My Account
By George Driver
A landmark serious fraud case got underway in the Auckland High Court on September 27 with claims that corruption was widespread among transport staff at both Rodney District Council (RDC) and Auckland Transport (AT).
The Crown also claimed ratepayers effectively paid for more than $1 million in bribes, through inflated invoices.
The trial involves former AT and RDC transport manager Murray Noone and director of Projenz transport contractor, Stephen Borlase.
Mr Noone is facing six charges of corruption and bribery for receiving over $1.1 million in bribes from Mr Borlase between 2006 and 2013, while Mr Borlase is facing eight charges of corruption and bribery, and four charges relating to filing inflated invoices. Both defendants have pleaded not guilty.
The third defendant in the case, Barrie George, was sentenced to 10 months home detention last month after pleading guilty to accepting over $100,000 in bribes while working for RDC and AT.
In his opening statement, Crown solicitor Brian Dickey said Borlase paid for travel and entertainment for a number of RDC and AT staff, and a culture of corruption was widespread in both organisations.
“In addition to the benefits provided to Mr Noone and Mr George, Projenz provided hundreds of benefits to RDC and AT staff throughout all the charging periods,” Mr Dickey said.
“This created the propensity for, and culture tolerant of, corruption throughout the team.
Mr Dickey said benefits provided to staff at RDC included overseas travel of significant value, including about $25,000 for one employee, domestic travel and accommodation, and electronics. The offending continued under AT.
“Projenz provided entertainment to AT staff on a significant scale. The highest value category was on large scale meals, totalling about $69,000.”
The wining and dining took place at top restaurants, including French Cafe and Heritage Hotel, and one dinner cost $3000.
Mr Dickey said this created a culture where a wide number of Council employees were compromised.
“There was little chance for disgruntled or principled employees speaking out, as everyone was being ‘looked after’ or was compromised. The benefits had been significant for all.
“The extensive provision of benefits to staff at all levels of their teams resulted in a culture where corruption flourished and was normalised, with no questions asked.”
No other RDC or AT staff had been charged in the case. Mr Dickey said this was due to the relatively low level of offending compared with Mr George and Mr Noone, and “the exercise of prosecutorial discretion”.
Former and current staff at RDC and AT would be called to the witness box in the seven week, judge-only trial.
The Crown claimed that Mr Borlase made back the cost of the bribes and gratuities by inflating the hours invoiced to Council for sub-contractors, effectively claiming back the cost of the bribes by overcharging Council. The increase in the invoices matched the costs of the bribes.
“This demonstrates that payments to Noone and George were treated as costs of doing business with RDC.”
The Crown said Projenz benefited significantly from the arrangement. The company’s net profit rose from $36,000 in 2006 to over $8 million in 2012.
Contracts awarded to Projenz during the period included the Hibiscus Busway Station design in 2011, valued at $617,822, and the Silverdale Walk and Cycle contract, valued at $443,912.
A long relationship
Mr Dickey said Mr Noone had a successful consulting business before starting work at RDC in 2006. He was working as a sub-consultant for Mr Borlase in 2000 and was a consultant to RDC from 2004 and 2006. During that period he invoiced over $1 million for services, including $662,000 from RDC.
Mr Noone was first employed by RDC as Director of Transport, where he took a significant paycut, agreeing to a $165,000 salary. However, he worked just four days a week in order to continue his work as a consultant.
He soon started making monthly invoices to Projenz for about $8500 each time, but the Serious Fraud Office found no evidence any of the work was carried out. Instead, it said the money was a retainer paid to Mr Noone to gain influence in the awarding of transport contracts.
In 2008, Mr Noone got a promotion to the position of Director of Infrastructure with a salary of $231,000.
A significant point in the case occurred when RDC was amalgamated into the Supercity.
In early 2010, Mr Noone applied for a top-tier job at AT, but was unsuccessful. He was later offered a third-tier job with an annual salary of $220,000.
At the same time, he approached a major contracting company for a job and was offered a $250,000 salary for a senior position. Four days later, Mr Borlase paid Mr Noone a lump sum of $230,000, which the Crown claimed was a bribe to entice him to take the AT contract to continue the fraudulent relationship. The following day, Mr Noone accepted the job at AT.
The Court was told that Mr Noone did not disclose any relationship with Projenz to AT.
Mr Noone and Mr Borlase maintain the payment was for consultancy work, but neither have offered any evidence to show what work was carried out.
“The agreement is simply corrupt, with the intent of maintaining influence over Noone,” Mr Dickey said.
In June 2012, Mr Noone got a further $40,000 lump sum from Mr Borlase, the day after Projenz was awarded significant AT contracts.
Mr Noone also continued to file monthly invoices to Projenz. None of the payments were declared to AT.
There was no evidence that Mr Noone carried out any consulting work for Projenz during the seven year period.
“The invoicing by Noone is a farce,” Mr Dickey said.
Mr Borlase issued a press statement on the first day of the trial, maintaining his innocence.
The case is continuing.
