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Digest No. 1616

Serious Fraud Office (Abolition and Transitional Provisions) Bill 2008

Date of Introduction: 24 April 2008
Portfolio: Justice
Select Committee: As at 14 May, 1st Reading not held.
Published: 13 May 2008Prepared by John McSoriley BA LL.B, BarristerLegislative AnalystP: (04) 471-9626 (Ext. 9626)F: (04) 471-1250 Caution: This Digest was prepared to assist consideration of the Bill by members of Parliament. It has no official status.Although every effort has been made to ensure accuracy, it should not be taken as a complete or authoritative guide to the Bill. Other sources should be consulted to determine the subsequent official status of the Bill.

Purpose

The aim of this Bill is to:

  • repeal the Serious Fraud Office Act 1990 and to provide for matters consequential on the abolition of the Serious Fraud Office;

  • vest control of the documents of the Serious Fraud Office in the police, while continuing the protection given to those documents under that repealed Act;

  • empower courts, during a transitional period, to order persons to produce documents and supply information that constitutes evidentiary material of offending in the context of serious or complex fraud; and

  • enable the police, during that period, to conduct effective investigations into offending in the context of serious or complex fraud (Part 1 of the Bill, Clause 4, the "purpose clause").

Background

This Bill disestablishes the Serious Fraud Office so that its existing functions and powers " ... can be reformed" into a permanent Serious Fraud Taskforce within the new Organized and Financial Crime Agency of New Zealand [1]   .

Main Provisions

Repeal of Serious Fraud Office Act 1990

The Bill repeals the Serious Fraud Office Act 1990 (Part 1, Subpart 1, Clause 6).

Documents vest in the Police

The Bill provides that on a date to be determined (the clause concerned is to be brought into effect by Order in Council), the possession and control of all documents then held by the Serious Fraud Office will vest in the Commissioner of Police. Protections relating to the secrecy of information that applied to information under the Serious Fraud Office Act will continue to apply (Part 1, Subpart 1, Clause 7).

No technical redundancy

The Bill restricts employees of the Serious Fraud Office from being entitled to redundancy if they are offered equivalent employment within the police, or they are offered and accept other employment within the police. Equivalent employment is defined as being "substantially the same", in the "same general locality", on terms and conditions "no less favourable", and service in the Serious Fraud Office is treated as continuous with the new employment (particularly important for contributors to the Government Superannuation Fund and for the computing leave of various sorts). Certain of the appointment processes in the Police Act 1958 do not apply to the transfer of Serious Fraud Office staff to the police (Part 1, Subpart 1, Clauses 9 - 11).

Comment

These provisions are standard for such restructurings.

Continuance of certain matters

The Bill provides for the continuation of the Serious Fraud Office Act 1990 in respect of specified matters. Any production and examination notices given before the commencement of this Bill may be continued under the Serious Fraud Office Act 1990. Any search warrants applied for can be granted and executed, and any search warrants obtained can be executed under the Serious Fraud Office Act 1990. The indemnity provided by the Serious Fraud Office Act 1990 of Serious Fraud Office members continues (Part 2, Subpart 1, Clause 15).

Orders assisting certain investigations during transitional period

The Bill provides for transitional measures. In particular it sets an expiry for Subpart 2 of the Bill. This date is 31 July 2011, or earlier as set out by Order in Council. These provisions will cease to apply once the search and surveillance reforms are implemented. Any matters pending at the expiry date will be determined as if the relevant provisions in the Serious Fraud Office Act 1990 had not expired. The Bill also sets out the matters to be considered in determining whether something is serious or complex fraud under the subpart. These are the suspected nature and consequences of the fraud, the suspected scale of the fraud, and the legal, factual, and evidential complexity of the matter (Part 2, Subpart 2, Clauses 16 and 17 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Production orders

The Bill makes provision for production orders. A production order must require the person against whom it is made to give the Commissioner, or a person identified in the order, any documents described in that order. The Commissioner of Police or the Commissioner's delegate may apply to a High Court Judge or a District Court Judge for such an order. The Bill sets out the conditions for making a production order. These are that there are reasonable grounds to suspect that:

  • an offence punishable by imprisonment has been committed; and

  • the offence arises in the context of serious or complex fraud.

In addition, there have to be reasonable grounds to believe that the documents sought:

  • constitute evidentiary material in respect of the offence; and

  • are in the possession or under the control of the person against whom the order is sought.

A production order is in force for the time specified in the order, which must not exceed 30 days. The penalties for non-compliance with a production order are imprisonment not exceeding twelve months or a fine not exceeding $15,000, or both, for an individual; and a fine not exceeding $40,000 for a body corporate. (Part 2, Subpart 2, Clauses 18-23 and 34 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Examination orders

The Bill makes provision for examination orders. An examination order requires a person to attend a meeting and answer questions. The order must specify the name of the person required to comply with the order, the grounds on which the order is made, the nature of the questions to be asked, who will conduct the examination (if it is to be conducted by a delegate of the Commissioner), and where and when the examination will take place (or how the time will be determined). An examination order may be made where there are reasonable grounds to suspect that:

  • an offence punishable by imprisonment has been committed; and

  • the offence arises in the context of serious or complex fraud.

In addition, there have to be reasonable grounds to believe that the person being examined:

  • has evidentiary material in respect of the offence; and

  • has been given an opportunity to provide the information voluntarily but has not done so.

The application for an examination order must be made on oath to a District Court Judge or a High Court Judge. If there is a business relationship between the person or entity being investigated and the person to be examined, the Commissioner or a delegate must approve the application for the order. If there is no business relationship, the Commissioner as well as the Secretary for Justice must approve the application for the order. The approval of the Commissioner and the Secretary for Justice for that application must be given personally. The penalties for non-compliance with such an order are as for non-compliance with a production order (see above) (Part 2, Subpart 2, Clauses 24-29 and 34 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Self-incrimination

The privilege against self-incrimination as provided in Section 60 of the Evidence Act 2006 applies to production and examination orders. A District Court Judge is able to determine whether a particular claim of the privilege is valid. Section 63 of the Evidence Act 2006 (which requires disclosure in certain circumstances in civil proceedings) does not apply to production and examination orders (Part 2, Subpart 2, Clause 30 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Other privileges

The Bill sets out the legal professional privilege, medical privilege, and religious privilege in the Evidence Act 2006 that will apply if the person could assert the privilege in a criminal proceeding (Part 2, Subpart 2, Clause 31 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Secrecy

The Bill provides that all designated persons must observe the strictest secrecy in respect of information received from the exercise of a production or examination order, any search warrants obtained by a designated person, and any information derived from that information. Specified reasons for disclosure are set out and include the situation where the person who disclosed the information consents and where the information is used for the purpose of a prosecution. It is an offence punishable by a fine not exceeding $5,000 to knowingly contravene this provision (Clause 35). All designated persons must observe the strictest secrecy in respect of revenue information, being information subject to secrecy under the Tax Administration Act 1994 and information disclosed by the Commissioner of Inland Revenue. Specified reasons for disclosure are set out. It is an offence punishable by imprisonment not exceeding 6 months or a fine not exceeding $15,000 to knowingly contravene this provision (Clause 36) (Part 2, Subpart 2, Clauses 35-43 (Note: Subpart 2 to expire on 31 July 2011 or an earlier date to be set by Order in Council (Clause 16)).

Copyright: © NZ Parliamentary Library, 2008
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  1. Serious Fraud Office (Abolition and Transitional Provisions) Bill, 2008 No 206-1, Explanatory note, General policy statement, p. 2.   [back]