Former CBL chief executive Peter Harris and a co-defendant appeared this morning in the High Court for the first time to face fraud charges after the collapse of the insurance company.
Harris and another man who has interim name suppression were charged by the Serious Fraud Office (SFO) last December after an investigation by the financial crime department that began in June 2018.
CBL had a market value of $747 million when its shares - valued at $3.17 - were suspended from trading on NZX and ASX in February 2018 after the company revealed the Reserve Bank (RBNZ) had been questioning its solvency. The specialty insurance firm debuted on the New Zealand sharemarket in October 2015 at $1.73 per share.
After the firm's failure, Harris, 65, was charged with five counts of theft by a person in a special relationship, two of obtaining by deception and a single charge of false accounting.
His co-accused, who is due to have a name suppression hearing this month, was charged with single counts of theft by a person in a special relationship, obtaining by deception and false accounting.
Both men denied all the charges this year in the Auckland District Court.
Today, after the case was transferred to the High Court, the duo stood in the dock wearing dark suits and ties.
Harris' lawyer, Rachael Reed QC, said despite her client pleading not guilty in February, there had yet to be "proper disclosure other than initial disclosure" by the SFO.
Reed told Justice Sally Fitzgerald she was concerned about the lack of disclosure to date, given the amount of material likely to be reviewed and time it will take to prepare for a trial.
Justice Fitzgerald allocated an eight-week trial for the men - both of whom are on bail - starting on September 13 next year.
Harris, who was the CEO and managing director of CBL Insurance and the managing director of CBL Corporation from January 2007, and his co-accused will have their criminal case called in court again later this year for an administrative hearing.
Charging documents viewed by the Herald show Harris and the second defendant are accused of intentionally not disclosing material relating to the National Bank of Samoa to avoid scrutiny by New Zealand regulators.
The alleged fraudulent strategy, according to the court papers, involved CBL Insurance facilitating a €12.5 million ($22.2m) loan to now liquidated Danish company Alpha Insurance.
This was allegedly "obscured by a series of transactions that made it appear the lender was Federal Pacific Group (Singapore) Pte Limited", the papers read.
Another charging document for Harris alleges he breached RBNZ directions when authorising a $42.1m payment from CBL Insurance to Alpha.
The accounting charge both men face relates to material omitted from the CBL Insurance Group annual report for the year ending December 31, 2014, court papers allege.
The SFO also claims a CBL agreement with US firms United Specialty Insurance Company and TexCaz Transborder Insurance breached RBNZ directions.
The charging documents allege Harris and his co-accused, as a "secondary party", breached RBNZ directions relating to transactions totalling $13.2m to United Specialty Insurance Company in February 2018.
After being charged, Harris said: "I welcome the opportunity to finally bring the wider picture of the CBL saga before the court after the SFO and RBNZ jointly announced the investigation in June 2018.
"The court is a proper forum to respond to these allegations and to challenge the regulatory response that placed CBL Insurance Group, and its investors' funds, at risk."
Harris was crowned EY Entrepreneur Of The Year for 2017 and would have represented New Zealand at a global competition in Monaco in June 2018 but withdrew in March that year as the fallout began.
Last year, the RBNZ commissioned an independent report to examine its supervision of CBL Insurance, spanning its pre-licensed state in 2011 through to its eventual collapse.
During the pre-licensing and licensing phase in 2012 and 2013, the report found the RBNZ's processes were sound. However, from 2014 to 2016 - a period that included CBL's initial public offering - it found the RBNZ gave the CBL the benefit of the doubt too often and should have acted more decisively about its solvency concerns.
It later emerged the company had been trading while insolvent and had been for some time.
A group of civil proceedings are also running concurrently to the criminal case.
The Financial Markets Authority (FMA) filed two cases against CBL Corporation, including the six directors, alleging multiple breaches of the Financial Markets Conduct Act 2013.
Two class actions by CBL's shareholders were also launched, while the liquidators have further filed a case against the directors and PwC, which was CBL's actuary.
Andrew Bascan, the chair of the CBL class action claim committee, has said CBL's collapse "represents one of the largest corporate failures in New Zealand's history".
• February 2018: NZX-listed insurer CBL Corporation, with a market capitalisation of $747m, collapses.
• May 2018: The FMA announces an ongoing investigation and a month later the SFO announces it is also investigating matters relating to CBL Insurance. CBL Corporation is also placed into liquidation by the High Court.
• July 2018: The FMA announces its intention to file a civil case against CBL.
• October 2019: CBL's shareholders launch two class actions.
• November 2018: CBL Insurance is placed into liquidation by the High Court.
• December 2019: Criminal charges are filed by the SFO against two defendants and the FMA issues two sets of civil proceedings alleging multiple breaches of the Financial Markets Conduct Act against CBL.
• February 2020: The two defendants plead not guilty to the SFO charges with Peter Harris revealed as one of the accused.
• June 2020: The first combined High Court hearing for the four civil suits is held for the FMA's proceedings, the liquidators, and the shareholder class actions. Further hearings are scheduled for later in the year.
• August 2020: The SFO case is transferred to the High Court where Harris and his co-defendant appeared today. A name suppression hearing for the second defendant is due to be held later in August.