White collar crime unreported because of concern for reputation: SFO head

SFO director Julie Read says firms are less likely to report financial crime in times of economic growth. Photo / Dean Purcell

Many businesses don't report financial crime because of the risk to their reputation, the head of the Serious Fraud Office says.

SFO chief executive and director Julie Read appeared before a parliamentary select committee today alongside the office's responsible minister Paula Bennett.

In response to a question about why white collar crime was not increasing, Read said it was difficult to know the true size of the problem.

"What we see is what is referred to us or what is detected. We know there is a level of financial crime out there that is undetected," Read said.

"One of the accounting firm's surveys showed that something like 40 to 60 per cent of businesses reported they had been the subject of financial crime in the last three or four years. A lot of that is not reported because people don't want to admit their firms have been the subject of financial crime."

Read said companies were less likely to report financial crime in times of economic growth, given it often did not greatly affect their bottom line.

"But when you have a recession, then all of a sudden it not just affects their bottom line it puts them out of business and this all comes to light."

Budget 2017 allocated the SFO an extra $1.4 million in operating funding and $840,000 in capital over four years, for an integrated case and evidence management system.

MPs also queried Read about the threshold at which SFO would investigate. She said that was about $1m, but cases with losses below that could be investigated if there were indications of systemic problems.

Documents released earlier this year revealed Police investigate less than 5 per cent of fraud cases referred from the banking sector.