'Astonishing greed' sunk Swann

Former Otago District Health Board chief information officer Michael Swann at his sentencing in...
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.

During negotiations he had endeavoured to keep a home for his wife and children, but the board's solicitors would not move.

They said Swann had more vehicles available, but he denied that.

Justice Stevens said he was "concerned at the lack of steps" Swann had appeared to have taken to address reparation.

Crown counsel Robin Bates' response to a suggestion from Mr Haig that there was "no hidden bag of money" was: "That remains to be seen."

"Your Honour is well aware there are difficulties in relation to that."

The Crown "strongly rejected" the view in the probation report that Swann was at low risk of reoffending.

The probation report said both men showed little insight into their offending.

Justice Stevens said Harford had claimed he was ignorant of the fact his business dealings with Swann were fraudulent, but he had come to appreciate what he did was wrong.

Harford had been "fully aware" the invoices were false and he had formed the company Sonnford Solutions Ltd specifically as a buffer between the board and structures involved with Swann, he said.

In a letter to the court, Harford said: "If I had asked more questions, as a prudent business person would have been expected to ask, then the offending would not have occurred.

"Not asking questions will live with me for the rest of my life."

Harford's counsel, Greg King, said Harford was at the lowest point in his life.

There had been multiple properties, which were all gone, except for the family home, on which the mortgage was now greater than the original purchase price of the property, he said.

Justice Stevens said his starting point for Swann's sentence was 10 years and six months, but he deducted 12 months after taking into account Swann's remorse and his attempts at reaching a settlement.

He rejected Mr Haig's submission that the sentences on the three charges should not be cumulative.

From a five year starting point for Harford, Justice Stevens deducted nine months, allowing for his remorse, his lack of a criminal record, the reparation he had already made and his stated intended co-operation with the investigation and civil proceedings against Swann.Crown counsel Robin Bates' response to a suggestion from Mr Haig that there was "no hidden bag of money" was: "That remains to be seen."

"Your Honour is well aware there are difficulties in relation to that."

The Crown "strongly rejected" the view in the probation report that Swann was at low risk of reoffending.

The probation report said both men showed little insight into their offending.

Justice Stevens said Harford had claimed he was ignorant of the fact his business dealings with Swann were fraudulent, but he had come to appreciate what he did was wrong.

Harford had been "fully aware" the invoices were false and he had formed the company Sonnford Solutions Ltd specifically as a buffer between the board and structures involved with Swann, he said.

In a letter to the court, Harford said: "If I had asked more questions, as a prudent business person would have been expected to ask, then the offending would not have occurred.

"Not asking questions will live with me for the rest of my life."

Harford's counsel, Greg King, said Harford was at the lowest point in his life.

There had been multiple properties, which were all gone, except for the family home, on which the mortgage was now greater than the original purchase price of the property, he said.

Justice Stevens said his starting point for Swann's sentence was 10 years and six months, but he deducted 12 months after taking into account Swann's remorse and his attempts at reaching a settlement.

He rejected Mr Haigh's submission that the sentences on the three charges should not be cumulative.

From a five year starting point for Harford, Justice Stevens deducted nine months, allowing for his remorse, his lack of a criminal record, the reparation he had already made and his stated intended co-operation with the investigation and civil proceedings against Swann.

 

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