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Like clashing CGI dinosaurs in a Peter Jackson movie, the Serious Fraud Office and Winston Peters seem to be creatures from another era, and not entirely real. The credibility problems of the SFO – which hinge on the allegedly politically selective way in which it has chosen to conduct some of its investigations in the past – date back to the Winebox era. Then and since, Peters has been the SFO’s loudest and most consistent critic.
In January this year, a month before before Owen Glenn’s fateful meeting with Helen Clark, Jenni McManus wrote in the Sunday Star-Times about the SFO’s image problems :
Worse still is the perception, popular among investors and business people, that fraud targets are chosen more with an eye to potential political fallout and the career prospects of enforcement agency bosses rather than the magnitude and seriousness of the crime.
Most remember the Winebox Inquiry evidence of a senior SFO staffer who said he’d been told by then SFO director Chas Sturt that “our friends in Wellington” would be displeased if the SFO began investigating the Fay Richwhite-owned BNZ. When it came to his turn to give evidence, Sturt denied the claim. But the dirt stuck…..[ Ultimately] Sturt, quit in a blaze of notoriety after giving evidence at the Winebox inquiry showing he had misled Parliament about the extent of the SFO Winebox “investigation”.
At the heart of the SFO/Peters conflict has been the decision by David Bradshaw, Sturt’s then-successor as SFO boss, not to prosecute over the Magnum transaction in the Winebox. As McManus put it :
Most galling to Winston Peters and other Winebox-watchers was Bradshaw’s failure to prosecute named individuals connected with Magnum, the central Winebox transaction, despite a legal opinion from the Auckland Crown solicitor Simon Moore that there was sufficient and admissible evidence to lay criminal charges.
Not only did Bradshaw refuse to prosecute, but he refused to give reasons. Nor would he release Moore’s legal opinion. When parliament’s law and order select committee demanded the document he simply threatened to quit. Rather than calling his bluff, the select committee backed down.
This is not ancient history. Late last year, the Securities Commission finally announced a $20 million settlement with Fay/Richwhite over allegations of insider trading regarding the Tranzrail sale. This occasioned, as McManus pointed out, further blasts by Peters in Parliament against prior – and in his view, deliberate – inaction by the SFO. Accusations firmly denied by Bradshaw, on behalf of the SFO.
Now of course, Peters faces his own credibility problems. Having insisted in Parliament last February that his party ‘ assiduously’ followed the electoral law, it transpires that New Zealand First did not report the $50,000 in donations funnelled from the Spencer Trust in the wake of the 2005 election, an amount that included the $25,000 donation from Sir Robert Jones – who it seems, with one cheque comprised half of the Spencer Trust’s entire activity that year.
Having railed against the use by other political parties of anonymous trusts, NZF now stands exposed of operating one itself and moreover, of not reporting its relevant donations. Only the expiry of the statute of limitations saves NZF from being prosecuted. No small problem for a party that bases a lot of its electoral appeal on acting honourably, and on a promise to keep the other bastards honest. The court of public opinion, as Helen Clark says, will judge New Zealand First accordingly at the next election.
At the same time, the question needs to be asked – just what offence does the SFO think it is investigating? Fraud is not the issue at the Spencer Trust. If anything, all the SFO has done so far is confirm what Peters and NZF have said all along – that donations made to the party went to the party and were used by the party, with no fraudulent diversion.
So where is the residual SFO interest in this process – and can we assume that if the SFO finds a similar pattern with respect to the Vela family donations, that it will publicly declare that it has found no evidence of fraud, or any other white collar crime ? Probably not, one would suspect. Making public the non-actionable, non-declared donations, one suspects, has become a purpose in itself.
As I said yesterday, SFO really needs to say – sooner rather than later – whether it has reason to believe that a prima facie case exists, and with respect to what offence? As we all know, the statute of limitations ran out long ago on any failure to report political donations – so the SFO can have no role in that respect, if it ever had one. Given the track record of bad blood between the SFO and Peters, the SFO needs to demonstrate that it is not pursuing or extending this investigation of Peters in order to settle old scores – or to reap political favour, by serving as a de facto research arm of Act and the National Party.
There are competing imperatives here, of transparency and due process. Voters do need to be aware of NZF’s hypocrisy over the kind of anonymous political donations that it denied it was receiving – and then ‘forgot’ to declare. One can only imagine what Peters would have made of such a self serving administrative ‘mistake’ if it had been made by one of his political enemies.
At the same time, the SFO has a track record with Peters that cannot help but raise concerns about his chances of fair treatment and due process. Ironically, to get at the Spencer Trust, the SFO has used the very same sweeping powers of seizure and disclosure that have been heavily criticized by corporates and by legal commentators. See the last part of the McManus article cited above, for a sound critique of the draconian sections 5 and 20 of the Serious Fraud Office Act, 1990, by the likes of Auckland University associate law professor Scott Optican.
Until now, these misgivings fostered a business and political climate supportive of the SFO’s abolition. The SFO has now averted this fate, by launching the Peters investigation – thus removing NZF next week from the parliamentary majority for the Bill to abolish the SFO.
If National wins the election, the SFO may well survive. Intentionally or otherwise, it will have done useful service to its new political masters. Even so, it will be interesting to see whether, in the fullness of time, it still gets stripped of the draconian powers of seizure, disclosure and exemption from judicial review that it has started to use against Peters, but which the National Party’s business friends would most certainly oppose being used against them.