Legislation to abolish the Serious Fraud Office and merge its functions with a police unit to deal with organised crime was to come into effect on July 1. Parliament has missed that deadline and a select committee has just begin hearings on the bill. National has indicated that if it is not passed before the election it might not become law. The party should go further and promise to restore a dedicated fraud detection agency forthwith.
The office is unlikely to be dismembered quickly if the legislation is passed. It has recently taken on two big investigations, one into the Blue Chip property companies that went into liquidation between February and April owing $80 million to 2000 investors, the other into the Bridgecorp finance company that owes about $500 million to 18,000 depositors.
The SFO's new director, Grant Liddell, is confident the office can continue these investigations when it is merged with the police's new Organised Crime Agency because it would move to the new agency "intact". The scale of the projects should keep it intact long enough for a different Government to let it stand alone again.
The nature of the projects also is a reminder of why the office is needed. Its takeover was mooted before the economy entered stormy water this year. The failure of 22 finance companies and the equal number of property schemes operating under the Blue Chip franchise raise the sort of questions that should cause the Government to think again.
Fraud, as former Attorney-General Sir Geoffrey Palmer, now Law Commissioner, would attest, is the most difficult of crimes to detect and prove its intent beyond reasonable doubt. If the task is subsumed in the policing of organised crime, which in this country involves fairly juvenile and conspicuous gangs, there is no doubt which job will present the squad with the easier return on its resources.
The SFO's previous director, David Bradshaw, believes the office has been sacrificed to the Government's need to be seen doing something about gangs. He has told the select committee that as head of the office he was "blindsided" by the decision to fold it into the police. The SFO had not seen the move to disband it despite attending months of discussion on the new Organised Crime Agency, he said.
When told of the decision, he was given no opportunity to correct "misleading advice" to ministers, he said. Ministers would not see him and the SFO's dissenting view was not included in the final papers to the Cabinet. It sounds like a public service patch war that did not interest the Government very much.
Winston Peters' party withheld its approval for a while but now seems to have come in behind. Mr Peters inveighed against the SFO after Mr Bradshaw's submissions to the select committee, saying the office had failed to follow up Winebox evidence. That is unfair. Those tax-avoidance schemes, reprehensible as they may have been, were legal in their day.
White-collar crime bears little resemblance to the gang activity that will be the easier target for the clumsily named Organised and Financial Crime Agency of the police. The agency will lack some of the powers thought necessary for the SFO. Corporate fraud suspects will regain the right to remain silent and cannot be compelled to attend a police interview unless a judge orders them.
It is bizarre to tie the hands of investigators as property and finance company collapses are bringing a new round of apparent rorts to light. If a National government was doing this it would suffer all sorts of aspersions. All the more reason, then, for National to announce unequivocally that it will put this right.