When Adam Feeley was appointed Serious Fraud Office director in late 2009, there was a joke doing the rounds among Wellington lawyers: Now would be a good time to commit serious fraud.
The ambitious qualified lawyer, fresh from the helm of the Eden Park Development Board, made it clear from the "get-go" mundane mortgage and employment-related fraud would not be the priority on his watch.
Instead, Mr Feeley was after the high-profile finance companies which had just fallen like dominoes.
Although investors had been left billions of dollars out of pocket, the SFO had yet to lay any charges against finance company directors.
Mr Feeley went straight for the headline-grabbing cases, a focus linked to one of the big criticisms levelled at Mr Feeley this week, when his tenure at the SFO ended.
Some in the legal fraternity have described the outgoing boss as “media hungry”.
While Mr Feeley was more forthcoming about investigations on the SFO's books, industry insiders say he had his media favourites.
If the alleged fraud wasn’t going to get Mr Feeley the column inches, some say harshly, the SFO wasn’t interested in investigating.
“If it hasn’t been sexy high-profile stuff it has been a bit hard to get them engaged,” one lawyer spoken to by NBR ONLINE said.
The SFO's limited budget – $9.9 million this year compared to $5.2 million when Mr Feeley joined – ho doubt played a role in steering his allocation of priorities.
And as insolvency practitioner Damien Grant, of Waterstone Insolvency – who admired Mr Feeley’s ‘get stuff done’ approach – told NBR ONLINE: "Feeley made a decision to accept a lower success rate than the ridiculously failure-adverse one that he inherited."
Finance company focus
The Bridgecorp file, gathering dust when Mr Feeley started, was one of the first finance company files he resurrected, and for which he can claim a slice of the courtroom success.
Although the Bridgecorp investigation predated Mr Feeley, it was on his watch the fraud charges were laid against Rod Petricevic and Rob Roest in relation to luxury spending with Bridgecorp money.
Separately, the pair pleaded guilty to the charges at Auckland District Court in July and August, adding four months and three months to their existing six-and-a-half year sentences.
Ironically, the Bridgecorp file also threw up one of Mr Feeley’s more embarrassing moments on the job, after raising a glass to the laying of criminal charges against now imprisoned Petricevic, with a bottle of Gosset champagne lifted from the office of the former Bridgecorp boss.
That story certainly gave him headlines.
In the last few years hardly a week went by, it seemed, without a press release from the SFO, and headline writers have had a field day coming up with new words to describe its various probes, inquiries and investigations.
It is in the finance company space that Mr Feeley’s success is most obviously measured and where he may have proven some of his detractors wrong.
With the exception of Hanover Finance, the SFO said it has closed all major finance company investigations.
Of course, he can’t claim all of the SFO's scalps in the courtroom so far. Many of the investigations began before he took up the role.
For a list of his courtroom wins, see the scorecard below.
Lawyers spoken to by NBR, none of whom were prepared to be named, credit the SFO for this year’s successful prosecution of Capital + Merchant Finance directors for $28 million fraud – described as one of the most complicated finance company trials seen in this country.
However, one lawyer can’t believe the SFO didn’t “nail” two of the directors over a $14.4 million related-party loan known as the "Hub" transaction
The SFO is seeking to appeal the not guilty verdicts against Neal Nicholls and Wayne Douglas from a separate Capital + Merchant trial in April-May.
Jailing criminal finance company directors is a legacy Mr Feeley seems happy to leave after bowing out early from his five-year contract.
In exit interviews before he heads off to be chief executive of Queenstown and Lakes District Council, he claimed the jail sentences handed down to company directors had sent a “chill” through boardrooms.
In the legal fraternity, lawyers spoken to by NBR ONLINE agree Mr Feeley had been good in the finance company space, but there was frustration over his allocation of priorities.
“He has seemed very media hungry – not necessarily appropriate for someone in a prosecutorial role,” one lawyer said. “The SFO is there to prosecute all manner of fraud. Not just the one-off spikes in bad behaviour.
“If you talk to anyone who does work in the fraud space they will tell you the two constant themes in life and it is mortgage fraud and employment-related fraud.”
A balanced approach from the SFO was seen to be important given “complete inadequacy of the police to manage fraud cases”, another lawyer said.
To some, it seemed the SFO couldn’t have made a more contrasting appointment when Mr Feeley replaced his predecessor Grant Liddell.
According to Damien Grant: “The fact he celebrated his wins with bottles of purloined plonk and gave away Alan Hubbard's books as booby prizes shows he was passionate about his work – something lacking in many of the faceless and timid minions that fill the hallowed halls of the state.
“He was a character, he got some convictions and he made a difference. We could do with more public servants like him.”
Restoring a battered reputation
A private investigator said Mr Feeley had succeeded in changing the public's perception of the SFO.
When he joined, the SFO was in need of a public figure to reassure a market reeling from finance company collapses.
Mr Feeley had performed that role well.
The perception shift of the SFO under Feeley was from slow-moving beast to a more responsive agency
“The old-school SFO did not have a high level of visibility. It was largely established investigators and lawyers working to their own agenda – and the SFO was their own comfy place.
“One of the first things he did was clear some of those people out.”
Although Mr Feeley’s immediate office shake-up – the SFO lost close to a third of its staff in his first year - was controversial, it had created a team better able to respond to the need for swift prosecution action, the investigator said.
Criticisms Mr Feeley was media hungry were unfair. Chasing the big cases was part of the SFO’s remit as a small agency on a tight budget.
“The ‘serious’ in its title should be taken to mean cases with lots and lots of money or of significant public interest,” the investigator said.
Adam Feeley’s scorecard
As Mr Feeley left the SFO’s Britomart, Auckland, office this week, the agency had 31 open investigations on its books, but still no replacement for the director.
The SFO said it had opened 40 new investigations in the last financial year – the greatest number in the course of a year to date – none of which are finance companies.
It said 86% of those investigations had been completed within their prescribed timeframe in the year so far.
This compared to Mr Feeley’s first year in office, when 15 investigations were started and 18% completed within prescribed timeframe.
The average age of an open investigation was now 185 days, compared to 279 days in 2010.
In the three years Mr Feeley led the white-collar crime agency, 76 people were charged under SFO-led prosecutions.
(Some cases jointly brought by the Financial Markets Authority).
- SFO opened an investigation into ASB Bank independent advisor Stephen Versalko in August 2009
- He was sent to jail in 2010 for six years after admitting stealing $17.7 million from the bank’s clients – the country’s largest employee theft case.
- SFO investigation opened April 2011
- Datasouth owner Gavin Clifford Bennett pleaded guilty to defrauding South Canterbury Finance of $103 million - one of the country's largest fraud cases.
- Bennett was been sentenced to eight years imprisonment in the Christchurch District Court in May 2012.
B’On Financial Services
- Placed into voluntary receivership in December 2009, owing about $29 million to about 86 investors.
- SFO investigation opened January 2010.
- SFO laid 87 charges under the Crimes Act against co-directors Michael John Bradley and Jacqueline Bradley, for what was alleged to be the defrauding of about 85 investors of more than $15 million.
- September 2012 a jury found Jacqueline Bradley guilty of fraud on all 75 Crimes Act charges she faced.
- She will be sentenced in the Auckland District Court on October 19.
- Placed into receivership in May 2008 owing about 1000 investors about $20 million.
- SFO investigation opened July 2010.
- Director Shane Buckley was sentenced to three years in jail at Auckland District Court in August after pleading guilty to 19 charges of theft by a person in a special relationship and four charges of false statement by promoter under the Crimes Act.
- Fellow directors Stephen Charles Smith and Raymond Tasman Schofield have been committed for trial to be held in Auckland High Court in April 2013.
Capital + Merchant Finance
- Placed into receivership on November 23 owing about 7500 investors about $167 million.
- SFO investigation opened February 18, 2010.
- Charges laid against Neal Medhurst Nicholls and Wayne Leslie Douglas on December 9, 2010, in relation to the "Hub" property transaction involving related party lending of about $14.4 million.
- Investigation brought additional matters to light and a second investigation file was opened involving complex fraud.
- Mr Nicholls, Mr Douglas were sentenced to 7.5 years in prison and Owen Tallentire was sentenced to five years prison at Auckland High Court in August 2012.
Five Star Group
- Placed into receivership August 2007 owing investors about $46 million.
- SFO investigation opened April 2008. *prior to Mr Feeley’s leadership.
- SFO laid more than 100 charges against Marcus MacDonald, Nicholas Kirk, Neill Williams and Anthony Bowden in 2010.
- Directors Nicholas Kirk and Marcus McDonald sentenced to two years, eight months and two years three months in prison, respectively, in December 2010.
- Anthony Bowden sentenced to nine months' home detention in June 2012 after pleading guilty to charges of theft by a person in a special relationship.
Prosecutions under way
- Placed into receivership September 2008 owing 5937 debenture holders about $177 million. Wholesale lenders were owed an additional $55 million.
- SFO investigation launched October 2010.
- A trial of four directors is set down for February 2013 at Auckland High Court.
- Herbert Insurance Group put into liquidation and receivership in March 2011, with a shortfall of $3.1 million to insurers.
- SFO investigation opened March 2011.
- Company owner Grant Malcolm Herbert appeared in Auckland District Court in May 2012, facing Crimes Act and Secret Commissions Act charges. No plea has yet been entered.
- SFO started pursuing Loizos Michaels in 2011 in relation to an allegations he falsely represented he was a senior operator in the international casino industry and induced people to invest $1.1 million in a New Zealand-based business.
- He was charged with 140 counts of obtaining by deception. A trial is currently under way.
Lane Walker Rudkin Group
- Placed in receivership April 2009 owing about $120 million, mostly to Westpac.
- SFO investigation opened September 2009.
- SFO laid 82 criminal charges against director Kenneth James Anderson and another person, who has name suppression.
- The case has been committed for trial, but no dates have been set.
Natural Dairy Land Transactions
- Hong Kong-listed company being investigated for transactions involving companies linked to May Wang and plans to buy the farm assets of the Crafar family.
- SFO investigation opened in September 2010.
- Joint investigation with Independent Commission Against Corruption in Hong Kong continues.
South Canterbury Finance
- Finance company linked to the late Allan Hubbard was placed in receivership in August 2010 owing investors about $1.8 billion, later bailed out by the government.
- SFO is investigating its related-party loans.
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