Borrows Chester: Serious Fraud Office (Abolition and Transitional Provisions) Bill — First Reading 
Borrows Chester: Serious Fraud Office (Abolition and Transitional Provisions) Bill — First Reading 
[Volume:647;Page:16106] 
CHESTER BORROWS (National—Whanganui) 
: 
 I rise to speak in respect of the Serious Fraud Office (Abolition and Transitional Provisions) Bill to clarify a number of issues raised by my colleagues Simon Power and Richard Worth and in response to some of the comments made by Mr Ron Mark. I want to look at the history of the Serious Fraud Office Act 1990. I note that that legislation had its third reading in June 1990 a month before the New Zealand Bill of Rights Bill was introduced to the House. 
National’s major problem with the bill as it reads at the moment is that it takes away a number of the serious investigative powers that are open to the Serious Fraud Office. The reason why it is said that these powers should be removed is that the legislation predates the New Zealand Bill of Rights Act. It seems strange to me that the Serious Fraud Office bill would have been introduced to the House and then given its third reading within a month of the introduction of the New Zealand Bill of Rights legislation and not be given the protections of the New Zealand Bill of Rights Act by the same Government that introduced it without good cause. 
I say to the House that good cause exists right now. We have not seen an environment like this with a number of finance companies going under and mum and dad investors being hurt since the crash of 1987. Of course the Serious Fraud Office grew out of the 1987 crash. It is interesting to note the Rt Hon Jonathan Hunt’s comments at the time in respect of the Serious Fraud Office Bill. During its second reading debate he said: “The bill provides the Serious Fraud Office with forceful and rigorous powers to combat serious or complex fraud. It also provides protections to deal with possible abuses of those powers. While the passage of the bill will not of course eliminate fraud it will assist in the battle against serious and complex fraud.” He commended the bill to the House. The comments he made at that time from the other side of the House are just as fitting today as they ever were. 
It was also interesting to note the comments made before tea by the Hon Phil Goff. A comment was made in respect of companies like Blue Chip going under. He made some disparaging comments in relation to Blue Chip and asserted that National wanted to protect its mates. We have to remember just who has been affected by the collapse of Blue Chip and other similar companies. 
One of the victims happens to be my mother-in-law. She is a lady who had very little money but she had an asset which was a nice home in Nelson. It was worth a lot of money. She decided she wanted to shift to be close to her family which includes me fortunately. She shifted from Nelson to South Taranaki. She was able to buy a house of much less value than the one she sold so she had a significant amount of money to invest. Her money was invested on the advice of advisers in companies of which Blue Chip was one and Bridgecorp was another. Those companies went under and she did her dough. She is now 82 years of age and does not have much except her home and not a lot of assets. Now is not the time to be withdrawing those powers from the Serious Fraud Office. 
National believes that the Serious Fraud Office has had some concerns and of concern is the number of million-dollar costs that have been awarded against it. Also we note the way the investigations have been run over time. A number of serious charges have been thrown against various defendants and gradually they have fallen away. A number of companies have gone down for what have been a large number of more trivial offences such as using a document and the rest which any constable in the Criminal Investigation Bureau could prefer and successfully prosecute. 
National’s concern though is not only the reduction in powers under the Serious Fraud Office Act and their dissipating away once they have moved to the police but also the state of fraud investigation in this country at the moment at the hands of the police. 
Last year in the review of the Police Act a number of us heard speakers at a seminar talking about what the review would mean. One of those speakers was a man called Ron McQuilter the Managing Director of Paragon New Zealand. He started his discussion with a true case and I will read just a few lines of it to the House: “John is a senior auditor with a Government department. In September last year John lodged a complaint with the police that an employee had stolen $80000. After hearing nothing for 4 months in January 2006 John wrote to the police inquiring as to the progress of his complaint. Ten days later they called to say they could not find the file but they would get back to him. On 26th February 2006 some 5 months after he had laid the complaint John received this letter.” Mr McQuilter proceeded to read out to the seminar a letter he had received from the police that said that the police would not be investigating the complaint—in spite of the fact that it was an $80000 theft and the offender was identified—for several reasons out of a possible five reasons: it was not a significant priority at that time they did not have the staff to do it and so on. 
Later on Mr McQuilter got in touch with the detective senior sergeant who had written him the letter. When he spoke to him the detective senior sergeant said: “We can’t handle it at this time. We can’t give a time frame and we don’t like it any more than you do.” The fact is that corporate fraud or fraud in general has not been listed as a key strategy of the police for a number of years because they are focusing on violence drugs traffic organised crime burglary and theft from or of cars. 
The question then is: can it really be that bad? Mr McQuilter said: “Well let us consider the police statistics themselves.” Police statistics for the year 2005-06 detail that the resolution rate for dishonesty complaints is 15.5 percent out of 36407 complaints in Auckland alone and 32125 complaints in Manukau. That means that in these two districts alone some 57491 complaints per year or 4790 complaints per month are not resolved. The total number of non-resolved dishonesty complaints for the entire country is 184965 per year or 15500 per month. 
The problem is that the police do not have the ability either through resources or manpower or for whatever reason at the moment to do the job on fraud that people expect them to do. Moving the Serious Fraud Office into the police poses a number of concerns. One of them is that they will be used to clear a backlog of other fraud that is not being attended to at the moment. The other concern is that part of the Organised and Financial Crime Agency of New Zealand initiative will see the fraud aspect being run alongside such things as a national gang strategy and operations relating to gangs. Gangs will be a distraction. There needs to be an emphasis on gangs. The Minster has admitted she has dropped the ball on gangs when she admitted she dropped the ball on P. But that emphasis will be to the detriment of dealing with fraud investigations. 
The initiative for this particular legislation came in only in the last half of last year in the middle of a Law and Order Committee consideration of the Criminal Proceeds (Recovery) Bill. It was done ad hoc and sloppily. In December the Minister was sent by Cabinet to go back and have another think about it. We now find it before the House in a form such that Government members cannot tell us how it is will work. In answers to questions I have received back in the last 2 days the Minister cannot even tell us how many people will be working in the office how it will be manned or what other staff requirements there will be. 
National is not prepared to support this piecemeal on-the-trot legislation at this stage although we see that it has a number of laudable objectives. We will deal with clear law that is open and transparent before the House and before the New Zealand public. That is what we are here to do and that is what we as members of this House are tasked to do.