A woman's suicide has prompted the Ministry of Social Development (MSD) to change the way it investigates fraud.

Photo: RNZ / Rebekah Parsons-King

Wendy Shoebridge took her own life in April 2011, less than a day after receiving a letter saying she had been overpaid $22,000 and would be prosecuted.

Ms Shoebridge's death was initially investigated by a coroner in 2013, but he died before the findings were released.

A second inquest in December 2016 looked at whether MSD management were told Ms Shoebridge was at risk of suicide and whether they would automatically prosecute cases of fraud without any discretion.

In her findings, coroner Anna Tutton noted that a ministry investigator said he was told to prosecute her, despite telling his manager she was at risk of suicide and should only be given a warning.

However, the manager denied she directed the investigator to prosecute. She said he did not raise concerns about the case, nor did he tell her he wanted to issue a warning.

The investigator, whose name is suppressed, said investigators were required to "get" one prosecution a month over a year and recover $30,000 of debt a month. Investigators had to clear four cases a month and if they didn't meet their performance targets they were put on performance management.

In its evidence, the MSD said there was an expectation that investigators would clear about four cases a month, but "KPIs [key performance indicators] that related to the number of prosecutions and the number of clearances and ... people were assessed over the course of a year and the expectation was at least one prosecution on average (per month)."

Ms Tutton has found that managers were not aware of the suicide risk and that prosecution did not automatically follow a successful fraud investigation.

The coroner also considered whether the MSD position in 2011 was that prosecution automatically followed, if fraud was discovered.

In its Annual Report 2010/2011, the ministry said there was a zero tolerance policy to benefit fraud and that "where we find evidence of fraud we prosecute."

Ms Tutton found the message in the agency's annual report was consistent with the beliefs of staff and had "cascaded down" to staff, following a meeting of managers earlier in the year.

The ministry said since Ms Shoebridge's death it had made changes to introduce further checks and balances to the process for initiating prosecutions and interviewing clients.

It conceded it needed to be clearer about its messaging over its test to prosecute benefit fraud.

Information about a client's suicide history was now flagged in the MSD risk assessment and the case would be escalated to the manager.

The MSD said it had improved processes around prosecutions, staff training and changed its focus, "so that we now work with client's early before they fall into debt. We now work with clients to help them do the right thing and make it easier for them to keep us informed of changes in their circumstances," it said.

After Ms Shoebridge's death the ministry reduced the debt to around $5000 before clearning her name. The ministry told her mother she should not have received the prosecution letter.