11. TARIANA TURIA (Co-Leader—Māori Party) Link to this
to the Minister of Police
Ko te āwangawanga o Te Tari Hara Tāware ka ngaro i te iwi whānui tō rātau whakapono mō te mana o te ture (ā, mō te mana hoki o te Tari Tāware) ki te kore ngā hara tāware pakupaku noa iho nei e tirohia, te take e whakaaro nei te Kāwanatanga ki te whakakapi i te Tari Tāware, meina ehara, he aha kē te take?
[Is the Serious Fraud Office concern at the potential of the public to lose confidence in the justice system (and by association the Serious Fraud Office) if low-level fraud is not investigated, the reason why the Government plans to replace the Serious Fraud Office; if not, what is the reason?]
Hon Dr MICHAEL CULLEN (Leader of the House) Link to this
No. Indeed, in terms of low-level fraud, the great bulk of it is probably investigated by the New Zealand Police already. For example, over the last 3 years the police have averaged something like 13,000 fraud investigations a year. The primary factors are that organised crime has been growing in New Zealand, as it has been elsewhere in the world, and that since the Serious Fraud Office was established in 1990, the nature and scale of fraud offending have changed. The issue facing the Government, therefore, was whether to have a separate organised crime agency and a serious fraud office, or to combine the functions of both into a larger and more comprehensive office.
Can the Minister confirm that the general objectives of the Serious Fraud Office were to prosecute all fraud involving over $500,000, all fraud perpetrated by complex means, and any fraud of major public concern; if so, what explanation can he offer as to the rationale for Serious Fraud Office resources being targeted towards the alleged improper expenditure of $25,000 by a Chinese school in Hamilton?
Hon Dr MICHAEL CULLEN Link to this
I do not have any information in relation to that. I note that the primary question, because of its nature, was transferred to the Minister of Police—who, of course, is not responsible for the Serious Fraud Office—because the question seemed to imply that it was about the reasons for abolishing the Serious Fraud Office and amalgamating it with another agency. That issue, of course, is one where the carriage has been taken by the Minister of Police.
Martin GallagherHow will combining the specialist fraud investigation powers of the police with those of the Serious Fraud Office assist in detecting and prosecuting fraud?
Hon Dr MICHAEL CULLEN Link to this
The Government has taken the view that putting the resources of the two agencies together will enhance the capacity for detection and prosecution of fraud. It seems to be common sense to remove any impediments that may exist that prevent New Zealand’s resources in this area from being fully harnessed. Again, I would emphasise that in a small country, operating two separate specialist agencies is unlikely to achieve the maximum impact.
Ron MarkDoes the Minister agree with David Bradshaw, the head of the Serious Fraud Office, when he said: “If someone has lost even $10,000 to a scam, they would regard that as serious fraud in their world.”; and how can that be reconciled with the police telling a person who is chasing $200,000 that “fraud and dishonesty are given a lower priority”, and that the police were not in a position to investigate that case?
Hon Dr MICHAEL CULLEN Link to this
As indicated previously, the police investigated something like 13,000 fraud cases a year over the last 3 or 4 calendar years, but, obviously, the new agency, which will be housed within the police but not subject to the normal police controls in that regard—it is an agency within the police but separate from the police in general—will be taking a much keener interest in the relationship between organised crime and serious fraud. On the particular matter raised, I do not have advice. The police, of course, always have operational independence about which offences they choose to investigate and how. They must have that operational independence; they must not be subject to direction from the Government.
What explanation can be offered for the fact that the Court of Appeal cancelled the award of $1 million in costs for the failed prosecution in the Digitech case, because, the court said, it was concerned about the effect on the ability of the Serious Fraud Office to perform its statutory duty of prosecuting complex fraud cases if compensation were awarded against the Serious Fraud Office that was materially significant compared with its budget?
Hon Dr MICHAEL CULLEN Link to this
It is not appropriate for me to comment on the reasons for the Court of Appeal arriving at any particular decision.
Simon PowerCould the Minister just clear up whether the new organised crime agency will report to the Commissioner of Police whilst it is housed inside the police, or whether there will be separate reporting lines to other Ministers; and, secondly, could the Minister clarify at what point the House will know what particular powers this new agency is to have, and whether legislation will be required for the agency to be able to use those powers?
Hon Dr MICHAEL CULLEN Link to this
The intention at the moment is that reporting will occur to the Commissioner of Police, and through him, obviously, to Ministers. In terms of the powers, there are still some issues to be decided around them. Obviously, there is some concern about whether some of the current powers of the Serious Fraud Office will need to be transferred over—at least, in part and for certain purposes—to the new agency. On the other hand, it is fair to say there has been significant concern about the nature of some of those powers for some considerable period of time. It may well be that the Law Commission’s broad proposals around search and surveillance, etc., may be sufficient to deal with the powers that the new agency will need. Those remain open questions at this point, and will remain open questions, I am sure, through the select committee process, whatever the bill says on this matter when it is introduced, because those, I think, are the most important questions to be decided on this particular matter.
Does the Minister agree with Dr Cullen’s statement that: “The demarcation between fraud and other forms of organised criminal activity is no longer a clear one.”; if so, what assurances can he give to the Mitchell partnership, which was allegedly defrauded of farm leases and a large amount of dairy stock, and to George Calvert and other investors who were caught up in the Spacetable scam promoted by PricewaterhouseCoopers, and were allegedly victims of white-collar fraud, that their cases will be duly investigated, given the stated specific focus and orientation of the organised crime agency towards organised crime?
Hon Dr MICHAEL CULLEN Link to this
It is very important that the decision to combine the Serious Fraud Office with the proposed organised crime agency means that the current work of the Serious Fraud Office will continue to be carried out by the new agency. Those functions will not disappear; they will become part of the functions of the new agency. I am sure that Dr Cullen was referring to the fact that there is a continuum now between the Serious Fraud Office and the organised crime agency, and that to draw a hard and fast line, when one has a specialist agency for organised crime, with the Serious Fraud Office, would create its own internal difficulties.
Can the Minister confirm that the reason for the Government disbanding the Serious Fraud Office is that the Government had lost all faith in the ability, integrity, and honesty of the Serious Fraud Office; if not, what is the real reason behind the decision?
Hon Dr MICHAEL CULLEN Link to this
Not at all; absolutely not at all. The Serious Fraud Office has continued to have a high success rate in its prosecutions. There has been some criticism from some outside that it has not chosen to pursue certain cases—and therefore that, if you like, bolsters its success rate—but I have seen no clear evidence to support that particular claim. The real reasons for disbanding the Serious Fraud Office are, firstly, that the Government had determined to set up an organised crime agency. That decision was in train. Secondly, it is fair to say that the Attorney-General—and of course I am speaking on behalf of the Minister of Police here—has for some time felt uncomfortable that the Serious Fraud Office comes under the Attorney-General because it is not merely a prosecuting agency, but an investigating agency as well. The Attorney-General’s view is that that is something of a conflict in his role as Attorney-General. Therefore, the possibility arose and discussion occurred as to whether the two agencies should be combined, particularly given the fact that there is a change in the chief executive of the Serious Fraud Office due in the near future.