Prison sentence for gas fraud

SYDNEY HUNT: Former E-Gas general manager.
SYDNEY HUNT: Former E-Gas general manager.

The former managers of retail gas supplier E-Gas have been imprisoned for three years, and 3-1/2 years respectively, for fraud of at least $9.75 million.

Sydney Lio John Hunt, 46, and Ronald Peter Rosenberg, 73, were last month found guilty on multimillion-dollar fraud charges for under-reporting the amount of gas supplied to customers.

Wellington District Court judge Bruce Davidson today sentenced Hunt to 3-1/2 years' jail, and Rosenberg to three years.

RONALD ROSENBERG: Former E-Gas managing director.
RONALD ROSENBERG: Former E-Gas managing director.

Rosenberg was also ordered to pay $400,000 reparation within 28 days.

The SFO alleged during the month-long trial that E-Gas under-reported consumption by about 950,000 gigajoules, worth about $8.7m, and penalties were avoided to the value of about $8.6m between May 2003 and October 2008.

The defence, however, had contended the amount was between $4.5m and $9.75m.

Judge Davidson said today the disputed amount of the fraud was crucial to the sentencing.

He found it was at least $9.75m, but was most likely more.

Both Rosenberg and Hunt were similarly culpable, with Rosenberg leading the charge and Hunt, at the least, standing aside to let it happen.

Apart from salaries, and potential future shareholder dividends, neither had made significant financial gain, Judge Davidson said.

The offending was out of character for both men, he said, and there were compelling personal circumstances impacting sentencing, evidenced by a packed public gallery supporting them.

Prosecutor John Upton, QC, for the Serious Fraud Office, had sought imprisonment for both men.

He said today the offending had affected several victims, over more than three years, the personal benefit of which was that it allowed the company to continue operating.

Neither Rosenberg nor Hunt had shown genuine remorse, he said, and he sought jail sentences of between 6-1/2 and 7-1/2 years.

Rosenberg's lawyer, Richard Laurenson, said a home detention sentence, with or without community service, was suitable.

The quantum of offending was disputed, but Rosenberg had paid reparation and a confidential settlement with the liquidator had been reached yesterday afternoon.

Laurenson said Rosenberg had made no personal gain, and was a leading contributor to business and his community.

He had received an income which was not extravagant, and had employed several people.

Hunt's lawyer, Kevin Preston, said his judgment had become clouded, but now had genuine and heartfelt remorse.

He was applying for bankruptcy and cared for his terminally ill mother, with the support of his family.

In a letter to the judge Hunt had said he knew he was wrong, but had been a coward and done nothing about it.

Judge Davidson, however, did agree it amounted to a confession from Hunt.

When the pair were found guilty the judge said there were substantial benefits to E-Gas which must have improved its solvency.

Hunt, a former general manager, knew he was submitting inaccurate data about gas consumption, and Rosenberg, former managing director, knew the data was inaccurate and provided dishonestly.

E-Gas was established in 2000 to supply the retail market.

The SFO received a complaint in 2010 about inaccuracies in the amount of gas supplied, compared with the amount reported.

The company went into voluntary liquidation that same year.

The judge said the Crown had maintained that the under-reporting enabled E-Gas, which was either insolvent or barely solvent, to improve its financial position and declare shareholder dividends of about $4.6m between 2006 and 2009, as well as both men drawing a salary and other entitlements.

The defence case was that both men genuinely believed the monthly allocation of gas could be under-reported, he said.

Hunt and Rosenberg were each convicted on 41 charges of dishonestly using a document.

The charges carried a maximum sentence of seven years' imprisonment.

The Dominion Post