SFO to investigate South Canterbury Finance

SFO to investigate South Canterbury Finance transactions

The Serious Fraud Office (SFO) today announced that it had launched an investigation into South Canterbury Finance (SCF).  

Chief Executive, Adam Feeley, said that as a result of inquiries made by its newly established Fraud Detection Unit, the SFO had grounds to suspect that a number of related party transactions involving SCF may have involved false statements or other fraudulent conduct.

“Given the scale of the SCF collapse, it would be neither feasible nor productive for SFO to carry out an investigation into all aspects of the failure. Instead we will focus on specific transactions which we consider may have been a fraud on the investors in SCF and/or the Crown as the guarantor of investor funds.”

Mr Feeley said that despite the volume of cases which SFO had taken up in recent months, the matter was one which would have a high priority and would be progressed as quickly as possible.

“As is appropriate with a small agency, we will coordinate our efforts with the receivers of SCF; the Registrar of Companies; and the Securities Commission. We will also be engaging private sector insolvency and forensic accounting specialists for external assistance.”

Mr Feeley said the sharp increase in SFO investigations in recent months should be seen as a positive sign of greater law enforcement in the financial markets.

“Swift and visible investigations are a critical part of maintaining confidence in New Zealand’s financial markets. Despite the challenges presented by the current volume of cases, the SFO is committed to ensuring that the public can have confidence in us as the lead law enforcement agency for financial markets fraud.”

Mr Feeley added that the SCF investigation was an entirely separate matter from the SFO’s investigation into the affairs of Aorangi Securities Limited.

“While there are some persons who are common to both cases, the SCF transactions we are currently investigating have no material connection with the affairs of Aorangi Securities.

Mr Feeley added that, subject to receiving any new information from the statutory managers, the SFO was in the closing stages of its investigation into Aorangi Securities.

For further information

Adam Feeley
Chief Executive
Serious Fraud Office
Phone 021 333 539

The role of the Serious Fraud Office

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 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 2010-2012 sets out the SFO’s three year strategy and goals for contributing towards the Government’s Justice and Economic Development goals. It is available online at http://www.sfo.govt.nz/f56,555/SFO_Statement_of_Intent_2010.pdf(external link)(external link)

Current SFO Investigations & Prosecutions

The SFO is currently investigating 22 matters, two of which involve assistance with international law enforcement agencies. Cases under investigation include:

•  Nathans Finance
•  Lane Walker Rudkin
•  B’On Financial Services
•  Capital + Merchant Finance
•  Aorangi Securities
•  Belgrave Finance

It is also bringing 31 prosecutions, including proceedings against persons involved with National Finance; Bridgecorp Ltd; and Five Star Company Group.