SFO to investigate South Canterbury Finance transactions

The Serious Fraud Office (SFO) today announced that it had launched an investigation into South Canterbury Finance (SCF).

Tuesday, October 19th 2010, 10:55AM

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."

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.

He said as is appropriate with a small agency, the SFO will coordinate its efforts with the receivers of SCF; the Registrar of Companies; and the Securities Commission.

It will also be engaging private sector insolvency and forensic accounting specialists for external assistance.

He 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."

Feeley said, subject to receiving any new information from the statutory managers, the SFO was in the closing stages of its investigation into Aorangi Securities.

He said the sharp increase in SFO investigations in recent months should be seen as a positive sign of greater law enforcement in the financial markets.

He believes swift and visible investigations are a critical part of maintaining confidence in New Zealand's financial markets.

He says despite the challenges presented by the current volume of cases, the SFO is committed to ensuring that the public can have confidence in the office as the lead law enforcement agency for financial markets fraud.

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