CMA spotlight on Britam over irregular sale of shares to tycoon

Tuesday August 10 2021
Britam officials at the company’s 24th Annual General Meeting

Britam officials at the company’s 24th Annual General Meeting, held virtually on June 29, 2020 at Britam Tower in Nairobi. PHOTO | FILE


Kenya’s Capital Markets Authority (CMA) has summoned directors of Britam Holdings Ltd to establish their role in the alleged irregular sale of 452.5 million shares (23.34 percent stake) owned by the Mauritian government to Kenyan tycoon Peter Munga, the former chairman of Equity Bank, five years ago.

According to the regulator, the regional insurer which is listed on the Nairobi Securities Exchange (NSE) may not have control over the dealings of its shareholders but could have undue influence on the process.

“We have scheduled a meeting with Britam next week (this week) to understand if there are regulatory matters. What we know is that the government in Mauritius feels its officers were comprised when clearing the transaction but our investor indicates that it was based on negotiations,” the authority’s chief executive Wycliffe Shamiah told The EastAfrican in an interview last week.

“We meet next week to establish if there was undue influence. The problem usually is unless the issuer was directly involved in the transactions, shareholders are distinct parties. The listed Company may not have control on the shareholders,” added Mr Shamiah

This comes after an inquiry into the fraudulent transaction revealed that the Mauritian government lost a massive MUR 1.9 billion ($43.51 million) through a deal shrouded in secrecy, with the Mauritian Cabinet being kept in the dark throughout the entire process.

Non-existent investors


The deal which was signed on June 10, 2016, saw Plum Holdings, a company associated with Mr Munga acquire additional 23.34 percent shareholding in the regional insurer at a price of MUR2.4 billion ($54.96 million) compared with the market value of the shares estimated at MUR4.3 billion ($98.48 million).

“Basically, Peter Munga, was duping the Kenyans and Mauritians alike because he was astute enough to make a covert deal with the Mauritians,” according to the findings of the report dated June 2021.

“Mr Munga a Kenyan business tycoon was in fact, the principal all along but presented himself as agent for a number of investors who never in fact existed and using Kenyan officials to have his way.”

Ponzi scheme

Plum Holding’s purchase of 452.5 million additional shares increased its shareholding in Britam to 38.54 per cent (747.06 million shares).

The shares were sold by the government of Mauritius to help reimburse policyholders and investors who fell victim to a scandalous scheme orchestrated by the Mauritius businessman Dawood Rawat in 2015.

The shares were previously owned by Mr Rawat but were seized by the Mauritian government when it emerged that the businessman was defrauding citizens through a Ponzi scheme.

According to the investigation report dubbed “Commission of Inquiry on disposal of shares of BAI Company (Mauritius) Ltd in Britam Holdings Ltd (Kenya),” the Mauritian government was duped into selling shares below the market price and recommended criminal investigations for forgery/making use of forged documents against officers involved in the fraudulent transactions.

In 2016 Plum Holdings, a company associated with former Equity Bank chairman Peter Munga acquired an additional 23.34 percent shares in the regional insurer Britam Holdings Ltd.

On April 8 2017, the Mauritian government set up a Presidential Commission to inquire into the facts and circumstances in which Mauritius had sold the shares which BAI Company (Mauritius) Ltd and its related entities held in Britam Holdings Ltd (Kenya).

The shares were sold at MUR2.4 billion ($54.96 million) when there had been buyers interested a couple of months earlier to purchase them, and one of which had agreed, at nearly double the price of MUR4.3 billion ($98.48 million).


On September 8, 2011, British American (Kenya) Holdings Ltd which was a subsidiary of BAI Company (Mauritius) Ltd acquired 452.5 million shares representing 23.34 percent stake in British American Insurance Company Ltd (BAICL) which was renamed Britam Holdings Ltd (Kenya) in June 2015.

BA Insurance was listed on the Stock Exchange of Mauritius (SEM) and assumed the status of a PIE.

In the same year, BAI Company (Mauritius) Ltd which was listed on Stock Exchange of Mauritius in 1992 was majority owned by Mr Rawat.

Last year, Britam Holdings Ltd posted a Ksh9.11 billion ($84.35 million) loss blaming it to adverse operating environment occasioned by Covid-19.

In 2019, the regional insurer with interests across Eastern and Southern Africa region, with operations in Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique and Malawi made a net profit of Ksh3.54 billion ($32.77 million).