Guilty plea and helpfulness cut embezzler's jail time

By pleading guilty and helping police and financial regulators, New Zealander Upul Anthony had his jail time reduced when he was sentenced in a Sydney court yesterday for embezzling A$16.16 million ($17.6 million).

In the Sydney District Court, Judge John Nield imposed a maximum of four years and six months' jail, but said Anthony would be eligible for parole in May 2007.

Anthony, 33, last year admitted 16 charges of obtaining financial advantage by deception and last month admitted three of market rigging and manipulation.

Anthony, who was born in Sri Lanka but was taken to New Zealand as an infant by his parents, embezzled his employer, former AMP subsidiary Cogent Securities.

He had left New Zealand after working for the National Australia Bank in Christchurch and lived in London for four years before arriving in Sydney in early 1998.

Judge Nield said Anthony was securities lending dealer with Cogent, which gave him access to "seemingly unlimited amounts of money".

His befriending of a fellow New Zealander, Andrew Boyd, and Hastings Singh in 1997 appeared to have led to his downfall.

They had set up two companies, called Advantage Telecommunications (Australia) and Advantage Telecommunications Hong Kong.

The court was earlier informed Boyd and Singh had told Anthony their company was going to hold the only licence to take telecommunications traffic between China and the rest of the world.

He was also told the Perth mining company Nugold, run by Western Australian accountant John Palermo, intended to take over their companies.

Anthony became increasingly interested in the proposed deals.

In April 2000 Nugold bought 40 per cent of Advantage's Australian company, increasing its holding to 60 per cent seven months later.

When Nugold's share price plummeted in mid-2000, Anthony said Boyd told him the Hong Kong business needed A$1.6 million to become operational. After capital-raising attempts proved fruitless, Anthony offered to make an unauthorised loan for that amount from Cogent.

He had hoped that the Hong Kong operation would become profitable quickly, but it never did and he continued to pour money in, with nothing ever coming back.

In all, he made 84 different transactions between 2001 and 2002.

Of that, A$7 million went to Advantage Telecommunications, while another A$3 million was loaned to Futures Communications, which invested it in Nugold when that company was taking over Advantage Telecommunications Australia.

Anthony spent a further A$6 million trying to prop up the share price of the publicly listed Advantage Telecommunications. He set up multiple accounts with stockbrokers and used accounts of friends and family to buy shares.

After 20 months, Cogent management discovered irregularities. When questioned, Anthony initially denied making the transactions, but then he confessed.

Advantage Telecommunications asked to be suspended from trade in May last year, its share price at 0.01c. It was renamed Consolidated Global Investments in June.

Judge Nield said Anthony's propping up of the Advantage/Nugold share price had been with the intention of creating a false or misleading effect on their market price, with the idea of attracting others to invest.

The offences had had "a real effect on investor confidence in the sharemarket", he said.

Barrister Charles Waterstreet had described his client as "naive, gullible, lacking in foresight and easily led".

But Judge Nield said he rejected Mr Waterstreet's submission that those qualities had led to Anthony's offences.

He rejected the view that Anthony was coerced into the transactions by Mr Boyd, Mr Singh and Mr Palermo, though he noted Mr Boyd had suggested AMP as a possible source of funds to Anthony.

Judge Nield said he expected that Anthony had made the transactions "in the hope of obtaining financial return". He had committed a gross breach of trust to Cogent.

"This led to substantial losses, none of which has been recovered and most of which or all of which may never be recovered."

However, he said Anthony was entitled to significant discounts in penalty for his guilty pleas and his help since his arrest to Cogent's lawyer and to financial regulator the Australian Securities and Investment Commission.

Judge Nield gave Anthony discounts of up to 50 per cent on the prison terms for some of the charges.

Each charge carried a maximum penalty of five years' prison.

Cogent is suing Anthony and other parties including Advantage Telecommunications for its A$16.1 million. Anthony has been bankrupted, but action against the others is due to begin in the NSW Supreme Court in November.

- NZPA