Serious Fraud Office Amendment Bill

Committee of the whole House

Thank you, Mr Chair. As prefaced, only moments ago, as we are in urgency, of course, I do have a number of questions. This is a bill which only has one substantive part. One question that comes out of Part 1, by its silence, is the clause 9 question that I asked earlier, because the whole of Part 1 is the substantive part in the bill.

The case that that precipitated this, and it’s in the regulatory impact statement, is the Crown and Pikia. One of the critical parts of that case concerned, is the fact that when the Serious Fraud Office issues a notice under Section 9 of the Serious Fraud Office Act, it’s notice which can require a person to both attend and to produce documents and information. But it had been being used, and I can understand that—well, the whole point of this is that the Serious Fraud Office Act hadn’t kept up and there had been a, kind of, creep as to what information and documents meant. The Serious Fraud Office was proceeding on the basis that they could, essentially, require people to attend and produce the things that contained information and documents such as cellphones, laptops, and other devices.

Now, it does strike me—because you’ve got to remember, in terms of search and surveillance, there’s a principle that you take the least invasive approach. If you’ve got a person who, you know, is not a flight risk, there’s no real risk that they’re going to destroy any evidence, and you could get the information from the bank if you needed it, but you just want to get them in to ask for it; that’s what you should do. You should use the least invasive method possible, and that will be, “Please come along and give us your laptop.” That’s what they should, in fact, have the power to do and require. Of course, they can still say, “If you wouldn’t mind terribly, would you, possibly, hand over your laptop?” But I can tell you that the first thing you do then is call your lawyer and say, “Do I have to?” If it’s a Section 9 notice—and I’ve had these phone calls—you say, “Yes, you do, and you also need me to help you because this has become quite serious.”

But, at the moment, it appears, and even after the bill has been passed, that the Serious Fraud Office still can’t say, “You are required to attend on our office and produce your laptop so that we can extract the documents from it.” It is kind of odd. I suppose, they could say, “Please provide us all emails from date X to date Y, between these two people”, and they happen to be on the laptop, but you might have to go and get them and put them on a USB, but they can’t actually ask for that laptop or that cellphone that might have traffic information on it—because that’s the other thing, of course; it’s not just the emails; it might be information about phone calls: when they were made and who they were made to—or anything of that nature.

So in that point of the least invasive approach, because it seems that if you need the laptop or the cellphone or whatever device it is, you’ve now got to get a search warrant and enter someone’s house, which is much more invasive and serious and—this is the real point, right; this is what we’re talking about—less New Zealand Bill of Rights Act compliant to be free of unreasonable search and seizure than the alternative.

It’s actually quite a big question. I’ve had a good read of the regulatory impact statement, which, interestingly, notes that there was not sufficient consultation prior to the policy decisions being made; that because of the urgency created by this case and the Government moving at speed, again. But it does strike me that this is an issue that does need addressing. I’m hopeful, actually, that I’ve missed something, but it does seem to me that there is a gap and it’s not reflected in the analysis of this, which, basically, says, “Yes, there’s problem. Yes, we should fix it. Yes, we should make it consistent with the Evidence Act”, but it doesn’t actually say how throughout.

Committee of the whole House

Yeah, sorry. Just very quickly, for Dr Lawrence Xu-Nan, for linked accounts, you would need to specify in the warrant application, so that would have to be specified; and yes, the safeguards are sufficient and it matches the Search and Surveillance Act. Just in relation to issuing officers to authorise Serious Fraud Office (SFO) warrants, the bill allows an issuing officer to authorise an SFO search warrant rather than being limited to a judge. Issuing officers also authorise search warrants for other law enforcement agencies under the Search and Surveillance Act, so that is covered under the Search and Surveillance Act.

I think Mr Dan Rosewarne has just raised this one, as well. A judge can be an issuing officer, but this role can also be performed by justices of the peace, community magistrates, registrars, or deputy registrars who have been authorised by the Attorney-General under section 108 of the Search and Surveillance Act. This allows for more efficient processing of SFO warrant applications than is currently the case.

Committee of the whole House

The SFO officials are so good that they’re almost getting ahead of the questions that I’m getting. I just wanted to come back to the Hon Dr Duncan Webb’s question. For clarification, just have a look at section 97, because apparently in the Search and Surveillance Act, it does define “thing”. Maybe just have a look at that. Cloud-based information—a level of specificity is expected for that, and that is set out in new clause 10(2)(b), (c), and (d), and forms in Schedule 2 also set out the required detail.

The bill aligns the SFO powers for digital material with those of other New Zealand law enforcement agencies. This, again, sort of comes back to the question that the Hon Dr Duncan Webb brought forward. The issue of extraterritoriality and digital searches is a legally complex one where case law is still developing both domestically and internationally. In some cases, the courts have allowed for access to evidence stored overseas, particularly where the information was created in New Zealand or was interpreted to form part of a New Zealand computer system. In other cases, law enforcement agencies need to seek formal assistance through the mutual assistance in criminal matters regime.

Committee of the whole House

To very quickly come back to the Hon Dr Duncan Webb. Retention of documents is under new section 10B, inserted by clause 6. It’s for the court to retain documents, so records of warrant applications. The same requirement exists in the Search and Surveillance Act. If I cover off very quickly, too, with Dr Lawrence Xu-Nan: the court already must do this for search and surveillance, so the court already has capacity to be able to do this.

Committee of the whole House

Yes, I agree. Coming back to Dr Lawrence Xu-Nan and the use of force. The Serious Fraud Office (SFO) could already use reasonable force to access a place to search it. This amendment bill does not change the SFO’s powers in that regard. It simply uses the more modern language in the Search and Surveillance Act to grant the SFO the same powers it had before.

Committee of the whole House

I’ll just come back to the member Dr Tracey McLellan’s point, which had been partly covered earlier, but under the current settings, there is legal uncertainty for the Serious Fraud Office (SFO), as to their ability to seize and search digital devices and digital material. This is because the SFO can currently only search a place. In an environment where fraud is almost exclusively carried out digitally, it is important that the SFO can search digital devices, and material effectively.

While I’m up, just coming back to—the officials are probably doing some work on this anyway—but in relation to a warrant that the SFO is executing, obviously that’s going to be in the SFO’s name. They’ve got the warrant. No one can compel anyone to do anything they don’t want to do. Obviously, if they’re the subject of a warrant, and they’re required to provide something, then the expectation is they will, and there are consequences.

Will the SFO take someone who has got, as you’ve just highlighted, expert capability or experience in a certain field, because the area that they operate in is very complex. In fact, the SFO probably operates in the most complex world, in terms of law enforcement and protecting our country, so it’s highly likely that they would need to call on that expertise. What is codified in the legislation is the SFO has got the ability to exclude someone from being at that location while the execution of a warrant is being undertaken.

Committee of the whole House

Just to address the member Dan Rosewarne’s question around admissibility rules for unlawfully obtained evidence: in New Zealand and most other comparable jurisdictions, unlawfully obtained evidence is not automatically excluded from proceedings. Instead, a judge will evaluate whether the evidence should be admissible based on tests set out in legislation and case law.

Currently, the test in the Serious Fraud Office Act requires that the unlawfully obtained evidence must be ruled inadmissible and destroyed unless the court is satisfied that there is no unfairness in obtaining the evidence. The test sets a high bar and is out of step with the more modern test set out in the Evidence Act. The updated approach in the bill uses the test in the Evidence Act, enabling the court to consider a wide range of factors when determining what evidence can be included in a prosecution. The test includes factors as to the quality of the evidence, the seriousness of the offence, and whether urgency or safety was a factor in how the evidence was obtained.

Committee of the whole House

If I go back to Dr Lawrence Xu-Nan’s forensic copies and what safeguards exist—in Serious Fraud Office (SFO) operational practice, only relevant material is made available to investigators. Irrelevant material is held separately and needs to be balanced with the need to preserve evidence. On notification requirements on emails: if no email address is available, then they must take reasonable steps to identify one, but these aren’t specified.

Sorry, Madam Chair, I just wanted to come back—

CHAIRPERSON (Barbara Kuriger): I just want people over here to know that we’ve still got a couple of unanswered questions here, so I’m not going to be closing until we get those.

Hopefully I can help you with that, Madam Chair.

CHAIRPERSON (Barbara Kuriger): I’m sure you can. You’re doing a good job.

Thank you. Coming back to the Hon Dr Duncan Webb—who’s acknowledging his experience in law as a professor, I think; it’s almost like you’re asking the question to me and then answering it, as well—around the fact that the updated approach in the bill, and I’ll go through this again, uses the test in the Evidence Act, which he has referred to, enabling the court, which is the critical thing, to consider a wider range of factors when determining what evidence can be included in a prosecution. The test includes factors such as the quality of the evidence, the seriousness of the offence, and whether urgency or safety was a factor in how that evidence was obtained.

Committee of the whole House

Thank you, Madam Chair, and I just want to ask a couple of questions, one going back slightly—indulge me, because I didn’t quite get a chance to ask and it’s quite quick—and another one just following up on the Minister’s last response.

Clause 7, the remote access search authorised by warrant issued under Part 2—does that remote access permit the Serious Fraud Office (SFO) to access information that’s stored overseas? I don’t know if you may have answered that—

CHAIRPERSON (Barbara Kuriger): The Minister’s actually just said yes.

Yes, it is. So how does that provision interact, therefore, with some of the terms and conditions of those systems of overseas cloud service providers, and what happens if a remote search inadvertently accessed an account or a data set that falls outside of the warrant? That’s of interest to me.

Then just going back to that last response to the Hon Dr Duncan Webb’s question about section 30, that balancing test for criminal procedures. Whilst that answer was interesting, I’m still not sure it sufficed for the overall question. In doing that, could the Minister provide some sort of example of evidence unlawfully obtained that would currently be excluded but might be admitted under this new test, if that was the case? So those are my two questions.

Committee of the whole House

I think what’s happened is the legislation has updated the way that evidence is held and treated by the Serious Fraud Office (SFO) and the arbiter of that is actually the court. I can’t give you any operational cases because the work they do is—I don’t get briefed on the detail on it, I just know that it’s very complex in terms of the work they do.

I don’t know if the member is in the House; I’m not sure. I will say I don’t know when I went back to the issue, as Dr Lawrence Xu-Nan said, that the word of the day is “territoriality” and digital searches is a legally complex one where case law is still being developed, both domestically and internationally, because of the complexity around it.

💬 Dr Tracey McLellan: I was probably beguiled by the word; I missed that.

Yeah. As you’ve highlighted, it’s deeply complex. Are you happy with that?

💬 Dr Tracey McLellan: Yep.

Committee of the whole House

Thank you, Madam Chair. I’ve actually got a very short question and it’s around the forensic copies. New section 13A talks about disposal of forensic copies that don’t contain evidence, and then it talks about forensic copies that do contain evidence. My question, in its most simple form, is: how long are you allowed to keep that for? If you have a prosecution—so this is going to be personal information about people’s financial affairs, and if you choose not to prosecute, how long can you keep it for? If you prosecute and are not successful—so you get a not guilty verdict—how long can you keep it for? And if you prosecute and you send them away, presumably you keep it indefinitely.

I’m particularly interested when you get this information and you make a prosecution decision that is “No, we won’t prosecute”. You’re going to get rid of the search warrant in two years—the application for a search warrant. What’s the time limit for holding this information, which is, in fact, information private to the person you’ve seized it from and who isn’t going to be prosecuted?

Committee of the whole House

This is my last question for this part, and I specifically want to look at clause 2(1) of Schedule 1. In effect, the clause that the Hon Dr Duncan Webb mentioned around the inadmissibility of evidence applies here when it comes to 2(1). It says that that clause 22(3), subclause (a) applies to anything before commencement. That would include—if no charge has been laid, I would guess section 22 would be applicable, if that’s correct.

The second question is, I would assume this also includes appeals of previous judgment—in that case, if the appeal cannot appeal beyond the basis of inadmissibility of evidence that now under section 22(3) in clause 8, it would actually make something that was previously inadmissible admissible. Would that be a possibility? That would make things quite serious.

CHAIRPERSON (Barbara Kuriger): Minister, have—

Point of order.

CHAIRPERSON (Barbara Kuriger): The Minister is just telling me that he doesn’t have the information, so we’re just going to take one call from Tracey McLellan while we’re getting the information.

Committee of the whole House

Very quick, yep.

CHAIRPERSON (Barbara Kuriger): Then I will be looking to wind up.

And I can soak up a little bit of time until you get that advice. I just wanted to ask a follow-up question with regard to those forensic copies. In that case, if you can hold information indefinitely, what happens to the material that’s subject to legal professional privilege or other types of protected information that might be contained within that forensic copy? I don’t suppose it’s really that relevant to how long it’s held for, but either way, that privileged information that could be contained in that—how does that get handled in those circumstances?

Committee of the whole House

💬 To Dr Lawrence Xu-Nan: new section 22 will apply to any charges filed after enactment and the appeals are subject to the old test—so it’s the same as the old test. To the member Tracey McLellan: at the end of the day, forensic copies that contain evidence could be kept indefinitely—they can be kept indefinitely. This is the same as in the Search and Surveillance Act.

CHAIRPERSON (Barbara Kuriger): You haven’t answered around the legally privileged question; that’s the only thing I was just waiting for.

It’s the same.

Committee of the whole House

I move, That debate on this question now close.

A party vote was called for on the question, That the question be agreed to.

Ayes 67

New Zealand National 48; ACT New Zealand 11; New Zealand First 8.

Noes 36

New Zealand Labour 25; Green Party of Aotearoa New Zealand 9; Te Pāti Māori 1; Kapa-Kingi.

Motion agreed to.

CHAIRPERSON (Barbara Kuriger): I will remind people on both sides of the Chamber: we don’t speak during voting.

Part 1 agreed to.

Committee of the whole House

Part 2 Amendments to other enactments, and Schedule 2

CHAIRPERSON (Barbara Kuriger): Members, we come now to Part 2, which is the debate on clauses 10 to 13—“Amendments to other enactments”—and Schedule 2. The question is that Part 2 stand part.