Insolvency practitioners key to fighting corporate fraud

Insolvency practitioners key to fighting corporate fraud

The Serious Fraud Office (SFO) today recognised the importance of insolvency practitioners in the fight against corporate fraud. 

Speaking at the 11^th Annual Corporate Insolvency Conference in Auckland, SFO Chief Executive, Adam Feeley, said “No profession is better placed than insolvency practitioners to assist the SFO, and other law enforcement agencies, in the fight against corporate crime.”

Mr Feeley said that factors such as their strong links to business; geographic spread; and relative strength of numbers, made the profession a key ally to the work of the agencies tasked with fighting financial crime.

“We are heavily dependent on the on-the-ground knowledge and cooperation of insolvency practitioners to detecting crimes within the corporate sector, and to ensuring a successful outcome to an investigation.”

In the past 12 months the SFO had been greatly encouraged by the support of insolvency practitioners for greater law enforcement activity, and their active reporting of possible offending.

“Several accounting and law firms have assisted us in major investigations. Without their help, these cases would have, at best, taken longer to complete, and in some cases may not have been completed.” 

Mr Feeley cited cases such as Aorangi Securities, Hanover Finance, South Canterbury Finance, and Herbert Insurance Group where insolvency practitioners had made significant contributions to the SFO’s investigations. 

“I think there has been significant shift in the level of collaboration between agencies such as the SFO and Financial Markets Authority and those responsible for administering the affairs of financially distressed companies.

“While it would be naïve to think corporate fraud won’t continue, the public should feel heartened by the commitment of the private and public sector to working together to make New Zealand a safer place to invest.”

For further information

Sarah Knowles
Serious Fraud Office
Phone: 0275 637 695

Note to editors

Copy of SFO presentation

A copy of the SFO’s presentation, “A Team Effort – SFO and Insolvency Practitioners” can be found below:

Legal obligations on insolvency practitioners in law enforcement

Section 28 of the Receiverships Act and section 258A of the Companies Act imposes a duty on receivers and liquidators to report to the Registrar of Companies any suspected offences under the Crimes Act; Companies Act; Securities Act; Financial Reporting Act; and Takeovers Act.

Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act in response to the collapse of financial markets in New Zealand at that time.

The SFO operates three investigative teams:

• Fraud Detection & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”

Part 2 of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”

The SFO’s Statement of Intent 2011-2014 sets out the SFO’s three year strategic goals and performance standards.  It is available online at: www.sfo.govt.nz(external link)