Zamara Group, a Kenyan financial consulting and pension management firm, is entangled in an ongoing push for investigations into alleged irregular procurement of a contract for administration of a pension scheme for retired Malawian civil servants.
The Malawian Human Rights Defenders Coalition (HRDC) is urging the Malawian Anti-Corruption Bureau to investigate circumstances under which the Public Service Pension Trust Fund appointed Zamara as the administrator of the public service pension fund in the country.
The rights body claims Zamara is a Kenyan Company with no foothold in Malawi, and therefore did not qualify to be awarded government business of this nature, with the value of the Malawian civil service pension scheme estimated at 0.4 percent of the total public wage bill.
HRDC chairperson, Gift Trapence, in an interview told The EastAfrican that his organisation has forwarded its complaints to the Anti-Corruption Bureau and other law enforcement agencies to investigate what he terms as an irregular procurement.
“Following our whistle-blowing initiative we received an allegation and our organisation forwarded the allegation to the Anti-Corruption Bureau to address it,” said Mr Trapence.
According to the HRDC, the award of a serious contract affecting the livelihoods of senior citizens of Malawi to a foreign company is questionable.
The Public Service Pension Trust Fund had, in a notice published in the Malawian press, indicated that it had finalised the evaluation process and intended to award the K556.8 million ($741,000) contract to Zamara Pension Administrators Ltd.
HRDC, in the letter addressed to the Anti-Corruption Bureau director-general Reyneck Matemba, also claims that Malawian companies such as Old Mutual, National Bank and Nico Life also applied to be administrators of the scheme, but were overtaken by the “foreign” firm.
However, Zamara Group CEO Sundeep Raichura said his company had bought out a Malawian firm last year, and therefore had a local presence contrary to HRDC’s claims.
The rights group alleges that Zamara flew the pension fund trustees to Kenya “for an unknown meeting.”
When pressed to present evidence of the allegations, Mr Trapence said only the Malawian anti-graft unit could comment on the investigations.
The anti-corruption agency boss could not be reached on his phone to respond to our queries on the matter.
“We urge the Anti-Corruption Bureau to suspend the award of the contract and carry out urgent investigations," reads the letter that has been making headlines in the country. The rights group says Malawian pension funds should be managed by a company with traceable roots “and not some company whose only aim is to make profits from senior citizens' money.”
While refuting the allegations of procurement irregularities, Mr Raichura said Zamara Pension Administrators Ltd (Malawi) is only majority owned (51 per cent) by the Kenyan entity, but has a Malawian partner that has been operating in the country.
He said Zamara Kenya acquired a controlling stake in Malawi’s Axis Pension Administrators Services Ltd, a subsidiary of the Ghanaian Axis Pensions Group Ltd, last year and rebranded to Zamara Pension Administrators Ltd (Malawi) early this year.
Prior to the acquisition, Axis Pension Administrators Services Ltd had operated in Malawi for close to four years, since 2016.
Zamara Group manages close to Ksh300 billion ($3 billion) worth of pension funds in Kenya.
The Kenyan industry regulator, Retirement Benefits Authority (RBA), said it was aware of the allegations being made against Zamara.
“Zamara (Kenya) owns a controlling stake in this Malawian company (Zamara Pension Administrators Ltd) which is being accused. So these are related companies (Zamara Kenya and Zamara Malawi) and that is why we have that mandate to ask for information.
“In this case we will await the investigations and then we will request the Malawian Pension regulator to give us information. Then if we see there is anything affecting the company that we have registered then we can now take action,” RBA’s chief executive, Nzomo Mutuku, told The EastAfrican.
The Zamara boss said he was not aware what the alleged procurement irregularities were about. According to Mr Raichura, Axis Pension Administrators Ltd (Malawi) had initially tendered for the same government business and lost, but believes with Zamara Kenya on board the new outfit is more qualified and competent to handle the lucrative contract.
“They bid before for the same business and lost. So there was an open tender which we participated in and we won it. We believe we are well qualified, competent and also our company is not a new entity in Malawi. It has been in existence for a number of years and we simply came in as majority shareholders,” said Mr Raichura.
The performance of Kenyan pensioners’ investments has been adversely affected by the depressed share prices at the Nairobi Securities Exchange (NSE).
As a result, fund managers are shifting pensioners’ savings to treasury bonds, whose returns are relatively stable to avert further losses.
A recent survey by Zamara, which covered 421 pension schemes with a total of Ksh902 billion ($9.02 billion) of assets under management, shows that in the first six months (January-June), fund managers allocated a huge share (75 per cent) of their investment portfolio to fixed income securities, followed by equities (18.7 per cent), property (5.7 per cent) and offshore (0.6 per cent).