9 Feb 2011

Serious Fraud Office expects busy year

3:27 pm on 9 February 2011

The Serious Fraud Office says this year will be even busier than 2010, as it concludes investigations into major fraud at finance companies.

Seven months into the financial year, the SFO has already reached its typical workload for a year, with 23 major investigations on its books.

Chief executive Adam Feeley says while all of the cases it is investigating are important, the SFO will focus on cases that are more relevant to the public.

Mr Feeley says public expectations will be higher around finance companies. Ongoing investigations include Dominion Finance, South Canterbury Finance, Hanover Finance, Kiwi Finance and Mutual Finance.

He says there are trials in the case of Five Star, Capital + Merchant and Bridgecorp.

Mr Feeley says it is in everyone's interest to bring what has been an unhappy period in the New Zealand finance scene to some sort of conclusion and believes the large cases will take from six to 12 months to complete.

Hanover investigation 'a challenge'

Hanover was owned by Mark Hotchin and Eric Watson and its 16,000 investors had their investments frozen in July 2008.

Its assets and loanbooks were later sold to Allied Farmers for $400 million.

Mr Feeley says the ongoing investigation into Hanover is a challenge because it is large-scale and requires many resources.

He says in the case of Hanover, and other investigations of similar scale, the SFO will need to focus on those transactions which it believes show clear evidence of fraud and not get distracted by peripheral issues.

Mr Feeley says the SFO is not close to making a link between suspicion and hard evidence of criminal offending in Hanover.

With regards to Aorangi Securities, Mr Feeley expects to hear back from Alan Hubbard's lawyers by the middle of February before making a decision about whether to pursue court action.

The SFO raised the financial threshold for cases it takes on, from $500,000 to $2 million six months ago.

While this has not reduced the workload, Mr Feeley says it provides a more meaningful limit for investigations.