A legal attempt by police to collect a portion of the fraudster Joanne Harrison's KiwiSaver money has failed in the Court of Appeal.
Harrison, who defrauded the Ministry of Transport of just over $780,000, now lives in Britain after being deported and applied to access her KiwiSaver on the grounds of financial hardship in 2019.
The money was released from the fund but before it was paid to her police tried to seize it under the Criminal Proceeds Recovery Act and the funds were frozen.
When the Police Commissioner first filed an application in the High Court in 2017 for profit and assets forfeiture orders, it included the contents of Harrison's KiwiSaver account, which at the time had a balance of almost $110,000.
This application was declined under section 127 of the KiwiSaver Act, which protects the money from being paid out to anyone who is not the account holder.
However, when Harrison successfully applied to withdraw some of the money two years later the Commissioner applied to the High Court for a restraining order on the $23,000.
This was on the grounds that it had been released from the fund so was no longer subject to section 127.
A freeze on the funds was allowed due to the large amount Harrison still owed.
At the time this was $238,000.
The Court of Appeal however decided there was no provision under the Criminal Proceeds Recovery Act for the Commission to put a hold on the funds because a final profit forfeiture order had already been made.
It also decided the funds were still subject to section 127 of the KiwiSaver Act despite being "cashed in" by the fund manager.
An observation was made however that the relationship between the Criminal Proceeds Recovery Act and the KiwiSaver Act required urgent legislative attention.
"Apart from the fact scenario that arose in this case, another crucial matter that needs to be addressed is what happens when KiwiSaver members turn 65. As matters currently stand, we are not persuaded there are compelling reasons to treat KiwiSaver schemes as so sacrosanct as to be beyond the reach of the Crown under the Act.
"But that is not the case before us and in any event given the competing policy considerations and the importance of avoiding further delay and uncertainty may well be an issue best resolved by Parliament."
A key argument made by police in the appeal was that criminals would simply transfer their funds into KiwiSaver accounts if they knew they could not be seized under the Criminal Proceeds Recovery Act.