White collar crime booming

By Anne Gibson

Five months after the Serious Fraud Office got its death sentence, there is still no word on the future of white collar crime investigation in this country. Meanwhile, the technical specialists that will be needed if a new organisation is to be effective continue to leave the SFO at an alarming rate.

On September 11, Police Minister Annette King said the SFO's functions would be handed over to the police and a new organised crime agency would be established.

In November, Gus Andree Wiltens, one of the SFO's most senior and experienced bosses, resigned and was appointed a Manukau District Court judge. He was the SFO's assistant director for prosecutions and had worked at the office in a prominent role for 11 years.

Now, his talents are consumed by an infant murder trial and deciding whether to grant bail to a man accused of unlawful firearm possession.

Director David Bradshaw, with the SFO for more than 10 years, also left in November, despite offering to stay. And Mark Treleaven, an SFO prosecutor, left in October and went to the Auckland District Law Society.

About a quarter of the SFO's forensic accounting power is about to vanish, according to informed sources. The SFO's website is advertising forensic accountant as a "current vacancy" - a notice that present staff are deriding, asking who will want to work at an office which will soon disappear.

Karen Greenwood, a senior and highly experienced forensic accountant, is about to leave. And Anna Tierney, another top forensic accountant, resigned and will leave soon.

Grant Liddell is the new SFO director and chief executive. The former acting deputy solicitor-general came from Crown Law where he was a team leader and civil litigator. He fiercely defends the SFO and says only Greenwood and Tierney resigned after September.

The others had all made their plans before then.

Asked how many staff had been assured their jobs were secure under the new agency, he said: "That's a matter between us and the police and I would prefer not to comment."

Nor can he say exactly when the SFO will be "disestablished". What he can say is that things remain up in the air.

"There has been some uncertainty for staff associated with the transition to the new organised crime agency, as is to be expected, and this is a factor in the resignations. The primary reasons the staff are leaving are personal and related to new opportunities for them."

He is confident the SFO will attract new staff and said it had just taken on a new investigator and two lawyers would join soon.

But staff complain of being demoralised because the Government has said nothing since the September bombshell. The five-month hiatus is sucking confidence out of the organisation. About 40 staff were at the SFO in the Duthie Whyte Building on the corner of Mayoral Drive and Wakefield St. Now, only about 33 remain.

Changes at the SFO couldn't come at a worse time.

The SFO itself is a small, highly specialised government department with wide-ranging powers. Its core staff are made up of a team of investigators, forensic accountants, prosecutors and lawyers.

The office has just begun investigating complex property business Blue Chip but staff are wondering if they will still have jobs by the time they make any real progress. Many investors who poured money into finance companies had also hoped the SFO would look into the affairs of the string of failed businesses.

But instead, talented staff at the only office with the power to bring charges against those involved are about to be absorbed into the larger police force.

By coincidence, next week the Australians are shining the spotlight on the issue. Fraud Awareness Week - an initiative of the Australasian Consumer Fraud Taskforce - is scheduled to start on Monday.

"During this week a number of government departments and agencies in New Zealand and Australia will be promoting fraud awareness," the SFO says, directing visitors to the Ministry of Consumer Affairs Scamwatch website.

Olly Newland, helping a large group of Blue Chip investors owed millions, says New Zealand lacks any real will to tackle white collar crime.

He puts a case for the Commerce Commission, SFO, Companies Office, law societies and the police to join forces, pleading for one organisation that can handle fraud.

That kind of co-ordinated approach was precisely what was being planned by the Securities Commission, SFO and Ministry of Economic Development over the failures of Bridgecorp, Blue Chip and Five Star, other sources said last week.

But Jeremy Bioletti, an SFO prosecutor from 1990 to 1994, thinks the Government is deluded to axe the SFO because corporate fraud remains a serious issue.

The string of finance company collapses and harder economic times mean that now is precisely the time the SFO is most needed because the public demands accountability, he says.

"Many of the SFO people are professional accountants and lawyers. Why would they want to join an organisation run by the police? Without their brains and ability the police will simply not be up to the task."

National MP Simon Power said the SFO had been shafted and the decision to wind it into the new agency was made in a rush. No details about how it would work or what powers it would have had been announced, he said.

Five months since its death sentence was passed, he is astonished that no further decisions have been made and laughed at the idea that staff had any job security.

"It's not an ideal environment for those individuals to stick around when they don't know when, under what circumstances of what opportunities will exist in the new agency, the form of which is a lump of play dough.

"The future of the SFO has been left hanging for all that time and a new CEO appointed in the most bizarre circumstances when we don't know what the life of the organisation is. We don't have any sense of what's happening."

A spokesman for Police Minister Annette King said decisions on the new agency could not be rushed but details would be announced in the next few weeks.

SUCCESSES AND FAILURES OF INVESTIGATING FRAUD

David Bradshaw, the former SFO chief executive, knows white-collar crime is on the rise.

When he started at the SFO in 1997, 20 cases were under full investigation. By June last year, 33 were on the go.

In 1997, 15 prosecutions were under way. By last June, 19 were under action, many involving millions of dollars taken by fraud.

He noted finance company collapses and said he was talking to the Securities Commission about a possible joint action - all this was in October, only a month before he resigned on November 2.

Michael Cullen told Parliament last year that the police averaged "something like 13,000 fraud investigations a year" and the primary factor behind establishing the new organised crime agency was a change in the nature and scale of fraud.

The disbanding was not because the SFO had "not chosen to pursue certain cases and bolster its success rate", Cullen said. Instead, it was that the Government was determined to establish an organised crime agency.

WINS

Donna Awatere Huata, a former Act MP, convicted of fraud for financial mismanagement of an early childhood reading programme, jailed for two years, nine months for stealing from the government-funded Pipi Foundation which she set up to help under-privileged Maori children in literacy and social skills.

Roderick Bernard Harrison and Alan Victor Jones, Auckland businessmen jailed for six-and-a-half years after running the $6 million pyramid-style Harvest Investment Club, which took money from relatives and the public, promising a high-yield interest of 4 per cent a month. The Court of Appeal refused to shorten the prison sentences.

Donald Eugene Allen, an American evangelist, defrauded investors out of $8.5 million and was jailed for six years. The minister, preacher and motivational speaker was convicted of a scam that left more than 154 people out of pocket. Allen worked with Paul Eugene Palmer - who is serving nine years for tax fraud in the US - to mount a South Pacific swindle.

Brent Todd, former Canberra and Kiwis league prop and TV star, admitted his part in a fraud case brought by the SFO, targeting charity grants to the North Harbour Rugby Football Union and Touch New Zealand. He was sentenced to a year's home detention and 190 hours' community work after admitting stealing $2 million in pokie machine grants.

LOSSES

The SFO has had its share of misses too, drawing strong criticism particularly from Winston Peters. These cases include:

Winebox case SFO decided not pursue a formal inquiry.

Powdergate prosecution resulted in only small fines for five defendants and a discharge without conviction for the sixth.

Auckland Rescue Helicopter Trust prosecution resulted in four men being acquitted following a $2 million case.

Tuariki John Delamere, the former immigration minister prosecuted but cleared of 14 charges of attempting to defraud his old department.

Digi-Tech, the prosecution of four businessmen on charges of fraud and money-laundering. All were acquitted although the judge said he had no doubt the scheme was a tax-avoidance structure.

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