The report of the commission headed by former Supreme Court judge Bhushan Domah looking into the sale of Britam Kenya shares seems in large measure to agree with former BAI head Dawood Rawat's explanations as to what happened in that deal. The sale of Britam Kenya - an asset held by the ex-BAI Group that collapsed in 2015 - was supposed to be used to reimburse policyholders and investors.
To start with, there did not seem to be any shortage of buyers. This, the commission learnt from the testimony of Yogesh Rai Basgeet, partner at PwC Mauritius, who along with Mushtaq Oosman, were the first special administrators in charge of disposing of the ex-BAI assets. According to Basgeet, six investors approached them to buy the 23.92 percent stake held by the ex-BAI in Britam Kenya, with offers ranging from Rs4.2 billion to Rs4.5 billion.
However, the Financial Services Commission (FSC) did not approve the sale preferring instead to transfer the shares to the National Property Fund Ltd (NPFL). Oosman was pushed out as special administrator on August 14, 2015 over the Rs6 million sale of Solis - a company of the ex-BAI group - which the FSC and the parent ministry insisted had to be cleared by them first. Basgeet was soon to follow, resigning as special administrator on August 26, 2016. They were replaced by Yacoob Ramtoola of BDO.
By October 2015, South African group MMI Holdings offered to buy the stake in Britam Kenya for Rs4.2 billion. On October 14, 2015, a meeting was held between financial services minister Roshi Bhadain, financial secretary Dev Manraj and a representative of MMI Holdings where they upped their offer to Rs4.3 billion.
The interest of MMI Holdings as well as Basgeet and Oosman's arguments in the commission report about the stake in Britam Kenya would seem to agree with Dawood Rawat's version that the asset was a good one. In written notes prepared for the commission, Rawat stated that the stake in Britam Kenya allowed him to control who became CEO and CFO of Britam Kenya as well as the fact that he himself had had four meetings with MMI Holdings to sell off the stake before BAI went bust. Rawat argued that audit firm McKinsey had forecasted the value of the shares to reach Rs10 billion by 2016 and at least Rs15 billion by 2018.
Peter Munga pushes MMI Holdings out
It was at this stage that Britam Kenya chairman, Peter Munga, comes into the picture. On November 14, 2015, he met with Bhadain, Afsar Ebrahim of BDO Mauritius and Sandeep Khapre of BDO in Kenya. At that meeting, the commission notes, Munga said that Britam Kenyan shareholders did not want a sale of Britam shares to a non-Kenyan company, MMI Holdings. It goes further to hint that Bhadain and Munga had hatched a plan to push the deal through.
But there is a problem with the commission's narrative here: while it confidently declared that November 14, 2015, was a conspiracy, in the same breath it goes on to state, "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". In other words, the commission knows that there was a 'conspiracy' hatched at that meeting, but just what that conspiracy was, it declined to mention.
But to what extent was this true that Britam and some in the Kenyan government did not want to see foreigners get into Britam? The commission' report does not get much into this. So, once again we must turn to Rawat's version: In January 2017, the International Finance Corporation (non-Kenyan) bought a 10.37 percent stake in Britam for Rs1.2 billion.
Then in September 2017, another 14.3 percent stake was sold to Africinvest, a Tunis-based company for Rs1.94 billion. In fact, Munga's own company Plum LLC, after he bought the shares from the Mauritian government, went on to sell a 13.81 percent stake in Britam to Zurich-based Swiss Re for Rs1.61 billion.
Whatever concerns Munga said there was about selling to non-Kenyans seemed short-lived. At any rate, it sufficed to push MMI Holdings out and Munga, ostensibly representing a pool of Kenyan investors, in. Manraj said he had no problem selling to those Kenyans if they matched MMI's offer of Rs4.3 billion.
Then permanent secretary to finance ministry Vidianand Lutchmeeparsad, already on an official mission to Kenya, was asked to negotiate with Munga. He met with Munga and Khapre in Kenya on November 18, 2015, and officially told the finance ministry, led by Lutchmeenaraidoo and Manraj, that Munga and Britam had agreed to buy the stake for Rs4.3 billion.
On December 11, Rotich sent a thank-you note to Manraj for securing the deal for the Kenyans. So far, Munga had been dealing with both Bhadain and Lutchmeenaraidoo separately. At least that's according to the commission's version of events.
Lutchmeenaraidoo out, Bhadain in
In February 2016, however, Lutchmeenaraidoo bowed out as finance minister, with Sir Anerood Jugnauth then telling the commission that government had put Bhadain in charge of the file. A big deal for a first time minister and parliamentarian. The offer to Lutchmeenaraidoo was out too, it seems. On a visit to Mauritius, Britam's finance director Gladys Karuri and Afsar Ebrahim of BDO entered talks from March 8 to 12, 2016, at the end of which the deal was signed for Rs2.4 billion, instead of the original Rs4.3 billion offer.
What happened? The commission blamed several factors for this: contrary to what Bhadain was saying that the money was needed quickly to pay a tranche of SCBG and BAML holders in June 2016, the commission took Oosman's point that the money for that was already there as a Rs3.5 billion loan from the Bank of Mauritius. "There was no dire need to fix the sale price, more particularly when the share price was so low," the commission noted.
The next thing Munga did was argue that the share prices should determine the deal value and managed to push the sale down to Rs2.4 billion. With no transaction or legal adviser to look over the deal, it seems, that Mauritians just bought this without considering that this was a major stake in the company that carried with it the power to determine management (as Rawat had earlier argued).
That, and the fact that the share price had not changed much, the commission noted, between MMI's and Munga's earlier offer of Rs4.3 billion, and the deal signed by Bhadain for Rs2.4 billion. The commission seemed to accept Manraj's view that, since this was not the sale of a government asset, Bhadain could sell it on his own without cabinet approval, though he would have to take responsibility for what happened afterwards. If true, having a neophyte minister negotiate a deal worth billions on his own without consulting anyone else is an amazing bit of governance on its own.
Munga gets the better of everyone
As it turned out, Munga did not represent a pool of investors, but his own company Plum LLC bought the shares undersold by the Mauritian government. Some of which he then went on to resell to other entities. "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 concluded.
Bhadain, the FSC, NPFL (who technically owned the shares) and BDO fell for it and Munga, the report continues, "had perfected his art of buying gold for the price of chaff".
If this seems familiar, it is because it is. Despite government's problems with Dawood Rawat, its own commission of enquiry seems to have reached precisely the same conclusion that Rawat did in his notes that he wanted to submit to the commission back in 2018: "The Kenyans either duped the Mauritians or made a covert deal which is rather intriguing."