Editorial: Question of confidence at the SFO

Opinion

The long-running Powdergate case ended last week not so much with a bang as a large question mark over the role of the Serious Fraud Office. True, the six accused were finally convicted after entering guilty pleas to charges of producing false Customs documents and were fined a total of $58,500. But this was a small return for an SFO investigation into the illegal export of dairy products that began five years ago.

That there were greater expectations is obvious from the original charges which were far more serious: conspiracy to defraud. Not only was the nature of charges eventually toned down but so was the value of the illegally exported product which the SFO originally put at $44.6 million before finally settling on just $3.2 million. If this is to be regarded as a victory then it comes at too great a cost. The outcome seems hardly justified by the time, effort and money spent on the investigation.

Of course, it could be argued with some reason that there is a degree of uncertainty in any prosecution which increases in proportion to the complexity of the case. Such an argument would be acceptable were it not for the fact that Powdergate was not an isolated example. There have been two other cases recently which ended with even worse results from the SFO's point of view.

In one, four men were acquitted after a lengthy investigation of allegations that they defrauded the Auckland Rescue Helicopter Trust. The men are seeking costs from the Crown in a case that ran to more than $2 million for the defence and prosecution, according to one estimate.

In the other case a judge ordered the SFO to pay nearly $1 million to the accused after a failed prosecution that alleged fraud and money laundering in a $16 million tax scheme. In making the order Justice John Fogarty in the High Court at Auckland criticised the SFO's conduct of the case, especially its decision to prosecute independently of the Inland Revenue Department which was comfortable with the transactions at issue.

It is not hard from the above examples to see grounds to question the office's judgment. Taken together these three high-profile cases - one a pyrrhic victory for the SFO and the others resounding defeats - suggest the time is ripe for a review of the office that was set up in the aftermath of the excesses of the 1980s. Its brief is to investigate and prosecute serious cases which are defined as fraud involving more that $500,000, fraud perpetrated by complex means or fraud likely to be of public interest.

Given the circumstances of the time there was no question that a body with wide-ranging powers was required. But it was criticised by the police, with some justification, on the grounds that, at $500,000, the threshold for serious fraud was set far too low. Not only does that threshold remain the same but there have been suggestions that, in the past, the office has seized on easy victories in straightforward cases while failing to come to grips with its real purpose - to go after the high end.

In the 16 years since the SFO was established the country may have changed radically but it still needs an effective and high-powered agency to deal with this most difficult and complex form of crime. The office's recent record is enough to raise doubts about whether it is up to the job.

Clearly there needs to be a thorough review if confidence is to be maintained. The review, which should come sooner rather than later, ought to begin by establishing a more realistic threshold for serious fraud and then consider whether the SFO as it stands is properly resourced and has the right people to tackle the big, complex cases.