Christchurch Earthquake 2011
Cantabrians who have made false claims to the Earthquake Commission will be investigated by a special team that has already uncovered millions of dollars' worth of fraud.
There have already been four successful prosecutions and the Sunday Star-Times can reveal that a special team within the Earthquake Commission (EQC) has sent a further 17 files to police as dodgy claims total $4.6 million.
The Serious Fraud Office is also focusing on "the potential for serious or complex financial crime arising out of the Christchurch recovery" and acting chief executive Simon McArley said it would consider opening a Christchurch office if necessary.
EQC general manager of customer services, Bruce Emson, said the commission had zero tolerance for those who deliberately provided false information about claims.
"EQC research this year showed Cantabrians have absolutely no tolerance for fraudulent behaviour," he said. "Making a false claim is simply stealing from every New Zealander. We have to be vigilant. Our job is to ensure that our customers get their fair entitlement."
Emson said international evidence showed there was an element of fraud in about 10 per cent of claims relating to a "catastrophe recovery situation".
The investigation had already looked at 880 claims and it was trying to sort honest mistakes from serious cases of "deliberate and calculated" fraud.
Commission chief executive Ian Simpson cited the case of bills being submitted for two chimneys being demolished when the house had just one. "We've got to try and make a decision about whether that's a book-keeping invoicing error or whether it's actually an attempt at fraud."
In a recent briefing to Parliament's finance and expenditure committee, EQC chairman Michael Wintringham confirmed the recent fraud convictions.
The commission's liability for Christchurch repairs is estimated to be up to $12.5 billion, and he said international experience showed sums of this scale tempted fraudsters.
"When those sums of money are involved, international experience says that there are opportunities for fraud and some people try and take advantage of those opportunities," he said.
The commission's investigation team was headed by an ex-police officer described as "rather scary".
Not only are the investigation team reviewing all claims, they are also looking into the pricings and practices of 1500 contractors involved in the rebuild.
Simpson told the committee that the commission was working with the SFO to "build a broader risk register" which would highlight trends likely to be associated with fraudulent activity.
Simpson said the commission believed a level of "collusion" between assessors, contractors and surveyors was necessary "to get significant fraud through the system".
In a bid to uncover any dirty deals between contractors and house owners, it had "a number of different people touching the claims".
Canterbury Earthquake Recovery Authority chief executive Roger Sutton also addressed the parliamentary committee, telling the nine MPs that $30b-$40b would be spent on the rebuild. That equated to Christchurch's annual gross domestic product.
Sutton told the Sunday Star-Times on Friday that there would always be "opportunists looking to exploit the system".
It was not possible to quantify a percentage, he said.
"Of course we would like to stamp out any fraudulent activity and we have developed robust internal systems to ensure we have the ability to react appropriately should the need arise."
To report suspected fraud: www.eqc.govt.nz
- © Fairfax NZ News
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