The Serious Fraud Office has launched an investigation into South Canterbury Finance (SCF).
Chief executive Adam Feeley said today 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," Mr Feeley said.
"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."
He said that despite the volume of cases which the SFO had taken up in recent months, the SCF matter would have a high priority and would be progressed as quickly as possible.
The SFO would coordinate efforts with the receivers of SCF, the Registrar of Companies, and the Securities Commission, and would use private sector insolvency and forensic accounting specialists.
The SCF investigation was an entirely separate matter from the SFO's investigation into the affairs of Aorangi Securities.
"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," Mr 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.
A sharp increase in SFO investigations in recent months should be seen as a positive sign of greater law enforcement in the financial markets, Mr Feeley said.
"Swift and visible investigations are a critical part of maintaining confidence in New Zealand's financial markets.
"Despite the challenges presented by the current volume of cases, the SFO is committed to ensuring that the public can have confidence in us as the lead law enforcement agency for financial markets fraud."
The SFO said it was now investigating 22 matters, two of which involve assistance with international law enforcement agencies.
Among cases under investigation were those involving Nathans Finance, Lane Walker Rudkin, B'On Financial Services, Capital + Merchant Finance, and Belgrave Finance.
It was also bringing 31 prosecutions, including proceedings against persons involved with National Finance, Bridgecorp Ltd, and Five Star Company Group.
