Samoa Observer

Former N.B.S. chief gives evidence in High Court

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Former N.B.S. chief gives evidence in High Court

By Sialai Sarafina Sanerivi 05 June 2023, 10:10PM

A former National Bank of Samoa chief executive officer has given evidence in New Zealand's High Court in an ongoing fraud case that began after the 2018 collapse of insurer C.B.L. Corporation.

According to an article last Friday by Tim Hunter of the New Zealand National Business Review, the former C.E.O. of the N.B.S. Tu'u'u Amaramo Sialaoa told the High Court he was "misled by former C.B.L. Director", the late Alistair Hutchison. 

Sialaoa gave evidence in the trial of the insolvent C.B.L. managing director Peter Harris and chief financial officer Carden Mulholland. 

"Two of the charges laid by the Serious Fraud Office against Harris and former C.B.L. chief financial officer Carden Mulholland relate to a deposit of €12.5 million ($21 million) made by C.B.L. at the bank.

"The Crown alleges the deposit was deliberately misrepresented in C.B.L.’s accounts to allow it to meet regulatory solvency requirements, leading to charges of obtaining by deception and false accounting." 

The former C.B.L. director Mr. Hutchison was a major shareholder of the bank and was a senior member of the N.B.S. Board. He was also a former finance secretary to the Government of Samoa and was a regional businessman. He passed away in December 2021.

The N.Z. National Business Review reported that Sialaoa had informed the High Court that there was a request from Hutchison to arrange for €12.5 million (SAT$36 million) to Hutchison's company in Singapore, the Federal Pacific Group. 

"The purpose was to fund an equity investment by Federal Pacific in Danish insurer Alpha, which wrote long-tail construction insurance for CBL’s agents in France and reinsured much of the risk with CBL Insurance in New Zealand," N.Z. National Business Review reported.

"According to a bank document shown to the court, the loan was funded by a deposit of the same amount from C.B.L. secured by an irrevocable guarantee from C.B.L. and a personal guarantee from Hutchison.

"C.B.L.’s guarantee was in the form of a loan default insurance bond covering full repayment plus interest. Sialaoa told the court the deposit was to be tied to the loan until it was fully repaid."

The report also stated that because the loan was "so large relative to the size of the bank's equity" there was a need to seek approval from the Central Bank of Samoa and N.B.S. provided full details of the structure to the central bank. 

Counsel for the prosecution Brian Dickey then referred to email correspondence with C.B.L.'s chief finance officer, Mulholland in 2015, where he was asking for a letter from N.B.S. saying the deposit was "not secured or encumbered” and that “C.B.L. could break the term deposit if it wished at any time with prior notice to the bank”.

"Sialaoa said before receiving the request, Hutchison had told him of a need for some declarations about the deposit. On March 3 N.B.S. provided a letter to Mulholland signed by Sialoa confirming it held the €12.5m deposit and that the money was 'not secured or encumbered'," using the exact wording as requested by Mulholland.

Counsel Dickey then asked Sialaoa: “Did [the letter] reflect what you understood to be the underlying terms?”

“No,”  Sialaoa said in response, according to the N.Z. National Business Review article. 

Davey Salmon KC, counsel for defendant Peter Harris then jumped up and the hearing paused to consider the Section 62 issue. On reconvening, the judge made sure Sialaoa had received legal advice during the adjournment and told him he may not need to answer questions under a privilege against self-incrimination.

The case continues in the High Court in Auckland, New Zealand. 

In 2018 when the allegations first surfaced linking the N.B.S. to the late Hutchinson, the Governor of the C.B.S. in response to an email from the Samoa Observer said that she was not aware of the allegations. However, she stated that the C.B.S. has a strict "no tolerance policy" towards money laundering. 

“In any case, any person(s)/company proven guilty of a money laundering offence must be dealt with in accordance with the provisions of the Money Laundering Prevention Act 2007,” Maiava Atalina Ainu'u-Enari said at the time. 

If N.B.S was accused of money laundering, according to Maiava, it would be “obligated under the law to report this to C.B.S. Financial Intelligence Unit.

“From a regulatory perspective, we continue to remind financial institutions to be vigilant in identifying as well as reporting money laundering related transactions."

However, it has been reported that the C.B.S. approval of the loan was subject to the requirements that the loan "shall be fully supported by an equivalent term deposit and fully collateralised by surety bond issued by Contractors Bonding Ltd indemnifying N.B.S. from any loss in the transaction”.

By Sialai Sarafina Sanerivi 05 June 2023, 10:10PM
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