New Zealand Governance Centre Inaugural Conference 15 and 16 August 2008 Dealing with serious fraud Grant Liddell, Director and Chief Executive, Serious Fraud Office 1
220 Theft by person in special relationship (1) This section applies to any person ... in circumstances that the person knows require the person--- ... (b) to deal with the property ... in accordance with the requirements of any other person . (2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property , or any proceeds of the property, otherwise than in accordance with those requirements . ... (4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements. 2
• Review of the Serious Fraud Office Jessica de Grazia, June 2008 • Compared English SFO with 2 New York prosecution agencies - one state, one federal 3 3
Fraud cases Conviction rate Resources ($NZ Staff FY2002/3 - equivalent) - 2006/7 FY2007 SFO (Eng) 166 61% $113m 311 SDNY 810 97% not public 77 (federal) DANY 124* 92%* $108m 19* (state) * = fraud work SFO (NZ) 57 90% $5m 34 4
Disclosure • DANY, SDNY “keys to warehouse” approach - all unused prosecution material disclosed • SFO (Eng) - Criminal Procedure and Investigations Act 1996: – requires “scheduling” of potentially relevant prosecution material – disputed disclosure arbitrated by judge – system discourages early guilty pleas • Allied Deals: – SDNY: 5 staff, 6 weeks – SFO (Eng): 20 staff, 2 years 5 5 • SFO (NZ) - all used and unused relevant material
Key features of agency process • SDNY and DANY – cradle to grave – lawyer-led investigations, multi-disciplinary teams – independent prosecutor • SFO (Eng) – some investigations unfocused, arising from lack of role clarity, skills shortages, insufficiently “pro-active” investigative techniques, lengthy referral and vetting process, heavy reliance on external counsel - briefing and advocacy • SFO (NZ) – cradle to grave (integrated, multi-disciplinary teams) 6 6 – panel counsel
What are the critical success factors? • De Grazia: – Structurally guaranteed prosecutorial independence (UK and NZ traditions support) – Disclosure regime (but SFO conviction rate in late 90s was 80%) – Investigative focus and integration of lawyers in investigations at early stage (but in NZ lawyers don’t examine witnesses) • Question of powers? – SFO (Eng and NZ) - document and examination notices – New York agencies - subpoena, grand jury 7 7
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