Serious Fraud Office Amendment Bill

Thank you, Mr Speaker. I rise on behalf of New Zealand First to speak on the third reading of the Serious Fraud Office Amendment Bill. This is about modernising legislation to give the right powers where they need to be. I think broadly across the House we have recognised the importance of moving with the technology and moving with the criminal activity and ensuring that the right powers, the right capabilities, are sitting where they need to be.

This is largely process-driven legislation, which is ensuring that the Serious Fraud Office has fit for purpose legislation moving forward, and New Zealand First commends the bill to the House.

Tēnā koe e te Māngai o te Whare. The Green Party supports the Serious Fraud Office Amendment Bill at this third reading. This bill updates a 36-year-old Act. It aligns Serious Fraud Office search warrants with the Search and Surveillance Act and brings evidence admissibility into line with the Evidence Act—sensible overdue changes. We support this modernisation.

Fraud costs this country billions every year. Charities are hollowed out, businesses become insolvent, and people lose trust in banks. New Zealand used to sit equal first in the world on Transparency International’s Corruption Perception Index. We’ve slipped to fourth, but I believe we may be improving again.

However, corruption perception is as much about political donations as fraud, and the two are not unrelated. The Serious Fraud Office made allegations of improper donation management against both the National and New Zealand First Parties. The Court of Appeal dismissed all the charges; however, it explicitly noted in its judgment that these cases expose major structural weaknesses and legal loopholes in New Zealand’s Electoral Act regarding how political money is tracked. Today, we are fixing some of the Serious Fraud Office issues, but we are not fixing political donations. Real democracy means limiting political donations to restore public faith that we can make decisions without bias and without thinking about corporate donors. The Greens have consistently advocated for honest politics free of the stench of corruption.

When this Government talks tough on crime, it’s almost never about serious fraud. It’s about someone sleeping in a doorway who won’t move on; it’s about a beneficiary, a young person, someone who shoplifted or breached a curfew; someone acting in the grip of addiction, or a split-second decision, or someone whose upbringing that never gave them time to plan five minutes ahead, let alone five hours. For those New Zealanders, this Government reaches for trespass notices, boot camps, crackdowns, and tougher bail.

Let’s be honest where the real damage lies. A person sleeping rough in a doorway is not the person driving up your insurance premium, your grocery bill, or your rates; serious fraud is driving those things up. Every dollar diverted through a fake investment scheme or a cooked set of books comes straight out of the ordinary Kiwi, the worker whose KiwiSaver was defrauded, the tradesperson left unpaid because a contractor faked insolvency. One fraudster with a laptop and a good accountant can do more harm to more households in an afternoon than anybody asking for change on a footpath would do in a lifetime.

Unlike the person shivering in the doorway—or worse—the fraudster made a plan. Serious fraud is not impulsive; it’s planned over months or years, requiring patience, professional advice, and the confidence that comes from financial privilege. It’s almost entirely premeditated, targeting the trust that everyday Kiwis should be able to place in banks, investment schemes, and in the people they do business with. Yet the same Government that wants trespass powers and boot camps waits till the last month of a three-year term to treat serious fraud properly. I think this is the last month of the three-year term.

Francisco Hernandez: Yep—it’s September now.

CELIA WADE-BROWN: Yeah—so we could have done it a little earlier. Real crime prevention looks like warm, affordable homes, not premeditated crime and getting away with fraud.

It’s about time we come back to the actual legislation we’re debating here this evening, which is about the Serious Fraud Office and bringing them into the 21st century. We scrutinised this bill as part of our Justice Committee process, hence why it has taken the time to get it to the House here. Last week, credit to Minister Mark Mitchell, who sat in the chair and did a superb job through the committee of the whole House stage, working with members across the House to answer questions to understand where we’ve got to. This is a really important piece of legislation, so I commend it to the House.

Thank you, Mr Speaker. It’s great to be able to take this call on the Serious Fraud Office Amendment Bill. I wasn’t sure if I’d get the chance, because I wasn’t in the House at the end of urgency, but there the Government pulled urgency and didn’t get through all of its bills. Well done to the Opposition for not letting the Government get through all of its agenda; that’s something we always try to do and, in this case, it’s allowed me to speak to you for 10 minutes on the Serious Fraud Office Amendment Bill. It’s a very important bill, and one that I was on the Justice Committee for, and it has a really interesting history, so I will take my time to go through—

Carl Bates: Over here, we believe in efficiency. You don’t need to use all the 10 minutes.

CAMILLA BELICH: Oh, that’s a very interesting opinion to put forward, Mr Bates. I thank you for your contribution to my 10-minute call through your interjection.

I wanted to go back to the beginning of this bill, which is the Pikia case. This went to the Court of Appeal. In this case, there was a number of—if you read the case, and I actually have it here, it’s quite a shocking case. It, essentially, looked at the powers that the Serious Fraud Office (SFO) had been using, and it actually, at the back of the judgment, lists a lot of the unlawful exercises. There’s actually a list at the back of this bill of all the unlawful exercises that the SFO had undertaken in this case. I think it runs to several pages, and there’s just list after list of things that were illegal. This is a case, really, where the practices of the Serious Fraud Office were not consistent with the legislative framework that they’re working in.

To be fair to the Serious Fraud Office, their primary piece of legislation was written in 1990. I remember 1990—the sesquicentenary—it was an amazing year, and I enjoyed it very much, but I have to say it was quite a different environment in terms of the technology that was available. This is a key issue in this bill: the SFO’s powers and the powers that they had to investigate fraud. It really goes without saying, but maybe we should say it: fraud is a terrible, terrible crime. It is damaging, it can ruin lives—it can destroy lives in much the same way as a physical crime that can be committed against someone.

The objective that the Serious Fraud Office is attempting to prevent fraud is one that everyone in this House would agree is a noble objective and something that we should support, but the Act was not fit for purpose. That was clearly set out in the Court of Appeal, and something needed to change, so we do have this bill in front of us that we did take to select committee, and this bill does seek to update some of those practices. I do think there is a question for the House to consider. We are living in an age where technology is advancing so quickly that I do think there is a serious question for the way that we draft legislation: can we legislate in a way that is fast enough to keep pace with modern technology?

This Serious Fraud Office Amendment Bill, one of the changes that it puts in, is changing the word—instead of searching a physical, named item, it uses the word “thing”. It’s such an open term for searching—you can just search a thing. In a way, that is futureproof, because who knows the type of technology we’ll be using in a few years’ time—whether we’ll all be in the House, and we won’t be looking at our phones, but we’ll be wearing our special glasses that allow us—

Arena Williams: I don’t want them.

CAMILLA BELICH: —to search the internet or have our speech notes. I don’t know, it’s—

Tom Rutherford: Carl will be wearing a tinfoil hat.

CAMILLA BELICH: I accept that that’s your submission, Mr Rutherford. But the point, really, is that the technology is moving so fast, and this is a clear example. I mean, this was in 1990; this was a long time ago. I predict that changes will be needed, not just to this Act, but other similar Acts in the search and surveillance area, sooner than in another 30 years’ time.

I think that this is a challenge that we are facing due to the incredible technological advances that we are facing at the moment. This certainly will help. I think all of the changes at select committee were agreed unanimously—that doesn’t always happen. Many of them, I have to say, because there is a lesson here for the Serious Fraud Office, which is, firstly, of course, we want them to have the ability to do search and surveillance in a way which is commiserate with modern technology; but the second point is, and I think an important lesson, is the Serious Fraud Office, or any agency of the law, should never be using powers that are above those which are prescribed at law. And in this case, that has clearly been the case. Whether that’s a failure of the Serious Fraud Office, or that’s a failure of Parliament to keep the legislation up to date, it’s certainly a failure. No one should be able to act outside of the law, and certainly no one is above the law—that also applies to our law enforcement agencies.

The additional changes that we’ve made here as well, also highlight a really important point, which is the principle of innocent until proven guilty. There are a couple of changes that the select committee made which I just wanted to highlight, which are in line with that principle: innocent until proven guilty. Some of the changes that we implemented as part of the select committee process was—I mean, this is something that I don’t think people would have imagined in 1990—under this new piece of legislation, you were able to undertake a remote search—a remote search—and one of the things that the select committee did to protect people’s rights, was to say, “if you undertake a remote search, you must tell the person that you are undertaking the remote search”, which I think is a really sensible check and balance on that power. Because otherwise you could just be tapping away on your computer and the Serious Fraud Office could be just looking through all of your documents and, unless the select committee hadn’t put this change in, you wouldn’t know.

It is incredible to think what they can do these days. Certainly, remote searching is an inevitability of the modern way that technology exists. Because we know we are not just looking at physical objects now, we are looking at clouds, we are looking at storage facilities, cloud storage, things that may not actually be physically able to be taken by the Serious Fraud Office but need to be searched. So that was one of the changes that we put in place.

The other thing that I think was an important change, which and respected the rights of the people who are involved in the search, and, of course, very famously, a number of these cases have not been successful by the Serious Fraud Office over recent years. So one of them is that return and disposal requirements. When the Serious Fraud Office does have a situation where they’re taking phones, they’re taking laptops, I don’t know, anything else that they need to search from someone, they must provide that back to the person. That was a change that we made to clauses 13 and 13A.

The other thing that we also addressed—and I think this was something that the Law Society put in their submission, we didn’t hear an oral submission from them, but they did put forward a very detailed written submission. And the fact that we have considered it as evidence that it’s still worthwhile to put in a written submission that can be very, very helpful to select committees as well. They talked about the amount of time that documents were being kept by the Serious Fraud Office. In this particular case that we were looking at, that led to this bill, we had a situation where there was a retention of documents by the Serious Fraud Office, as I understand, for an indefinite period of time. And actually, I think, in this bill, we’ve changed that to two years, which is actually shorter than the usual period of time that you would keep something, which would be seven years. That was a something I was going to look into a wee bit at the committee of the whole House stage if I’d been here. But anyway, it certainly is a protection on those documents, which may be quite personal. There may be situations where highly personal documents are relevant to a fraud case, and there is a legitimate reason for the Serious Fraud Office to retain those, but we did put in, at select committee, a time limit on that.

I don’t think anyone disputes the need for this bill. There are lessons in here for the Serious Fraud Office; there are lessons for Parliament in the way that we approach law making, and the way that we deal with new technologies; and there is, certainly, a serious lesson here that anyone who attempts fraud or serious fraud in New Zealand, there will be consequences.

I had a conversation with my constituents office earlier today, my electorate office, and over the course of this term, as a hard-working local MP, we’ve dealt with 1,478 constituency cases. Now, included in those, were a number of constituent cases where they had occurred or been involved in scams. These are heart breaking when they happen because they can cost an individual a huge amount of money. This bill helps the Serious Fraud Office fight financial crime. It’s all part of the work that we’re doing to fix the basics of law and order.

It made me imagine what those constituents could have done with that money had it not been taken from them through a scam; what they would have used that for. Even a couple of those cases were people in the process of thinking about starting a business the Investment Boost process there, would have been very helpful to them. So I commend this bill to the future as we build the future here in New Zealand.

ASSISTANT SPEAKER (Greg O'Connor): A five minute split call.

Thank you, Mr Speaker. It’s a privilege to stand and take a call on the Serious Fraud Office Amendment Bill, something I haven’t done since last Friday night, just before midnight, as we worked in urgency through almost all the stages. It’s not quite as many as, I think, the Government wanted, but we did manage to progress things.

Now, the really important thing with this bill, is that legislation does need to move with the times. Not all political parties can—the one across the way definitely a good example of that—but legislation needs to move with the times and it needs to be futureproof. The things that stuck out for me, when I was looking through the bill and the summary of the bill, was the need to modernise, which included extending the warrant regime so that the Serious Fraud Office can search “things”. And there was much discussion in previous stages, and in the committee of the whole House stage, where the Minister in the chair did generously share his time and his answers with us. Just around that shift from the traditional search warrant—you imagine a bookshelf all astray after people have rifled through it—but now, what we’re talking about in the modern context of investigating serious fraud, is actually executing search warrants on intangible things. So the need to modernise the legislation certainly essential there.

One of the other really good examples was around the need for speed. The need for the Serious Fraud Office, sometimes, to be able to get a warrant simply through the oral applications for search warrants, so that those warrants can be received in enough time for them to still be valid and relevant.

Now, a number of speakers have talked about the process that select committee, about the constructive way in which the select committee worked together to ensure that they, actually, were able to improve this, and, ultimately, end up with a bill that, I believe, we’re all supporting through its third reading in the House this evening. One of those was around the remote access searches, and one of my colleagues, Camilla Belich, has referenced that in her contribution to this bill earlier. Increasingly, the kinds of information and the places in which we can find that information, when we would be executing searches or investigations through the Serious Fraud Office, can be done without the person even knowing that that’s happening and without someone, you know, knocking on the door or bashing down the door and coming into their home. So making sure that those remote searches are actually notified, that the person can then be given a notification that that search has taken place, is increasingly important.

One of the other pieces of it was around when you capture data or devices such as hard drives that store data, or access those in cloud storage. There’s a risk that you’re not just picking up a stack of bank statements; you might be picking up all sorts of other personal items or personal information, much of which may not, on investigation, be relevant to being able to take a prosecution.

There are really some important features of the bill that allow for the disposal or the return of that information and that data that might not be relevant to the investigation, so that information that people may not want in the hands of the Serious Fraud Office—or, in fact, with anybody other than themselves—could now be more clearly accounted for in the legislation as it appears.

Ultimately, I guess the purpose of the Serious Fraud Office and of the revised Act is to protect New Zealand and New Zealanders from fraud. When we think about that, it’s probably worth thinking about the idea of an election campaign, and I know there’s been a little bit of integration of election campaign slogans into the contributions this evening. There’s been talk about getting the country back on track. Then, if you think of a fraudulent claim such as that, when you then go on to see grocery prices go up, petrol prices go up, power prices go up, rent prices go up, and rates go up—[Interruption]

They’ve even been adding extra things on from the benches on the Government side. They’re adding things on. Insurance is going up, trust is going down—definitely going down—but what we are seeing absolutely consistently is that New Zealand cannot afford there more years of a National Government. But we can, in this House, afford to support the Serious Fraud Office Amendment Bill, and I commend this bill to the House.

I’m glad to hear that this bill is receiving cross-party support to give the Serious Fraud Office the tools to obtain digital evidence and to investigate serious fraud efficiently.

I want to use this opportunity to acknowledge my colleague Paulo Garcia, who was on the Justice Committee, for his contribution to this legislation. I also thank the select committee, the community, and the Filipino community as well. I commend this bill to the House.

Thank you very much, Mr Speaker. This is an important bill that makes important changes. In terms of the changes that it makes to the Serious Fraud Office (SFO) and how it operates, it’s good to see that my colleagues have continued the good work on the Justice Committee and have scrutinised this bill pretty thoroughly. The Justice Committee had made recommendations in relation to that. The key part that’s important about this is that there was unanimous support for it to proceed and support for the notification requirements for those remote access searches, record keeping for oral warrant applications, and requirements to return seized devices and destroy forensic copies that contain no evidential material.

It’s been interesting as to how this process has come about. I quite often read the submissions from the Law Society. They really do a good job of analysing some of the finer points, and that often makes our job as MPs easier. The submission that we did get from the Law Society supported the bill’s intention to modernise the Act in response to Pikia, which said that it showed that the SFO regime was outdated and that the approach that they took to notices and search warrants involved significant overreach.

It’s heartening to see that we’re able to support this bill, because we want to make sure that expanded powers are no substitute for resourcing. We know that the Serious Fraud Office is a really small agency with an enormous task. When I was the Minister of Police and had responsibility for it also, I was amazed at how much the Serious Fraud Office was actually able to do on such a small budget. And, of course, since this Government has come in, all those departments lost funding and the Serious Fraud Office was one of those that had to find, I think, 6 percent in their baseline. I don’t know if there’s anything left for the Serious Fraud Office after losing that much. They’ll be kind of trying to keep the lights on.

The cuts that we’ve seen under National have affected the Serious Fraud Office too. So, yes, while it’s important to make sure they’ve got the right powers, it’s just as important to make sure that our Public Service is adequately funded to make sure they can actually do the work that they need to do. I do have some concerns as to whether there is sufficient funding for the Serious Fraud Office to actually fully do the work that they need to do to keep fraud in check in New Zealand. We do know that, with all the cuts we’ve seen, it potentially makes our country less safe if the SFO is unable to do their job, so the question does have to be asked: can New Zealand afford another three years of National when we’re seeing things like this happen? My answer would have to be: no, we can’t. We have to make sure that we have public services that operate and deliver the things we need.

It is good that we are now enabling the SFO to apply for search warrants directly to an issuing officer rather than only to a judge. We think that’s an improvement. We also think it’s good that we’re extending the warrant regime so that the SFO can search “things”, as it’s described, as well as places. That’s really a modernising approach, including intangible things such as email addresses and access to information that, say, might be on the cloud and accessible those ways, in terms of data storage. It also recognises that evidence of fraud is increasingly digital, and that’s really where we need those great skills of digital experts, forensic accountants—those people that have those skills and are able to follow the money. We know that organised criminal networks and those who are conducting online fraud are able to hide the trail of money in different ways, so it’s incredibly important that we have those people within the Serious Fraud Office who are able to do that work.

We know that those skills are in hot demand internationally. It is a huge task sometimes for the Serious Fraud Office to always be able to attract the type of people that can keep on top of the latest ability for hacking, for getting in behind data sets, for impersonation, for identity fraud—all of those things that are continually morphing and changing. We also know that, with the increase in the ability to use artificial intelligence, that is also an area that’s increasing the reach of online fraud and impersonating identities with the use of AI. Providing modern scene management powers, securing the site, excluding people who would obstruct or hinder a search, and bringing in the use of equipment and electricity onsite are all changes that this bill puts in place.

It is also made clear that police assisting the SFO to execute a warrant can use their usual powers under Part 4 of the Search and Surveillance Act, and that’s important. It replaces the admissibility test in section 22 of the Act with the balancing test in section 30 of the Evidence Act so that courts weigh a wider range of factors, such as the seriousness of offending, the quality of the evidence, and whether urgency or safety was a factor in how it was obtained. A transitional provision means that the new admissibility test will not apply to criminal proceedings that were already commenced before the bill comes into force, and it was good to see that that was in place.

The select committee did an incredibly good job in terms of making some changes and strengthening this bill, and it’s always good to see those changes being made in agreement. A key change that was made at the select committee was the notification of remote access searches, and that is because remote searches can be executed without the user’s knowledge—for example, digital searches, where that might be happening in terms of someone’s online access and being able to access things that are stored in the cloud, or even what they’ve sent over emails. The Serious Fraud Office must, on completing a search, email a copy of the warrant and the details of the search to the account that has been searched, or take all reasonable steps to identify and notify the user by other means, and that’s in a new section. Essentially, it’s just modernising due to the fact that we have new means in terms of how the Serious Fraud Office will be operating.

Another change that the select committee saw in this bill was the additional requirement for remote access warrants. They can now only be issued if the issuing officer is in fact satisfied that the thing is not located at a physical address a person can enter and search. It’s good to see that change. There were also changes to the safeguards for oral search warrant applications. In this instance, the issuing officer must record the grounds for an oral application as soon as practicable. All the information required for a written application is still required, so that must happen. Applications must be retained by the District Court Registrar until proceedings are complete, for two years. The Serious Fraud Office (SFO) has always been renowned for having those really far and wide - reaching powers, so some of these safeguards are important improvements to modernise the legislation.

The Justice Committee also made the change to section 14 of the Act, which was repealed, and that just simply removed duplication. It removed the new requirement to disclose any applications made within the previous three months in respect of the same place or the same thing—so that “require to disclose” is being put into legislation. There is also provision there for the return and the disposal requirements. Seized documents and things, as described in the legislation—which would be devices, laptops, phones, smartphones, tablets—must be returned as soon as practicable. Forensic copies must be destroyed where the data contains no evidential material. It is really important to specify how long data can be stored. It also tidies up the wording of force powers, as aligned with the modern language of the Search and Surveillance Act, and the bill confirms these powers do not authorise the application of force to any person. It’s an important improvement in this area.

We know that the way that organised criminal networks operate is very much shifting into an online space. It’s important that our key entity in New Zealand for serious fraud has all of the abilities to be able to do that. We, in Labour, still think it’s really important to be able to resource these Government departments, not to just to give them more power but to make sure that they have the people, the abilities to actually do that work. Because if we don’t, then they fail, and that is really the overarching narrative we’ve seen under this Government: that the Public Service is failing to deliver many of our public services, and that’s why we just can’t afford three more years of National.

Thank you, Mr Speaker. I commend this bill to the House because it addresses the fastest-growing crime in New Zealand: fraud. It’s a shame that Labour had six years to address fraud, but did nothing, as usual.

Hon Members: Mr Speaker?

ASSISTANT SPEAKER (Greg O'Connor): Suze Redmayne—she got off to a quick start there.

I commend this bill to the House.

Motion agreed to.

Bill read a third time.

ASSISTANT SPEAKER (Greg O'Connor): I declare the House in committee for further consideration of the Oranga Tamariki (Responding to Serious Youth Offending) Amendment Bill.

Oranga Tamariki (Responding to Serious Youth Offending) Amendment Bill

Committee of the whole House

Debate resumed from 18 August.

Part 1 Substantive amendments to principal Act (continued)

CHAIRPERSON (Barbara Kuriger): Members, the House is in committee for further consideration of the ordering of Oranga Tamariki (Responding to Serious Youth Offending) Amendment Bill. When we last considered the bill, we were debating Part 1. Part 1 is the debate on clauses 4 to 40, “Substantive amendments to principal Act”. Once again, the question is that Part 1 stand part.