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The Government is to scrap the Serious Fraud Office and give its job to a new specialist agency designed to tackle organised crime.
Police Minister Annette King said the new Organised Crime Agency would be fully operational after a year and would tackle organised crime such as drugs,
money laundering, cyber-crime, paedophile rings and identity theft both nationally and internationally.
It will be run by the police and will take over the functions of the Serious Fraud Office, which was set up in 1990 to investigate white-collar crime.
Ms King and Justice Minister Mark Burton said a specialised unit was the only way to beat increasingly sophisticated criminal rings.
Many of the current SFO staff would be absorbed by the new agency because of their specialist skills.
The ditching of the Serious Fraud Office has led to concerns that corporate fraud will be sidelined.
NZ First law and order spokesman Ron Mark welcomed the national focus on organised crime rather than a "piecemeal" local approach, but said corporate fraud should not be put on the backburner as a result.
NZ First leader Winston Peters has often criticised the SFO, claiming its 90 per cent prosecution success rate was only because it had failed to tackle hard cases such as the Winebox Inquiry and claims of insider trading involving Tranz Rail - for which Sir Michael Fay and David Richwhite recently paid the Securities Commission $20 million, despite no admissions of guilt.
Mr Mark said lack of skills and time had been a barrier to police investigation of commercial fraud and he hoped the resources of the new agency would help boost its capacity.
Ms King said fraud investigations would not be neglected and were better placed under the new agency.
"Organised criminals have moved on, and we have to move on to keep ahead of them."
Ms King said closing the SFO was not a criticism of it, but the skill of its staff and nature of its work were more suited to the new unit.
However, the new agency was unlikely to have the same coercive powers the SFO has, such as itspower to force people to co-operate by providing information for an investigation even at the risk of self-incrimination.
Mr Burton said the powers of the new agency would be based on a Law Commission report on search and seizure powers that balanced the need for investigative heft with protection of basic civil liberties.
Police have welcomed the initiative - Deputy Commissioner Rob Pope said it would help them to better target criminal gangs and was essential to keep pace with organised crime.
National Party justice spokesman Simon Power said it was a step in the right direction but police needed powers for it to have proper effect.
Retiring SFO director David Bradshaw would not comment yesterday.
