WSBC faces exile from Cook Islands

Friday 27 March: The Cook Islands bank named in money laundering investigations is connected to a New Zealand company seeking a listing on the New Zealand Stock Exchange.

The National Business Review in New Zealand this week reports that developments in the Cook Islands will have a bearing on the stock exchange listing.

WSBC Bank, which is currently under investigation by the Serious Fraud Office, after accusations of links to international money laundering, this week withdrew its legal action in the Cook Islands against the revocation of its banking licence.

The bank is no longer seeking to reinstate its banking licence in the island nation, reports NBR.

The SFO investigation has seen a related company in New Zealand, WSD Global, pull back on its plans to list on the NZX through Tasman Capital.

WSD Global is chaired by ex-MP Matt Robson, who has told NBR that the links between the two companies were minor, but that WSD would still hold off on its listing bid until the SFO investigation of WSBC was complete.

That investigation could be one step closer to completion now, with WSBC no longer fighting to reinstate its bank licence in the Cook Islands.

WSBC has been engaged in litigation with the Financial Supervisory Commission (FSC) of the Cook Islands since 2004 over the initial refusal of the FSC to grant the company a banking licence and the later revocation of that licence.

An appeal against that revocation was due to start in the next week, but the matter between the two parties was settled on Wednesday.

Terms of the settlement are still not fully known, but it is believed to be the result of the Cook Islands government’s moves in parliament to abolish offshore banks.

Late last week, the Cook Islands government’s bill to ban the offshore banks went through its second reading and could become law within 90 days.

NBR understands that a condition of the settlement ending the court action between WSBC and the FSC was that the bank would fully withdraw from the Cook Islands by the end of the year.

Where this leaves WSD, and its long-running bid to list on the NZX, remains to be seen. Although managing director Riaz Patel has no convictions for any illegal activity, he has been connected to money laundering.

In the 1990s, he was director of an Australian company whose staff were arrested by Australian Federal Police and charged with under-reporting of shipped on behalf of clients, with the company itself forced to pay more than $A1 million earlier this decade in an out of court settlement with the Australian Tax Office.

While Robson has claimed the connection between WSD and WSBC is limited to some outsourcing work carried out by the New Zealand company, WSBC’s Rarotonga-based chief executive Kumud Mohanty wrote in an affidavit last month that he understood that a family trust that benefits Patel’s children was the ultimate beneficial owner of WSBC.

The listing of WSD on the NZX was due to take place before the end of last year, but remains in limbo. - Robert Smith NBR