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Exchange cuts Cook Islands adrift in Allied aftermath

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The stock exchange council has terminated its memorandum of understanding with the Cook Islands Monetary Board for failing to co-operate during the investigation into the Allied Group, sources say.

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An exchange circular to members said the newly elected council approved a listing committee recommendation to terminate the memorandum, originally signed with the Securities and Futures Commission (SFC) in April 1991.

The move means the Cook Islands are no longer recognised as an 'approved jurisdiction' and companies incorporated there will not be able to seek a listing in Hong Kong.

The exchange did not explain the reason for the move in the circular but an exchange source said it stemmed from the Cook Islands' failure to co-operate with the SAR during the Allied Group investigation in 1992.

The Government's investigation into the Allied Group revealed certain former Allied senior executives used a network of offshore companies, including a bank based in the Cook Islands, to evade Hong Kong's share disclosure laws and avoid paying for share transactions.

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Allied Group investigator Nicholas Allen said in his report that his attempts to establish the facts about many Allied transactions had been materially inhibited by Cook Island laws.

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