Elomar v R; Elomar v R

1. [1]

   MACFARLAN JA: I agree with Hoeben CJ at CL and also with the additional observations of Fagan J.

2. [2]

   HOEBEN CJ at CL:

Offences and sentence

1. [3]

   The maximum penalty for the offence was 10 years imprisonment and/or a fine of 10,000 penalty units (equivalent to $1.7 million at the time of the offence). By Applications for Leave to Appeal, filed 7 May 2018, Ibrahim Elomar (hereafter referred to as Ibrahim) and Mamdouh Elomar (hereafter referred to as Mamdouh) seek leave to appeal from their respective sentences.

2. [4]

   Ibrahim relies upon the following grounds of appeal:

Ground 4 – The applicant has a justifiable sense of grievance from the imposition on him of a heavier sentence than that imposed on Mr Jousif.

1. [5]

   Mamdouh relies upon the following grounds of appeal.

FACTUAL BACKGROUND

1. [6]

   Ibrahim and Mamdouh were directors and equal shareholders in Lifese Pty Ltd (Lifese). The company was involved in engineering, infrastructure and construction projects both in Australia and overseas. The company experienced a “downturn” in 2013 and was “in decay” by 2014. Mr Jousif was a person resident in Australia, who held himself out as someone with expertise in introducing companies to government and statutory authorities in Iraq and who was familiar with the protocols necessary to obtain contracts with such bodies. Mr Al Zubaidi held himself out in a similar manner but lived in Baghdad. Mr Al Zubaidi and Mr Jousif were assisted by a person named Ms Abraham.

2. [7]

   Ibrahim and Mamdouh were engaged in lawful undertakings in Iraq at the encouragement of Mr Jousif and had expended substantial sums of money in establishing their company in Iraq in 2013.

3. [8]

   Mr Jousif, Ms Abraham and Mr Al Zubaidi all understood that it would be necessary for the Elomars to pay a bribe to get a government contract in Iraq. On 9 July 2014, Ms Abraham assured Mr Al Zubaidi that Lifese would pay “the commission”. Mr Al Zubaidi stated in a recorded conversation with her “as you know we’re dealing with the government, you need to keep giving bribes to get anywhere. I have given away so many iPhones, that is how it is here. It is all out in the open”.

4. [9]

   Mr Jousif, Ms Abraham and Mr Al Zubaidi had a strong financial interest in persuading the Elomars to obtain government contracts because their remuneration comprised commissions and they regularly discussed their commissions. Mr Jousif was to receive five per cent for every project. Mr Al Zubaidi told Ms Abraham that a number of international companies did not get work from the Iraqis because they did not commit to “the commission arrangements”.

5. [10]

   In April 2014 Lifese was registered in Iraq and an Irrevocable Pledge was signed undertaking to pay 25 per cent of the value of drilling each well to a nominated Iraqi national. On 4 June 2014 Mr Al Zubaidi was appointed the manager of Lifese’s office in Iraq. Funds were transferred to Iraq by first being deposited into Mr Jousif’s son’s account in Australia.

6. [11]

   On 5 May 2014 the Elomars agreed in principle to a partnership contract with the Ministry of Industry and Minerals and the Al Rasheed Company and wanted to start with a drilling project. On 7 July 2014 Mr Al Zubaidi told Mr Jousif it would be necessary for the Elomars to pay a bribe if they wanted to get a government contract in Iraq. However, it was not until over a month later that the Elomars learned of this. In July Mr Jousif discussed bribery with Ms Abraham and said that the risk was worth it as there was “a lot of profit” to be made.

7. [12]

   On 3 August 2014, Ibrahim and Mr Jousif left Australia for Iraq. The Elomars still did not know that they could only get government contracts if they paid the bribe that Mr Jousif had discussed with Mr Al Zubaidi on 7 July 2014. The Elomars continued to spend money in the expectation that Lifese would do lawful business in Iraq.

8. [13]

   On 10 August 2014, Ibrahim told Mamdouh that they were at the Ministry of Industry and Minerals, which would present some projects and if the projects were ready, he would take them immediately saying “We can take the deal and pay later. You know?” Ibrahim told Mamdouh to keep talking to a “Chinese man” (inferred to be Mr Lam).

9. [14]

   On 14 August 2014, Ibrahim spoke to Mamdouh in the context of “bringing plans back” and said “they are all very serious you know ... where we have entered no one can enter ... if they are truthful and things go smooth ... we are laughing”. Mamdouh replied “hope all good ... we have to take a risk ... what can we do ... we just need them to put 20 million in the pocket”.

10. [15]

    On the same day, Mr Jousif returned to Australia and told Border Force officers that he was working as a middleman for Lifese and that his job was to secure contracts for the company in Iraq. He also said that the payment of money was required in order to meet with officials and win contracts in Iraq.

11. [16]

    On 16 August 2014, Mr Jousif told Mr Al Zubaidi that he had spoken to Ibrahim who indicated that he would send the money “for the bank” when he returned, with Mr Al Zuibaidi responding “... get him to send the money for people, the one that we agreed upon the million ...”. This was the first reference to a specific amount which her Honour found was for the bribe. Her Honour found that the evidence did not indicate that the Elomars knew of either the requirement for or the amount of the bribe at this time.

12. [17]

    Her Honour found that by 17 August 2014 Ibrahim knew that a bribe of $1 million was required. As at 19 August 2014, Mamdouh refused to pay money and told Mr Jousif that he had told his brother he did not agree. Mamdouh preferred other projects that “did not involve money” and that no money would be sent until Lifese had projects to consider. Her Honour found that it was around 17 August 2014 or shortly after that “the Elomars became party to the conspiracy to pay a bribe to an Iraqi official. Prior to this time only Mr Jousif and Mr Al Zubaidi were parties to the conspiracy” (Sentence judgment [54]).

13. [18]

    There were further conversations between Mr Jousif and Mr Al Zubaidi where they discussed the money and said that “Ibrahim was all right” but that his older brother [Mamdouh] was a “bit hesitant, he pulls the strings”. On 19 August 2014 Mr Jousif told Mamdouh that he had spoken to Mr Al Zubaidi and that the job was guaranteed and that “everything is done according to law”. Mamdouh was assured that when the money was received it would not be touched until the project started working. Ibrahim returned from Iraq on 20 August 2014.

14. [19]

    There were various communications between Mr Jousif and Mr Al Zubaidi and some conversations with Ibrahim. Her Honour relied on a conversation between Ibrahim and an unknown person where Ibrahim said that they were waiting for a document and once they had that, they would be given a proposal for a waste treatment plant which would cost around $250 million, saying “so they got money ... they just needed someone experienced” and that he needed help organising an office, car, furniture and employing people. Her Honour found “I infer from this conversation that Ibrahim had overcome whatever objections Mamdouh had raised and that they were both working with Mr Jousif and Mr Al Zubaidi to progress the conspiracy” (Sentence judgment [72]).

15. [20]

    There were discussions between others about transferring the money, the subject of the bribe, from Australia to Iraq. This task was difficult because of the prohibition on transferring money from Australia to Iraq. The prohibition was part of sanctions imposed on Iraq.

16. [21]

    On 27 August 2014, there was a conversation between Mamdouh and Mr Jousif about money, with Mamdouh saying he was waiting to receive the money and Mr Jousif warning him not to delay because there was likely to be a change of government in Iraq. Mamdouh then spoke to his brother and asked how much money they had in their company. Ibrahim told him that they had around one million in the company. There was further delay because of problems in sending money from Australia to Iraq.

17. [22]

    On 28 August 2014 Ibrahim told Mr Jousif “What we are thinking is that now we can give you the money and you can smuggle it to there”. There was a conversation between the brothers about the Iraqis and sending money. On 29 August 2014, Mr Al Zubaidi told Mr Jousif that he just wanted to get the $1 million so they could receive the contract. Discussions concerning how to transfer the money to Iraq continued on 29 August 2014.

18. [23]

    On 30 August 2014, Ibrahim told Mr Jousif that Mamdouh wanted to “stop everything” as he was very unhappy and “they won't send us projects to study”. This was repeated in a further conversation with Mr Al Zubaidi. That afternoon, Ibrahim told Mr Jousif that Mamdouh had told him not to send anything and to hold off until Monday.

19. [24]

    Mr Jousif tried to reassure Ibrahim that more detailed documentation would be provided and mentioned various oil-related projects. Ibrahim indicated that although he was serious about the work, as far as he was concerned he had fulfilled all his obligations and if they did not want to fulfil theirs, he did not want the work any more. At about 9.30pm on 30 August 2014 Ibrahim received an email (in Arabic) from Mr Al Zubaidi reminding him to send “the amount agreed upon” so that he would not “feel embarrassed in front of the people”.

20. [25]

    On 31 August 2014 Ibrahim received a phone call from Mr Al Zubaidi and a Mr Abu Karrar. Abu Karrar told Ibrahim that he and Mr Al Zubaidi had just left the Ministry and that they had been put in an awkward position at the Ministry in relation to the money and added that they needed to “finish the contract issue before the change of Ministry … because we have agreed with this Minister. They do not know how much the new Minister will ask for” (Sentence judgment [126]).

21. [26]

    Ibrahim confirmed that they would send the money within a week.

22. [27]

    Mr Al Zubaidi complained throughout this period that he was in trouble and would have to pay the $1 million if the money was not paid. Mr Jousif told Mr Al Zubaidi on the afternoon of 1 September that he was with the Elomars and that they would send the money now and that it would be there on Wednesday, 3 September (Sentence judgment [130]-[131]).

23. [28]

    On the night of 2 September, Mr Jousif texted Mamdouh asking for the name of a restaurant and they met at the restaurant. Her Honour inferred that Mamdouh gave Mr Jousif at least $1,035,000 in cash. That night Mr Jousif rang Mr Al Zubaidi saying “green light”, that he did “take it”, that he had received a “full one” and Mr Al Zubaidi instructed him to take $45,000 and give $15,000 to the money remitter for the transfer fee, with $955,000 to be transferred. Mr Jousif rang Mamdouh who told him not to say anything on the phone and to go to his home the next day instead. On 3 September 2014, Mr Jousif remitted $US900,000 to Iraq in his own name (Sentence judgment [135]-[137], [142]-[145]).

24. [29]

    By 9 September 2014, Mr Jousif advised Ibrahim that the contract was complete and promised that documents would soon arrive. The Elomars, who were keen to start preparing tenders, were becoming increasingly anxious about the fact that no details about the projects were forthcoming from Iraq. Ibrahim repeatedly pressed Mr Jousif, who passed on their concerns to Mr Al Zubaidi, who was ready with explanations and excuses. For example on 10 September 2014, he said that he had not sent the plans for the waste management project because he wanted to send them with the plans for the chlorine project (Sentence judgment [159]-[163].

25. [30]

    Between 31 October 2014 and 1 November 2014, the Elomars tendered for a concrete plant. Her Honour accepted that “that tender involving expenditure of time, money and skill for a legitimate project which would have contributed to Iraq's infrastructure” (Sentence judgment [178]).

26. [31]

    On 6 November 2014, Ibrahim told Mamdouh that Mr Al Zubaidi was saying that he had to pay a “big bond” and that he had borrowed $75,000 and was asking for money for fees. Ibrahim told Mamdouh that he refused to pay that amount.

27. [32]

    On 12 November 2014, Mr Jousif mentioned that two people in Iraq suggested that further bribes be paid in relation to proposals for the concrete project. He told those people “Bring work and you’ll get the money”. Mamdouh agreed . The next day Ibrahim complained that they had an office arranged in Iraq for months but it had still not been used and that he had received a request for a bribe the day before. Both Ibrahim and Mr Jousif complained about the further demands for money. On 19 November there was a request for more money.

28. [33]

    On 2 December 2014 Mr Jousif told Ibrahim that the concrete and waste projects were “100 per cent”. On 9 December 2014, Mr Connell submitted a technical and commercial offer and invoiced Lifese $53,096.53 for the work which was paid in full. Around $180,000 was paid for the house in Iraq.

29. [34]

    On 15 February 2015, Ibrahim, Mamdouh and Mr Jousif were arrested and charged. There was no evidence as to what happened to the $1 million bribe. No contracts were ever allocated to Lifese.

30. [35]

    On 19 February 2015, the Australian Federal Police (AFP) interviewed Ibrahim, who denied knowing anything about the money. Mr Jousif told the AFP that Ibrahim was the main controller of Lifese. He admitted that he had had possession of $US955,000 for some days. He said the money came from Mr Al Zubaidi in Iraq and denied payment of bribes.

31. [36]

    Her Honour held that the seriousness of the offence was not diminished by the fact, if it were the fact, that Iraq was already a “contaminated pool” insofar as bribery and corruption, as compared to corruption or bribery committed in a “pristine” or more pristine pool (Sentence judgment [223]-[227]). Her Honour also held that the vulnerability of Iraq to corruption did not increase the seriousness of the offence (Sentence judgment [226]). Her Honour held that this was so given that the laws criminalising bribery of foreign officials corresponded with the local laws criminalising bribery of local public officials.

The sentence proceedings

1. [37]

   Her Honour held that common to each of the three co-offenders was an agreement that money would be paid to a person or persons they knew or believed to be relevant Iraqi government officials involved in the allocation of Iraqi government work. They knew that Al Rasheed was an adjunct to an Iraqi government ministry and that a payment to Al Rasheed was, in effect, a payment to the government. They intended that the payment would have the result that the official (or officials) would favour Lifese in its efforts to obtain multi-million dollar contracts to perform such project work. The intended end result was that Lifese would obtain those contracts.

2. [38]

   The Elomars and their co-accused, Mr Jousif, were arraigned and pleaded guilty on 10 July 2018, one week before their joint trial in respect of the conspiracy charge, was to commence. Neither Ibrahim nor Mamdouh gave evidence in the sentence proceedings.

3. [39]

   Her Honour summarised the involvement of the Elomars together, holding that much of what they knew and decided was “common and joint” (Sentence judgment, [239]).

4. [40]

   Her Honour held that by their pleas the Elomars accepted that in conspiring to bribe an officer of Al Rasheed they were conspiring to bribe a foreign public official in the exercise of his or her official duties in order to obtain business and the intended end result was that Lifese would obtain the aforementioned contracts.

5. [41]

   Her Honour held that although the offence was punishable (by having the same maximum penalty as if the substantive offence to which the conspiracy related had been committed), the relevant (criminal) conduct was the agreement which constituted the conspiracy. Although the elements of the offence of conspiracy were established once there was an agreement, the court was required to assess the content, duration and reality of the conspiracy. This includes each offender’s role in what was done pursuant to the conspiracy, while bearing in mind that an offender was not to be sentenced for offences not charged.

6. [42]

   Her Honour held that although the determination of each offender’s role was important, the fact of agreement and its subject matter were also relevant and the court was not confined to sentencing each offender on the narrow basis of what they actually physically did (in pursuing the conspiracy).

7. [43]

   Her Honour observed that Division 70 of the Code was designed to implement the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions which came into force on 15 February 1999. Her Honour concluded that the evident Parliamentary intention when implementing Australia’s obligations under the Convention was to make laws criminalising bribery of foreign public officials correspond to local laws criminalising bribery of local public officials. In those circumstances, it was not to the point whether corruption was thought to be more common in the nation where the foreign public official was located than in the jurisdiction which conducted the prosecution. It follows that the (assumed) prevalence of corruption in Iraq could not, consistently with the objects of the legislation, lessen the seriousness of the offence. Nor did the apparent vulnerability of Iraq increase the seriousness of the offence.

8. [44]

   Her Honour held that although there was no evidence about what happened to the money after it was transferred to Iraq, it did not follow that no damage had resulted from the offence. The payment of $1 million tended to reinforce not only Mr Al Zubaidi’s belief that foreigners were prepared to pay substantial sums to bribe Iraqi officials to get infrastructure contracts but also Mr Jousif’s and Ms Abraham’s belief that it was worthwhile spending time and effort soliciting Australian business people to pay such sums.

9. [45]

   Her Honour held that bribery by its very nature tended to distort markets by giving a competitive advantage to the person who makes the most substantial bribe and tended to impede the assessment of tenders on any rational basis. Her Honour held that general deterrence had a significant role in the present case. An offence of this kind is difficult to detect. This is because none of the parties to a conspiracy to bribe has an interest in its disclosure. The victim is the nation state whose public officials are to receive the benefit.

10. [46]

    Her Honour concluded that it was important that the sentences included an element of denunciation so that those Australians who carry on business overseas appreciate that bribery of foreign officials is as serious and as criminal, as bribery of local officials and can never be excused, much less justified, on the basis of a business imperative.

11. [47]

    Her Honour made the following further specific findings concerning the conduct of the Elomars:

12. [48]

    Her Honour made the following findings as to the criminality of Mr Jousif and his role in the conspiracy:

13. [49]

    At the outset, he was well aware that it was likely to be necessary for the Elomars to be required to bribe an Iraqi official if they were to do business in Iraq. He sought to keep this fact from the Elomars until Ibrahim had arrived in Iraq and had seen the infrastructure projects that would be on offer.

Mr Jousif

1. [50]

   Her Honour made the following findings:

Ibrahim

1. [51]

   With respect to matters personal to Ibrahim, her Honour noted and took into account the following:

Mamdouh

1. [52]

   With respect to matters personal to Mamdouh, her Honour noted and took into account the following:

Ground 1 – Her Honour erred in her findings as to the role and involvement of the applicant (Mamdouh)

1. [53]

   This ground of appeal was only relied upon by Mamdouh.

2. [54]

   He submitted that it was not open to her Honour to find that he was a party to the conspiracy to pay a bribe from around 17 – 19 August 2014. He submitted that it was also not open to her Honour to infer from the conversation between Ibrahim and an unknown person on 21 August 2014 that his objections had been overcome and that he was a party to the conspiracy. Mamdouh submitted that this was particularly so when the unchallenged evidence was that he was angry that day when he left to fly to Hong Kong.

3. [55]

   Mamdouh submitted that his position was to be contrasted with that of Mr Jousif, who had been aware of the requirement for bribes since 7 July 2014, and had thereafter engaged in cajoling, prompting and facilitating the conspiracy and in due course, trying to persuade the Elomars to pay the bribe. Mamdouh submitted that he had resisted overtures for payment of the money, including saying “no” to a payment as late as 19 August. He submitted that it was clear that he was not part of the conspiracy at that time. He submitted that it was clear that he had a different attitude to the payment of the money than did Ibrahim.

4. [56]

   Mamdouh submitted that it was clear that as late as 27 August 2014 he was still equivocating about whether or not to agree to pay “the bribe” despite being urged by Mr Jousif to do so. He did accept, however, that as of 28 August 2014 he had entered the conspiracy.

5. [57]

   Mamdouh submitted that there was no basis in the agreed facts for the finding that by 19 August he knew that there was a demand for $1 million to be paid or that he had joined the conspiracy at this time. Mamdouh noted that a finding of this kind had to be made beyond reasonable doubt and that the evidence to which her Honour referred did not reach that standard.

6. [58]

   Mamdouh accepted that by 23 August 2014 he was discussing an option of US$1.2 million being sent “to this people” from China or Hong Kong with Mr Lam (Sentence judgment [84]). This was later referred to by others as “the Hong Kong option” for the transfer of money. Mamdouh submitted that although an inference could be drawn that he had joined the conspiracy by that time, the evidence did not exclude the reasonable possibility that he was still considering the matter.

7. [59]

   Mamdouh submitted that his criminality was distinguished from that of Ibrahim and Mr Jousif, given his relatively brief participation, what he did and his role in facilitating the handing over of the money to Mr Jousif. He submitted that of all the conspirators he was involved for the least period of time and was subject to continuing pressure until finally succumbing to join the conspiracy. He submitted that his only role at that time was to assist in the sourcing of the monies for the payment to be given to Mr Jousif. Mamdouh submitted that the task of assessing his role and the part he played in the conspiracy was not properly undertaken by her Honour.

8. [60]

   Mamdouh submitted that while it was correct to say that he might ultimately have been susceptible to “the sunk costs fallacy’ and that he must have ultimately been attracted by the potential of contracts being awarded in Iraq and the prospective profits, it was equally clear that he was coerced to enter the conspiracy by his brother, and especially by Mr Jousif.

9. [61]

   Mamdouh submitted that there was simply no evidence that he “made sure that it was Mr Jousif who was the one to effect the transfer of funds to Iraq”. He submitted that the true position was that he and his brother refused to do it themselves and gave the money to Mr Jousif. It was Mr Al Zubaidi who was instrumental in insisting that Mr Jousif effect the transfer of funds to himself in Iraq and it was Mr Jousif and Mr Al Zubaidi who were pressing for the money to be transferred so they could take their own payments from it.

10. [62]

    Mamdouh submitted that it followed from the above analysis that her Honour erred when she found that there was “little to distinguish the Elomars in terms of the seriousness of the criminal conduct”. He submitted that it was clear that he joined the conspiracy later than Ibrahim and did far less towards facilitating the agreement. He submitted that his role went no further than to agree after significant coercion.

11. [63]

    Mamdouh submitted that even if one were to accept that it was correct to say that his criminality and that of Ibrahim could not be distinguished, they were involved for a far lesser time in the conspiracy than Mr Jousif. He submitted that it was clear from the evidence that Mr Jousif was part of an organised business of bribing officials for gain.

Consideration

1. [64]

   Her Honour dealt with the relative positions of the Elomars in the conspiracy in her sentence judgment as follows:

2. [65]

   When considering the relative culpability of Mamdouh and Ibrahim, it needs to be kept in mind that the essence of their offending was their participation in the conspiratorial agreement. It is true that Ibrahim was the first to apparently become involved in the conspiracy with Mr Jousif and Al Zubaidi. It is also clear that from an early point in time, and at least by 19 August 2014, Mamdouh was well aware of the bribery proposal and the amount of the bribe. That is the clear inference to be drawn from the intercept of the conversation between Mamdouh and Mr Jousif set out at [55] of the sentence judgment:

3. [66]

   Her Honour concluded (as was well open on the evidence) that Mamdouh’s objection to the request for money (which was clearly the money constituting the bribe) was that it was bad business. A large sum of money was being requested without any security or other tangible guarantee being offered in return. What is significant is that in all of the discussions between Mamdouh and other members of the conspiracy, he never expresses any moral objection to the proposition that a bribe would have to be paid in return for the provision of lucrative contracts. In those circumstances, the fact that Mamdouh may have joined the conspiracy some days after Ibrahim was not of significance.

4. [67]

   As her Honour pointed out, it was also open to infer that Mamdouh’s apparent opposition to the payment of any money at an early point in time was being used by the Elomars as a negotiating tactic.

5. [68]

   In any event, it is clear that by 23 August 2014 any objections which Mamdouh had in relation to participating in the conspiracy had been substantially withdrawn. That is the clear inference to be drawn from the discussion between Mamdouh and Mr Lam on that date and the reference to US$1.2 million being sent “to this people” from China (agreed facts at [84]). Accordingly, if it were not open to her Honour to find that Mamdouh had joined the conspiracy by 19 August, it was certainly open to her to find that he had done so by 23 August when this conversation took place. The inference is overwhelmingly to that effect and to suggest that he was still in doubt at that time involves speculation and is not supported by any evidence.

6. [69]

   As was submitted by the Crown in oral submissions, an assessment of the part played by Mamdouh in the conspiracy should not be confined to the narrow inquiry of what he actually physically did. Even if it be the case that Mamdouh was engaged in lesser or different conduct to that of Ibrahim, the culpability of Mamdouh and Ibrahim was indistinguishable. A matter of fundamental importance was that the money could not be sent so as to implement the bribe without the consent and co-operation of both brothers. In that regard, the fact that Mamdouh physically handed the money to Mr Jousif, should not be ignored.

7. [70]

   Even if her Honour were mistaken in the date she attributed to Mamdouh’s first participation in the conspiracy, his clear participation some days later and the overall circumstances of the collaborative relationship between the two brothers does not invalidate her ultimate conclusion, i.e. that the culpability of the Elomars was indistinguishable and that Ibrahim and Mamdouh, both separately and together, participated in and implemented the decision to send the moneys for the bribe to Iraq. This is clear from her Honour’s findings at [47] and [51]-[52] hereof.

8. [71]

   This ground of appeal has not been made out.

Ground 2 – Her Honour erred in finding that there was damage resulting from the offences within s 16A(2)(e) Crimes Act 1914 (Cth)

1. [72]

   This ground of appeal was relied upon by Mamdouh as his second ground and by Ibrahim as his first ground of appeal.

2. [73]

   The Elomars submitted that the available evidence did not establish what had actually happened to the money sent to Iraq. It was not known whether the entire process had been fraudulent or whether in fact Iraqi government officials had been involved and had received some or all of the money which had been transferred to Iraq.

3. [74]

   The Elomars submitted that the reinforcement of the beliefs of Mr Al Zubaidi, Mr Jousif and Ms Abraham that Australian businessmen were prepared to pay bribes in order to obtain infrastructure contracts could not found a conclusion of damage resulting from the offence as intended by s 16A(2)(e) of the Crimes Act. They submitted that it was inherent in any criminal offence that it involved conduct that is to be discouraged. They submitted that in this case, the involvement of other people was a part of the conspiracy charged, and was taken into account as part of the objective gravity of the offence. Even if it were the case that in other contexts conduct that gave rise to such beliefs could result in “damage”, it is clear that these persons already held those beliefs before the commission by the Elomars of the offence.

4. [75]

   The Elomars relied upon the definition of “damage” in the Macquarie Dictionary which was to the effect that it meant “injury or harm that impairs value or usefulness”. They submitted that findings of “damage” in the context of s 16A(2)(e) have been made in a number of cases, none of which were comparable to the finding made in this matter. Examples identified in support of that proposition were trauma associated with fraudulent medical services, damage caused by the supply of drugs, damage caused by false and misleading representations and damage caused in the market place by insider trading.

5. [76]

   By reference to those decisions, the Elomars submitted that when the section refers to damage to either a class or to individual persons, it envisages actual damage consequent upon the offence that was committed. This was demonstrated by cases such ACCC v Rana [2008] FCA 374. That was a case where the offender had made representations that certain treatment would cure terminal or life-threatening conditions when such was not the case. The court identified the injury and damage resulting from the offence as causing people dying of cancer and/or their families being further traumatised by having to give information to the ACCC to ensure that the offenders’ conduct could be stopped. In effect, the conduct caused further distress to people already in a vulnerable position.

6. [77]

   The Elomars submitted that the damage envisaged by cases such as Rana, although of a non-physical kind, was real but quite different from the concept sought to be developed by her Honour as constituting damage for the purposes of s 16A(2)(e) in this case.

Crown submissions

1. [78]

   The Crown in its response noted that the word “damage”, as used in s 16A(2)(e), is not defined. It submitted that the word should be given its ordinary meaning and its scope should be construed according to the intention of the legislature and the purpose of the enactment under consideration.

2. [79]

   It submitted that s16A of the Crimes Act applied to the sentencing of all persons who have committed offences against the laws of the Commonwealth. Accordingly, the ambit of specific consideration as listed in s 16A(2) must be construed in a way that permitted application across a broad range of offences, circumstances and contexts. It submitted that ultimately whether a particular matter listed in s 16A(2) is engaged or not, will depend upon the specific facts and circumstances of the particular case. The Crown submitted that simple factual comparisons between cases where s 16(2)(e) has been engaged and the present case provides very little assistance in determining whether her Honour erred in the manner asserted.

3. [80]

   The Crown submitted that what the cases do show is that the term “damage” is not limited to physical harm to persons or property, or to instances of tangible harm, nor to direct or specific harm, to a particular individual entity or victim. The Crown noted that the term has been considered to cover indirect and assumed harm done to the community, tax payers in general, the integrity of a market and the reputation and standing of government institutions and bodies. The Crown submitted that damage may also be an intangible concept and may also be indirect.

4. [81]

   The Crown submitted that in each of the cases referred to by the Elomars, what actually occurred in the particular circumstances is not as relevant as discerning the reasons why damage was found in those cases to be a relevant factor.

5. [82]

   The Crown submitted that [259] and [260] should be read together as encapsulating what her Honour identified as the damage flowing from this offence, i.e. her Honour saw as the damage not only the effect on the beliefs of Messrs Al Zubaidi, Jousif and Ms Abraham but the adverse effects of bribery generally.

Consideration

1. [83]

   The relevant part of her Honour’s findings, to which this ground is directed were:

2. [84]

   Her Honour’s second point concerning the distortion of markets caused by bribery loses much of its force because in this case it is not known what happened to the money sent to Iraq. It is not known whether it actually was received by Iraqi government officials or whether it was part of an elaborate fraud based on a premise that lucrative contracts could only be obtained in Iraq by the payment of bribes. If that were the only basis for her Honour’s finding of damage, then this ground may well have been made out.

3. [85]

   Her Honour did not, however, restrict her finding as to damage to that scenario. Her Honour commenced the investigation of the objective seriousness of the offending by having regard to some of the extrinsic material and in particular, the terms of the relevant Convention against bribery. Her Honour also had regard to the Second Reading Speech of the Minister introducing the offence provision for the purpose of discerning what really was the purpose and object of the offence. Her Honour did this from [211] onwards. It was in that context that her Honour made reference to the parties to the convention having the desire to stamp out and eliminate the culture of bribery amongst other things. What her Honour was doing there in the first part of her reasoning was to emphasise the success which was achieved in this case by the fraudsters, in particular Mr Al Zubaidi, by the fact that payment was made by Australian businessmen. The damage identified by her Honour was that the success of this enterprise apparently for the benefit of Mr Al Zubaidi would have the effect of entrenching and encouraging him and others like him to continue to solicit payments of this kind by holding out to other businessmen the prospects of lucrative infrastructure contracts in Iraq.

4. [86]

   Looked at in that way, her Honour’s finding as to damage was an appropriate one, but nevertheless limited in the way in which her Honour specified, i.e. the effect of this successful “scam” was to encourage Mr Al Zubaidi to continue with such conduct.

5. [87]

   Although her Honour was entitled to make that finding, its limited effect would have meant that it played a very small part in the sentencing exercise. This ground of appeal has not been made out.

(b) Qualifying the “discount” by taking into account only that the plea demonstrated the subjective intention of the applicant to facilitate the administration of justice (cf s 16A(2)(g) Crimes Act 1914 (Cth).

1. [88]

   This ground of appeal was Ground 3 in the appeal by Mamdouh and Ground 2 in the appeal by Ibrahim.

2. [89]

   In order to understand the submissions on this ground, it is necessary to set out what her Honour said in the sentence judgment:

3. [90]

   The Elomars submitted that it was apparent from that quotation that her Honour did not consider it necessary to deal with the utilitarian value of the guilty plea as an objective factor as could be seen from the concluding words in [263] of her sentence judgment. They submitted that it was apparent that whatever benefit her Honour allowed with respect to the pleas of guilty, that benefit was assessed by reference to the appellants’ subjective willingness to facilitate the administration of justice and qualified by her Honour’s assessment of the strength of the Crown case. They submitted that this interpretation was strengthened by the fact that her Honour did not specify the extent of the discount allowed.

4. [91]

   They submitted that Her Honour's approach was in accordance with the interpretation of Cameron v The Queen [2002] HCA 6; 209 CLR 339 in subsequent decisions such as Tyler v The Queen; The Queen v Chalmers [2007] NSWCCA 247; 173 A Crim R 458. They noted that in Xiao v R [2018] NSWCCA 4 a five judge bench (Bathurst CJ, Beazley P, Hoeben CJ at CL, McCallum and Bellew JJ) had determined that cases such as Tyler v The Queen; The Queen v Chalmers should not be followed and that the utilitarian value of a plea of guilty, i.e. its objective beneficial effect, should be taken into account, as well as any subjective intention to facilitate the course of justice. They noted that in the related judgment of Jinde Huang aka Wei Liu v R [2018] NSWCCA 70 Bathurst CJ had observed that a failure to take into account the utilitarian value of a plea of guilty is an error.

5. [92]

   They also relied upon the decision of Naizmand v R [2018] NSWCCA 25 at [30]-[33] where Fullerton J (Hoeben CJ at CL and Price J agreeing) concluded that the sentencing judge in that case had erred in the assessment of the appropriate discount for the guilty plea by limiting it to the offender’s subjective willingness to facilitate the administration of justice. This was despite the sentencing judge specifically noting that the plea had saved the need for “witnesses to be called at trial.”

6. [93]

   Applying those authorities, they submitted that her Honour had erred in failing to give effect to the utilitarian value for the guilty pleas in this case (as opposed to their subjective intention) despite the real benefits derived from the avoidance of a lengthy trial, and the potential for a conviction appeal on matters of statutory construction.

Consideration

1. [94]

   I have concluded that her Honour did take into account the utilitarian value of the Elomars’ guilty pleas and did not qualify their utilitarian value by taking the pleas into account only as demonstrating a subjective intention to facilitate the administration of justice, albeit in the face of a strong Crown case.

2. [95]

   Her Honour was well aware of the controversy as to whether the utilitarian value of a plea of guilty should be taken into account for the purposes of awarding a discount in a Commonwealth offence. She had been told by the Crown that this issue was argued in Xiao v R and that the decision in that matter had been reserved. It is for this reason that her Honour made specific mention of the utilitarian value of the pleas at [263] of her sentence judgment.

3. [96]

   As I read that paragraph, her Honour was making a finding as to the existence of a utilitarian value in the pleas of guilty in that the cost of a trial with potential appeals had been saved. She also found a subjective intention on the part of the Elomars to facilitate the administration of justice. Having made both those findings, her Honour did not consider it necessary to consider the issue raised in Xiao v R because on the facts of this case, the pleas of guilty had both a utilitarian value and indicated an intention to facilitate the administration of justice. Her Honour was clearly taking both matters into account when determining whether there was an entitlement to a discount for the pleas of guilty.

4. [97]

   There is nothing in that approach which is inconsistent with what this Court said in Jinde Huang aka Wei Liu v R and in particular the observations of Bathurst CJ. Her Honour’s approach can be distinguished from that of the sentencing judge in Naizmand v R because the reference to the saving of the need for witnesses to be called at trial in that case was made to simply exemplify the offender’s subjective willingness to facilitate the course of justice. There was no indication that the sentencing judge was in any way taking into account as a separate concept, the utilitarian value of the plea. The distinction in the ratio between Naizmand v R and this case is clear.

5. [98]

   This ground of appeal has not been made out.

Ground 4 – Her Honour erred in proclaiming and applying a principle that “in offences such as the present, good character, while relevant, is not as significant as a mitigating factor”.

1. [99]

   This was Ground 4 in the Mamdouh appeal and Ground 3 in the Ibrahim appeal.

2. [100]

   The full text of what her Honour said on this issue was:

3. [101]

   The Elomars submitted that the “character” of an offender is a matter that the court “must” take into account (s 16A(2)(m) of the Crimes Act (Cth)). They submitted that good character acts in mitigation. It may allow a sentencing court to conclude that the offending conduct was out of character and an isolated aberration with the related impact on a lesser need for specific deterrence. The Elomars submitted that there was powerful evidence in their cases to support this conclusion. They submitted that in such circumstances good character had a related effect of reducing the need for specific deterrence (s 16A(2)(j)) and increasing the prospects of rehabilitation (s 16A(2)(n)). Less weight could be given to retribution and general deterrence (s 16A(2)(ja)). They submitted that in such circumstances, an offender is likely to be dissuaded from further criminality by a relatively lenient sentence (Kenny v R [2010] NSWCCA 6 at [13]).

4. [102]

   They submitted that prior good character, particularly in the case of a mature aged offender such as the Elomars, might also allow for leniency on the basis that they had a “bank of credit” upon which to draw: Ryan v The Queen [2001] HCA 21; 206 CLR 267 at [30], R v Berg [2004] NSWCCA 300 at [35].

5. [103]

   The Elomars submitted by reference to the facts of Ryan v The Queen that a distinction was to be drawn between an isolated instance of offending and a person such as Ryan, who lived a double life over many years, which enabled him to engage in criminality and gross breaches of trust. They noted that Gummow J at [68] referred to the relevance of circumstances where the offence was an “isolated lapse” representing human frailty or where the prior good character informs the offender’s appreciation of the censure apparent in the criminal process and thus suggests that repetition of the conduct was unlikely. Gummow J contrasted that with the case of repeated offences over 20 years with numerous victims and the use of good character to assist in the commission of the offences such as occurred in Ryan v The Queen.

6. [104]

   The Elomars referred to the observations of Hayne J at [143] where his Honour held that there could be no rule of general application when it came to good character. He noted that in Ryan v The Queen the good character evidence also revealed the extent of the offender’s breach of trust over many years with multiple victims, it not being a momentary lapse in an otherwise good and blameless life.

7. [105]

   The Elomars submitted that her Honour had erred in principle in stating and applying a blanket rule that good character was not as significant as a mitigating factor in an offence of foreign bribery. They submitted that even if there were such a principle, it did not have application in the circumstances of this case.

8. [106]

   The Elomars submitted that there was no evidence that their prior good character was what gave them the opportunity to tender on government contracts in Iraq. Indeed, it was the use of an Iraqi intermediary (who unbeknown to them at the time of his engagement had a reputation for the provision of commissions) that allowed them the opportunity. They submitted that this suggested that the person receiving the bribe or bribes, had no particular interest in the prior character of the person providing it. The Elomars submitted that there was no evidence that their good character had anything to do with the opportunity to perform contract work in Iraq, or the facilitation of a bribe. They submitted that while there might be occasions where persons, who because of their good character are in positions of trust, and use those positions to facilitate foreign bribes, that was not the case here. Their good character was not of “less significance” because of any principle from the cases referred to by her Honour. In particular, this case could be clearly distinguished from that of Ryan v The Queen and R v El Rashid (Court of Criminal Appeal (NSW), 7 April 1995, unreported) where the offenders’ previous good character provided the opportunity for their offending.

9. [107]

   The Elomars submitted that there was a substantial quantity of good character evidence to the effect that not only had they not committed any offences for many years, but there was evidence of positive actions and contributions on their part to society.

10. [108]

    In the case of Mamdouh, he sponsored a community event with the purpose of using his own family example (one of his sons had been convicted of terrorist offences) to counsel against Islamic State extremism, reject it publicly, denounce his son’s actions and extremism and counsel other families to stop their children from engaging in such activity. This was but one aspect of his positive contribution to the public good.

11. [109]

    There was evidence that he was generous to the Catholic Church and cared deeply for those who worked for him. He was described as having a strong work ethic and being dedicated towards the training of young people from low socio-economic backgrounds, enabling those persons to advance themselves in life. He liaised with Tafe and other training groups to assist them into industry. There was evidence that Mamdouh’s actions and those of Ibrahim in committing this offence were totally out of character.

12. [110]

    There was evidence that Mamdouh constantly promoted positive interaction with persons from all backgrounds without fear or prejudice and that he encouraged and enhanced community relationships.

13. [111]

    Mamdouh had also “directed police to very important areas of possible fraud and conflict” which produced better relationships and good results for the police and the community. He was described as “brave and always willing to help police and any agency with any criminal or similar information that he might have”.

14. [112]

    The Elomars were described as professionals who fully embraced Australian values while suffering many prejudices because of their cultural background. They had recruited a large and diverse workforce who embraced Australian values and respected other cultures.

Crown submissions

1. [113]

   The Crown referred to the decision of Regina v Kennedy [2000] NSWCCA 527 where Howie J (with whom Simpson J agreed) identified particular features of an offence which might enable a sentencing court to give less weight to evidence of prior good character:

2. [114]

   The Crown submitted that although s 16A(2)(m) required that a sentencing court must take into account the character and antecedents of an offender, the weight to be given to that factor was a matter for the exercise of the sentencing court’s discretion. Apart from the nature and extent of the evidence of an offender’s previous good character, the nature and circumstances of the offence in question might bear upon the weight to be given to prior good character in the sentencing exercise. The Crown submitted that in terms of the weight to be given to an offender’s prior good character, a sentencing court had a very wide discretion.

Consideration

1. [115]

   I have concluded that this ground of appeal has been made out. There is no evidence that the Elomars’ good character had anything to do with the opportunity to contract work in Iraq, or the facilitation of a bribe to foreign officials. They appear to have been particularly singled out by their co-conspirators because they were successful businessmen and had access to large sums of money. There was a single offence. There was no breach of trust. While there can be occasions where persons, who because of their good character are in positions of trust, and use those positions to facilitate foreign bribes, that was not this case. It was not correct for her Honour to find that the Elomars’ good character was of “less significance” because of any principle from the cases referred to by her Honour. Her Honour’s finding significantly understated the force of the good character evidence of the Elomars.

2. [116]

   There is, in my opinion, a significant distinction to be drawn between persons whose claim to good character is based upon them not having been engaged in any criminal activity and evidence of good character which goes not only to that subject, but which positively establishes that the particular person or persons under consideration have made a positive contribution to society and have demonstrated a consistent history of philanthropy directed to their fellow citizens. The Elomars well and truly met that criteria and their previous good character was a significant mitigating factor. This ground of appeal has been made out.

Ground 4 – The applicant has a justifiable sense of grievance from the imposition on him of a heavier sentence than that imposed on Mr Jousif – (Ibrahim appeal)

1. [117]

   Because of the Elomars’ success in relation to the “good character” ground of appeal, it will be necessary to re-sentence them so that it is not necessary to deal with the parity grounds of appeal in any detail, except insofar as that ground will influence the re-sentencing exercise. I have already dealt with the parity question as between Mamdouh and Ibrahim (Ground 1 of the Mamdouh appeal) so that on re-sentence they should each receive the same penalty.

2. [118]

   A comparison of the objective seriousness of the offending and moral culpability as between Mr Jousif and the Elomars is a difficult exercise. The findings by her Honour are at [47]-[52] hereof. Despite their conviction for the same offence, the quality of the offending was rather different. Mr Jousif was involved in the conspiracy with Ms Abraham from its inception and his overt acts in relation to the conspiracy were numerous when compared to those of the Elomars. Mr Jousif was tireless in his efforts to bring the conspiracy to fruition so that he could receive his personal remuneration. There was the difference between his age and that of the Elomars, they being significantly older than him. The Elomars have suffered a significant financial loss, not only the loss of the bribe money, but also the costs of setting up their operation in Iraq. The Elomars had the advantage of positive good character findings with only a minor criminal blemish which occurred many years before.

3. [119]

   On the other hand, the participation of the Elomars was fundamental to the conspiracy. The amount of money involved was substantial. Although Mr Jousif was the instigator and facilitator of the conspiracy, it was the Elomars who obtained the money and passed it on to him. The Elomars’ motivation was greed in circumstances where the likely reward for obtaining infrastructure contracts in Iraq would be highly lucrative. The objective seriousness of the offending was high. Mr Jousif had some hardship issues in his subjective case which were lacking in that of the Elomars, i.e. his gambling addiction and his wife’s mobility problems.

4. [120]

   It follows that when comparing the objective seriousness of the offending and the subjective features of the Elomars and Mr Jousif, I have reached a conclusion similar to that of her Honour. There is little to choose between them. The only adjustment I would make, which reflects the success of the Elomars on the “good character” ground, is to reduce their period of imprisonment. I do not propose to reduce or remove the fine imposed by her Honour. I am of the opinion that a substantial fine of the kind imposed appropriately reflects the seriousness of the offending and the fact that it was motivated solely by greed on the part of the Elomars. In an area where general deterrence is so important, a fine of that magnitude remains appropriate. Its imposition was well justified by her Honour’s analysis at [314] of her sentence judgment.

5. [121]

   As indicated, because of the strength of their good character evidence, and their success on this ground of appeal, the Elomars are entitled to a reduction in their sentence, but not to any reduction in the fine imposed. Such an approach better reflects the balance between the Elomars and Mr Jousif having regard to the seriousness of the offending and their respective subjective cases.

6. [122]

   The orders which I propose are:

   1. (1)

      In the case of Mamdouh Elomar, leave to appeal against sentence is granted.

   2. (2)

      The appeal is allowed.

   3. (3)

      The sentence imposed by Adamson J on Mamdouh Elomar on 27 September 2017 is quashed.

   4. (4)

      In lieu thereof Mamdouh Elomar is sentenced as follows:

   5. (5)

      In the case of Ibrahim Elomar, leave to appeal against sentence is granted.

   6. (6)

      The appeal is allowed.

   7. (7)

      The sentence imposed by Adamson J on Ibrahim Elomar on 27 September 2017 is quashed.

   8. (8)

      In lieu thereof Ibrahim Elomar is sentenced as follows:

7. [123]

   FAGAN J: I also agree with the reasons of the Chief Judge and with the orders proposed. At [116] his Honour has referred to evidence of the applicants’ positive contributions to society. Their submissions on the appeal concerning the strength of that evidence, summarised by the Chief Judge at [106]-[112], are sustained by numerous testimonials which were before the learned sentencing judge.

8. [124]

   Several referees attested to the applicants’ sound ethics in the conduct of their engineering and infrastructure business, Lifese, since 1986. Past good conduct in this respect was of particular relevance to sentencing for the offence of conspiring to bribe a foreign public official: cf Ryan v The Queen at [149] (Hayne J). This is not an offence of a type to which past good conduct could be treated as relatively neutral: cf R v MacIntyre (1988) 38 A Crim R 135. Given that the offence involved impropriety in commercial dealings, demonstrated integrity over many years in business was material, as her Honour recognised.

9. [125]

   Referees concerning the applicants’ honesty in business included executives and professionals in the engineering industry who had represented companies for which Lifese had performed contracts. One such referee directed a company that had engaged Lifese as management contractor on a number of major construction projects. He described each of the applicants in these terms:

10. [126]

    The manager for BHP of a substantial project in South Australia, on which Lifese was contracted, had extensive dealings with both applicants. He was subsequently employed by them as manager on a two-year power station construction project in South East Queensland. He wrote of Mamdouh in the following terms (and to substantially the same effect with respect to Ibrahim):

11. [127]

    Another referee who had known both men for 25 years and for part of that time had been their work associate and business partner made this observation:

12. [128]

    The director of a construction company that had engaged Lifese to fabricate substantial structures from high-quality steel, for a complex and significant project, described the character of each of the applicants in their business dealings as “exemplary”. This referee’s professional contact developed into a personal friendship over the course of the project.

13. [129]

    In Ryan v The Queen the sentencing judge was held to have erred in determining that the offender’s good conduct and character, apart from the offences for which he was to be sentenced, did “not entitle him to any leniency whatsoever”. In the present case her Honour only said that the applicants’ good character “while relevant, is not as significant as a mitigating factor”. The reasoning in support of that view is set out in the balance of [296], to the effect that being invited to tender for large infrastructure contracts in Iraq would have depended upon having a record of experience and that could, normally, only have been achieved by persons of good character.

14. [130]

    I consider it was not justified to reduce the leniency to be extended for good character upon this basis. No doubt only a contractor with proven experience would be eligible for the contracts the Iraqi government was letting in 2014. No doubt, also, contractors from Western countries would have been able to acquire suitable experience over the years prior to 2014 only if they had been ethical and honest. But these circumstances are not equivalent or analogous to the prior good conduct having been utilised in any degree to provide the opportunity to commit the crime under consideration. This case did not involve exploitation of a position of trust based upon past good character and sound reputation: cf Ryan v The Queen at [69] (Gummow J), [148] (Hayne J) and [176] (Callinan J); Kennedy v R [2000] NSWCCA 527 at [20].

15. [131]

    In Athos v R [2013] NSWCCA 205 at [36] this Court identified white collar crime as one category of offence in which prior good character will generally be of less weight as a mitigating factor. However, as acknowledged by the Crown in its written submissions on this appeal:

16. [132]

    For this proposition the Crown referred to R v Gent [2005] NSWCCA 370; (2005) 162 A Crim R 29 at [46]-[59] where consideration was given to a variety of offences and the differing reasons why prior good character might assume less significance as a mitigating factor in relation to some of them.

17. [133]

    In R v Rivkin [2004] NSWCCA 7; (2004) 184 FLR 365 this Court said (at [410]):

18. [134]

    The relationship between the applicants’ prior good conduct and their commission of this crime, as analysed by her Honour, was indirect and tenuous. The intermediaries who solicited the bribe from the applicants and the Iraqi officials who in turn sought it from the intermediaries (assuming there were such officials) were not victims taken advantage of by the applicants displaying false colours of past integrity. Those who sought the bribe were looking for tenderers whom they could persuade to act improperly. The applicants’ background of honest dealings did not position them to commit the crime.

19. [135]

    Differently from her Honour’s reasoning at [296] of the Remarks on Sentence, it seems to me there was no basis to deny the applicants undiminished credit for decades of ethical business practice, from which this offence was an aberration, explicable (though not excused) by the pressure to find work outside Australia after their name suffered critical damage as a result of notorious criminal actions of family members. I agree with the Chief Judge that when full credit for previous good character is taken into account with all other factors identified by the learned sentencing judge, a lesser sentence is warranted.