Serious Fraud Office enters CBL fray

The Serious Fraud Office says it is investigating “matters relating to CBL Insurance and associated entities.”

In a brief press release issued this afternoon the Reserve Bank and the SFO said they were each investigating the company.

The Reserve Bank said it was co-operating with the SFO investigation, as well as with the Financial Markets Authority’s investigation relating to issues of market conduct and disclosure by CBL Corporation.

They said they would make no further comment on the investigations.

CBL Insurance, the main operating subsidiary of NZX-listed CBL Corporation, was placed in interim liquidation in February at the request of the Reserve Bank, which said the company was in breach of solvency requirements and there was a risk its assets would be dissipated by directors.

The move prompted CBL directors to place the rest of the New Zealand group in voluntary administration.

Trading in CBL stock was halted on February 5 and shareholders fear its equity, valued by the market at $747 million before the halt, is now worthless.

Since revelations emerged in January and February that CBL’s core business insuring French construction risk in France was in trouble, the company’s affairs have become entangled in court proceedings and insolvency procedures.

Two of CBL’s bank lenders, ICBC and Bank of China, are seeking its liquidation at the High Court, adding to full liquidation proceedings brought by the RBNZ for CBLI.

Meanwhile, CBL’s managing director Peter Harris and deputy chairman Alistair Hutchison have proposed a restructuring plan aiming to allow the business to continue in a modified form.

This plan is to be put forward to creditors as a deed of company arrangement to be considered at a watershed meeting on August 17.

The plan has yet to be disclosed to shareholders.

However, NBR intends to publish details of the plan shortly.