SFO close investigation into Hawkins Construction

22 January 2013

SFO close investigation into Hawkins Construction

The Serious Fraud Office (SFO) has announced that it has completed and closed an investigation into one of New Zealand's largest privately owned construction companies, Hawkins Construction Limited (Hawkins).

In August last year, SFO investigators executed search warrants on two premises relating to Hawkins, and the $415m upgrade of Transpower's network Hobson Street substation that it is project managing.

The SFO prioritised the investigation as a matter of urgency, aware that the public interest was significant and the potential costs high.

Following a thorough evaluation where investigators considered thousands of documents, conducted interviews and obtained expert industry advice, the Office has concluded that there are no grounds to commence a criminal prosecution.

Acting Chief Executive for the SFO, Simon McArley said that while the parties appear to have genuinely differing understandings of the nature of the contracts in question, investigators have not identified evidence that would establish that Hawkins had the intent to deceive required for a criminal prosecution. "While the manner in which the parties conducted their business appears to us to be unusual, we have evidence from industry experts that it is possible that those involved honestly believed the conduct was legitimate. In light of that it cannot be concluded that the criminal threshold has been reached," he said.

This investigation had provided the SFO with a deep insight into the contracting and sub-contracting nuances of the construction industry. Whilst in this case a genuine concern was raised in good faith but not found to be substantiated, Simon McArley did not believe that this will be the last time the SFO will look into these aspects within the industry.

He concluded with a reminder to businesses of the importance of being truthful and honest in their dealings. "Attempts to disguise, bury or fudge the true nature of transactions can easily risk crossing the line into a criminal deception," he said.

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Background to investigation

Hawkins is a company with over 60 years' experience in the construction industry. It is one of New Zealand's largest privately owned construction companies. Its role in the development of the Hobson Street substation is one of project management. The actual building work is delegated to a variety of subcontractors managed by Hawkins.

Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO operates three investigative teams:

• Evaluation & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.

The SFO operates under two sets of investigative powers.

Part I of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part II of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

The SFO's Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz