Goff Phil: Serious Fraud Office (Abolition and Transitional Provisions) Bill — First Reading 
Goff Phil: Serious Fraud Office (Abolition and Transitional Provisions) Bill — First Reading 
[Volume:647;Page:16096] 
Hon PHIL GOFF (Minister of Defence) 
on behalf of the  
Minister of Justice 
: I move  
That the Serious Fraud Office (Abolition and Transitional Provisions) Bill be now read a first time. 
 I intend that the bill be considered by the Law and Order Committee and that the committee report finally to the House on or before 15 August 2008. 
In summary this bill disestablishes the current small and stand-alone Serious Fraud Office and transfers those important functions powers and commercial fraud investigative capabilities into the larger police infrastructure. This bill is the second of four major legislative initiatives by this Government to tackle serious and organised crime in New Zealand. Those four measures are the Criminal Proceeds (Recovery) Bill the Serious Fraud Office (Abolition and Transitional Provisions) Bill the Organised Crime (Penalties and Sentencing) Bill and the Search and Surveillance Powers Bill. The new powers penalties and law enforcement improvements provided in these four bills will enable tougher investigation and tougher action against organised crime and gangs. These criminal groups plague our communities with intimidation illegal drugs identity fraud serious property crimes and violence. 
This particular bill must be viewed in the context of the creation of the new Organised and Financial Crime Agency of New Zealand. This agency will be created within the police and its mission will be to improve the safety and security of New Zealand by combating serious organised and financial crime through an inter-agency partnership approach. Amalgamating the skills and experience of the Serious Fraud Office and the police will bring a new capability to tackle corporate fraud and sophisticated organised crime groups. The Organised and Financial Crime Agency of New Zealand offers a mechanism to increase the attention given to serious and complex fraud while significantly challenging those engaged in domestic and international organised crime. Accordingly this bill disestablishes the Serious Fraud Office so that its existing functions and powers can be re-formed into a permanent financial crime task force within the Organised and Financial Crime Agency of New Zealand. Combining the skills abilities tools and resources of these two organisations will allow us to better focus our forensic accountants and financial investigators on the unravelling of complex financial dealings wherever they may occur. These illegal financial arrangements are not the domain just of commercial fraud but the mechanism by which organised crime launders its money hides its assets and attempts to create a front of legitimacy for criminal wealth derived at the cost of New Zealanders. 
The Serious Fraud Office was established in the wake of the 1987 share market collapse. However since the late 1980s the nature and scale of fraud offending has changed. Fraud has become more complex and widespread. The results of globalisation computers and Internet access provide for levels of anonymity speed and identity fraud well beyond those of the 1980s. In addition more than ever organised criminal groups in New Zealand are using commercial and financial tools as part of their criminal offending. To their credit I believe that the small group of people working in the Serious Fraud Office to date have done an admirable job of keeping pace with changes in the commercial fraud sector. They are to be congratulated. But the growth of fraud generally and the expansion of organised crime has led to the development of specialist commercial fraud and financial crime investigation teams in the police and other Government departments. This can result in jurisdictional overlaps competition for expertise difficulties with coordination amongst agencies and reduced overall effectiveness. 
Against that background it makes sense to integrate the Serious Fraud Office within the police to allow the greatest degree of flexibility and coordination in the investigation of serious complex fraud and financial crime. This much-needed pooling of personnel and expertise will act as a resource for investigations around the country. It will ensure that the whole range of illegal and harmful commercial activity employed by both company fraudsters and organised crime can be addressed. Accordingly Subpart 1 of Part 2 of the bill contains the provisions required to disestablish the Serious Fraud Office and amalgamate its current resources and expert personnel into the police. This includes provisions to ensure that the current Serious Fraud Office investigations and prosecutions continue under the new umbrella of the Organised and Financial Crime Agency of New Zealand. 
Since the Government’s announcement that it would amalgamate the Serious Fraud Office with the police we have received expert advice that much of the Serious Fraud Office’s investigative capability is linked to its document production and compulsory examination powers. These powers are seen as essential tools in the investigation detection and unravelling of complex commercial transactions and serious commercial fraud. They often facilitate the cooperation of good corporate citizens whose ability to assist authorities may be hindered by fears of potential civil liability at the hands of less scrupulous clients. The Government is committed to retaining this current investigative capability and ensuring that banks accountants and other professional advisers are able to assist the police. However the Serious Fraud Office’s current framework for these powers is out of step with modern police practices and human rights safeguards that have developed to prevent potential abuse. Thus we have restructured these investigative tools to better reflect our modern expectations of criminal investigations and bring them into line with the Law Commission’s proposed comprehensive reform of the search and surveillance law. These powers will now be the subject of independent judicial authorisation and applications for these orders will require approval by the Commissioner of Police or his delegate. In those rare instances where compulsory examination orders are sought in respect of individuals whose knowledge is obtained in a social or non-business context such applications must also receive the additional approval of the Secretary for Justice. I do not consider these new safeguards to be of any hindrance to the efficient investigation of corporate or financial crime. Indeed they are disciplines that are welcomed by the police. 
As this bill relates to the repeal of the Serious Fraud Office Act the powers provided to police for the investigation of serious or complex fraud are transitional. These powers expire on 31 July 2011 or an earlier date by Order in Council. It is intended that these powers will be eventually overtaken by the wider reforms set out in the Government’s Search and Surveillance Powers Bill once it is considered and enacted by Parliament. 
Finally I note that clauses 35 to 43 of the bill retain the secrecy provisions from the current Serious Fraud Office Act. This type of investigation requires the analysis of large amounts of commercially sensitive information and the retention of these provisions ensures that the current high standards of confidentiality are maintained by the Serious Fraud Office and will continue in the hands of the Organised and Financial Crime Agency of New Zealand. Officials will continue to look at this issue across the wider police operation to determine whether similar provisions should be put in place for all police investigations. 
Some will question the disestablishment of the existing Serious Fraud Office. However I have confidence that combining this small specialist office with the greater resources and support structures of police will have only benefits for the investigation of serious fraud throughout New Zealand. I thank those existing staff and experts within the Serious Fraud Office for a job well done but they should now look forward to the future and the even greater benefits that their expertise will bring to all New Zealanders. Their ability to investigate and capture serious or complex commercial fraud will be enhanced and now their financial investigation expertise can be used to capture P manufacturers drug smugglers gangs and other violent organised criminal groups that threaten and destroy the lives of New Zealanders every day. I commend this bill to the House.