Labour still wants to merge SFO with OFCANZ

December 9th, 2013 at 11:00 am by David Farrar

Stuff reports:

On election in 2008, the National Government scrapped Labour’s plans to merge the SFO into the Organised Financial Crime Agency (OFCANZ) and boosted funding to deal with cases stemming from the GFC. Labour MP Jacinda Ardern says the Government has now ”cut that back”.

Presumably as the GFC is over.

Ardern said Labour still believes that bringing the SFO into an organised crime agency is the right approach.

I’m surprised Labour is still pushing their 2008 policy. OFCANZ are the wallies that botched the raid on Kim Dotcom, and have made other major mistakes in recent years. The SFO is not perfect but advocating they merge with OFCANZ is the worst thing you could do for helping detect serious fraud and ensure a conviction.

Fake invoicing

October 26th, 2012 at 1:00 pm by David Farrar

The Herald reports:

Six people have been arrested over a $1.6 million invoice scam which involved the sale of advertising in magazines that did not exist or were not as widely circulated as claimed.

The arrests follow a five-month operation involving more than 60 staff from multiple agencies – the first of its kind to crack down on invoice scams in New Zealand.

Police arrested six people in Auckland, Port Waikato and Picton after search warrants were executed at more than 25 locations throughout the country.

All are facing charges of participating in an organised criminal group, while five are also facing fraud charges.

The Serious Fraud Office (SFO) alleges the group sold advertising in magazines that did not exist or had “grossly exaggerated” circulation figures.

The magazines had general titles that suggested links with worthy causes like road safety, parenting or drug addiction.

The SFO alleges the invoice scam generated up to $1.6m since 2008.

These sort of scams have been going on for decades. They’re sort of cunning. They rely on the fact that large companies will just pay a $250 bill without bothering to trace down which ad appeared and who authorised it.
Small companies will go back and say they didn’t place an ad, be told it was a mistake, and generally not worth their time to follow up and expose it as a scam, if they even realise it is.

Acting SFO chief executive Simon McArley said high-volume, low-value fraud was particularly difficult to address.

But the operation was completed in a relatively short timeframe because of the multi-agency approach.

“The agencies were able to each contribute specialist skills and achieve a result that none working alone would have been able to,” Mr McArley said.

“Invoicing scams cost New Zealand businesses hundreds of thousands of dollars a year and small businesses and charities are often the target.

Will be interesting to see the names of the accused.

SFO alleges $1.7b fraud with South Canterbury Finance

December 7th, 2011 at 6:12 pm by David Farrar

Stuff reports:

SFO boss Adam Feeley confirmed the total estimated value of the allegedly fraudulent transactions was about $1.7 billion, which includes an esimated $1.59 billion from entering the Crown Retail Deposits Guarantee Scheme. …

“The collapse of SCF was one the most significant of all the failed finance companies. The value of the fraud alleged to have been committed exceeds anything in the history of white-collar crime in New Zealand, and the time we have taken to complete this matter is a reflection of that scale,” Feeley said.

The SFO spent 14 months investigating the company and the charges it has laid cover a variety of offences, including theft by a person in a special relationship; obtaining by deception; false statements by the promoter of a company; and false accounting. The offences carry maximum penalties of between seven and ten years imprisonment.

“It is not appropriate at this point to comment on details of the allegations, but the investigation itself has been one of the most resource-intensive and time-consuming in recent history,” Feeley said.

SCF founder and chairman and Allan Hubbard, was facing 50 fraud charges relating to his private investment vehicles Aorangi Securities and Hubbard Management Funds, but was killed in a car accident in September.

This won’t restore the money to those who lost it, principally taxpayers, but it is important there is accountability over SCF’s management and alleged mismanagement.

Of course it is up to the trial process to determine if any laws were broken, and by whom.

What is it that the Herald thinks the SFO did wrong?

October 1st, 2011 at 10:12 am by David Farrar

I’m puzzled. Go read this story at the NZ Herald, and then can someone explain to me what exactly the SFO is meant to have done wrong.

The Hubbard charges

June 21st, 2011 at 9:00 am by David Farrar

Stuff reports:

Allan Hubbard’s supporters have vowed to fight on for the 83-year-old financier facing 50 charges of fraud.

Yesterday the Serious Fraud Office laid the charges against Hubbard after a year-long investigation into his investment company, Aorangi Securities.

Aorangi has about 400 investors in the South Island who are owed $96 million and Hubbard has pledged up to $60 million of his own assets to help pay them back.

The charges come exactly a year after Hubbard and his wife Margaret, known as Jean, and their investment company Aorangi Securities and seven charitable trusts were placed in statutory management by the Government. Two other companies and two more trusts were added to the statutory management three months later.

The charges were laid under three sections of the Crimes Act which deal with theft by a person in a special relationship, false accounting and false statements by a promoter.

It’s very sad news. There is little doubt that Allan Hubbard is a compassionate, caring and modest man who has done a lot of good for many people.

But as I said to someone the other day, good people can do bad things. It doesn’t make them a bad person, just flawed (as we all are to varying degrees). The Serious Fraud Office has obviously concluded that Allan Hubbard broke the law, and that the offences were serious enough to warrant charges. The fact Hubbard is a nice well intentioned man is a factor in sentencing (if found guilty) rather than guilt.


October 20th, 2010 at 2:12 pm by David Farrar

The NBR reports:

The Serious Fraud Office served the notice on NBR yesterday, demanding documents and audio tapes relating to the paper’s investigation of South Canterbury Finance’s dealings over Auckland’s Hyatt Regency Hotel. The deadline for delivery was 9am today.

The Serious Fraud Act Section 5 notice requires NBR editor-in-chief Nevil Gibson to hand over all written and audio notes relating to Mr Nippert’s investigation of the Hyatt Regency, specifically the NBR exclusive story of how one-time meatworker Peter Symes came to own the hotel.

The NBR story by Nippert may be what led the SFO to focus on SCF. It was an excellent story about how the Hyatt in Auckland was officially owned by a retried freezing worker.

The SFO has incredible powers to demand documents. They were given them to use against the bad guys doing the fraud, not against the good guys who helped expose the alleged fraud.

A polite request to NBR for information would be more productive than a section 5 notice.

So far NBR has decided to risk adverse legal consequences:

The National Business Review is in a standoff with the Serious Fraud Office after the SFO this morning refused an invitation by NBR publisher Barry Colman to attend a meeting with the paper.

The SFO instead warned that NBR had been in breach of its statutory obligations under the Serious Fraud Office Act since 9 am today.

The SFO has demanded editorial files relating to NBR’s investigation into the collapse of the South Canterbury Finance group of companies and yesterday threatened its journalists with jail and fines for non-coperation.

The NBR called for the meeting to seek reassurances that its co-operation with the SFO would not lead to further fishing trips for information that could compromise the paper’s confidential sources.

It does look like the info demanded will eventually be provided:

The SFO’s request related to already published material that the paper has no objection to supplying as no confidential sources were violated.

But NBR is seeking an assurance from the Serious Fraud Office that it will not invoke its draconian powers of document seizure in return for NBR’s co-operation into the SFO’s investigations in the South Canterbury Finance collapse.

Mr Colman said today the initial information sought by the SFO had already been published and its release would not violate the confidentiality of any NBR sources.

So NBR are saying yeah we can give you that info but we don’t want to be seen to assenting to further info which will compromise sources.

Mr Colman said today the SFO’s blatant intimidation was appalling and counterproductive.

“We are not the enemies of the SFO. We want the bad guys investigated as well,” he said.

“However, no news service is going to be able to get crucial information from its sources or whistleblowers if they face public exposure. We have taken legal advice and been told the act is so draconian that it is impossible for us to refuse to co-operate without risking serious penalty.

“We have decided to hand over the material they are asking for today because it doesn’t compromise any of the sources of Matt Nippert, the reporter who carried out the investigation.

Good on NBR for not rolling over without protest. If Barry does end up in jail, I’ll smuggle in an iPad to him!

SFO announces SCF now under investigation

October 19th, 2010 at 9:55 am by David Farrar

This will upset the cultists. The SFO has announced:

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.

Also of interest:

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.

Until their investigations are complete, it is hard to comment in great detail. But

Cult calls for official corruption

October 4th, 2010 at 3:00 pm by David Farrar

A small fanatical cult in Timaru has called for their religious leader to be exempt from the laws of New Zealand, reports TVNZ:

They said in a statement today, issued under the name of Paul Carruthers, that the petition also sought the immediate removal of the Hubbard’s from statutory management, and for the removal of the investigations that are being carried out by the Serious Fraud Office.

That is a call for official corruption. No Government should interfere with an SFO investigation. The cult members obviously have lost grasp on reality, and do not understand little things such as separation of powers.

What is interesting is that the cult are being actively supported by Labour. Do they support the call for the Serious Fraud Office to be told that certain people in New Zealand are too highly regarded to be investigated?

The Allan Hubbard supporters

August 27th, 2010 at 9:23 am by David Farrar

I have previously blogged my hope that Allan Hubbard will be found to have done nothing wrong. From all accounts he is a wonderful New Zealander, who has done much good and has the best of intentions.

However that does not mean that he, or his companies, are exempt from the law. And indeed there are some problems to be accounted for, as reported by the Herald:

About 300 investors in Hubbard Management Funds (HMF) have been told by statutory managers that the reported value of their investments at March 31 was overstated by at least 25 percent.

In their second report, statutory managers Richard Simpson and Trevor Thornton of Grant Thornton New Zealand also warned today that investors in another company operated by Timaru businessman Allan Hubbard, Aorangi Securities Ltd, may suffer a loss in their investments.

This indicates to me the legal process should continue until there is a clear resolution. But one group of his supporters has been getting very excited.  There is a bit of a split in his supporters. Some want to engage a professional public law firm to engage on their behalf (which seems sensible), while another group wants to run full-page newspaper adverts. And what do they want the ads to say:

The idea that has been put forth is to run half or full page newspaper advertisement’s in the NZ Herald, the Dominon Post, The Christchurch Press, and the Otago Daily Times, in the form of an open letter to the Prime Minister, demanding the cessation of statutory management and the removal of the SFO from this situation.

This is probably the most appalling idea I have ever seen. A group of citizens saying we want the Prime Minister to interfere in a criminal investigation and to try and call the SFO off. This is in fact a call for corruption – what else can you call it – to have political pressure decide who does or does not get investigated by the SFO,.

The group seems to have had some negative feedback to their plans, and are now talking slightly different ads. But it is clear to me their blind loyalty to Allan Hubbard has suspended their facility for clear thought and reason.

As I said, I hope Allan Hubbard is found to have done nothing wrong, but they are decisions for independent authorities, and not something that should be decided by newspaper advertisements.

Editorial 28 June 2010

June 28th, 2010 at 2:46 pm by David Farrar

The Herald talks whaling:

The collapse of international whaling negotiations at Morocco is a chilling moment for the future of controlled whaling, let alone the prospect of a complete ban. The collapse is no less disturbing for the fact that it has always been as likely as not.

The International Whaling Commission proposal to the three nations that permit commercial whaling, Japan, Norway and Iceland, never satisfied either side. …

With all hope of a compromise now gone, the New Zealand Government will probably join Australia in its case against Japan at the International Court of Justice.

It is not a course that promises effective policing of the Southern Ocean even if the court can be persuaded the Antarctic is a whale sanctuary in international law. Even if a favourable ruling can be obtained, the case is likely to take years and leave the ocean open to unrestricted whaling in the interim.

Not even Greenpeace and other environmental lobbies at Agidir favoured court action over a negotiated compromise. Mr McCully went out of his way to praise their helpful approach to the negotiations, an approach that helps keep non-whaling governments and most of the public firmly behind the effort to end all whaling.

I suspect we will join the court case now.

The Dom Post looks at Allan Hubbard and the SFO:

The good people of Timaru seem stunned by news that highly regarded local businessman Allan Hubbard, and wife Jean, might have fallen foul of the law. Last Sunday, Commerce Minister Simon Power took the rare step of putting the couple themselves, Aorangi Securities and seven charitable trusts into what is known as statutory management. He said the objective was to “prevent fraud and reckless company management [and] to protect investors …”

The city’s newspaper, the Timaru Herald, said in an editorial last Monday that the Hubbards’ sin, in official eyes, seemed to be the unconventional way they did business. It went on: “If the allegations are unfounded, the officials involved will have humiliated one of the country’s most successful and generous businessmen for nothing. They will also have wasted a good deal of taxpayers’ money at a time when there is no shortage of directors of failed companies to chase.”

It is that latter point that so upsets Mr Hubbard’s supporters.

All those who broke the law should face consequences for that.

Little wonder that Mr Power, aside from rejigging the justice system, is upending securities law, too. He plans to have a new and independent Financial Markets Authority, consolidating the powers and functions of the Securities Commission, some of those of the Registrar of Companies and Government Actuary, and some of the NZX’s regulatory role, operating early next year.

He has also completely restructured the financial advisory industry, and now wants submissions on how to replace the Securities Act and Securities Markets Act, in a bid to strengthen the financial markets, and restore investor confidence. “The Government cannot and will not legislate for risk,” he said this week, “but we can build a regime that makes those risks more transparent.”

A unified regulator makes sense.

The Press farewells Kevin Rudd:

Even by Australia’s brutal political standards, the dumping of Kevin Rudd was spectacular. Sudden, decisive and risky, it cast out the man who had brought his party into power and governed until recently with substantial voter support.

That Rudd at the beginning of the week seemed secure in his job but by the end of the week had so little party support that he could not contest the challenge is testament to a ruthlessness in Labor. The party has shown not a shred of loyalty to the man who won it a landslide election after years in the wilderness, who had done little wrong in government, and who had shaky polls but no worse than John Howard at the same part of the election cycle.

Loyalty is two ways. If you run Government through a inner circle of just four people, you alienate your colleagues.

The ODT focuses on debt:

The economy, it is fair to say, is very gradually improving after the short-lived recession, although the position so far as internal and external debt is concerned remains grave.

New Zealand, fortunately, is nowhere near in as bad a way as Britain, whose economy is practically in ruins, and where after last week’s budget, every household will be worse off as the new government tries to rebuild.

A vast range of cuts has been imposed to try to reduce government spending and pay off the colossal debt load.

New Zealand has dealt with similar problems in budgets of the past two years, but beyond the immediate future the economy faces what may turn out to be a difficulty of very serious proportions: a lack of capital. …

The kind of public service job creation the Clark government indulged in has also proved to be a serious drag on the economy: since 2004 more than half of all new jobs were in public administration, health, and education.

Over the same period 40,000 jobs disappeared from agriculture, horticulture, forestry, manufacturing, and transport – what some have described as the “earning side ” of the economy, the tradeable sector.

The tradeable sector went into recession in 2005 and only came out of it in 2009.

Treasury forecasts show steady economic growth of about 3% a year and that is an extremely modest number.

Clearly, though, there will be no new “value-added” jobs unless and until the confidence of businesses to invest and to employ is restored and investors are willing to risk their money.

Our collective failure to do that will inevitably mean all taxpayers will face what the British and other European disaster economies are now confronting.

We need investment and business confidence.

Editorials 5 April 2010

April 5th, 2010 at 3:00 pm by David Farrar

The Herald focuses on the SFO:

Helen Clark’s Government threatened to abolish the SFO and merge its functions with a police unit.

Having survived that, the SFO is now facing a renewed barrage of criticism and an overhaul that seems likely to comprehensively change its mode of operation.

Judith Collins, the Minister Responsible for the SFO, has talked of rebuilding “its capabilities after years of political neglect”. …

The upshot appears to be that five senior staff with more than 70 years of fraud investigation experience among them, including Gib Beattie, the present assistant director, are unlikely to reapply for new roles.

All have been involved in high-profile cases, including, most recently, that of ASB Bank fraudster Stephen Versalko. If they depart, the SFO will lose a huge fund of institutional knowledge.

It will surely face a greater struggle to combine with other regulators to ensure the “speedier, united response to cases of suspected fraud” demanded by Ms Collins.

Too much of the criticism of the SFO has been over the top. It should not be the whipping boy for the finance-company debacle and nor should it be restructured in such a way that valuable experience is driven away.

If a wiser approach is not adopted, white-collar criminals will be the only winners.

In the end, the SFO will be judged on its results.

The Press calls for goodwill on the foreshore & seabed issue:

In recent New Zealand political and social history, few issues have been as divisive as the foreshore and seabed. This controversial debate was triggered by the Court of Appeal ruling in the 2003 Ngati Apa legal action, which suggested that in some narrow cases iwi might be able to convert customary title into freehold title.

For the then-Labour Government, this raised the spectre that Maori could end up controlling sections of the coastline and limiting public access. Labour over-reacted by passing legislation that placed the foreshore and seabed in Crown ownership, albeit with a process for recognising customary rights, and this triggered the formation of the Maori Party.

Now, National has offered an olive branch to iwi and the Maori Party. It is, inevitably, a compromise solution but, with goodwill on all sides, it does have the potential to heal the lingering sore that has been the foreshore and seabed issue.

People should not be surprised that most Iwi will say they want more, than what is in the proposed solution. To some degrees, this is like any other commercial negotiation. You never have one party say “Oh well actually I think we have enough money/resource, so we won’t try and get any more”. Of course you do.

But this tension is not the only reason why the Maori Party has been circumspect in its reaction to National’s foreshore and seabed proposal. Maori leaders will want to be seen as pushing for the maximum concessions possible.

The party will be acutely conscious that within its ranks are those who would agree with its MP Hone Harawira’s view that Maori should have full ownership, rather than just customary title.

And that is a view some may have. But that is not what the Court of Appeal ruled. In fact, it is a million miles from what the Court of Appeal said.

But this would be totally unacceptable to National, and Prime Minister John Key has delivered a blunt warning that if he cannot forge a consensus around his party’s proposal, then the status quo will prevail.

Given that the Maori Party was originally formed to get rid of the hated foreshore and seabed legislation, the chance to achieve this and to get customary title through the courts is one which, while not ideal for all iwi, should still be firmly grasped.

And so far, there does seem to be goodwill.

The Dominion Post looks at Labour’s plans for Wellington City Council:

The Labour Party has announced it will relaunch itself into local body politics, and put up a slate of council candidates as well as, perhaps, someone for mayor.

So Labour want to take over the Council. I’m tempted to joke that at least it makes it easy to know who not to vote for, but in fact I don’t vote purely on ideological lines for local bodies. I regard (for example) that Ray Ahipene-Mercer does a good job as a Councillor, and he is left of centre. Celia Stephanie Cook also does a reasonable job, and she is Green.

Does Wellington want local body politics to return to tribal affiliations? Would that be good for the city?

The answer is “maybe”. Having a stance thrashed out at caucus meetings – which MPs hold regularly – before council meetings might mean that the fractious debate that so marks Wellington City Council disappears. Arguments would happen within the caucus instead.

That might improve the council’s public reputation.

On the other hand, councillors who represent a political party would be subject to the party whip – that is, be forced to toe the party line – or risk being dropped from the party ticket at the next election.

The same might be true, of course, of those who rely on Sir Robert’s patronage when or if they stand in October.

Party politics have their place. That might be around a council table. But cleaving to rigid ideologies is no substitute for considered thought, which is what ratepayers vote councillors into office to provide – especially when Wellington’s future is at stake in a post-Auckland super-city environment.

The over-riding concern of any councillor must surely be what is best for the city they have the honour to represent.

That is not possible for Labour Councillors. I agree a ticket can sometimes be of value, to get a coherent agenda through. But tickets are best as groupings of like minded people, but not as a party that bans Councillors from voting against the majority.

Labour has specific rules on local body elections.

  • Rule 87 bans party members from standing as Independents if Labour contests the election
  • Rule 91 requires candidates to sign a pledge that they will vote in line with the Caucus for that local body

So be aware, if you vote for a Labour candidate, you are voting for candidates who are forbidden freedom of opinion on any issue that comes before Council.

The ODT focuses on land in Africa and New Zealand:

During the past two or three years, as many as 20 million hectares of African land, an area equivalent to all the arable farming land in France and worth about $US20 billion-$US30 billion, have been acquired by countries such as Saudi Arabia, Kuwait and China.

These vast tracts have been either bought or leased to grow staple crops, or biofuels, which are then repatriated, says a 2009 Economist magazine article. …

It is partly against this background that attempts to buy up large parcels of New Zealand land should be considered.

The latest such move came to light on Wednesday when it was reported that a company, Southern Pastures, registered in Auckland, is seeking $500 million from local and offshore investors either to buy outright or controlling shares in farming concerns thoughout the southern hemisphere, but with a bias towards New Zealand. …

Leadership is required, and care needed, to devise policy on how New Zealand will play its part in the food supply chain over the next several decades.

On the one hand, the country requires inward investment to develop further aspects of food production infrastructure; on the other, once the land is gone, it is gone forever.

Measurable gains from such sales will need to be demonstrably substantial and long-lasting before they can be permitted.

If we ban Chinese firms from investing in NZ farms, then we can’t complain if China bans Fonterra from investing in Chinese dairy operations.

Swann gets nine and a half years

March 12th, 2009 at 9:12 am by David Farrar

I was very pleased to see Michael Swann get nine and a half years jail for his unprecedented fraud of $17m from taxpayers through the Otago District Health Board.

Despite what he says, he has shown no remorse. His pitiful attempts at a defence, that his company did deliver the services contracted showed that. At least Kerry Harford admitted guilt and remorse early on and his sentence of four years three months is about right also.

Look at Harford arguing to the end that what he did nas not so bad:

Mr Haig took issue with the victim impact statement which said the defrauded money could have been used for surgery or more nurses.

“My instructions are that is completely wrong. The money that was taken was health administration money.”

While there was no denying much of the money had been spent on property – “not spectacularly luxurious property I might add” – boats and cars, there was “no real champagne lifestyle”.

I hope the Parole Board don’t let him out halfway through. I don’t detect one hint of remorse.

The ODT editorial says:

First, the crimes of Swann, especially, were those of cunning calculation, carried out from a position of absolute trust and significant authority, involving a sum of money unimaginable to most people. …

Second, Swann and Harford robbed a public institution, not some private enterprise, and thus stole from all taxpayers, rich and poor.

Third, the institution was a hospital board, that is to say, an entity dedicated to the sick and injured, where no “profit” is expected and where every cent of income is desperately important – literally life-saving.

In the annals of so-called “white collar” crime in this country there has been no more despicable example.

One aspect of the editorial scares me:

As to the difficulty of establishing its criminality, it is notable that when first presented with suspicion of what seemed initially to be highly complex circumstantial evidence, the Dunedin police declined to investigate.

The Serious Fraud Office, with its special skills and powers, was finally the agency to put Swann and Harford behind bars.

The Police would not investigate????

And Labour tried to abolish the SFO and transfer its functions back to the Police! Thank God for a change of Government.

Why no decisions by Police on electoral breaches?

December 24th, 2008 at 9:25 am by David Farrar

The Herald reports today that the Police have rejected the NZ First complaint against the Director of the Serious Fraud Office. They were very upset that he told the truth to the Privileges Committee about the funding of the $40,000 Peters paid Clarkson. It showed that both Peters and Henry had given false evidence to the Privileges Committee, so no wonder they were upset.

But this got me thinking about the Police, and the election. The Electoral Commission has referred multiple alleged offences to the Police this year, and with one exception (the false donation returns from NZ First) it has not announced an outcome for any of them.

The earliest referral was on 27 June in relation to unauthorised banners in Tauranga. This was as simple a case as you can get. How is it the Police have not been able to reach a conclusion in six months?

There was also the Progressive adverts referred on 1 August, the EMA adverts on 26 August, the late Social Credit donations return on 4 Sep 2008, and a further Progressive ad on 18 Sep 2008.

It is difficult to not conclude that the Police just have no interest in enforcing electoral law (as they showed in 2005), when they can’t even make a decision within six months on an unauthorised billboard.

The SFO outcome

October 11th, 2008 at 10:34 am by David Farrar

I am totally unsurprised by the outcome of the Serious Fraud Office inquiries into the Spencer Trust. And the outcome is in no way a clearance or an exoneration. What it says is laws have been broken, but not fraud laws.

NZ First’s failure to obey the electoral laws of New Zealand is what made the investigation occur. Because the public facts were that Bob Jones had stated he had made a $25,000 donation intended for NZ First, through the Spencer Trust, and the NZ First Party had filed a donations return saying it had not received any donations in 2005 of over $10,000. To quote the SFO:

There were two competing explanations for how this could be.

  1. The Spencer Trust never passed the money onto NZ First, which would be possibly fraudalant
  2. The Spencer Trust did pass the money onto NZ First, and NZ First filed a false electoral donations return

No 2 was always far more likely. And thanks to the SFO investigation we now know this is true. In fact we know that NZ First has filed a series of false returns, as has Winston Peters personally, and Peters has lied on multiple occassions about these returns, including giving false information to the Privileges Committee.

This is no case of an accidential omission on a return, due to Mrs Muggins the branch secretary. This was a strategy signed off by the Leader. Let us look at the multiple false returns and statements:

  1. A false donations return for 2005
  2. A false election expenses return for 2005
  3. A false donations return for 2007
  4. A false return on the Register of Pecuniary Interests for 2006 (Payment of debt to Bob Clarkson for Peters)
  5. A false return on the Register of Pecuniary Interest for 2006 (Payment of debt to David Carter for Peters)

Now these are not just mistakes or errors. Only because of the SFO investigation has this come to light. And it gets even worse. Most semi-honest people would, once they had been caught out, would at least reveal all. But no Peters does not.

He was instructed by the House of Representatives to file amended pecuniary interest returns for 2005, 2006 and 2007. And all he did was amend them to include the two donations that had already been publicly forced out (Owen Glenn and Spencer Trust for Clarkson) but he didn’t declare the $13,640.37 the Spencer Trust paid on his benhalf to David Carter in 2006. These are the actions (assuming Weekend Herald is correct) of a pathological liar, not a cleared man.

And on that issue, it sounds like Eye to Eye at 11.30 am on Sunday will be interesting watching as Matthew Hooton is on the panel with Peters as the guest. Quoting Roar Prawn:

TVNZ sources say that Willie Jackson’s Eye to Eye tomorrow will be one of the most fiery TV debating shows ever seen in New Zealand.

Winston fronted up to the Green Room, last night to tape the show that airs on 11.30 on Sunday on TVNZ, thinking he would be up for a cosy chat with his mates Barry Soper and Chris Trotter.

He was high on hearing that the SFO had dropped criminal charges, but he was less than impressed when he realised that Jackson had decided to replace Trotter with Matthew Hooton.

Hooton won’t talk about the encounter but BustedBlonde’s media sources say that Winston tried to bluff his way out of appearing with Hooton, . saying there was no way he was going to be with someone who called him a liar.

Before they even got on air, we understand Hooton then called him a liar, a crook and a lying c***t straight to his face.

Anyway, things didn’t get much better on air, and the air was so blue Jackson had to stop the pair at one stage and re- record the show.

Our sources say that Winston always wins these debates on points but Hooton had him on the ropes more than once refusing to kowtow to the liar (our words)

Our sources say it was one of the most brutal encounters they had ever witnessed on NZ television.

That is very typical of the mischievous Willie Jackson – invite Peters on and then have Hooton on also. Can’t wait to see it.

QC backs SFO Director against attacks

September 25th, 2008 at 10:00 am by David Farrar

QC Jim Farmer has criticised Helen Clark and Michael Cullen for their attacks on the Director of the Serious Fraud Office. Farmer is a past president of the Bar Association.

Jim Farmer said criticism of Mr Liddell’s judgment by Prime Minister Helen Clark and her deputy, Michael Cullen, was wrong and unwarranted.

Mr Liddell’s evidence was uncovered in the SFO investigation and showed that Mr Peters had a $40,000 debt paid for him by the Spencer Trust, contradicting his version that he paid it himself.

Dr Farmer said Mr Liddell had a simple choice: whether it was responsible to “sit on” relevant information, or to hand it over.

And Labour wanted the information supressed, because it reveals that Peters broke the Cabinet Manual and Register of Interests even more blatantly than in the Owen Glenn case.

“He has obviously taken a responsible decision. It is very defensible on its merits and it doesn’t warrant attack from politicians, particularly personal attacks in the form of saying he has poor judgment.”

Dr Farmer may not understand that for Clark and Cullen, a public servant exercises poor judgement if they do not act in the best interests of the Labour Party, as opposed to acting in the public interest. You see they have convinced themselves that nothing is more important for the public good than them remaining in power, so anything that may damage that is automatically poor judgement by the public servant involved.

Dr Farmer said there was no formal requirement for Mr Liddell to consult Crown Law and he had “no idea” why Helen Clark and Dr Cullen were suggesting this.

“In carrying out the investigative duties, the SFO and the director are intended to be independent and operate without influence from anyone,” he said.

“Running off to Crown Law or the Solicitor-General to get advice – or approval, if that’s what Dr Cullen is suggesting – doesn’t seem to be obvious or even right.”

Indeed. And in fact a growing number of Government Departments no longer even use Crown Law for their legal advice or representation in court.

PM has not read report!

September 23rd, 2008 at 2:36 pm by David Farrar

This is amazing. Rodney Hide has just questioned Helen Clark on whether she is happy with the $40,000 donation to Peters from a donor through the Spencer Trust. Peters tried to block it half a dozen times but he finally got to ask it.

Clark’s response was she has not seen the wiring diagram from the SFO that was in the Privileges Committee report.

So the PM has not even bothered to read the report. This takes her hear no evil, see no evil to new levels. That $40,000 strikes cast grave doubt on the integrity of decision making around the racing portfolio and the PM declares she hasn’t even looked at the evidence.

I mean seriously just when you think the standards can not drop any lower, they do.

So Helen Clark has cleared Winston Peters from any wrong doing, and she did it without even needing to read the report of the Privileges Committee. She will presumably be voting against the report – also without reading it.

Cullen on SFO and Peters

September 23rd, 2008 at 1:03 pm by David Farrar

Two fascinating comments from Cullen, according to NZPA:

Attorney-General Michael Cullen says the Serious Fraud Office’s judgment over releasing information to a parliamentary inquiry is questionable.

Not really, but Michael isn’t a lawyer so doesn’t understand the concept of law over politics.

But let us think more about this. The SFO has revealed the then Foreign Affairs Minister lied to the Privileges Committee. Also that he had an undisclosed $40,000 donation. And is our Chief Law Officer concerned about the content? No – not at all. He is just concerned that the SFO revealed the truth.

He also raised concerns over the SFO decision to investigate New Zealand First donations at a time when its future was being decided by politicians.

And here we have partisan hypocrisy. The SFO invstigated the National Party just prior to the 2002 election. Was he concerned about that? of course not.

Cullen also says:

This morning Deputy Prime Minister Michael Cullen said Mr Peters would not be reinstated to his ministerial portfolios before the election which is to be held on November 8.

Now this is significant. The suspension from portfolios was due to the SFO inquiry only. Cullen is now sayign even if the SFO clears him, they will not reinstate his protfolios – yet they will keep him on as a Minister without portfolio and all his baubles.

Isn’t that ridicolous?

Why the PM is furious at the SFO

September 23rd, 2008 at 8:57 am by David Farrar

Having now seen the evidence from the SFO, it is no surprise that the Prime Minister is furious that they told the truth to the Privileges Committee. Clark is still questioning the judgement of the SFO Director, and complaining he did not consult Crown Law.

Apart from the fact there is no requirement he do so, I say thank God he didn’t. Crown Law would have informed the Attorney-General who was moonlighting as Co Chief Defence Counsel for Winston Peters at the Privileges Committee.

Look at who the Director did consult:

  1. The Clerk of the House of Representatives
  2. The Auditor-General (who is empowered to investigate matters relating to the Register of Interests)
  3. A QC

There really is no question that the Director acted properly. Those suggesting he did not, are trying to divert attention from the devastating evidence he provided. You see we learnt that the Spencer Trust did not just deliver money to NZ First, but to Winston Peters personally by paying off a $40,000 debt of his.

ACT tried to get the Privileges Committee to further investigate the Spencer Trust after the SFO investigation. And they are right that the issue of secret donations through the Spencer Trust to pay off a $40,000 debt of Peters is of massive concern.

The reason the PM is so furious is because the SFO evidence directly calls into question the integrity of decision making in her Government.

It is hard to not conclude that the ultimate donor of the $40,000 was the Vela Family. The descriptions in the SFO report strongly suggest that. And the Vela Family make much of their money from horse racing.

Now I am not suggesting the Velas had bad motives with their donations. I support their right to donate to parties they support. But there is a massive difference between a donation to a party and a donation or gift to an MP personally. The former is absolutely common. The latter is unheard of in NZ at the level of $40,000.

Winston Peters got the Government to give a lot of money to the racing industry. He had to persaude Clark and Cullen to ignore Treasury advice and go along with his plans for the Giovernment to provide prize money for some horse races.

Now if he was the personal beneficiary of a $40,000 donation (through paying his debt) from racing industry figures, then that absolutely 100% had to be disclosed. In fact the Prime Minister has to approve retention of any gift over $500 this is such a serious issue for Ministers.

Consider how scandalous this would be in a different portfolio.  Let us say Winston was Minister of Health and he persuaded Cabinet to fund a new drug against the advice of Pharmac. And then it turned out the drug company that manufactures that drug had given him $40,000. You start to get the idea of how serious it is.

The PM needs to urgently find out whether that $40,000 was in fact donated by the Velas. The secrecy of donations through trusts (a practice I sumitted to Parliament should end incidentially) has only ever applied for donations to political parties. There can be no secrecy for donations to Ministers of the Crown.

A legal analysis of the NZF complaint

September 22nd, 2008 at 2:59 pm by David Farrar

As people will have read, NZ First is outraged that the SFO has revealed to the Privileges Committee that the evidence given by Peters and Henry is false. I mean shame on the SFO – how dare they reveal the truth. What sort of law enforcement body do they think they are.

So NZ First have complained to the Police about the SFO. Now this is of course a media stunt -designed to maybe convince the most stupid 5% of the electorate. For the benefit of the other 95%, I’ll link to Dean Knight – a public law specialist at Victoria University.

Dean makes four points:

  1. s39 of the Serious Fraud Act does not apply as the information given to the SFO was not protected under some other Act (which is linked to the SFO’s coercive power to require information protected under other legislation)
  2. s36 might apply as it refers to a wider set of information but 36(2)(e) allows the Director to disclose to “any person who the Director is satisfied has a proper interest in receiving such information” and Dean says a committee of Parliament fits this definition
  3. Regardless the letter to the Privileges Committee is covered by parliamentary privilege under the Bill of Rights 1688
  4. Those complaining about the letter may be in contempt of Parliament as Standing Order 400w includes ” assaulting, threatening or disadvantaging a person on account of evidence given by that person to the House or committee”

So Peters and NZ First may be in contempt of Parliament (again) due to their attacks on the SFO for telling the truth to the Privileges Committee. If Parliament wasn’t about to dissolve, it would be worth an MP writing to the Speaker about!

A Government that thinks they are above the law

September 22nd, 2008 at 1:28 pm by David Farrar

The implicit attacks on the Serioud Fraud Office Director by Clark and Cullen (and Peters) are really final proof that this is a Government that thinks they are above the law. There is a very disturbing pattern of abuse directed towards senior officials who ever draw attention to the fact someone in the Government is breaking the law.

Here’s five examples:

  1. Helen Clark attacked the Police for the investigation of her for forgery in Paintergate
  2. Labour attacked the Chief Electoral Officer for stating the 2005 pledge card was an election advertisement and referring them to the Police
  3. Labour and allies launched a sustained campaign of vilification against the Auditor-General for whistle blowing on their illegal use of taxpayer funded parliamentary budgets
  4. Just last week Jim Anderton attacked the Electoral Commission for referring him to the Police for a possibly illegal election advertisement
  5. The refusal of Clark and Cullen to express confidence in the Director of the Serious Fraud Office while the SFO is investigating one of her Ministers on serious or complex fraud allegations

Now consider this. The evidence the SFO seemingly gave to the Privileges Committee was that one of Helen’s Ministers lied to the media, lied to the public and gave a false statement to the Privileges Committee. This is an incredibly serious thing. The only reason it isn’t perjury is because they never swore their statements under oath.

Labour resent being held to account by the laws of this land. Whenever laws are broken they attack the law enforcement agencies. This goes well beyond a third term born to rule attitude. It is a sense of entitlement and being untouchable that is repugnant.

The NZ First President is reported to have complained to the Police about the SFO. This is a media stunt designed to hide the fact that the evidence the SFO is meant to have revealed is devasasting for Peters and Henry’s credibility. The NZ First President should in fact be thanking the SFO – he was one of those who knew nothing about the Spencer Trust before they shed light on it.

Meurant will talk to SFO

September 22nd, 2008 at 8:28 am by David Farrar

Ross Meurant has said he will be returning to NZ and will speak to the SFO, if they wish to speak to him.

It will be good if he does this promptly, because it is in everyone’s interest to get these matters cleared up as soon as possible.

More changes to Winston’s stories

September 21st, 2008 at 8:10 am by David Farrar

Audrey Young has a very useful blog entry analysing what Winston says now, and what he said before the truth came out.

As readers will know, Winston is outraged because the SFO passed on evidence to the Privleges Committee that proved Peters and Henry lied. In Winston’s world it is outraegous if law enforcement agencies expose his lies.

Audrey notes:

Peters confirmed that the Spencer Trust had reimbursed his lawyer Brian Henry the $40,000 Henry had personally paid for costs awarded against Peters in the Tauranga electoral petition, talking to drive-time host Larry Williams on Friday night:

This is quite crucial because if anyone but Peters paid that $40,000 debt then beyond doubt that had to be declared on the Register of Pecuniary Interests.

”Mr Henry paid the money initially. He was later reimbursed out of the trust account from the Spencer Trust funds. In that sense yes,” Peters said. ”But that was a trust to assist the New Zealand First Party and any actions it might take. What’s wrong with that?”

What is wrong is Winston failed to disclose this. Just as NZ First failed to disclose donations from the Spencer Trust.  This is not a series of one off “mistakes”.

The great service done by the SFO investigation has been to expose the failure of NZ First and Peters personally to disclose funding from the Spencer Trust. And in case anyone really thinks it was all a mistake – consider the fact that these “mistakes” only came to light due to the SFO. Peters did not at any stage move to correct on his own initiative his public statements. He only admits to something once law enforcement agencies pry it out of him.

It means that the information Peters gave in a speech on August 20 to supposedly “clarify” what had been said about the $40,000 at the privileges committee two days earlier was actually not true.

“Mr Henry paid the money [$40,000] to ensure the bill was paid in time – and he was later reimbursed by myself,” Peters told Grey Power in Upper Hutt.

“He checked his records yesterday and found this was indeed the case.”

A clarifying letter was sent to the privileges committee to that effect.

People should be very aware of this point. The lie which has been exposed by the SFO is not about what was said at Privileges Commitee in response to Russel Norman. Most people would accept that you could be mistaken when responding to an unexpected query on the spot.

But what we have here is Peters claiming two days later, in a formal speech, that he had “checked the records” and Peters had reimbursed Henry. And they were so certain of this info, they sent a letter to the Privileges Committee stating this.

Their claim and letter was false. The Prime Minister once again keeps Winston with his baubles of office despite the fact he has been exposed at deliberately deceiving the public and the Privileges Committee. This was no mistake made in the heat of the moment. It was a statement made two days later which they claimed was based on a check of records.

Peters’ admission about the reimbursement also raises questions about whether the $40,000 should have been declared to Parliament in 2007 in the Register of Pecuniary Interests.

There is no question that it should have been.

We now know the Spencer Trust was run by Winstons’ brother, law partner of his brother and a staff member in Winston’s office. And it paid personal bills on behalf of Peters. So Audrey reminds us of this press conference:

Q: Mr Peters are you seriously saying that people are meant to believe that you don’t know what the ST is used for?
A: Yes I do. You know why? Because those are the facts.
Q: We asked your brother yesterday and he wouldn’t answer the question.
A: Well Audrey you should show a bit of knowledge, experience and a bit of commonsense, right? Go and ask him again.
Q: Who should we ask?
A: You’re entitled to ask it all the questions you like.
Q: But you’re not answering them.
A: How can I answer them if I’m not in charge of the trust.
Q: Because you know what that trust is using the money for.
A: Sorry I don’t.
Q: Really?
A: Well I just said no I don’t.

And as you read what are really bare faced lies (unless you think Winston can somehow not know that the Spencer Trust paid a $40,000 debt on his behalf), remember once again that Helen Clark has no problems keeping Peters on.

Audrey also goes back to the original Privileges Committee hearing when Brian Henry lied and insisted he paid for it personally (you would know the difference between paying $40,000 out of your own pocket and temporarily paying $40,000 and getting reimbursed). He obviously did not want to admit the Spencer Trust effectively paid for it, so in response to an incredulous Wayne Mapp:

Mapp: Are you seriously suggesting that you would’ve paid $40,000 in court costs which were against Mr Peters and you advised Mr Peters of that fact, and that Mr Peters would not have understood that that would’ve effectively come out of the $100,000 – well the donations received?

Henry: Mr Mapp, I’m not ‘seriously’ saying it; I am saying it. I’m not suggesting it. I’m telling you exactly what I did…..So don’t slur it – this is what I did. I’d like to finish with Mr Mapp….Mr Mapp I am telling you what I did. So please do not slur it or belittle it by saying ‘Are you seriously suggesting….’ This is actually what I did. You mightn’t like it but that’s what I did.

Such outrage, all faked.

Whale Oil also blogs about further revelations from Spencer Trustee Grant Currie. On radio Currie said that they spent money on behalf of NZ First, after consulting with “someone” who was not a duly elected office holder of NZ First. That someone would be McClay on behalf of Peters I suspect.

You have to wonder if there is a single MP or office holder in NZ First with any spine? The party president didn’t even know of the Spencer Trust. Money meant for NZ First went into the trust, and then spent on behalf of the party bypassing the authority of the NZ First President and Board.

The SFO evidence

September 19th, 2008 at 6:41 am by David Farrar

No wonder Peters and Cullen are both highly upset at the SFO.  The Herald speculates that the SFO may have told the Privileges Committee that the Spencer Trust paid the $40,000 court costs that Peters paid Bob Clarkson.

If this is true, it is devastating for Peters and his Labour defenders.

The $40,000 is crucial because there is no doubt it was a debt owed by Winston Peters personally to Bob Clarkson. There is an arguable case about whether money given to Henry is paying off Winston’s debts as Henry claims he never invoices Peters. But there is no doubt over the $40,000.

After Brian Henry testified that he paid the $40,000 to Clarkson, it then became clear that this meant Peters had broken the Register’s rules by not declaring that Henry had paid $40,000 on his behalf. But suddenly two days later Peters and Henry claimed Peters had repaid Henry so there was breach on that issue.

If the Herald is correct, and the Spencer Trust reimbursed Henry for the $40,000, then what does it mean?

  1. That Peters broke the rules of the Register by not declaring The Spencer Trust in his annual return.
  2. That Peters and Henry both lied when they claimed Peters had paid Brian Henry back
  3. That Winston has such control of the Spencer Trust, that he can get it to pay his personal bills

Now in an attempt to divert attention from the evidence, Peters and Cullen are going on about a letter that may have been sent by an anonymous SFO staff member some months ago to Ron Mark, criticising Mark for supporting the SFO being wound up.

It was wrong for that staff member to write such a letter, and they should be given a kick in the behind. However this is not exactly the crime of the century. Thousands of state employees have written letters to MPs on issues affecting their employer – anyone remember thousands of firefighters collecting petitions for a referendum to stop their restructuring? However one does expect a higher level of standards from SFO staff and the Director should kick butt now he knows of the letter.

But for the Attorney-General to refuse to express confidence in the SFO Director, due to the actions of one staff member, is appalling. Make no mistake Cullen is not concerned by the letter – he is aghast the SFO may have told the truth to the Privileges Committee and damaged the Government. Cullen is reacting as an accessory after the fact, not as the Attorney-General.

If the Herald is correct, and the SFO does have information that the Spencer Trust paid (back) the $40,000 debt to Bob Clarkson, it would have been outraegous for them to sit on that information. They are reported as having asked the Auditor-General and the Clerk of the House whether they should inform the Privileges Committee of evidence that contradicts the public version of events by the Foreign Minister. Both agencies presumably said “Of course you should, it would be wrong to allow the Privileges Committee make a decision on false information”.

Non-disclosure an “administrative error”

September 2nd, 2008 at 8:54 pm by David Farrar

To say NZ First’s latest explanation fails the Tui test, is putting it mildy. Before we totally dismiss it out of hand, let us look at what they say:

The New Zealand First Party has admited they made a mistake by not declaring a donation they recieved from Sir Robert Jones.

The party is putting the non declaration down to an administrative error which happened at a time when they say there was an extensive changeover in administrative staff, who were new to their responsibilities.

They say the $25,000 donation was correctly banked into the New Zealand First account, along with other donations which were unfortunately overlooked when it came to declaring anything over $10,000.

The latest revelation comes after the Serious Fraud Office obtained Spencer Trust records.

The letter from auditor Nick Kosoof says New Zealand First made an administrative error by not declaring the money.

It says the amount was banked into the party’s bank account in September 2005, and unfortunately went overlooked by error, along with other donations.

This fails the credibility test on so many levels, it is not funny.

  1. The TV3 item on the Spencer Trust showed a payment of $50,000 not $25,000 paid to NZ First.
  2. NZ First has never ever declared a single donation from the Spencer Trust, so are we to believe that in three years of existence it has only received and passed onto NZ First a singular donation from Bob Jones?
  3. NZ First claim to have only had a couple of donations over $10,000 in the last decade, so how one could overlook your largest ever donation since 1996 is beyond belief.
  4. Since the Jones donation was exposed a couple of months ago there has been speculation that the NZ First 2005 return may be inaccurate. Why did no one in NZ First check until today?
  5. Why is the auditor, not the accountant, explaining the error? Are they the same person as suggested in the NZPA report?

There is a constant pattern here with NZ First – deny the donation until it is no longer credible to deny it, and then suddenly discover it somewhere. They do not deserve any benefit of the doubt. Thank God the SFO is investigating.

Even though they can not be prosecuted under the Electoral Act for the breach, it doesn’t mean that the SFO shouldn’t disclose how many other donations were illegally not declared to the Electoral Commission.

This also poses a challenge for Helen Clark. She has said she will act if there is evidence of illegal behaviour. We now have an admission from NZ First that it broke the Electoral Act 2003 in April 2006 (and maybe again since then). And filing a false donations return is not a minor or technical breach – it is incredibly serious.

Espiner also on the mark

September 2nd, 2008 at 2:28 pm by David Farrar

Colin Espiner also has some good insights:

I am going to criticise the Prime Minister for something else, however. Her decision yesterday to launch into the Serious Fraud Office and claim the agency tipped off the National Party about its pending inquiry into donations to the New Zealand First Party was extraordinary. I don’t think a prime minister in this country has made such an accusation against a law enforcement agency before. …

It’s difficult to see Clark’s outburst as anything other than a deliberate attempt to undermine the credibility of the agency investigating one of her ministers, whom she clearly wishes to be cleared of wrongdoing as soon as possible. She has gone out on a limb on this one. The attack looks desperate, unwarranted, and unfair.

As Colin says, one can’t even recall Muldoon at his worst attacking law enforcement like Clark has.

Asked whether any of his MPs had met Lord Ashcroft, Key said: “I think so, yes.”

Here’s what Key should have said to Duncan Garner’s first question: “Sure I met Lord Ashcroft. Why wouldn’t I? He’s close to a friend of mine, David Cameron, and I always take the opportunity to meet my counterparts from like-minded parties overseas, as does the Prime Minister.”

It’s this automatic first instinct to avoid an issue that has got National into trouble before. Why wasn’t Key’s meeting with Lord Ashcroft in his diary released to the media? Why not offer journalists the opportunity to talk to the pair? I’m sure he’s an interesting fellow. If the meeting had been released, I could almost guarantee the media would have ignored it.

I agree strongly here. I guess it is easier with hindsight, but the meeting should have been in the diary. It would have prevented any suspicion, by front footing it. Clin provided the perfect response to any questions.

Finally a word on the billboards. So far: Lame. National is missing John Ansell, the man behind the party’s wickedly clever 2005 billboards terribly. Apparently National isn’t Right-wing enough for Ansell these days, and he’s gone off to support ACT – so look out for some clever billboards from them.

Colin must have missed the news that John parted ways with ACT.

There does seem to be a consensus that the first National billboard isn’t particularly good. The most common complaints is it has too many design elements, and is not clearly a National billboard.