Former iwi social services CEO found guilty of fraud

Published

Former iwi social services CEO found guilty of fraud

Arapeta Victor Hamilton, a former Director and Chief Executive of Ngapuhi Iwi Social Services Limited (NISS), has today been found guilty of five counts of fraud following charges brought by the Serious Fraud Office (SFO). 

NISS was a Northland company set up to deliver services to Maori children through government and community funded contracts, from 1997 to 2006. Hamilton was appointed a Director to the company in October 2000.

During that time, Mr Hamilton was found to have fraudulently diverted NISS funds totalling approximately $147,500 to cover personal expenses, including mortgage repayments and investments in a nightclub.

SFO Chief Executive Adam Feeley said that Mr Hamilton’s actions were a violation of his trusted position within both NISS and the community.

“Mr Hamilton took advantage of his position for personal financial gain and, in doing so, has defrauded the organisation of valuable funds intended to enhance the local community. The guilty verdict in this case is a positive outcome and we hope it will provide some justice for those affected by Mr Hamilton’s actions.”

“This case highlights the need to have effective fraud prevention policies which have particular regard to the trust and authority conferred on key persons within their organisation,” Mr Feeley said. 

Mr Hamilton is due to be sentenced on 3rd August 2011.

For further information

Sarah Knowles
Media Liaison
Serious Fraud Office
Phone: 021 675 998

Note to editors

Background

1. From 1997 to 2006, Arapeta Hamilton was employed as CEO of Ngapuhi Iwi Social Services Ltd (“NISS”), located in Kaikohe. NISS was a subsidiary company of the Te Runanga A Iwi O Ngapuhi Charitable Trust and was set up to provide and deliver services to Maori children.  NISS was governed by a board of six persons located throughout the Northland region. 

2. As CEO, Mr Hamilton had overall responsibility for the finances and business management of NISS from his appointment in 1997.  Hamilton was given complete autonomy to run the business of NISS, including managing of their finances, and was responsible for reporting to the Board at their monthly meetings.

3. Mr Hamilton had sole signing authority for two bank accounts operated by NISS (the “03” and “04” accounts). He was also a co-signatory, with other NISS Board members, for two other bank accounts the company held (the “00” and “25” accounts).

4. From about January 2000 to November 2002, Mr Hamilton took money from the NISS “03” and “04” accounts with the intention of defrauding NISS of approximately $147,500. The money was taken from the accounts via cheques that Mr Hamilton wrote to either himself, to cash, or to entities not related to NISS.

5. Details of the payments are as follows:

a. Mortgage payments:  Approximately $86,588.69 by 40 cheques paid towards mortgages held over a property at Pakaru Road, Kawakawa, in which Hamilton and his family had an interest.

b. Advance Salary payments:  Approximately $9,000 by two cheques for advance salary payments to Hamilton, which were not authorised by the Board of NISS.

c. Overlapping Salary payments:  Approximately $11,000 by four cheques for salary payments to Hamilton that overlap with salary payments authorised by the Board of NISS.

d. Southside Ltd payments:  Approximately $12,885 by nine cheques written to Southside Ltd, a company running a nightclub in South Auckland owned by Hamilton.

e. Other payments:  Approximately $28,045 by 80 cheques written to cash or a company owned and controlled by Mr Hamilton which was not entitled to payments from NISS bank accounts.

6. Concerns about the company finances were eventually raised at Board level and Mr Hamilton was relieved of his financial authority in June 2004.

Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office 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