Flights, billionaire investors, competing interests and high-powered boardroom plays. The newly released report by a Presidential Commission of Inquiry formed in Mauritius in 2017 to investigate the controversial purchase of Britam shares by Kenyan tycoon Peter Munga reads more like a James Bond script.
Munga, who was already one of Britam’s biggest shareholders, acquired 452.5 million additional shares in 2016 from the government of Mauritius, which had seized the shares from Britam’s former largest shareholder, disgraced Mauritian businessman Dawood Rawat who was accused of running a ponzi scheme worth close to a billion dollars.
The report lays bare behind-the-scenes intrigues that led to Munga’s acquisition of the shares for 2.4 Billion Mauritian Rupee (Ksh6.1 billion), a price way below previous offers from players including Johannesburg Stock Exchange (JSE)-listed MMI Holdings which offered 4.3 Billion MUR (Ksh11 billion).
“The public interest in this matter was the sale of the Britam shares to Kenyans at MUR2.4bn when there had been an agreement with one potential buyer a few months earlier for MUR4.3bn. That is a legitimate public interest,” the report notes.
The commission was formed to “inquire into the facts and circumstances in which Mauritius had sold the shares which BAI Company (Mauritius) Ltd and its related entities (“BAI”) held in Britam Holdings Ltd (Kenya).”
Rawat had himself held a number of meetings with South African financial services firm MMI Holdings regarding the sale of the 23.92% Britam stake before BAI collapsed and its assets were seized by the government. The sale of the asset was supposed to be used to reimburse BAI policyholders and investors.
The first special administrators in charge of disposing of the ex-BAI assets – Yogesh Rai Basgeet, partner at PwC Mauritius, and Mushtaq Oosman – told the commission that they had at least six offers on the table for the Britam shares ranging between 4.2B MUR (Ksh10.7 billion) and 4.5 B MUR (Ksh11.5 billion).
In October 2015, a meeting between the Mauritius’ then Financial Services Minister Roshi Bhadain, Financial Secretary Dev Manraj and representatives of MMI Holdings resulted in an offer of 4.3B MUR (Ksh11 billion) for the Britam shares by MMI.
It was at this point that Munga and his company Plum LLC joined the fray, looking to get a piece of the action. According to the commission, Munga in November 2015 met the Financial Services Minister and new special administrators who had since taken over disposal of ex-BAI assets.
Munga expressed opposition by Britam shareholders to the purchase of Britam shares by a non-Kenyan entity, MMI Holdings.
The commission goes on to insinuate that a ‘conspiracy’ involving Munga and Bhadain to push the deal through was hatched at the meeting. It, however, failed to offer any further evidence of such a conspiracy, stating: “it is because a line of action had been agreed upon between ex-minister Bhadain and Peter Munga, the details of which only those who participated in the meeting will know: Peter Munga, the ex-minister, Messrs Afsar Ebrahim and Khapre”.
Notably, the commission disclosed that it failed to receive the co-operation of Kenyan witnesses and authorities in the course of the inquiry – lamenting that Kenyan authorities’ actions were totally different to Mauritius approach of “bending backwards” to facilitate the Britam transaction for Kenyan investors.
It emerged that after a November 2015 meeting with Munga in Kenya, then permanent secretary to finance ministry Vidianand Lutchmeeparsad officially communicated to the ministry that Munga and Britam had agreed to buy the stake for MUR 4.3 billion (Ksh11 billion), matching the MMI offer.
It was in February 2016 however that Vidianand exited the Finance Ministry and Bhadain was put in charge of the file. Munga’s Ksh11 billion offer, seemingly, went out with him as on a visit to Mauritius in March 2016, Britam’s finance director Gladys Karuri and the special administrator entered talks which culminated in the signing of a deal worth MUR 2.4 billion (Ksh6.1 billion).
Munga’s team had argued that the value of the deal should be determined by the share price and managed to push the price down by quite a few billions. The Ksh11 billion price had been based on projections from consultancy firms including McKinsey.
Painting Munga as an uncompromising businessman, the commission concluded: “Peter Munga was a business tycoon and all the Mauritian professionals involved put together were no match for him singly alone. He was able to dictate both time and terms, price and party.”
The commission which is chaired by a former Supreme Court Judge, Bhushan Domah, also cast doubt on the premise that Britam’s Kenyan shareholders were unwilling to sell to non-Kenyans and cited the company’s current ownership structure as evidence.
It observed that in January 2017, the International Finance Corporation (IFC), a non-Kenyan entity, bought a 10.37 percent stake in Britam. In September 2017, another 14.3 percent stake was sold to Africinvest, a Tunis-based company.
Munga’s own Plum LLC went on to sell a 13.81 percent stake in Britam to Zurich-based Swiss Re after completing the deal with the Mauritius government.