Gas company directors jailed for multi-million dollar fraud

Former E-Gas executives Sydney Hunt, left, and Ronald Rosenberg, during their sentencing in the High Court at Wellington. Photo / Mark Mitchell

Two former directors of a Wellington gas retail company E-Gas have been jailed after being found guilty in a multimillion-dollar fraud case.

Ronald Rosenberg, 73, and Sydney Lio Hunt, 46, appeared in the Wellington District Court today and were sentenced on 41 counts, brought by the Serious Fraud Office, relating to the dishonest use of documents.

Each was found guilty last month by Judge Bruce Davidson after a lengthy trial.

The SFO laid the charges in July 2012 after an investigation alleged that between May 4, 2005 and October 5, 2008 the two men deliberately under-reported the quantity of gas supplied to its retail customers.

Both Rosenberg and Hunt denied they were dishonest, and each genuinely believed the monthly allocation could be under-reported.

Judge Davidson sentenced Rosenberg to three years' jail and ordered him to pay reparation of $400,000 within 28 days.

Hunt was sentenced to three and a half years in jail.

Judge Davidson said the only reason for the disparity in jail time was the ability of Rosenberg to pay reparation.

During sentencing today, extra seating was brought in to the public gallery to accommodate the pair's supporters who packed the area.

Crown prosecutor Simon Upton, QC, told the court there was a "deliberate pilfering of reporting data".

The result of the offending was that E-Gas received an amount of free gas, and avoided fees and penalty charges - which allowed the financially-troubled company to continue trading, Mr Upton said.

"The offending was clearly premeditated and planned and co-ordinated over a long length of time."

The amount of money avoided was about $17.1 million - made up of $8.74 million of under-reported gas and avoided penalties worth $8.67 million, he said.

Rosenberg's lawyer Richard Laurenson said his client did not make "extravagant gains" from the offending, but it was done in order to help E-Gas continue trading.

"He received an income, but not at an extraordinary or elevated level."

"Mr Rosenberg, over a period of time, slipped into a complacency and wrong mind-set."

Mr Laurenson disputed the amount of money involved and said it was closer to about $9 million.

A confidential agreement between Rosenberg and the company liquidators had taken place in which some reparation had been made, he said.

Rosenberg had never offended before and had made a considerable contribution to the community "before the E-Gas fiasco".

Hunt's lawyer Kevin Preston said it was not a case where "in any way, shape or form" the offending allowed his client to live a lavish lifestyle and he was now essentially bankrupt.

"His judgement became clouded and for that there is now genuine regret and genuine remorse."

Hunt wrote a letter to Judge Davidson, acknowledging the offending, Mr Preston said.

"I knew the allocations were wrong, I did nothing about that, I was a coward," the letter said.

Judge Davidson said when there was a dispute about the amount of money involved in the fraud, the prosecution had to provide clear evidence that supported its figures beyond a level of a doubt.

The Crown did not do that, so Judge Davidson sentenced the pair based on a level of offending totalling at least $9.79 million.

"Most likely it was more."

After the sentencing many supporters cried, waved goodbye to the defendants and called out they loved them.

The SFO investigation uncovered that during the period of offending Rosenberg and Hunt deliberately under-reported the quantity of gas supplied to its retail customers by about 950,000 gigajoules.

"We hope that these sentences send a message that dishonesty, fraud and the manipulation of industry rules on the part of employees in positions of responsibility and trust will not be taken lightly and penalties will be imposed upon those who abuse their authority," SFO director Julie Read said.