The Serious Fraud Office has warned it won't be able to run as many white-collar criminal investigations and prosecutions over the next two years and is already struggling to cope with very large cases.
The fraud investigation agency made the remarks in answers to followup questions from Parliament's justice select committee following its annual review last month.
In May, the Government reduced the SFO's budget to $9.7 million for the June 2020 year, from $10.1m in 2019 and $10.1m the year before that. It was given $8.7m for the financial year 2015, meaning its budget has risen 15 per cent in four years, a period when the number of complaints it has received has doubled.
The SFO did not meet its targets for the number of investigations opened or prosecuted, its 2019 annual report showed.
In July and August this year, it closed probes into former Waikato District Health Board chief executive Nigel Murray and private investigators Thompson & Clark Investigations without laying charges. It's still looking into alleged breaches of electoral law by the National Party, and is investigating Forestlands, CBL Insurance and Fuji Xerox New Zealand.
"The SFO anticipates that over the next two years we will confront significant limitations on our ability to deliver investigations and prosecutions at the existing levels of service. We are presently experiencing difficulties in coping with the increased demands of very large cases," it said, when asked how close it is to the "tipping point" for its ability to deliver core services and strategy.
The fraud agency says it has already reduced the number of part 1 inquiries to "help manage the pressure caused by the high volume and complexity of open part 2 investigations".
Under its governing legislation, a case moves from a part 1 to part 2 inquiry once the SFO goes from suspecting fraud to having reasonable grounds for believing an offence has been committed. The difference is that a part 1 probe can only compel the release of documents, whereas a part 2 can require someone to attend an interview.
Last year, the SFO started 18 part 1 inquiries, down from 29 the year prior, and launched 13 part 2 investigations compared with 18 the year before.
"Typically, the matters the SFO has not opened or has referred elsewhere are those where the fraud value, in dollar terms, is lower or the complexity is such that it could be handled by another agency."
The number of cases the agency has brought to prosecution has dwindled, declining from 10 cases in the years ended June 2016 and 2017, to nine in 2018, and just seven for the 2019 year.
Further to this, the SFO said financial constraints meant it didn't measure the effectiveness of its investigations and prosecutions through a survey of stakeholders as it has in previous years.
The agency told the committee that the nature of the fraud and corruption seen by the SFO changed over the last five years. Since 2014 there has been a 40 per cent increase in cases involving public officials, central and local governments.
"The cases the SFO has investigated have seen an exponential increase in the level of electronic evidence gathered. This reflects the growth in personal devices, such as mobile phones. This has increased the amount of relevant evidence that must be analysed by investigators."
Last year, the State Services Commission undertook a review of the SFO to check its progress since its last review in 2014. Despite MPs being told the report would be released in November, it has not yet been made public.