Fran O'Sullivan: Don't throw out the SFO

Former Serious Fraud Office director David Bradshaw (right) with colleagues Gus Andree Wiltens, left, and Gib Beattie. Photo / Nigel Marple.

Shonky New Zealand directors will be given a get out of jail free card if the Government goes ahead with plans to disband the Serious Fraud Office.

The Government's short-sighted decision to roll the SFO into a new organised crime agency under the NZ Police comes as another wave of company collapses threatens investor confidence.

Investors should expect the SFO to be the independent agency that will at least take a poke into the affairs of companies like the failed Bridgecorp and explore whether any of the money-go-rounds and inter-company loans which appear to have propped up this particular transtasman finance group had a fraudulent aspect.

Instead, the Government is pondering the extent of transitional (political) damage that might occur if it prompts a sectoral shakeup by forcing the finance companies to adopt best practice. And the fraud investigators that should be probing some of these companies will instead be turned into organised crime sleuths - that's if they stay around.

Why New Zealanders would place any faith in the police to get to the bottom of complex fraud when they couldn't be bothered chasing up slam dunks like the electoral fraud at the 2005 election is a key question that neither they nor their political masters will be likely to answer.

New Zealand should be strengthening the SFO and its independence - not pushing it out of existence.

Police Minister Annette King is right to say transnational organised crime is now a major threat to New Zealand and the Pacific region. Much of the crime explosion in the Pacific is Asian-related, although the Police Minister is too PC to point that out.

The OCA, which will cover the gamut of criminal activity, including cyber crime, identity theft and identity fraud, money laundering, extortion, blackmail, fraud and drug manufacturing, distribution and trafficking, is long overdue. It will also cover paedophilia networks and politically motivated criminal activity.

But the need for an organised crime agency, doesn't mean the SFO should be scuppered.

Our SFO was modelled on the UK Serious Fraud Office. Britain has retained the fraud agency, which is actively engaged in probing white-collar crime, which certainly hasn't disappeared in that country simply because crime, like any other business, has been globalised. But it also has a Serious Organised Crime Agency (Soca) which addresses many of the functions that NZs new crime agency will cover.

This is an important distinction which seems to have eluded Attorney-General Michael Cullen, who has ministerial responsibility for the SFO and should be expected to champion it.