SFO confirms Hanover Finance investigation

SFO confirms Hanover Finance investigation

The Serious Fraud Office (SFO) today confirmed that it had been conducting an investigation into the affairs of Hanover Finance Limited for past 3 months.

SFO Chief Executive, Adam Feeley, said that the investigation had now reached a point where the that reasonable grounds existed to believe that fraud may have been committed and accordingly the investigation had been elevated to a “Part II” investigation under the Serious Fraud Office Act.

“Given the intense public interest and media speculation, it has not been appropriate to make any public comment on this matter until we had a detailed understanding of the issues involved, and the entities and individuals behind the Hanover operation.”

“We have undertaken extensive preparatory work and are now in a position to move into a more active phase of the investigation.”

Mr Feeley said that the SFO had commenced issuing notices last week under section 9 of the SFO Act to over 30 individuals which would require their compulsory attendance at interviews and the production of documents relevant to the investigation.

“Given the volume of notices which are now being issued, it was inevitable that our investigation would now become a matter of public knowledge.”

Mr Feeley said that the scale of the Hanover collapse was such that it was not feasible for the SFO to investigate all aspects of its failure.

“We are focusing on some very particular transactions, and specific individuals within Hanover management and their board.”

Mr Feeley said that having considered the Securities Commission report and the complaints of a number of persons, including Allied Farmers, the efforts of the SFO investigation was best focused on several key areas relating to the payment of dividends and other transactions occurring immediately prior to announcement of the moratorium proposal, and debt restructuring involving the transfer of assets to Allied Farmers.

“We will be interviewing a small group of key Hanover staff and professional advisers to seek explanations of these transactions.”

Mr Feeley said that the even with a tightly focused investigation, the scale of the task was such that the SFO would be engaging significant external resources.

“The interest in Hanover is such that it is in the interests of all parties to ensure it is carried out with the utmost professionalism and urgency.”

“In addition to a large internal team, and collaboration with the Securities Commission and Registrar of Companies, we have engaged a number of New Zealand ’s senior legal counsel and leading forensic accountants to assist us.”

Mr Feeley cautioned that, notwithstanding the focus of the inquiry and the resources which would be devoted to the investigation, the public should not expect quick results.

“It would be both unrealistic and unwise to think that an investigation of this complexity could be completed in a matter of weeks. This will be a lengthy inquiry and the only certainty from it is that any decisions reached will be the end result of a comprehensive and well-managed investigation.”

Ends

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