The New Zealand Court of Appeal has allowed the appeal of two charges that were dismissed in the CBL prosecution case.
The Deputy Solicitor-General, representing the Serious Fraud Office (SFO), sought permission to appeal charge 1 and charge 8 from the High Court’s decision to acquit Peter Harris and Carden Mulholland.
Charge 1 against Harris pertains to an alleged NZ$42,136,416 payment to Alpha Insurance A/S (Alpha), which the Reserve Bank of New Zealand claims violated a directive under the Insurance (Prudential Supervision) Act 2010.
Charge 8 involves Harris and Mulholland’s alleged failure to disclose the true nature of a €12,500,000 deposit by CBL with the National Bank of Samoa.
The Court of Appeal has decided to proceed with the appeal on these two legal questions related to charges 1 and 8. The Crown did not pursue an appeal on the other six acquittals.
The appeal comes after Harris, former managing director of CBL Corporation Limited (CBLC), reached a settlement with the Financial Markets Authority (FMA).
This agreement addressed allegations of non-compliance with continuous disclosure and misleading conduct between 2017 and 2018.
The FMA accused CBLC of failing to meet its disclosure obligations by not informing the market about significant issues.
These issues included the requirement for CBL Insurance Limited, its main subsidiary, to increase financial reserves, undisclosed problems related to aged receivables from a French insurance company, and regulatory instructions from the Central Bank of Ireland to CBLC's subsidiary in Ireland.
Additionally, CBLC faced allegations of deceptive practices in its August 2017 market communication.
Under the agreement, Harris acknowledged breaches under the Financial Markets Conduct Act 2013. He has also agreed to an Enforceable Undertaking that bars him from holding any management or board positions in New Zealand’s listed or licensed insurance firms until legal issues connected to CBLC’s 2015 initial public offering are resolved.
FMA head of enforcement Margot Gatland said the approval of the settlement’s terms supports the regulator’s mission to address significant misconduct by CBLC’s leaders.
“The FMA took these civil proceedings in the public interest to meet our regulatory objectives, including to hold significant misconduct to account by several directors and officers of CBLC. We are satisfied this agreement to move to a penalty hearing, with in-court admissions of contraventions, and the management restrictions to which Mr Harris is now subject, meets our objectives at this time in relation to Mr Harris and the Continuous Disclosure Proceeding,” she said in a previous statement.
