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CI Times Weekly | Current Issue 275 | 02 November 2008

Fraud Office witness appears

Serious Fraud Officer senior forensic accountant, Clive Hudson was on the witness stand on Thursday afternoon.
Hudson said he is a chartered accountant and was appointed in 2005 by the Director of SFO to investigate Junior Areai on what is known as a Part I enquiry where the SFO have powers to serve notice for documents for information. Later the investigations became a Part II enquiry which compels people to attend interviews as well as providing documentation requested.
These are under the powers of the Serious Fraud Act 1990 and Hudson said he has been involved in investigations for district and high courts in NZ, Rarotonga and Fiji.
In addition to the SFO investigation, the Cook Islands Police had a parallel investigation and at the request of the Cook Islands Police to the Director of SFO, there has been some cooperation between the agencies.
Hudson said he has drawn up flow charts and schedules of financial dealings which are identified with an unique number bar coded sticker with details of transactions by the defendants, Chris Vaile and Norman George. This information was found by way of discovery and has been provided to the defence and to the prosecution.
Isuzu truck & bank transactions in
New Zealand
The first chart and schedule referred to the purchase of an Isuzu crane truck invoiced by Cook Islands National Line Agencies Ltd at $55,000. With the records provided to him in the investigation, he checked the chassis number on the NZ registration records and found that the truck had been purchased from Deakin Motors in Hastings on 8 Nov 2000 for $10,500. The truck was sold to the Cook Islands for $55,000 and was credited to Triad’s account on 12 December 20 into Chris Vaile’s National Bank cheque account.
Did you analyse all larger documents in that account? Yes of $500 transactions and more. Have you brought the files with the SFO schedule of transactions after that deposit? Yes.
Various cheques were made out for various purposes for business purposes.
Cross examination of the SFO witness began with Tim Arnold, counsel for Chris Vaile who asked the forensic accountant about the statutory powers of SFO under the Serious Fraud Act 1990 (NZ).
Arnold asked about the vindication of Winston Peters on One News and the duty of the SFO to investigate in an impartial manner? Yes that is the reason for the security provisions in the Act said the witness and for the director (David Bradshaw) being media shy with no mention of investigation at all being reported by the media.
Counsel asked why SFO investigation was ‘limited to these 2 pages or was it within a broader range of pages because the issues are at the very heart of the charges, so why such a small snapshot? Because this is the time frame and transactions we were investigating.
He put it to Hudson that neither account shown by SFO to the court was there a 50% split as alleged by Crown? Witness agreed there was not.
Counsel changed tack and asked if SFO had been requested to provide information on his client’s visa transactions since February 2008? There has been such a request but have not followed up on.
Flow charts questioned by Paul Davison QC
Davison QC wanted to know about these flow charts that SFO had prepared and how their office had made the connection to Norman George.
Firstly, the Pelmec Industries letter was addressed to Vaine Teokotai and the Atiu Island Council, but Norman George is not the Island Council, so how did SFO make the connection?
It was from the fax number. QC: But there is no fax number on it.
Witness looked again and confirmed there was no fax number and then said he had been told by Detective Inspector Franklin that Teokotai worked for the DPM.
Davison informed Hudson that on 30 Oct 2001, Norman George was longer DPM or even Minister of OMIA said the QC. Oh.
What about the Aitutaki crusher from Materials Management to Norman George with a quote dated 5 August 2002 for $280,000? Was the quote not addressed to 3 people: Alan Mackie, Teina Bishop and Chris Holford? So why attribute it to the office of Norman George? Detective Inspector Franklin gave the SFO that information.
After more questioning regarding other transactions including the Isuzu truck to office of Norman George in June 2002 and a fax from John Weatherly and a quote from Eagle Spares that were addressed to other parties.
Why attribute them to the office of Norman George despite not being addressed to him or to his office?
Davison QC then invited Hudson to look at copies of bank statements of accounts belonging to his client, Norman George and look at the material and compare to what he had received from DI Franklin.
Were these under the name of Norman George and his wife? And are the dates from January 2002 to May 2002? Hudson said they dated right through to 2006 in a savings account, a business account and one for the New Alliance Party?
There are no cash sums to Norman George? Well there are cash deposits of $50 at time.
But nothing large or representing half of anything?
What about the meeting between DI Franklin and the SFO in-house lawyer, James Mullineux and yourself? That was a lawyer’s meeting so that is privileged information.
Did you check any bank accounts in the Cook Islands owned by Junior in Cook Islands? Not by me. But if DI Franklin had sourced them and asked you to look at them? Witness said his appointment was on 22 September 2005 for Part I enquiry and no other.
Was there not a 2003 inquiry into Keith Niederer and investigations of Norman George? If there were, I was not involved said the witness.
Next on the stand was businessman and former Atiu Mayor, Roger Malcolm.