Kiwiblog

The Herald says the SFO should remain:

There are good reasons to retain the Serious Fraud Office. One of the most obvious was mentioned last week by the Finance Minister, Michael Cullen, when he noted New Zealand was facing the most complex and challenging economic forces for 20 years. The fall-out from this will demand a dedicated fraud-detection agency.

Several commentators have said that in the midst of finance company collapses in entirely the wrong time to abolish them.

To suggest, however, as Progressives leader Jim Anderton has, that this inquiry was initiated by the SFO to serve its own purposes is ludicrous. Even greater depths of shamefulness were plumbed by the Prime Minister yesterday when she claimed it was “almost certain” the SFO tipped off National about its intention to investigate NZ First. The two extraordinary accusations suggest nothing less than a wilful and self-serving Government campaign to undermine the credibility of one of its own law-enforcement agencies.

And what do you call a Government which campaigns against its own law enforcement agencies?

Harsh times inevitably bring to light practices that tend to remain concealed when things are going well. Already, the SFO is investigating the Blue Chip property companies that went into liquidation this year owing $80 million to 2000 investors, and Bridgecorp, a finance company that owes about $500 million to 18,000 depositors. History suggests other probes will follow. This mocks the Government’s claim that substantial white-collar crime is no longer part of the landscape, and that it is safe to dispense with the agency.

But what about the sucessor?

There is little chance that alleged rorts by finance-company executives would be tackled adequately by the police’s Organised and Financial Crime Agency, which, according to the Government plans, would absorb the SFO. The Police Minister, Annette King, has admitted the agency’s focus would “very much” be gangs, as part of a strategy of getting tough on organised crime. The type of investigation typically undertaken by the SFO would not be a priority, and would also be seen as far more onerous than tackling gang activity. Fraud is the the most difficult of crimes to detect and prove its intent beyond reasonable doubt.

Indeed.

Yesterday saw a remarkable series of allegations from the Prime Minister, which I am going to go through in detail. There are two explanations for them:

1. She is a desperate paranoid leader who really thinks her own law enforcement agencies are colluding with the Opposition.
2. She deliberately accused the SFO of leaking, knowing the “media meerkats” would forget all about asking her questions about how she knew “No” meant “Yes” in reference to Owen Glenn’s donation, and instead focus on the SFO instead.

I suspect No 2, as the media did all fall for it. Very little coverage on the Owen Glenn issue. But whether her allegations are desperate or calculating, they are extraordinary to tolerate from the country’s Prime Minister. It almost brings Nixon to mind, railing against the FBI.

Let’s start with her performance on Breakfast yesterday.

I find the National Party statement and timing interesting. Because I would say it is almost certain they got a tip from the Serious Fraud Office that it was about to move.

So Helen Clark can not work out if Winston is telling the truth, but she is “almost certain” that the SFO tipped off the National Party. Does she has a shred of evidence for her claim? No.

And I challenge them directly to come clean on that, because it is a very serious thing if an agency like the Serious Fraud Office is leaking to the Opposition.

It is a very serious thing. Almost as serious as inventing allegations against the Serious Fraud Office. Note that Clark has gone from inventing the allegation to now demanding that the guilty parties come clean on it.

I’m saying they acted on a tip. There was news around Wellington on Tuesday night last week they were about to move. The next day the National Party moved.

This is a classic 2 + 2 = 7. First of all National moved the day Owen Glenn directly contradicted Winston Peters’ version of events, shattering what remained of his credibility. Helen Clark seems to be the only person left in NZ who believes Peters knew nothing of the donation until July. In fact not even she can beleive it because at a minimum she told Peters about it in February.

And as for the PM’s Sherlock Holmes like conclusion that there was gossip in Wellington, so the SFO must be leaking to National, it is more like Inspector Clouseau.

First of all it had been reported in the media that the SFO had been interviewing key parties. Hence it was not surprising that people would speculate that they may launch a formal investigation at some stage. I’d been hearing such gossip for one to two weeks.

Second, Clark overlooks the obvious. That some of those who were interviewed by the SFO, formed a conclusion that they thought a formal investigation was likely, and were saying so – hence the source of the gossip.

Then the SFO responds:

“We do not believe that there has been any leak from the SFO and have received assurances to that end from all SFO personnel involved with the donations matter, and we do not intend to make further comment.”

So is that the end of the matter?

NZPA:

Miss Clark said she had “no option” but to take the SFO’s word.

Good God. She invents a wild accusation with no proof. The SFO talk to every staff member and respond, and her response is to say she has “no option” but to believe them. That is code for saying she doesn’t beleive them, but can’t prove it. And of course she can’t prove it, as she invented the allegation.

The Press:

Late in the day, Clark widened her claims to include two other agencies.

“I have no doubt whatsoever that word seeped out that the SFO was about to make a move,” she said at her post-Cabinet press conference. “Whether it seeped from there or from others in the loop remains to be seen.”

Asked who else was in the loop, Clark said: “Crown Law and the police”.

Now remember, Clark still has not produced a shred of evidence, apart from the fact there was gossip in Wellington (something that happens every day of the year), yet now she claims Crown Law or the Police may be leaking to National.

She said she was not dealing in rumour.

Not dealing in rumour??? She is creating the rumours!!!

The Herald reports

A Crown Law spokeswoman, who confirmed Mr Collins was involved, said he “absolutely did not leak to the National Party, or anyone else for that matter”.

Next Clark will claim it must have been the Cabinet Office, or DPMC or Heather Simpson or anyone at all she can fit up, because Helen is “almost certain” someone leaked to National.

I am trying to think of a parallel where a Prime Minister has just invented allegations against three senior law enforcement agencies, like Clark has. I honestly don’t think even Muldoon acted in such a way.

Finally we do know there was one definite tip-off:

But Helen Clark was also tipped off on Wednesday by Deputy Prime Minister Michael Cullen – who had learned of the impending investigation in his capacity as Attorney-General.

She said she was told late on Wednesday, after Mr Key held a press conference saying a National government he formed was highly unlikely to work with Mr Peters.

Maybe she will accuse Dr Cullen of tipping off National?

The sad thing is the media all played along with her bizarre claims, and let her off the hook on her knowledge of the Owen Glenn donation.

With absolutely no evidence at all, Helen Clark stated on television this morning that the Serious Fraud Office almost certainly leaked to National that they were about to announce their investigation of Winston Peters.

Ben Thomas at NBR has been in contact with the SFO and their response:

The Serious Fraud Office has denied leaking information about its investigation of Winston Peters to the National Party, contradicting allegations made by Prime Minister Helen Clark.

Acting SFO director Gib Beattie said, through a spokewoman:

“We do not believe that there has been any leak from the SFO and have received assurances to that end from all SFO personnel involved with the donations matter, and we do not intend to make further comment.”

So the Acting Director has checked with every staff member involved. Will Helen Clark accept their word against her invented accusations?

Some people have suggested that Helen Clark is losing it, with his smear this morning against the Serious Fraud Office. Danyl at the Dim-Post though has a more logical explanation:

At first glance the Prime Ministers allegation that the Serious Fraud Office is in league with the National Party – for which she has not a shred of proof – suggests that she has joined her former foreign minister for a stroll in the gloomy sunless woods of paranoid delusion.

I mean it is extraordinary to have the Prime Minister accuse the SFO of actively working against her Government.

I don’t think the PM is losing it – I think she’s partly throwing shit in the hope that some of it sticks but I also think Clark assumes that the SFO staff abuse their authority to empower their friends and destroy their enemies through leaks and political theater because that’s what she would do if she ran the department. The notion that these public servants carry out their investigations with integrity and diligence without turning them into a savage partisan farce is simply unimaginable to her.

I wouldn’t want to argue that Danyl is necessairly wrong!

First we had Winston Peters smearing the SFO, basically saying they are corrupt and would be investigating him because of criticisms he made a decade ago about them.

Then senior Cabinet Minister Jim Anderton on Agenda smeared them, saying he thought they were motivated to investigate Peters to stop the agency being wound up (never mind all the staff have jobs in its sucessor agency).

Now we have Helen Clark herself smearing the SFO, saying:

“I find the National Party’s statement and timing interesting because I would say it’s almost certain they got a tip from the Serious Fraud Office that it was about to move,” Miss Clark said today on TV One’s Breakfast programme.

“I challenge them directly to come clean because I think it’s a very serious thing if an agency like the SFO is leaking to the Opposition.”

This is unbelievable. This is not an Opposition politician accusing the SFO, but the Prime Minister of NZ. She is issuing public challenges through the media, when as PM she can ask the SFO directly if they leaked.
What do you call a Prime Minister and Government which attacks and smears a body investigating a Minister for corruption? Reminds me of Italy I have to say.

John Key ruled Winston Peters out the day Owen Glenn contradicted Peters, saying Peters had solicited the donation. But Helen says it is “almost certain” National has been tipped off about the announcement the next day. Well what proof does the Prime Minister has to be “almost certain” in smearing the SFO?

And here is the irony. When National was investigated by the SFO in 2002, a politician was tipped off by the SFO. Not allegedly, but confirmed by the SFO. That politican was Helen Clark through Mark Prebble.

National was obviously very upset that Helen Clark was told in advance, and attacked the SFO for that. But here is the difference – National did not allege something unproven. They reacted to being told by the SFO that it had informed DPMC of the investigation into National.

If Helen Clark has some proof that the SFO tipped off National that they would announce the formal investigation the next day, she should provide that proof. Otherwise she should stop smearing them.

As I understand it, Helen Clark has suspended Winston Peters only from his portfolios, but not as a Minister. In other words he still gets his normal pay, his housing and transport allowances, his office, his ministerial funding and most importantly of all his staff, except the portfolio specific ones.

This means he gets to run his election campaign with full Ministerial resources, and they don’t even have any Ministerial duties to attend to.

John Key makes clear that his ruling out Winston is not tied to the SFO investigation:

Mr Key said questions still remained around the 2003 parliamentary inquiry into the scampi fisheries quota and whether Mr Peters had misled the public in relation to the Glenn donation.

He also questioned Mr Peters’ assertion today that Sir Robert’s donation had found its way to NZ First. If that was the case then why was it not declared, he said.

Mr Peters’ credibility had been severely dented and he would now find it hard to trust his word.

“We’ve had so many instances now where Winston Peters’ version of events just doesn’t stack up with the version of events presented by others.

“Really the call we made on Wednesday to effectively cut Winston Peters and New Zealand First loose wasn’t a call we made easily or lightly. We did it with the full knowledge it may well cost National an opportunity to be in government,” he said.

“I would find it enormously difficult trusting the word of Winston Peters.”

Key picks up a point I have made previously. The Herald today says:

The statement, several pages long, was generated by the trust and showed incomings and outgoings. It showed money from the Vela brothers and Sir Robert Jones going in, then being paid to New Zealand First.

If this is true, then NZ First have filed false donation returns for years on end.  As Winston Peters was railing against secret trusts, he had one which was funding NZ First. If what Peter WIlliams says is true, then how did the Auditor for NZ First ever sign off the donation returns? Or is there some explanation as to how Bob Jones gave $25,000 to the Spencer Trust, the Spencer Trust gave it to NZ First and NZ First does not declare a donation from the Spencer Trust?

Key again makes his stance clear in another Herald story:

“From our point of view,” he said, “the appointment of a minister to Cabinet has to be done on the basis that as Prime Minister I can look that person in the eye and have confidence that I can rely on their word.

“In the case of Winston Peters, I’m just not confident I can do that.”

Yet Helen is. How can anyone in NZ really think Peters was telling the truth when he said in July 2008 that he only first knew of the Glenn donation that day? I mean Helen Clark told him about it in February 2008, even if he didn’t actually know about it since it was solicited in 2005.

For all of Peters’ complaints about the SFO wanting to get revenge on him, they are doing exactly the same thing as they did in 2002 with regard to National, when there were also allegations about funding through a secret trust.

The SFO announced on 13 May 2002 the investigation:

Mr Bradshaw said he was investigating “a particular allegation relating to an aspect of funding provided to the National Party in the mid-1990s”.

It was not until 10 July 2002, that it cleared National:

Today, SFO director David Bradshaw said in a statement the investigation was complete and “there is no evidence of any criminal wrong-doing”.

Helen Clark called the election on 12 June for 27 July, so the SFO took two months back then to investigate, despite the fact it was in the middle of an election campaign. So any suggestions the SFO will on Monday announce it is all sorted out, seem rather optimistic.

The Herald has a copy in full of the SFO statement. I am interested at the exact wording:

“I have sufficient information that gives me reason to suspect that an investigation may reveal serious and complex fraud.”

Interesting he said serious and complex, not serious or complex.

“I want to emphasise that it is entirely possible that there are innocent and honest explanations. The use of the statutory power to require documents to be provided will enable the SFO to ascertain how funds were applied,” Mr Liddell said.

This is very important. I have never stated thet Peters or his cronies have broken the law. Quite simply not enough information is known to be able to make any such conclusion. But this decision means that the SFO will be able to gather the information they need to decide.

“I have decided on the information currently available that I do not have a basis for using statutory powers to inquire into allegations that Mr Glenn’s donation was misapplied or that there was an attempt corruptly to influence the Primary Production Select Committee that inquired into allegations of corruption in the Ministry of Fisheries in relation to scampi quota in 2003.

This means that the threshold to launch a full investigation is not just allegations, but that they have been substantiated in some way.

It is possible that the investigation I have authorised might be broadened at some later time and these other matters inquired into as a result of whatever information comes to light in the course of the investigation about to commence,” Mr Liddell said.

Might be broadened. A fascinating concept.

In the case of the allegations concerning the scampi select committee, the allegations are serious, but serious of allegation alone is not enough. There needs to be information availabel to support the requisite suspicion, and there is not, at this point.”

It would be tragic if the SFO, while looking through the NZ First bank accounts, for the Vela donations, also found some other donations – ones which had been denied as existing.

On information currently to hand, there are serious questions whether donations intended for one purpose may have been put to a different purpose. The allegations concern important matters relating to the funding of a political party, which go to the heart of the democratic process, and involve a minister in the Government. They also relate to the actions of laywers, who as officers of the court have fundamental obligations to uphold the law.”

Lawyers upholding the law. A wonderful concept.

“This investigation will be accorded priority. It is not possible to say how long it will take. Should the scope of the inquiry be substantially broadened, I will make a public statement. I will make a further public statement at the conclusion of the inquiry.”

We await any further public statements.

The founding director of the SFO, Chas Sturt, has said that the SFO should use its power to compel documents:

The Serious Fraud Office should be using its special powers to investigate the Winston Peters donation controversy, says its founding director, Chas Sturt.

Mr Sturt said the publicly available information about donations intended for Mr Peters’ NZ First party met his “smell test” – making it suspicious enough for the SFO to use the statutory power that can force documents to be produced. Mr Sturt said this would allow SFO investigators to check the “paper trail”.

Now Mr Sturt has some history with Peters, but he is right that independently checking the paper trail is crucial with these issues.

But the SFO has not ruled out using those powers, if it decides to launch a full investigation. It may find there is enough evidence already out there to launch a full investigation, without invoking their powers at this stage.

If however they do decide there is nothing to investigate, then the non-use of their powers to verify information could seem unusual. But from all accounts they are taking their duty very seriously, and have been doing in depth interviews with relevant players.

Very pleasing to read in the Dominion Post that Owen Glenn has said he will co-operate with both the Privileges Committee and any SFO investigation:

Mr Glenn last night revealed that he had already provided written statements to both the SFO and parliamentary privileges committee, which is conducting an inquiry into whether Mr Peters breached Parliament’s rules by failing to disclose the donation.

Mr Glenn would “cooperate with each body, as may be necessary”, a statement from his office said.

Good to see him doing the right thing.

But in a new development on Monday, Mr Henry disclosed that he personally footed the bill for $40,000 in costs awarded against Mr Peters after the electoral petition failed – which might also be considered a gift that should have been disclosed.

In a twist yesterday, however, Mr Peters said Mr Henry had now had a chance to check his records – and discovered that he had since been reimbursed by Mr Peters.

It would be useful for a copy of those records to be given to the Privileges Committee. If it was all reimbursed within the same year, then indeed there may not be a debt paid off on Peters’ behalf. If it was not all reimbursed within the year, then there may be issues.

The Herald on Sunday reports that two investigators from the Serious Fraud Office met Sir Robert Jones during the week, as part of their work in determining whether to launch a full formal investigation.

Oh I do love journalists who do research. Fran O’Sullivan has found these quotes:

Where’s the audit trail? Precisely into which account went this cheque?”

“On whose behalf was the cheque to be held and what happened to this money? Is there any significance that … was in serious financial trouble?”

“Why is the Serious Fraud Office taking so long to find the answers to these questions?”

“I say the whole thing stinks.”

Fran tells us that we might expect these to be quotes from Bob Jones or Rodney Hide asking about the investigation of NZ First finances. But in fact they are quotes from the Rt Hon Winston Peters in 2002 demanding the SFO get to the bottom of National’s funding.

Fran notes:

This is the real reason why Peters should be judged guilty by his political peers of the “H” word – hypocrisy.

By failing to publish a clear audit trail showing just how Sir Robert’s $25,000 donation found its way from the Spencer Trust into NZ First’s coffers, or the way in which the amount was disbursed on NZ First’s behalf, Peters invites a tsunami of disbelief which might easily be turned back by a simple disclosure.

As to whether the SFO will investigate:

The SFO, which is now deciding whether it should formally investigate Hide’s complaint, will tread carefully.

But it must be consistent.

It launched a formal investigation into National Party donations in 2002 after a former official – assured of anonymity – revealed the party still had unanswered questions over discrepancies between the amount its fundraiser had expected from Fay Richwhite interests and what arrived in the party’s accounts in 1996. …

The SFO ultimately cleared the National Party of any wrongdoing.

If Peters, his party and his lawyers have nothing to hide they should demand answers to the questions.

Otherwise they lay themselves open to new claims that “the whole thing stinks”.

The SFO decision will be pivotal.

Stuff has an NZPA story on the abolition of the SFO. Not surprisingly the former Director is very criticial of the move, and disagrees with it.

The worrying aspect for me isn’t that the Government took a different view to officials, but that they went out of their way to shut down dissenting views internally. The part that concerns me most is:

Ministers would not see him and a final Cabinet paper on this issue did not mention any of the SFO’s concerns, despite his requests for them to be included.

It is normal for dissenting opinions to be included in Cabinet papers.

Again I stress there is nothing wrong with Ministers not following the advice of officials. That is why we have Ministers – to decide.

But when Ministers will refuse to meet an agency CEO to discuss something as fundamental as the future of that agency? That is pigheadedness and arrogance.

And when the Cabinet paper doesn’t canvass all the pros and cons of an issues, but pretends there no no dissenting opinions – that is a very bad thing. When the agency being abolished specifically requests its views to be included – and this is denied – that is even worse.

Ministers can and should disagree with officials. But when Ministers tell officials to only include views they want to hear – then you have a significant politicisation of the public service.

The SFO’s record in recent years has not been up to its stellar early years. But I have always been nervous about simply abolishing it, especially as the sucessor agency will not have the same powers as the SFO. NZPA quotes the outgoing SFO Director:

Former Serious Fraud Office director David Bradshaw warned scrapping his agency would terminate high-end white-collar criminal investigations and prosecutions in New Zealand.

And a proposal to ditch special SFO powers would “sound the death knell for fraud investigations in New Zealand”, Mr Bradshaw wrote to Attorney-General Michael Cullen on August 29 last year.

Doesn’t sound good.

On August 29, Mr Bradshaw wrote to Dr Cullen: “The investigation and prosecution of serious and complex white-collar crime is almost certain to become nonexistent if the Serious Fraud Office is subsumed within the Organised Crime Agency.”

Mr Bradshaw said most serious and complex fraud was not organised crime and that a paper prepared by the Ministry of Justice and police for ministers was misleading.

I just hope the Police prove better at serious fraud than they did with electoral fraud.

NZ First has said it has concerns over the plans by the Government to reduce the powers of the SFO’s successor to investigate serious fraud.

The NZ Herald editorial says axing the SFO is a serious mistake.

Obviously not enough people are getting away with crime, so the Government is getting rid of some of the powers of the Serous Fraud Office with its merger into the Organised and Financial Crime Agency, run by the Police.