Former Otago District Health Board chief information
officer Michael Swann at his sentencing in the High Court
at Dunedin yesterday, for defrauding the board of $16.9
million. Photo by staff photographer.
"Fraud on a grand scale" was how Justice Lyn Stevens
yesterday described the actions of former Otago District Health
Board chief information officer Michael Swann and his friend
and business associate Kerry Harford.
The two men were each appearing in the High Court at Dunedin
for sentence after being found guilty of defrauding the board
of almost $17 million.
Swann was jailed for nine years and six months, with a
minimum non-parole of four years and six months.
Harford was jailed for four years and three months.
Swann, wearing a crumpled suit, and Harford showed no
reaction as the sentences were handed down.
The pair have been in custody since last December.
The maximum penalty available to the judge was 21 years, a
total of seven years on each of three charges of fraud.
Justice Stevens told Swann: "The cause of your predicament is
undoubtedly your sustained and blatant dishonest behaviour
and astonishing greed."
"It [the fraud] affected not only the ODHB as your employer,
but also indirectly the patients of the board, and the wider
community."
This was likely the largest fraud in New Zealand history and
arose in the area of public health where financial resources
were particularly scarce, he said.
He could not "underestimate the erosion of confidence in the
health system" the fraud had caused, he said.
"In Mr Swann's case, it is harder to think of a more serious
and cynical breach of trust of an employer."
No reparation orders were made.
The health board is pursuing a civil case to recover money
from Swann.
Justice Stevens said the outcome of the civil case could not
be predicted and he had been left in a situation where he
could not make a reparation order.
Harford reached a confidential settlement with the board
before the trial began.
Swann (47) and Harford (48), a Queenstown surveyor, sent 196
invoices from Harford-owned company Sonnford Solutions Ltd
and its predecessor, to the board for computer-related
services that were never provided.
They received payments totalling $16,902,145.27.
Harford retained 10% and forwarded the remaining 90% to
Swann-linked companies or entities.
Counsel for Swann, John Haigh QC, said Swann was remorseful
and had brought himself and his family into serious
disrepute.
He was "deeply regretful" of the distress he had caused his
colleagues.
"I have been asked by Mr Swann to express his real and
genuine apology to the community for what he has done."
Mr Haigh took issue with the victim impact statement which
said the defrauded money could have been used for surgery or
more nurses.
"My instructions are that is completely wrong. The money that
was taken was health administration money."
While there was no denying much of the money had been spent
on property - "not spectacularly luxurious property I might
add" - boats and cars, there was "no real champagne
lifestyle".
No assets were held in Swann's name, and all family assets
were held in his wife's name.
Swann had unsuccessfully attempted to reach a settlement with
the board prior to sentencing.
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