Mauritian state to take over shares billionaire fugitive holds in Britam

NAIROBI: Britam has been handed a major reprieve after the Mauritius government said it would join the financial services firm’s board and take up the directorships held by fugitive billionaire Dawood Rawat.

Among the options Mauritius is weighing is disposing of the stake valued at nearly Sh14 billion to settle benefits for policyholders of Mr Rawat’s insurance firms back home.

Shareholders of Britam, the Nairobi Securities Exchange-listed firm, have endured deep anxiety this month following claims that Rawat, the single-largest shareholder, had been indicted for running a Ponzi scheme, which could have far-reaching ramifications for their company. Rawat holds just over a 23 per cent stake in Britam.

RICHEST CITIZEN

But now, the tiny Indian Ocean country has effectively taken over most of the wealth and companies owned by its richest citizen, amid fears the government could be cracking down on the wealthy Rawat family that owns hundreds of businesses across the world, including a 50 per cent stake in a furniture store in Nairobi.

Minister for Financial Services Sudarshan Bhadain told The Standard his government was keen on keeping the Britam stake owned by its 71-year-old citizen.

“Through the National Insurance Company, it is the Mauritius government that will hold these shares, and so there would be no reason for panic in Kenya,” he said.

“We must assure all shareholders in Britam that there is no risk at all.”

New customers’ premiums were channelled to settle older policies that had matured and were due, the minister said, citing findings of a preliminary probe.

“It had all the hallmarks of a Ponzi, but really what we are dealing with is a huge fraud.”

A Sh40 billion (13 billion rupees) hole was discovered in Rawat’s insurance business, Mr Bhadain said.

In the suspected fraud, Rawat is accused of collecting customer one-time premiums on an investment product called SuperCashBack Plan Gold on the promise of repaying an interest or bonus of between 10 and 14 per cent, the probe revealed.

According to Bhadain, 14,570 customers signed up for the product. However, a clear investment plan was not available to show how returns would be generated to pay the bonuses, and the entire scheme soon collapsed.

Most of the funds have been shipped out of the company and Mauritius through Rawat’s extensive and complex businesses, which include a top-end hospital, “a hundred” insurance companies and Bramer — Mauritius’ biggest bank, which was taken over by the state on illiquidity and charges of suspect transactions.

Britam shares shed nearly 11 per cent last week as news of the alleged financial impropriety trickled into Kenya, with the stock closing trading at Sh22.50 on Friday.

A big concern for local shareholders was how exposed Britam was to the Ponzi scheme, with its management struggling to shake off any possibility of a downside.

The Mauritius government and the conservator appointed to manage Rawat’s insurance companies held under British-American Investment (Mauritius) have made it clear that their interest in Kenya was limited to the 23 per cent stake.

BIG CONCERN

Andre Bonieux, the State-appointed conservator of Rawat’s British American Insurance, told The Standard in a separate interview that Rawat’s stake in Britam was the “jewel in the crown”, and he had no option but find a buyer for it.

“I have liabilities to settle when they fall due, so yes, we may have to dispose of it,” said Mr Bonieux, who is also the director, advisory services at PWC Mauritius.

Bhadain, however, was non-committal about an outright sale. As an alternative, the minister said, policyholders could be compensated by the state when their policies mature.

Bonieux’s proposal would be more significant for Kenya since it would set the ground for the entry of another major shareholder in Britam. Already, besieged Rawat and his nephew Moussa Rawat have resigned as directors, paving way for the entry of the Mauritian government.

Critics have, however, argued that Mauritius’ four-month-old government was cracking down on Rawat because of his close ties to the previous president, who lost in the country’s general elections last year.

Rawat, who is said to have fled Mauritius in March, is thought to be in London. His vast wealth has been traced to Malta, the UK, the US and several African countries. He is among the earliest investors in Britam.