Crime Prevention Unit

Organised Crime 

Office of the Minister of Police
Office of the Minister of Justice
Office of the Attorney General
Office of the Minister of State Services
Cabinet Business Committee

Establishment of an Organised Crime Agency and Disestablishment of the Serious Fraud Office

2 This paper proposes:

• The replacement of the existing SFO powers by alternative judicially approved orders for the production of documents and limited compulsory examinations for all Police (to be set out in search and surveillance reform legislation);
• That the future Organised Crime Agency, located within the Police, be known as the Organised and Financial Crime Agency New Zealand (OFCANZ);
• That, following the disestablishment of the SFO, the SFO functions and resources are fully integrated into OFCANZ; and
• That interim powers are established to enable the new agency to maintain the effective investigation of Serious Fraud until such time as the new powers outlined above come in to force.

4 On 3 September 2007, Cabinet noted that: the scale of organised crime is difficult to quantify but is considered to be growing, the Pacific regions are an area of concern in regard to organised criminal activity, and there are deficiencies in the current cross government response to the enforcement of organised criminal activity [CAB Min (07) 32/5]. In addition Cabinet agreed that:

• An Organised Crime Agency (OCA) be established and hosted within New Zealand Police and that the OCA would focus on serious and organised crime rather than street level offending;
• The SFO be disestablished and its functions relating to the detection, investigation and prosecution of serious fraud be subsumed under the OCA; and
• There is no justification for retaining separate powers that the SFO currently holds in relation to the investigation of serious or complex fraud, and therefore agreed that the separate powers of the SFO be repealed when it is subsumed into the OCA, noting that the Law Commission’s proposed search and surveillance reforms would provide a basis for an assessment of relevant powers required by the OCA.

• The nature of the powers proposed for the SFO in the new Organised Crime Agency, particularly regarding document production and compulsory examination, and how those powers could be ring fenced to preclude their unnecessary or inappropriate use by other members of the Police;
• A comparison between the present arrangements and what is proposed for the new Organised Crime Agency;
• The experience of other similar jurisdictions in tackling organised crime and serious fraud; and
• The experience and/or role the Police currently have in dealing with serious fraud.

7 The intention of this paper is to seek cabinet approval to the establishment of additional powers for Police under the proposed search and surveillance reform legislation, the integration of the SFO into OFCANZ and the mechanisms for the establishment of OFCANZ and its the new powers.

The Changing Face of Offending and Implications for Investigatory Powers and Bodies

9 Fraud is more complex than ever before due to the impact of globalisation, computer, internet access and identity fraud, which provide for levels of anonymity and speed well beyond those of the 1990s. There is also greater convergence between the categories of serious fraud and organised crime. In addition, a number of agencies now have responsibilities to address aspects of corporate fraud or "white collar crime" and Police have also further developed their capability to investigate and prosecute serious or complex fraud.

10 In this new context, the decision to disestablish the SFO and integrate it into OFCANZ combines the skills, abilities and resources of the two organisations and is a significant step to increase the efficiency and effectiveness of dealing with both serious fraud and organised crime. It is proposed that a permanent Serious Fraud Taskforce be established within OFCANZ to ensure the continued prioritisation of corporate and serious fraud.

The Establishment of OFCANZ

12 OFCANZ will be established as a discrete service agency within Police, with its own identity and branding. As Cabinet has previously agreed, OFCANZ will integrate the SFO, and incorporate the SFO's functions and capability to combat serious or complex fraud.

13 Interim arrangements are proposed for the transfer of the SFO’s functions to OFCANZ, pending the enactment and coming into force of the search and surveillance legislation. The transitional legislation required to integrate the SFO and its capability into OFCANZ as soon as possible would effectively anticipate and bring forward into OFCANZ the same powers that would apply to the Police generally, once the search and surveillance legislation comes into force.

14 In order to manage this arrangement within OFCANZ, it is proposed that the transitional legislation, creating limited production and examination powers, would be available for OFCANZ’s work in relation to serious fraud. The Commissioner of Police would have authority to delegate the powers as required for this work.

15 The transitional legislation would include a sunset clause for the expiry of the related powers. The powers would be replaced by the same powers that would apply generally to the Police, under delegation from the Commissioner of Police, once the Search and Surveillance legislation comes into effect.

Implementation

17 Officials believe that, at this point, it is both feasible and preferable to implement the integration of the SFO into OFCANZ over a relatively short timescale. The nature of the process since the initial announcement has contributed to uncertainties for SFO staff. Police have communicated with SFO employees outlining Police’s commitment to retaining the skills and commitment of the SFO staff to create positive public value across the wider challenges of organised crime as well as serious or complex fraud. Police and the SFO are working closely to ensure that the transition of SFO staff into Police takes place without any disruption to SFO business. Providing clarity to SFO employees will enhance morale and reduce the likelihood of any resignations in advance of the integration.

18 Following the establishment date, Police will then build up the full staffing and resources of the agency over a period of time. This will allow for transfer and recruitment of appropriate personnel, preparation of appropriate infrastructure and resources etc. It is intended that OFCANZ will be fully operational by December 2008 but that further Task Forces will be established and disestablished after that date according to need.

19 To support the disestablishment of the SFO and the establishment of interim powers within police, a Bill for the necessary legislative changes is in preparation and has a high priority in the 2008 Legislation Programme. In addition the Search and Surveillance Bill is also established on the 2008 Legislation Programme.

Background

• agreed that further work be undertaken to determine the accountability structures of the OCA within the Police structure; and
• directed the Ministry of Justice, New Zealand Police, and the State Services Commission, to report to POL by 31 October 2007 on progress in developing the OCA and disestablishing the SFO.

22 The Chair of POL agreed to extend the reporting date to 26 November 2007 [POL Memo (07) 24/3]. On 10 December 2007, the Cabinet Business Committee invited the Minister of Justice along with other Ministers as appropriate to submit a new paper to the Cabinet Business Committee revised in light of the discussion at the meeting and in particular addressing the following matters [CBC Min (07) 26/1-3]:

• The nature of the powers proposed for the SFO in the new Organised Crime Agency, particularly regarding document production and compulsory examination, and how those powers could be ring fenced to preclude their unnecessary or inappropriate use by other members of the Police;
• A comparison between the present arrangements and what is proposed for the new Organised Crime Agency;
• The experience of other similar jurisdictions in tackling organised crime and serious fraud; and
• The experience and/or role the Police currently have in dealing with serious fraud.

24 Since 1990, the nature and scale of fraud offending has changed. Fraud is now made more complex by the impact of globalisation, computer and internet access and identity fraud, which provide for levels of anonymity and speed well beyond those of the 1990s. While there does still exist a category of such fraud that is strictly the criminal abuse of commercial practice and not covered by the taint of "organised crime" in the sense that it is generally perceived, there is a clear track of convergence between organised crime interests and the people who form up in the commercial world. The more serious criminal enterprises are both using commercial and financial expertise not just as devices to launder the proceeds of crime or to accrue assets, but also to suborn markets, financial processes and decision makers within the system in order for criminal financial gain.

25 Unlike the sparsely regulated environment of the 1980’s, there are now five agencies that can address aspects of corporate fraud or "white collar crime": the IRD, Police, SFO, Securities Commission and the National Enforcement Unit (NEU) of the Ministry of Economic Development (the NEU conducts investigations and prosecutions on behalf of the Official Assignee and Registrar of Companies and other statutory officers). In addition, reforms continue within MED, Ministry of Justice, Reserve Bank of NZ and Treasury regarding financial products, providers and anti-money laundering regulation.

26 Against that background, Police have also further developed their capability to investigate and prosecute serious or complex fraud. Police now deal with fraud with a significant dedicated resource including forensic accountants and detectives working in dedicated fraud squads such as the Company Fraud and General Fraud squads in the Auckland City District. Police also employ document examiners, computer forensic staff, legal advisors and forensic accountants.

Integration of SFO into OFCANZ

28 Accordingly, Cabinet has agreed that the SFO be disestablished, its existing powers be reformed and a permanent Serious Fraud Taskforce within OFCANZ be established. This decision provides an effective response to the changed environment outlined above and the undesirable proliferation of ‘fraud units’ within different government agencies. The combination of the skills, abilities and resources of the two organisations to undertake the financial investigations required to more effectively combat organised crime and serious or complex fraud is a significant step forward.

29 This integration also allows the greatest degree of flexibility and coordination in the investigation of serious or complex fraud, while ensuring that the investigation of serious or complex fraud is identified as a priority within Police. OFCANZ's ability to combat serious or complex fraud will be substantially enhanced by the integration of the SFO.

30 This integration would also conform with the direction of recent government-approved proposals to equip the New Zealand Police to provide the best policing services for New Zealanders. A key objective of the Policing Bill currently before the House is to strengthen the governance and accountability arrangements for Police. The Bill envisions the Commissioner of Police being more clearly positioned at the apex of the Police hierarchy, and being named in legislation as the centralised authority with the ability to delegate the power to exercise certain functions in his or her name. The Bill provides for the Commissioner at any time to take charge of, or appoint a Police employee to take charge of, a policing operation.

31 The full integration of SFO’s functions into OFCANZ is essentially consistent with comparable international models in Australia, Canada and South Africa. While the UK SFO has remained separate from their Serious and Organised Crime Agency (SOCA), it has received criticisms which include isolation from other investigatory agencies, duplicating investigatory efforts, and jurisdictional confusion. A description of the experience of other similar jurisdictions in tackling organised crime and serious fraud is provided in Appendix A.

Recommendation

34 The SFO was given two powers that are not currently held by the police. In brief:

• The power to compel the production of documents and information (on the minimum grounds of reason to suspect fraud has taken place), and
• The power to compel the attendance of witnesses or suspects and for them to answer questions about the whereabouts or existence of documents of questions relevant to the investigation (on the minimum grounds of reason to believe fraud has been committed).

37 Police do not currently have an examination or production power available to investigators, yet enjoy considerable success in the investigation of serious and complex fraud and organised crime matters by utilising existing investigatory methods.

38 These additional powers are therefore not considered a panacea for investigative difficulties but are intended to complement the current range of investigative tools available to Police investigators which include search warrants and surveillance capabilities.

39 These new powers for Police are outlined in the suite of 8 papers reforming search and surveillance (particularly Cabinet Papers 5: Production Powers and 8: Examination Powers). The search and surveillance papers propose that judicial authorisation is required before production of documents or examination can be compelled. In addition the search and surveillance Cabinet papers propose more precise thresholds or restrictions for the examination power.

40 Officials considered the possibility of ring-fencing OFCANZ’s powers by establishing a statutory unit within Police/OFCANZ, with powers in its own right. This option would undermine some of the key objectives of the Policing Bill and perpetuate key weaknesses of the Police Act 1958 and Police Regulations 1992 with regard to unclear responsibilities and confused lines of accountability.

41 The proposed examination power which requires judicial authorisation and the legislated restrictions provides, in Police’s view, sufficient ability to overcome the possible resistance of certain professionals who do not wish to cooperate with investigators in fear of breaching professional obligations to clients. Police, in the first instance, will generally consider other methods of obtaining information such as requesting voluntary assistance before compulsion is sought.

Transition from SFO Act to Search and Surveillance Powers

43 To manage the transition we propose that the legislation to disestablish the SFO include provisions which would preserve a heightened serious and complex fraud investigatory capability within OFCANZ until such time as the search and surveillance legislation is enacted. Effectively this would anticipate, and bring forward into OFCANZ, the same powers that would apply to the Police generally, once the search and surveillance legislation comes into force.

44 The transitional arrangement would involve the creation of production and examination powers on the basis proposed in papers 5 (Production and Monitoring Powers) and 8 (Examination Powers) of the search and surveillance suite of Cabinet papers for complex fraud investigations along with other necessary elements from paper 1 (Overview) and 7 (Remedies and Immunities). The Commissioner of Police and his delegate, would hold the authority for the exercise of those powers solely for the investigation of serious or complex fraud in this transition period.

45 The legislation to disestablish the SFO and establish interim powers as described above would include the provision of an Order in Council process for the expiry the limited examination and production powers on the enactment of the search and surveillance legislation. It is expected that the enactment of the search and surveillance legislation will take place in the last half of 2009. Therefore it is also proposed that the legislation to disestablish the SFO and establish interim powers have a sunset clause to require the Order in Council to be made by mid 2010.

46 The benefits of this approach are that it;

• allows for the immediate integration of SFO into the OFCANZ structure providing certainty and career paths for the existing staff of the SFO. This will mitigate the risk of losing key staff due to otherwise long lead times for integration;
• preserves heightened powers to investigate serious or complex fraud;
• brings greater safeguards to bear on the use of the powers through prior judicial authorisation and oversight of the Independent Police Conduct Authority; and
• conforms with the key objectives and provisions of the Policing Bill with regard to the role and authority of the Commissioner of Police at the apex of the Police hierarchy.

48 The Ministry of Justice, Law Commission, Police, Serious Fraud Office and State Services Commission recommend that these new investigative powers be established through the search and surveillance reforms submitted to Cabinet by the Minister of Justice.

49 In advance of the enactment of legislation to establish these new orders for Police, we recommend that legislation to disestablish the SFO and integrate its functions and resources into OFCANZ, also establish interim powers to mirror those to be established through the proposed search and surveillance legislation. We recommend these powers be vested in the Commissioner of Police who may delegate them. An Order in Council process, combined with a sunset clause in the legislation would enable the expiry of the powers once the search and surveillance legislation comes into effect.

Establishment of OFCANZ

52 As discussed in the first of this suite of three papers, OFCANZ’s contribution to the Organised Crime Strategy (OCS) focuses largely on its Intelligence and Enforcement goals regarding serious organised crime as described above.

53 As outlined above, in addition to its contribution to the OCS, OFCANZ will also tackle serious corporate or commercial fraud. This type of offence can be committed by single individuals acting alone and therefore does not always fall within any agreed definition of organised crime and the scope of the OCS. However, there is a clear track of convergence between organised crime interests and the people who make up the commercial world. The more serious criminal enterprises are using commercial and financial expertise not just as devices to launder the proceeds of crime or to accrue assets, but also to suborn markets, financial processes and decision makers within the system in order for criminal financial gain.

54 Building the responsibility for dealing with this type of offending into OFCANZ will bring together the skills and knowledge base required into a single agency, thereby improving the efficiency and effectiveness of OFCANZ in dealing with the complex financial aspects of organised crime. As previously discussed, this can be done without reducing the focus on dealing with corporate fraud and will provide improved support, systems and critical mass.

55 To ensure that OFCANZ’s role is clear, it is recommended that CBC endorse the following mission statement:

To improve the safety and security of New Zealand by combating serious and organised crime and serious or complex fraud through an inter-agency partnership approach.

• to centralise and enhance intelligence gathering capabilities against organised crime networks and those committing serious or complex fraud and to ensure information is shared between law enforcement and other agencies;
• to collaborate with, and enhance co-operation between, law enforcement and other agencies in the planning and conducting of operations, both nationally and internationally; and
• to detect, investigate and successfully prosecute serious and organised crime and serious or complex fraud;
• to interrupt organised criminal activity through operations to restrain and forfeit the proceeds of crime;
• to confront and disrupt the activities of serious and organised criminals and those committing serious or complex fraud;
• to improve understanding of the activities of organised crime networks and the harm they cause; and
• to prevent risks arising or potentially arising from serious and organised crime and serious or complex fraud.

• intelligence gathering, sharing, analysis and dissemination;
• strategy and priority setting, target setting and planning;
• undertaking and supporting investigations using overt and covert capability
• a focus on crime prevention;
• maintaining international linkages and strategic liaison with relevant agencies in New Zealand.

• permanent core units or taskforce groups, such as an intelligence hub;
• ‘standing’ taskforces, for example a serious fraud taskforce and a ready reaction taskforce; and
• ‘directed’ taskforces, set up at any time for a specific purpose.

59 Inter-agency participation will be vital to OFCANZ’s success. It is envisaged that OFCANZ-led taskforces will include a mix of secondments to OFCANZ and contributing personnel (ad hoc as required), assets and other capability from partner agencies. Where matters are not the subject of a OFCANZ taskforce, partner agencies will continue to lead operations in their own sphere and will be able to seek the assistance of OFCANZ.

Structure, governance and accountability within Police

61 OFCANZ will have Police support in areas such as Information Technology, Human Resources, Legal, Public Affairs, and Business Services.

Strategic oversight and Accountability

• agreed that the Officials Committee on Domestic and External Security Coordination (ODESC), whilst recognising the statutory independence and operational freedom of the Commissioner of Police, will provide strategic oversight, coordination, and advice in support of the Agency’s management and operations; and
• noted that the Organised Crime Strategy will guide further work developing the Agency [CAB Min (07) 32/5].

64 The Commissioner of Police has indicated that the Director of OFCANZ will be an Assistant Commissioner and will report to a Deputy Commissioner, who in turn reports directly to the Commissioner. The Director will be responsible for operational oversight of OFCANZ and its resources, acting under delegation from the Commissioner of Police.

65 As OFCANZ will be part of the Police, the Independent Police Conduct Authority (the Authority) will automatically have oversight of OFCANZ with regard to receiving and investigating complaints about members of Police involved with OFCANZ operations. Following recent Cabinet decisions [POL Min (07) 27/10 refers], the Authority also will be able to investigate on its own motion incidents where no complaint has been made.

66 The Authority would not be able to investigate complaints that relate to the activities of non-Police members, either seconded from other agencies or participating with Police in joint operations. Any such complaint would need to be referred to the chief executive of the organisation with which the non-Police person has their employment relationship.

Risk management

68 Police will also have a new disciplinary system for its personnel in place by the time OFCANZ is formed to reduce the risk of any staff misusing sensitive information and to respond to any such cases. Further work will be undertaken to develop adequate offence provisions regarding any breach of secrecy of information obtained by OFCANZ.

Implementation Management

70 OFCANZ will be formally established at the point of enactment of the enabling legislation (planned for 1 July 2008) and the resources of SFO will become part of the organisation at that time. OFCANZ will then build up its staffing and resources over a period of time. This will allow for transfer and recruitment of appropriate personnel, preparation of appropriate infrastructure and resources etc. It is intended that OFCANZ will be fully operational by January 2009 but that further Task Forces will be established and disestablished after that date according to need.

71 Officials believe that, at this point, it is both feasible and preferable to implement the integration of the SFO into OFCANZ over a relatively short timescale. The nature of the process since the initial announcement has contributed to uncertainties for SFO staff. Police have communicated with SFO employees outlining Police’s commitment to retaining the skills and commitment of the SFO staff to create positive public value across the wider challenges of organised crime as well as serious or complex fraud. Police and the SFO are working closely to ensure that the transition of SFO staff into Police takes place without any disruption to SFO business. Providing clarity to SFO employees will enhance morale and reduce the likelihood of any resignations in advance of the integration.

72 It is proposed that the management of the integration of the SFO into OFCANZ be overseen by an officials’ steering group. The group will comprise chief executives or their deputies from the New Zealand Police (Chair), State Services Commission, Ministry of Justice, SFO, Law Commission and the Department of the Prime Minister and Cabinet. There may be a need to review membership of this group.

Recommendation

74 Agreement to this recommendation would lead to:

• OFCANZ being launched within the Police on the date at which enabling legislation is enacted (planned for 1 July 2008) to lead a co-ordinated whole of government response to the problem of serious and organised crime;
• OFCANZ and its governance structure, including ODESC, replacing the national structures established under the Combined Law Agency Group (CLAG);
• OFCANZ retaining some operational aspects of CLAG and formalising joint planning and operations with partner agencies;
• The SFO being integrated into OFCANZ on the same day as OFCANZ is established (planned for 1 July 2008);
• Interim arrangements for appropriate powers being introduced as outlined earlier in this paper

77 The paper was also provided to the following agencies for their information: Treasury, the Crown Law Office, New Zealand Customs Service, Inland Revenue Department, Department of Labour, Ministry of Fisheries, Ministry of Agriculture and Forestry, the Department of Internal Affairs, Government Communications Security Bureau, New Zealand Security Intelligence Service and ODESC.

Judicial comment

80 The establishment of OFCANZ is therefore not dependent on the provision of new funding. However, Police has developed a funding bid for additional OFCANZ resources to further enhance OFCANZ’s core activities. That bid will be considered in due course through the Budget 2008 process.

81 The Treasury comments that the formation of OFCANZ is a merger of existing functions which Ministers should expect to be funded from within existing agency baselines. Given that additional Police resources have yet to be deployed, flexibility exists to provide for growth in OFCANZ. Ministers may wish to consider further investment opportunities post-formation, at a time when OFCANZ can demonstrate delivery of benefits against its objectives.

82 Planning for the establishment of OFCANZ includes considering whether it would operate under a separate output expense within Vote Police, setting out the services to be provided and their costs. Discussions on this possibility have begun with the Treasury.

Human rights

• repeal of the Serious Fraud Office Act 1990;
• removal of the SFO from the State Sector Act 1988 First Schedule (the SFO would then cease to be a Public Service department);
• provision for SFO staff transfer to the Police, using provisions similar to those in the State Sector Act 1988:

• section 30B – transfer of functions to Police does not transfer the Chief Executive or staff to Police;
• technical redundancy provision such as in section 30E State Sector Act 1988;
• section 30F so that Police Act provisions regarding appointments on merit, advertising of vacancies and review of appointments do not apply to these appointments;
• sections 30H, 30J and 30L, and possibly 30K if there are any transitional issues;

• amendment to the Ombudsmen Act by removal of the SFO from the Schedule; and
• protection of the prior exercise of powers under and in accordance with the SFO Act for cases that are continuing beyond the date of repeal.

86 A bid has been made to include the necessary Bill as a high priority in the 2008 Legislation Programme. The Ministry of Justice will be responsible for the resulting legislation.

Regulatory impact analysis

• In Australia SFO type functions are split between regulatory agencies and the Australian Crime Commission ("ACC"). ACC has functions similar to those proposed for OFCANZ (including the criminal investigation of serious fraud). ACC is a Commonwealth statutory body that works collaboratively with federal, state and territorial agencies to counter serious and organised crime.
• The ACC has similar powers to SFO and that these powers can be utilised in the investigation of offences beyond serious or complex fraud. Indeed, the ACC can use all evidence obtained through a compulsory examination in a subsequent criminal prosecution unless the individual asserts self-incrimination privilege before answering the question. However, approval for the use of these powers is from an independent Board rather than a Director, and there are only three investigators who can conduct compulsory examinations.
• A Parliamentary Joint Committee review of the Australian Crime Commission Act 2002 indicates public submissions expressed concern about the leaching of ACC powers into ordinary police work and that ‘fishing expeditions’ were being conducted in the examinations.

• The UK SFO remains in operation as a separate agency. In addition, there is the UK Serious and Organised Crime Agency ("SOCA"), which fulfils the organised crime functions of the proposed OFCANZ. Those cases that the UK SFO does not investigate are able to be taken up by SOCA. Criticism of the UK SFO has been similar to that mentioned above regarding the NZ SFO, and in particular, criticism has been made of the isolation of the UK SFO, doubling up of investigations, issues regarding jurisdiction with SOCA and cases falling in the cracks between organisations.
• Although the UK SFO relies on regulatory bodies to do the initial detection of possible serious fraud, it has similar investigatory powers as the SFO. As mentioned previously, the UK SFO has received criticism by the European Court of Human Rights for its use of compulsory powers for criminal investigations.
• In addition, as in New Zealand, the UK Police undertake a range of investigations into fraud, some of which are significant in scale and / or complexity
• SOCA has all the general police powers. It also has the ability to issue disclosure notices, which require a suspect to answer questions, provide information and produce documents.

• General fraud investigations are conducted by both the Canadian Police and the Royal Canadian Mounted Police. However, Integrated Market Enforcement Teams (IMET’s) have been developed to focus on the investigation of serious financial fraud. IMET’s are multi-disciplinary and located within the Royal Canadian Mounted Police Commercial Crime Section. IMET’s work closely with securities regulators and additional federal and provincial authorities.
• General Police powers include judicial orders for non-suspects to produce documents. When a production order is issued, rigorous safeguards are in place, in particular, the right under the Canadian Charter of Rights and Freedoms not to be subject to unreasonable search and seizure. Compulsory examination powers are not available for the investigation of corporate fraud.

• The Special Investigation Unit ("SIU") is a regulatory agency that investigates fraud, maladministration and corruption which is then enforced through civil prosecution. If the SIU discovers evidence of criminal offending it is handed over to the National Prosecuting Authority ("NPA"). The NPA has a special statutory agency called the Directorate of Special Operations ("DSO") also known as "the Scorpions". The DSO is a multi-disciplinary agency which investigates and prosecutes organised crime and corruption and appears to be functionally equivalent to the proposed OFCANZ. There has been some criticism of the competition between DSO and the South African Police for staff and an overlap of investigative capabilities.
• SIU regulatory investigations of securities and corporate fraud are prosecuted with civil remedies. However, the DSO has general police powers as well as expanded powers of search and seizure. In particular, the DSO has the ability to issue a notice to summon an individual to produce documents and answer questions.

The creation of a single agency charged with combating organised crime does, to some extent, accentuate existing risks in the security of information and in personnel corruption. Appropriate risk management, guided by the GCSB and NZSIS, is integral to the development of the agency. In particular Police propose the following measures:

• a constrained physical environment that provides a high level of security around all sensitive intelligence including for OFCANZ personnel;
• grading intelligence and progressively limiting access to sensitive information so that decision making around targets and tasking has substantial restrictions and is limited to appropriate personnel both within OFCANZ and the wider New Zealand Police; and
• implementing enhanced systems protections, such as random checks on computer use and restricted computer fields and access codes.

An agency that wishes to receive, store, and handle classified information, particularly more highly classified information, must be accredited by the GCSB and the NZSIS. The requirements for accreditation, which aim to ensure that the whole physical and electronic environment are of a secure nature, are set out in a variety of manuals. The NZSIS is charged with physical security; that material is largely contained in the Security in the Government Sector Manual, but also in the Protective Security Manual. The GCSB's security requirements are contained in a number of more technical documents, including SIT 400. These documents are concerned, generally, with electronic security, in the broadest sense of the word.

This Appendix sets out the sorts of measures that will contribute to physical, electronic, and personnel security for OFCANZ. This description is at a general level for two reasons. First, much of the detail is itself classified. Second, the requirements are set out in significant detail in a number of manuals. Together, those manuals are almost 500 pages long. Compliance with those manuals, however, gives domestic and international partners confidence that intelligence and information they provide to OFCANZ will be treated appropriately. Therefore, to ensure that it receives this material, OFCANZ will need to secure certification through compliance with those manuals.

It is expected that the existing SFO staff will continue to be housed in their current building in Auckland and the security of that building will be reviewed. The OFCANZ Wellington based staff will be housed on a floor at Police National Headquarters, at 180 Molesworth Street. That building is currently undergoing significant renovations; some of those renovations will make the building more secure. For instance, there will be pass-gates in the lobby, similar to those at Defence House. The pass-gates will make unauthorised access into the building considerably harder. Once inside the building, the floor itself will have limited access (limited swipe-card access from the lifts and stairs). Once on the floor, there will be further security around access to the office itself, most likely an electronic system during office hours with mechanical back-ups for after hours. Only suitably cleared staff and escorted visitors will be allowed access; access to more sensitive portions of the floor will be further limited. This level of security will mean, for example, that the offices are most likely to be cleaned during working hours under escort.

The walls on the floor will be strengthened, and will run from slab to slab (in other words, it will not be possible to crawl through ceiling cavities or air-conditioning ducts). Doors onto the liftwell will be very solid, and will be fitted into a strengthened frame. Further, the floor will be alarmed (and some portions of the floor may be separately alarmed). Finally, where appropriate, glazing on the floor will be intruder resistant to the approved standard.

Information held in paper form will be held in an approved security container (either a safe or a lockable filing cabinet, depending on the security classification of the material). Where sensitive material is being disposed of, that disposal will be done using a cross-cut shredder.

Electronic security will be an important aspect of OFCANZ's operations. Obviously, there will be strict access controls (logons and passwords), with greater security where the information is of a higher classification.

Many everyday devices can be used to compromise security. For instance, cell phones and PDAs can be used to record and transmit conversations without the knowledge of the person carrying them. Consequently, cell phones, flash media, cameras, etc will not be allowed within the OFCANZ premises.

There will be a number of agencies represented in OFCANZ, most if not all of which will have access to their "home agency" computer system. The Police IT system will also be used. GCSB has a number of requirements around the use of different systems, including physical separation of different systems and the use of shielded cabling, and those requirements will be followed.

It is also a GCSB requirement that printers used for printing higher security material are used solely for that, and not for, for instance, photocopying. Equally, there are strict requirements around the disposal of media used for storage of high-security material.

As every Government agency does, OFCANZ will rely on the NZSIS' clearance process to ensure that its staff, and staff seconded to it from other government agencies, are suitable to hold a security clearance that would enable them to deal with information the agency holds.

Footnote

1 Paper 1: Programme of Action for Organised Crime and the Organised Crime Strategy

Paper 2: Establishment of the Organised Crime Agency and Disestablishment of the Serious Fraud Office

Paper 3: Reducing the Level and Impact of Organised Crime in New Zealand: Recommendations for Legislative Reform