Defence slates 'inept' SFO inquiry into SCF

20:17, Aug 12 2014

The investigation into New Zealand's largest fraud case was inept, with those charged never given the chance to explain, the High Court in Timaru has been told.

The attack on the Serious Fraud Office (SFO) investigation was made as the defence yesterday began its closing arguments in the South Canterbury Finance (SCF) case.

Former SCF directors Ed Sullivan and Robert White, and former chief executive Lachie McLeod, face a total of 18 charges brought by the SFO following SCF's collapse and the resulting $1.58 billion payout under the Crown Guarantee.

The guarantee was the first matter dealt with by defence counsel Marc Corlett.

"In December 2011 the SFO announced it as the biggest fraud in New Zealand's history of $1.6b. After gleefully seizing on that, the media has taken every opportunity to focus on the $1.6b.

"What we now know is that these people were never questioned by the SFO about their entrance into the Crown Deed of Guarantee, they were never given the opportunity to explain. That people can be charged with the biggest fraud and not be given the chance to explain is an affront to the Kiwi fair go."


He was highly critical of the SFO's investigation.

"What emerged during the course of their [three SFO witnesses'] cross-examination was an inept SFO investigation, undertaken by inexperienced investigators with precious little leadership or internal testing.

"The most alarming example of the deficiency of the SFO's investigation concerns the charge concerning the Crown Deed of Guarantee."

The charge had not been investigated by the SFO, Corlett submitted, and instead it was, "crafted on the cutting floor".

"While it seems extraordinary, the likelihood is that this charge was formulated by lawyers and not investigators and announced before any investigation of the process by which SCF was admitted into the scheme.

"Equally disturbing is that when interviewed, none of the defendants was asked about the entry into the Crown Deed of Guarantee - they were simply charged with the biggest fraud in New Zealand's history without ever being given the chance to explain what had in fact happened back in 2008 and the role they had played."

Neither Treasury nor the Reserve Bank were asked to provide any of their analysis into SCF.

"It was left to defence to find three key documents, recording the reason why SCF was admitted into the scheme."

Key witnesses were not interviewed, including Treasury secretary John Whitehead, who was the gateholder to the scheme.

The Crown's case had shifted from causing the $1.58b payout by getting into the scheme using inaccurate information to getting into the scheme earlier than it otherwise would. "It is now said that the inaccurate information provided by SCF merely avoided a delay of an unspecified length."

The trial is being heard by Justice Paul Heath alone, with a verdict to be given in October.

The Timaru Herald