SFO lays 21 charges against South Canterbury Finance five

The Serious Fraud Office has laid 21 criminal charges against five individuals involved with South Canterbury Finance's affairs.

Wednesday, 7 December 2011

by Jenny Ruth

SFO chief executive Adam Feeley says until the charges are heard in court it would be inappropriate to name the five individuals.

"The charges allege a variety of offences, including theft by a person in a special relationship, obtaining by deception, false statements by the promoter of a company and false accounting," Feeley says.

"The offences carry maximum penalties of between seven and 10 years imprisonment," he says.

"The value of the fraud alleged to have been committed exceeds anything in the history of white collar crime in New Zealand and the time we have taken to complete this matter is a reflection of that scale."
The SFO's investigation spanned 14 months and Feeley says it "has been one of the most resource-intensive and time-consuming in recent history."

The SFO hasn't investigated every transaction SCF was involved with and it won't rule out the possibility of investigating other matters but its priority is to progress the current charges.

SCF's major shareholder and chairman until May last year Allan Hubbard died in a car crash in September so won't be among those charged.

SCF went into receivership in August last year and the government repaid the $1.7 billion owed SCF investors later in 2010. SCF's receivers have repaid the government $570 million to date.

The Financial Markets Authority will support the SFO's case rather than pursuing its own charges, says chief executive Sean Hughes.
His organisation will "supply particulars of false statements in two SCF prospectuses to support some of the 21 charges," Hughes says

"The untrue statements relate to the level of loan impairments and the availability of banking facilities."

The FMA and SFO have worked closely on the SCF investigation.

"We have also taken into account the fact that the Crimes Act charges laid by the SFO carry heavier maximum sentences than Securities Act charges targeting the same behaviour. Convictions on Securities Act charges would be unlikely to add to the penalties resulting from the SFO charges."

Hughes says the FMA is looking at taking civil action to recuperate some of the money paid out to SCF investors under the government's Retail Deposit Guarantee Scheme.

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