Fraud probe into failed CBL

The Serious Fraud Office and Reserve Bank are investigating failed insurer CBL Insurance.

CBL was put into liquidation in February after sending $55 million overseas, defying a Reserve Bank order.

The insurance company, which was owned by listed company CBL Corporation, specialised in providing the insurance behind 10-year builders’ guarantees that would cover the cost of fixing faulty building work on new homes.

The confirmation of the investigations by the Reserve Bank and the SFO follows a decision by the Financial Markets Authority to investigate CBL Corporation.

In a joint statement, the SFO and Reserve Bank said: ‘‘The Reserve Bank is co-operating with the Serious Fraud Office investigation. The Reserve Bank is also co-operating with the Financial Markets Authority’s investigation relating to issues of market conduct and disclosure by CBL Corporation. No further comment on these investigations will be made at this time.’’

The collapse of CBL Insurance had left thousands of Kiwi families with recently built homes with what appears to be worthless insurance that should have covered the cost of repairs should shoddy construction work be identified within 10 years of construction.

Though not a household name in New Zealand, CBL Corporation was a substantial operation with business in 25 countries, and almost 550 workers, the majority based overseas in countries including France, the United Kingdom, Australia and Ireland.

The February liquidation followed a four-month review conducted by independent appointed actuary PwC.

The Reserve Bank sought CBL Insurance’s liquidation after learning that CBL had paid $55m to ‘‘overseas recipients’’ against its direct order.

In March, Reserve Bank head of financial stability Geoff Bascand said it asked the court to liquidate CBL after the payments.

‘‘The payments to overseas companies were made in the context of significant doubts about CBL Insurance’s solvency,’’ he said, after the liquidation order was granted in the High Court at Auckland.

The company floated on the New Zealand and Australian sharemarkets in 2015, and in 2017 managing director Peter Harris was named the EY Entrepreneur of the Year.