The Serious Fraud Office is being turned into a "sacrificial lamb" in a misguided attempt by the Government to be seen to be doing something about gangs, MPs were told yesterday.
Former SFO director David Bradshaw told Parliament's law and order select committee he had been blindsided by the decision to scrap the SFO, end its special powers and roll its functions into a new organised crime agency run by the police.
In documents Attorney-General Michael Cullen released this week to NZPA after an appeal to the Ombudsman, Mr Bradshaw warned that the moves would end high-end white-collar criminal investigations and prosecutions in New Zealand.
A proposal to ditch special SFO powers would "sound the death knell for fraud investigations in New Zealand".
Mr Bradshaw reiterated his concerns yesterday and said the SFO had been the victim of a "bizarre" policy process.
The SFO had not been told of plans to disband it despite months of "talkfest" meetings with the working group looking at setting up the new agency.
Mr Bradshaw said that when he was told of the decision, he was given no opportunity to correct "misleading" advice. Ministers would not see him and a final Cabinet paper on this issue did not mention any of the SFO's concerns, despite his requests for them to be included.
It is normal for dissenting opinions to be included in Cabinet papers.
Mr Bradshaw said most serious and complex fraud was not organised crime. He believed the Government's decision was in reaction to gang violence.
In one memo to Dr Cullen, he said: "The cruel shooting of one baby seems to be the raison d'etre for changing the face of law enforcement in New Zealand. Is there anything really broke?"
Mr Bradshaw told MPs the move would neither assist the fight against organised crime nor ensure continuing investigation into serious fraud.
After the meeting New Zealand First leader Winston Peters issued a press release attacking the SFO, saying it was the architect of its own demise.
The SFO had picked on the "little fellas" while failing to prosecute any of big fraudsters, Mr Peters said.
"This office signed its death warrant when it totally failed to follow up on prosecutions during the winebox affair," he said.
Mr Bradshaw said the SFO had a high success rate and he was certain Dr Cullen was aware of that.
The select committee is hearing the first submissions on the Serious Fraud Office (Abolition and Transitional Provisions) Bill, which passed its first reading in May.
The Government announced last September that it was establishing a new organised crime agency within the police.
Subsequently named the Organised and Financial Crime Agency, it would absorb the SFO.
Mr Bradshaw said Police Commissioner Howard Broad had already admitted to him that his organisation "had dropped the ball" when it came to investigating fraud.
MPs should throw out the bill, let the police set up an organised crime unit and allow the SFO to co-operate with the police as it had in the past.
Scrapping the SFO's special powers - such as the power to require documents to be presented and evidence to be given - would result in many cases never getting to trial.
TAX CONFIDENTIALITY THREAT
Proposals to give police free access to confidential taxpayer information made a mockery of Inland Revenue confidentiality laws, MPs were told yesterday.
The Institute of Chartered Accountants said a bill scrapping the Serious Fraud Office (SFO) and giving new powers to police contained an "under-the-radar" move to end the traditional secrecy of information provided by taxpayers to IRD.
The Law and Order Select Committee is hearing submissions on the Serious Fraud Office (Abolition and Transitional Provisions) Bill.
The institute's tax committee spokesman Geoff Nightingale told the committee the bill contained a clause which would allow the police to access any information held by IRD.
The tax system was based on voluntary compliance.
"If Parliament removes that privacy, there is a risk that voluntary compliance and the integrity of the tax system are undermined."
Allowing the Police Commissioner or any officer he designated to get information from IRD and then also pass that on to others would represent a "fundamental change" to the system.
"We recognise that Parliament is sovereign and can broadly pass whatever law it sees fit. It may be that government policy is that taxpayer secrecy has had its day," Mr Nightingale said.
"The institute is very disappointed that the Government sees fit to amend a fundamental part of our tax system without consultation."
The proposal and other recent changes to tax law all seemed to contradict other law which required IRD to maintain confidentiality.
Giving police free access to IRD data would mean the collection of less tax as those involved in dodgy practices would move further into the "hidden economy".
There were also concerns that recent cases of police officers inappropriately accessing files might be repeated with tax information.
Allowing police to hand on this information to who they saw fit could create an "information superhighway".
The Government announced last September that it was establishing a new organised crime agency within the police. Subsequently named the Organised and Financial Crime Agency, it would absorb the SFO.