How Investor Groups In Kenya Play With Your Money....

In 2004, the late Naushad Merali purchased 60 percent ownership of Bharti Airtel Kenya from the then-largest shareholder, Vivendi, for $230 million (Ksh18.2 billion).
An hour later, he sold the shares to Celtel, making a $20 million profit (Ksh1.6 billion according to the then prevailing exchange rate of Ksh79.2 per US Dollar).

Fast forward to March 12, 2016, when businessman and former Equity Group chairman Peter Munga sought to replicate the same, this time through the Mauritian government, his company Plum Investments and Britam Holdings.

The Mauritian government had just seized 452.5 million shares of Britam Holdings from its citizen Dawood Rawat Bramer who had been running a Ksh71 billion Ponzi scheme. Mauritius did not want to keep the shares and was willing to sell them to the highest bidder. World Bank Group’s International Finance Corporation (IFC), Barclays Bank (now Absa), and South Africa’s MMI Holdings placed their bids, offering between 4.3 billion Mauritian rupees (Ksh11 billion) and 4.5 billion Mauritian rupees (Ksh11.5 billion).

Munga’s Plum Investments offered 2.4 billion Mauritian rupees (Ksh6.1 billion), a sum that was too low compared to other bidders.
Nevertheless, Plum Investments won the bid and bought the shares, despite being the lowest bidder, occasioning a Ksh5.4 billion loss to the Mauritian government.

Kahawa Tungu understands that Munga, hoping to execute the deal Merali-style, had borrowed the money he used to buy the shares from the Britam shareholders’ kitty.
Note that Plum Investments bought the shares despite being the lowest bidders. The plan was to resale them almost immediately to a local parastatal at a profit, but that flopped. With a ‘secret’ debt to pay and a failed deal, Munga was forced to sell the shares to the next available buyers, the international investors, who then bought at a lower price than what Plum Investments paid.

The proceeds of the shares sale, though in deficit, was returned to Britam with a loss, that has now been passed to Britam shareholders. This means that Britam experienced a loss in book value, that was pushed to shareholders to protect Munga.
All this happened as the Capital Markets Authority (CMA) watched without any regulatory scrutiny.
According to a presidential inquest by the United Nations Economic and Social Commission for Asia and the Pacific on the sale of the Britam shares, Munga held a series of meetings with Efsar Ebrahim, the ex-deputy managing partner of audit firm BDO.
Ebrahim also introduced Munga to Mauritius Minister of Financial Services, Good Governance and Institutional Reforms Roshi Bhadain. Munga and Bhadain held a closed-door meeting with Bhadain in Mauritius, in what Bhadain described as a courtesy call.
According to the commission, until the deal was concluded in March 2016, nearly everyone in Mauritius was kept in the dark including the Cabinet, parliament, and the public.

It was also discovered that Plum Investments was hurriedly set up by Munga almost the same day that the deal was struck, on March 12, 2016.
In the year ended December 2020, Britam recorded a Ksh9.1 billion loss, part of it thought to have been as a result of the deal.
Most notable was fair value losses of Ksh.2.3 billion from sliding stock market valuations and Ksh.2 billion from property impairments.
Another loss was from a Ksh5.2 billion provision for investment losses in Wealth Management Fund LLP, a fund manager under the wings of Britam Asset Managers- a subsidiary of Britam Holdings. This is the amount thought to have been borrowed by Munga and his Plum Investments.

By the time of going to press, Britam had not responded to our email inquiries about the issue… but here’s some more …

An inquiry has found that Peter Munga pocketed Ksh135.7 million worth of dividends in 2016 for Britam shares that he did not own.
According to reports by [I]Business Daily[/I], Munga signed a secret deal with top officials of the Mauritius government giving up the rights to earn dividends on the shares before he acquired the shares.

Munga’s firm, Plum LLP signed an agreement to buy 452.5 million Britam shares from the government of Mauritius on June 10, 2016, a day after the book closure date.
Under normal circumstances, the dividend, which was paid on June 24, 2016, would have gone to the government of Mauritius but was instead paid to Munga.
The Britam shares were seized from Dawood Rawat, a Mauritius national whose Ksh71 billion Ponzi scheme was exposed in 2015. They were managed by a special vehicle created by the government, the National Property Fund Limited (NPFL).

Munga bought the shares for Ksh7.1 billion, despite there being offers of Ksh11 billion each from South Africa’s MMI Holdings and Barclays Bank (now Absa Group).

“The commissioner, therefore, considers that NPFL had been unfairly deprived of an amount of approximately R43 million (Ksh135.7 million) representing dividend calculated on the basis of Ksh0.30 yield per share for the year ending 2015 in view of the fact that the completion date referred to at clause 6.2 of the special purchase agreement is well after June 10, 2015,” noted the inquiry report.
Munga is said to have been given so lenient terms in the purchase, raising suspicion on whether legal procedures were properly adhered to.
“This is not usual or good practice. The commission notes with utmost concern that such clauses do not seem to have been questioned by the NPFL or even the special administrator. It is also not clear whether this special purchase agreement (SPA) had been duly vetted by the legal advisers of the NPFL,” adds the report.
The purchase of the shares led to a loss of Ksh3.9 billion on the Mauritius government.

Shait na vile nilichoma pesa kwa britam damn those tumzeeees