The Serious Fraud Office (SFO) says probes into a growing list of failed finance companies have stretched resources, and delayed the start of an investigation into Capital & Merchant Finance.
The finance firm was put into receivership in 2007, owing $190 million to more than 7000 investors. Last year, receiver Grant Thornton said they wouldn't get any money back.
The investigation will focus on some related party loans and what the chief executive of the SFO, Adam Feeley, called questionable supporting documentation.
The Securities Commission and Companies Office had raised regulatory concerns about Capital & Merchant, but Mr Feeley says its investigation was only launched after a referral from Mr Thornton two weeks ago.
Office alleged to be dragging its heels
Investors' group Exposing Unacceptable Financial Activities says the office should have begun its investigation sooner. Spokesperson Gray Eatwell says the case is typical of many, and the SFO has dragged its heels on the issue.
But Mr Feeley says it only received information in the past few months. He says resources are stretched, with some nine finance companies currently either under investigation or facing charges.
"It's not ideal to be looking into a collapse as late as this, but equally when the concerns are as significant as they are, it's simply not possible to turn a blind eye to them.
"Given the passage of time that has occurred, this case will receive exceptionally high priority from us."
Mr Feeley says that in the next few weeks his office will decide which finance firm investigations will continue, stop or see charges laid.