Serious Fraud Office considers Hartner probe

The Serious Fraud Office is considering opening a formal investigation into the collapse of the Hartner Group, which left debts estimated at $28.5 million.

SFO director David Bradshaw yesterday confirmed his organisation's continuing interest in Hartner Group following the Securities Commission's decision not to appoint a statutory manager.

The SFO had received complaints alleging fraud in relation to the collapse, but it was not yet clear what evidence there was to back the allegations, Mr Bradshaw said.

If the Securities Commission had recommended the appointment of a statutory manager, that would have affected how the SFO dealt with the matter.

"In light of the commission's decision not to make such an appointment, I now have to consider the best way to complete a proper assessment of the complaints," he said.

"At this point, I am unable to say whether there are proper grounds to investigate the allegations of fraud within the Hartner Group.

"I would expect to complete my assessment on whether to open an investigation within the next few weeks."

The Securities Commission's decision not to opt for statutory management has been caused disappointment to some of those caught in the collapse.

Building industry arbitrator Geoff Bayley said the commission had sold Hartner's creditors short.

"Most of the Hartner unsecured creditors would be absolutely disgusted with the Securities Commission decision not to appoint a statutory manager," he said. "In law, they [creditors] have no other way to take action.

"There is no guarantee of any investigation taking place because the Companies Act says that if the company technically has no assets, then the official assignee can decide at any stage not to continue with the investigation, leaving the subcontractors high and dry."

But commission chief executive John Farrell said it had no option but to reject the request. "In very simple terms, the law doesn't apply."

Mr Farrell said the commission had statutory authority to step in only when it believed the ordinary laws did not cover the situation or when there was evidence of fraud.

But in this case, a receiver and a liquidator had already been appointed to Hartner and the commission felt further inquiries could be undertaken by the Companies Office and the Serious Fraud Office.

"We have no mandate to put the company into statutory management."