Hutchison refutes allegations of impropriety

29 November 2018, 12:00AM

New Zealand businessman Alistair L Hutchison has refuted allegations of impropriety in connection with a story, which was published on the front page of the November 28, 2018 edition of the Samoa Observer.

Speaking on behalf of his client Mr. Hutchison, lawyer Matafeo George Latu of Latu lawyers said they unequivocally refute the preposterous allegations and suggestions made on the front page of the Samoa Observer of Wednesday 28th November 2018. 

“The article appears to suggest illegal activity on the part of the National Bank of Samoa (NBS) and my client. This could not be further from the truth. The process through which the transaction in question took place, did so with full transparency, was contractually documented and had the knowledge and approval of the NBS and Central Bank of Samoa,” he said. 

“My client is a businessman who has contributed to the public service and private enterprise at the highest levels in Samoa for over 40 years and continues to provide growth and investment opportunities to the local Samoan economy both as an employer, investor and a substantial taxpayer.”

Matafeo said his client states the allegations as reported in the Samoan Observer are totally untrue and appear to be based on unproven allegations. 

Statement by C.B.L. Corporation Ltd

26 November 2018


Dear fellow CBLC shareholder


The last 12 months have been extremely distressing for all those involved with the CBL Group. No one ever imagined that a profitable, experienced and growing business could find itself in the position that it has.

When the Reserve Bank of New Zealand (RBNZ) approached us in mid-2017 with concerns about the reserving of CBL Insurance Ltd (CBLI)’s French business, it was inconceivable to think that despite RBNZ saying it had an open mind and had decided to appoint McGrath Nicol to carry out an investigation into CBLI’s affairs including its reserving, - the fact was, that RBNZ had already done its own analysis and concluded that CBLI was insolvent, and could not raise the capital to close the gap that it had determined was necessary. That was all kept secret from CBLI, and it is clear now that RBNZ had set on a fixated path from August 2017 to prove that it was right, or put hurdles in the way of CBLI to resolve its future, and nine months later, seek to put CBLI into liquidation for being under-reserved and insolvent.

All this when CBLI had an annual gross revenue of $400m, was highly liquid, had an investment grade credit rating and a good shareholder and capital management track record. It should have been able to withstand any financial burden foisted upon it, it should have been able to implement its plan to divest the controversial French construction business and raise sufficient capital to fund its ongoing 45-year credit and surety business.

Certainly, the work done by our independent actuaries PWC NZ over the years did not give us any concern about our reserving. Notwithstanding that, we took PWC’s advice (as we always did), to strengthen French reserves in February 2018 which resulted in CBL’s first loss in 13 years. After further and full consideration, on 5 February we announced a plan to take the risk of a future large actuarial adjustments away from CBLI and divest our French operations with its profitable, but long-tail run-off books of liabilities, and to divest CBLC’s two French MGA’s.

Hindsight is a wonderful thing. From August 2017 through to February 2018 RBNZ told us that it did not have a predetermined view on CBLI’s French reserving. We believed them, until we first read about the analysis and conclusions in Mr Fiennes’ without-notice affidavit filed in the NZ High Court on 23 February 2018. From August 2017 onwards, CBLI was put into an effective straight-jacket, and stopped from taking several prudent steps to improve CBLI’s position. Concurrent with appointing McGrathNicol (an insolvency expert with little or no expertise in CBLI’s business), RBNZ also issued numerous directions on the company, including immediately raising the minimum solvency capital from 100% to 170%, and to impose a very strict confidentiality clamp on the company. That clamp did not work for CBLI or CBLC, and was made worse by RBNZ failing to maintain the same level of confidentiality itself, as it was in regular contact with other regulators locally and internationally, fuelling concerns about CBLI’s financials. When we confronted RBNZ with what we were hearing from alarmed overseas regulators, - RBNZ always denied that it had any predetermined position on CBLI. The facts do not bear that out.

In April 2018, RBNZ abandoned the 8-month investigation it had got McGrath Nicol to carry out, with no report issued and no outcomes. There are two other agencies now looking at the matter, FMA, and SFO. We have no issues about proper inquiries being made by those agencies, - they are professional, discreet, and independent without any personal agendas.

RBNZ on the other hand has made some outrageous allegations, - unproven, google-researched, and unsubstantiated with evidence, and staged for the media in open court 12 November, whilst at the same time being careful to say their accusations should at least be investigated.

People hearing accusatory statements by RBNZ or its lawyers in a High Court are entitled to think “well if RBNZ said it – it must be fact and it must be true”. We are aware of at least one legal action being taken over one of these accusations, and there may be others.

Yes, we made mistakes. In hindsight, buying SFS with high borrowings and what turned out to be poor due diligence was a mistake. But we were prepared to face up and deal with that situation and were doing so. It was not fatal. It could have been sold on an orderly going concern basis, with ongoing insurer capacity. That solution was scuttled by the RBNZ.

The frustration and disappointment to have lived through this nightmare continues to this day. It is in fact a key reason why Alistair Hutchison and I have taken it upon ourselves to put in place a restructuring plan (referred to in the attached presentation) that seeks to put the creditors and policyholders of CBLI and creditors and shareholders of CBLC onto a pathway in the best interests of all.

This is diametrically opposed to the path which has been pursued by RBNZ of liquidating CBLI where creditors will get part payment, NZ policyholders have been abandoned, and the shareholders will get nothing.

The value lost in the CBLC shares is unlikely to be completely restored in the foreseeable future. Our plan puts some control of the outcomes back into shareholder and creditor hands – and establishes a route to restore some value in CBLC shares.

The moves by the RBNZ to liquidate CBLI is a significant setback to us. The alternative DOCA plan we had was fully cash backed and verified and supported by KordaMentha and the banks. Our incredibly loyal employees had stayed together with us, and were looking forward to a continuing future.

The RBNZ’s determination to liquidate CBLI raised itself to another level when it was found in the last few weeks that the RBNZ had been “lobbying” the regulators of the two major creditors Elite and Alpha to get support for RBNZ’s proposal for liquidation, and oppose our DOCA alternative.

RBNZ’s liquidation proposal contained a promised commutation for Elite, and an offering to Alpha that it could be possible to keep the €25m payment it had been paid by CBLI a week prior to being placed into interim liquidation, (as opposed to it being clawed back by a liquidator as a voidable preference payment), - if they were to support RBNZ’s plan to liquidate CBLI.

This apparent lobbying and deal making is surprising coming from a NZ government public body (a model regulator), and even more surprising given RBNZ’s usual total lack of interest in the commercial implications of its regulatory decisions. Alpha and Elite which had opposed liquidation since April, then filed to switch sides and support RBNZ’s liquidation application the day before the proposed hearing for CBLI liquidation.

Our plan is still to take care of CBLI residual creditors and policyholders, and we will deal with the liquidator of CBLI to try and achieve this.

However, the liquidation of CBLI is not fatal to our CBLC restructure plan.

If we can negotiate a plan with the banks pursuant to a CBLC DOCA, then it will give us an opportunity to present shareholders with a Scheme for all to consider and vote on. The Shareholder Scheme proposal envisages that all CBLC shareholders will retain the same number of shares they had at the time the shares stopped trading last February, and that no shareholders will be asked to contribute further capital.

Nothing can be formally put to shareholders until the creditors have voted and agreed to the DOCA proposals. In most insolvencies, there is nothing left over for shareholders after all creditors have been satisfied, but under our 5-step plan, combined with the money we are intending to invest, we think that there can be a future for CBL and its shareholders.

Our plan cannot proceed without the support of creditors and without you, the shareholders. There is a lot of water to flow yet before we are in position to formally put a Shareholder Scheme of Arrangement to you.

We hope the attached paper is of interest and we will keep you abreast of developments. We apologise that this communication cannot be made via NZX or email. Whilst we have Korda Mentha’s approval to use CBLC’s shareholder register, and Computershare’s registry services, we do not have privacy permission to access individual shareholder’s email addresses, so if you would like to get updates by email in future rather than mail, please send a confirmation to: as authorisation to use your email address for future communications.



Peter Harris                                                                                        

CEO, MD & Director



Alistair L Hutchison

Vice Chairman


29 November 2018, 12:00AM

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