the effect of this sentencing order. You need to understand that the effect of that order is that you will serve a period of imprisonment of not less than four years and nine months and, if a parole order is made on or after 17 September 2015, you will also serve a period under supervision in the community, called the “parole period” , so as to complete the overall sentence of eight years and six months. If a parole order is made, it will be subject to conditions, and it may be amended or revoked. In particular, it may be revoked if you fail without reasonable excuse to fulfil those conditions, in which event you may be returned into custody, pending further review and possible re-release, depending upon your behaviour and response to any rehabilitation opportunities which may be offered whilst you are in custody.