Jon Waldron, formerly the General Manager of Infrastructure Engineering at Commonwealth Bank of Australia has been sentenced to six years and eight months in prison.
Waldron will be eligible for parole after four years.
In May, Judge Phillip Mahony of the District Court of New South Wales convicted Jon Waldron on 10 counts of corruptly receiving a benefit, or aiding and abetting corruption sponsored by US-based cloud services supplier ServiceMesh in 2014.
Waldron had elected for a trial by judge alone and the reasons for his conviction are the subject of a lengthy judgement, reported here.
Following a guilty plea in 2016 Keith Hunter – Waldron’s co-offender and immediate superior at the bank - was convicted and sentenced to a term in prison of three and a half years.
Hunter received a 50 per cent discount on sentence, conditional on his cooperation in the trial, last year, of Waldron.
Seduced by representations from Eric Pulier, the principal shareholder in ServiceMesh, and the instigator of the bribes, who said that “he would look after them” Hunter and Waldron conspired to accelerate the purchase of McAfee security software via ServiceMesh as reseller, even though the bank had supply arrangements through HP and McAfee at the time.
In Waldron’s sentencing hearing, Mark Vudrag, Executive General Manager of Global Technology Services at Commonwealth Bank gave evidence that outlined the impact of the offending on CBA. Vudrag listed nine further civil and criminal proceedings for which CBA had either been a party or was required to respond to legal requests for documents, information or evidence from current and former staff.
Vudrag, Judge Mahony wrote, “described the impact to CBA from responding to requests arising from the various proceedings as ‘significant’ [via] lost productivity and financial costs and responding to multiple legal requests, [and] also through the personal and emotional impact on current and former staff members who have assisted.”
He put the direct costs to the bank at $2.4 million.
A report from Waldron’s psychologist chronicled “increasing alcohol consumption … a kind of siege mentality … becoming obsessively preoccupied with his defence, slowly relinquishing other facets of his life that have otherwise sustained him.”
The psychologist “described the requisite symptoms of Major Depressive Disorder.”
Judge Mahony said in his reasons for sentence that “the offender played an integral part in progressing the negotiations and contractual arrangements for the McAfee deal notwithstanding in the short term the CBA derived little commercial benefit from it.
“Whilst in the long term I held that it did have commercial viability for the CBA, the execution of the contract before the end of December 2013, whilst mandated by McAfee, resulted in the revenue being included in the earnout provision, to the benefit of ServiceMesh.
“I also held that the offender played an important role … to ensure the revenue earned by ServiceMesh was included in the earnout clause [for its subsequent sale to CSC].
“Ultimately the nine [purchase] transactions of less than $1 million each was done at the instigation of the offender to bring the deal under the delegated authority of Hunter to execute, and thereby avoid the CBA’s procurement policies and an inevitable assessment of the commercial viability, as well as risk and legal assessment of the products.
“In assessing the objective seriousness of the offending I have therefore had regard to the role of the offender.
“I accepted the evidence … that the McAfee deal was the offender’s idea and that it was both Hunter and the offender’s idea to break down [allied] deals into nine separate [deals].
“The amounts of each of the payments corruptly received is also relevant to the assessment of objective seriousness of the offending.
“The payments range between $99,971 and $350,000.
“The last four of those payments were paid into the offender’s account with the Auckland Savings Bank on 4 and 12 November 2014 and on 10 and 16 December 2014, which the offender failed to disclose to the CBA investigators, when interviewed by them on 17 December 2014.
“I therefore find in all of the circumstances that the offending was serious offending falling in the mid-range of objective seriousness for an offence pursuant to s249B of the Crimes Act.”