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• Australian IT expert Mark Lester and businessman Sean Bryan were sentenced to three years’ imprisonment.
• They illegally steered over $20 million in inflated contracts to Bryan’s company, with $4m in kickbacks.
• Justice Michele Wilkinson-Smith emphasised deterrence, highlighting the damage to New Zealand’s business reputation.

After turning a long-term consulting gig into a high-powered position with Spark New Zealand, Australian IT expert Mark Andrew Lester used his influence within the telco to illegally steer over $20 million worth of inflated contracts to a mate with whom he shared a passion for horse racing.

In turn, that friend – New Zealand-born Australian businessman Sean Bryan – paid over $4m in kickbacks to Lester and his company between 2014 and 2017.

Both company directors are now headed to prison.

The duo appeared in the High Court at Auckland for sentencing today and can now finally be named for the first time in connection to the criminal charges, which they both pleaded guilty to last year.

Justice Michele Wilkinson-Smith ordered both men to serve three years’ imprisonment for what the Serious Fraud Office (SFO) has called that nation’s “largest ever private sector corruption case involving a publicly listed company providing crucial services to New Zealanders”.

Australian businessman Sean Bryan stands in the dock in the High Court at Auckland, where he was sentenced to three years' imprisonment for corporate corruption. Photo / Dean Purcell

She rejected requests for non-custodial sentences.

“I regard deterrence of this type of offending to be of particular importance,” the judge said as Lester, 54, and Bryan, 51, sat in the courtroom dock.

She said their actions damaged New Zealand’s reputation “as a place where business can be carried out without corruption”.

Kickbacks, undisclosed relationship

Lester flew in from his home in Berwick, Victoria, for today’s hearing, while Bryan lives in Queensland. In a somewhat unusual agreement with the Serious Fraud Office, they were allowed to remain on bail in Australia through the duration of the prosecution – even after their guilty pleas, when it was acknowledged prison was a likely outcome.

Authorities said Lester was the sole director, shareholder and employee of Spud Consulting Ltd, which signed an $1800-per-day contract with Spark in 2013 to serve as “test director” of a major upgrade to the telco’s customer services IT platform. His role – reporting directly to product director Claire Barber, a member of Spark’s leadership team – included advising on, managing and overseeing testing for the new programme.

The contract, initially for five months, ended up lasting five years after several extensions. His responsibilities within the company grew as well, joining the Spark leadership team in 2016 as his title morphed to head of performance and resolution testing.

Australian businessmen Mark Lester and Sean Bryan were mates who owned horses together before a $4 million kickback scheme involving $20 million worth of contracts with Spark New Zealand. Photo / Dean Purcell

Early on while working with Spark, Lester advocated for contracting with Bryan’s company, Victory I.T Ltd, to help implement an IBM automated testing programme. He told Spark officials he had worked with Victory in the past and knew it was a trusted company, worth paying more than two other contractors who could have done the same job for less money.

But there was more to it than that.

“Mr Lester and Mr Bryan knew each other outside of their work for Spark,” the agreed summaries of facts for both men state. “They shared an interest in horse racing and were joint owners of a number of racehorses in Australia.

“This relationship was never disclosed to Spark.”

Over the following years, Lester helped convince Spark to pay Bryan’s company $20.6m in contract work, a cost estimated as 15-20% higher than competing contractors would have charged.

“In awarding the Victory the initial service contract Spark relied on Mr Lester’s favourable recommendation of Victory,” the summary of facts states. “Mr Lester ... advised that Victory could provide superior services, claiming there were quality issues with Spark’s two existing providers.

“Spark relied on Mr Lester’s expertise and judgment to ensure that engaging Victory‘s services was the right decision for Spark from an efficiency, cost-effectiveness and capabilities perspective.”

Australian IT expert Mark Lester is sentenced in the High Court at Auckland for corporate corruption involving his former high-powered position with Spark New Zealand. Photo / Dean Purcell

His advice was also accepted when Lester said Victory‘s specialist skills “required premium prices”.

Court documents describe Lester as “dominant in determining and directing the flow of work to Victory” and justifying the higher rates even as others within the company tried to raise the alarm.

It wouldn’t be found out until later that during that time, Lester and his company had received 32 separate payments totalling $4.1m from his mate’s company.

“Mr Bryan made these payments in return for Mr Lester’s acts in promoting Victory‘s interests, and/or showing favour, in respect of contracting between Spark and Victory,” the agreed summaries of facts state.

“Mr Lester accepted the payments on the same basis.”

Spark terminated its contract with Lester in 2017 after discovering irregularities with his performance. The telco terminated its agreement with Bryan as well after discovering some of the payments.

Victory I.T has since gone bankrupt, the court was told today.

‘A clear warning’

Both pleaded guilty in the weeks leading up to their trial last year to two representative counts of either giving or receiving a gift to an agent without the principal’s consent. A law change in 2015 means all offending prior to 2015 carries a maximum punishment of two years’ imprisonment, while offending after that date is punishable by up to seven years.

Justice Wilkinson-Smith ordered a six-year global starting point for both charge today before allowing various deductions for the men’s guilty pleas, health issues, difficulties involved with serving a sentence in a foreign country and other issues.

SFO director Karen Chang praised the sentence in a statement released after the sentencing hearing.

“It sends a clear warning about the real risks corruption poses,” she said. “These risks include harming the integrity of our business environment, reducing competition and lowering investor confidence.

“While this particular case does not involve foreign bribery, it highlights the behaviours the SFO’s latest campaign is targeting and reinforces why we must protect New Zealand’s reputation as a safe, trusted place to do business.”

- More to come

 is an Auckland-based journalist covering courts and justice. He joined the Herald in 2021 and has reported on courts since 2002 in three newsrooms in the US and New Zealand.