Serious Fraud Office 'blindsided' when absorbed

The Serious Fraud Office was blindsided by the decision to dissolve it into the new Organised Crime Agency, MPs heard today.

Outgoing Serious Fraud Office (SFO) head David Bradshaw told the law and order select committee the first he heard about the demise of the organisation was when the decision had been made.

Mr Bradshaw said he had been involved in consultation about the formation of the new agency, but no one had suggested the SFO would be absorbed into the agency.

He was told of the Government's decision towards the end of August, a few weeks before it was publicly announced on September 11.

Mr Bradshaw refused to openly criticise the decision or the process saying it was a matter for ministers and the "machinery of government did not follow an absolute process."

MPs noted that while the decision was being made the State Service Commission had begun the process of appointing Mr Bradshaw's replacement.

The Government had also sent to select committee the Criminal Proceeds Bill, which proposes giving the SFO the job of seizing illegally gained assets from criminals.

Mr Bradshaw said he could not comment on these matters as they were policy issues for ministers.

National MP Simon Power told NZPA that it was clear the SFO had been blindsided.

"I think they were shafted as well," Mr Power said.

The decision to wind the SFO into the new agency was made and announced in a rush, as there was still no detail about how it would work or what powers it would have, Mr Power said.

Mr Bradshaw told the committee the takeover of the SFO could work if its people, powers and processes were transferred in their entirety and kept together inside the new agency.

Mr Bradshaw, in his last annual report after 10 years as chief executive, wrote about the value of the SFO's special powers granted in 1990 to obtain information and to require people to answer questions with no right to remain silent.

He wrote the overview piece before the Government's decision about the new agency.

Announcing the plan Police Minister Annette King said the change did not imply any criticism of the SFO, which deals with white collar crime above the $500,000 level.

Miss King said the police were not seeking the special powers that the SFO currently has to obtain information and carry out surveillance.

Those powers would be reviewed, she said, and the Government would be guided by the Law Commission which had already recommended more transparent processes.

Mr Bradshaw said the Law Commission was threatening to curb the powers even though there had been no abuses of them. He dismissed concerns the powers could be seen as those of a police state.

"Most New Zealanders have not lived in fear of the coercive powers of the Serious Fraud Office for the past 17 years. Nor have they feared having to supply information to the Serious Fraud Office as it seeks to address serious and complex fraud."

He also raised concerns about the Bill of Rights.

"In complete contrast to the provisions of the Serious Fraud Office Act the provisions of the New Zealand Bill of Rights Act have been used to a large part by offenders to seek to avoid accountability for their actions and to prevent law enforcement agencies getting to the truth of a matter by claiming that somewhere during the course of an investigation there was a failure to comply (with the Bill of Rights)."

Mr Bradshaw wrote about the value of having a separate office dedicated to fraud and said it had become "one of the most effective crime fighting agencies within New Zealand" since being set up 22 years ago.

Mr Bradshaw is being replaced by Grant Liddell as chief executive.