SCF case bumps fraud inquiries to record levels

Photo / Sarah Ivey

Investigations into finance companies have bumped up the amount of money involved in alleged fraud cases to record levels, according to a survey.

There was a record-breaking $1.7 billion involved in cases that went before the courts in the first six months, according to the latest KPMG Fraud Barometer. The figure includes the South Canterbury Finance (SCF) case, in which five people have been charged as a result of its 2010 collapse owing an estimated $1.8 billion.

Without the SCF case, the total in the first half of the year was $30.8 million, the third-lowest total of fraud going before the courts since 2008.

"South Canterbury Finance could potentially be one of the last finance company investigations to result in criminal charges," KPMG head of forensics Stephen Bell said. "Consequently, the impact finance companies have had on the results of our research should reduce in the future.

"A lot of attention of prosecution agencies will be turning to the Christchurch rebuild in an effort to ensure the billions ... in rebuild money is not lost to fraudulent activities."

The fraud barometer looks at activity in excess of $100,000 and the individuals charged must have made their first court appearance to fit into the report period.

Cases in the first six months of this year mostly involved male defendants, who were accountable for 99 per cent of the $1.7 billion.

There were 33 cases, four of which were "super-frauds" with a value of more than $3 million.

The Government was the victim of the greatest number of alleged fraud cases - 12 of the 33 in the period. Taxpayers were at fault in most alleged fraud cases, with nine.

The cases

* $1.7 billion in alleged fraud, up from $279.7 million in the previous six months.
* 33 cases, up from 24.
* Four alleged "super-frauds" of more than $3 million.
Source: KPMG Fraud Barometer