Peter Alan Harris, former chief executive of the defunct insurer CBL, has been found not guilty at the High Court in Auckland.
Harris pleaded not guilty to five charges of theft by a person in a special relationship, two charges of obtaining by deception, and one charge of false accounting, as per a Stuff report. The charges were brought the by the Serious Fraud Office.
Once valued at $750 million, CBL was placed into liquidation by the High Court in Auckland in 2020, resulting in many KiwiSaver funds writing down the value of their shares in the company to zero.
Meanwhile, Carden James Mulholland, CBL’s chief financial officer, was also found not guilty of three charges of theft by a person in a special relationship, obtaining by deception, and false accounting.
While not widely known, CBL conducted local insurance operations, providing guarantees to buyers of new homes regarding defect-free construction. The majority of its operations were international, including insuring French homebuilders against potential defects in their homes.
Although investors initially valued the company at nearly $750 million, it was put into liquidation in 2018, prompting the Reserve Bank Te Pūtea Matua to initiate a review of its regulatory actions. The review indicated that the Reserve Bank could have taken more steps to safeguard investors and should have prevented CBL from listing on the NZX in 2015.
The charges against Harris and Mulholland were related to a series of transactions leading up to CBL’s failure, during a period when the Reserve Bank directed that any transactions exceeding $5 million needed consultation with them.
The Serious Fraud Office issued a statement stating it was considering the verdicts but did not confirm if it would appeal. It emphasised its commitment to investigating corporate fraud allegations that pose a threat to New Zealand’s reputation as a safe business environment.
The CBL failure stood as one of New Zealand’s major corporate collapses, significantly impacting the business landscape, the SFO said. It also underscored the importance of this case, emphasising the need to investigate serious and complex fraud allegations, especially during economic uncertainties, to maintain confidence in the country’s business sector and regulatory systems.
Harris consistently maintained his innocence, expressing disappointment at the SFO’s actions in 2020. Following the not guilty sentencing, he released his own statement via a Press release.
“Firstly, I want to make it clear to everyone that there has never been any allegation that I misappropriated any funds of CBL Insurance or any other party. Nor did the charges cause or have anything to do with the collapse of CBL Insurance,” Harris said. “I am pleased to be found not guilty of all the eight charges brought against me, and to have every one of them dismissed. The RBNZ and the SFO misinterpreted both my and CBL Insurance’s actions and misinterpreted the law. It is a great pity the SFO did not analyse these allegations properly, as the judge did, and avoid the unnecessary cost and stress involved in pursuing them against me.”
He also expressed his surprise at the SFO for maintaining that it was right to investigate fraud and prosecute “given that no fraud has been found.” He also called out the RBNZ, saying that those at senior levels that made regulatory decisions did not have the “relevant insurance experience” to make them.
“Frankly, New Zealand insurance companies, banks and investors deserve better from the RBNZ,” he said. “The RBNZ’s ill-considered decision to apply for the liquidation of CBL Insurance caused the unnecessary collapse of the company and resulted in a lot of harm to New Zealand’s regulatory reputation, particularly in Europe. I hope the RBNZ can shake off the ‘we are always right’ culture they had during our experience with them.”
“I would like to thank my excellent legal team, all my supporters and well-wishers from insurance entities all over the world, and my close-knit family and friends,” Harris said. “I look forward to getting on with life and to making a contribution again.”
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