Inside big battle at Britam Tower that led to board, management purge

It is customary for retiring company chief executives to hold media interviews on their exits, letting in journalists into intimidating soundproof offices, mahogany desks, name plaques, and an enviable view of Nairobi from the top floor of the corner office.

Sleeves tucked back, easy laughter of relief, befuddled memories and a fairy tale are usually aspects of such functions.

Retired Britam boss Benson Wairegi had this chance but his team of trusted lieutenants were not so lucky.

Their exits were silent and hollow after their roles were purged and most of them were shown the door in one of the most brutal boardroom shakeups in Kenyan history.

Smart Business can reveal that a rift between local and international owners emerged after some owners tried to endorse one of the managers Gladys Karuri to take over from Dr Wairegi.

“She was seen as a safe pair of hands, an insider who could protect the vested interests of the establishment,” a source who requested anonymity told Smart Business last week.

Foreign owners, on the other hand, including Swiss Re, AfricInvest and IFC with combined ownership of 51 per cent wanted a fresh impartial face, an outsider who could bring back the company to profitability.

Foreign owners

According to inside sources, the balance was tipped in favour of foreign owners who had raised issues about board strategies over the last couple of years, investment decisions, recruitment processes and conflict of interest queries to justify a radical gutting of top management.

Sources say wrangles exposed the ills that have been bedevilling the company over the years, cast board decisions on the spotlight and unearthed skeletons of vested interest that had haunted the company from within.

Britam did not respond to emailed queries by the time we went to press despite sending them days earlier.

According to insiders, Britam’s problems started way back in 2013 when it bought Real Insurance for cash payment of Sh825 million and issuance of new shares worth Sh550 million. Its owners through Royal Ngao Holdings included former KenGen chief executive Eddy Njoroge, Sam Kamau, Joe Muchekehu and Ian Mukuria.

Sources say it was not a good deal as the company was facing financial strain at the time of acquisition.

According to the Insurance Regulatory Authority (IRA), as at December 2013, the firm carried underwriting provisions of Sh1.2 billion and debt of Sh580 million against Sh342 million assets invested in related companies, Sh703 million outstanding premiums and Sh621 million receivables.

Two years later Real insurance owners had sold off their shares at a premium with more than 20 per cent stock rally and dropped off the list of major shareholders. Between 2014 and 2017 Britam annual reports have showered plaudits on its ERP, integrated software system Jawabu. Then silence over the last two years speaks volumes.

Consumed billions

Insiders say the unit led by Jack Maina has consumed billions of shillings in premium rates for third party supply of software but has done little in improving profitability.

A decision to build the famous Britam Tower has also been questioned given at the time it was evident there was a glut in office space.

“A running joke was that since UAP had 31 floors and Britam had 30 floors they decided to mount a pike on top to make it the tallest building, we call it the tower of hubris,” a source who spoke to Smart Business in confidence said.

The building constructed using pensioners’ money (Britam Life Insurance) is only partly occupied and has whittled down returns.

According to the IRA, Britam long-term insurance made a Sh1.6 billion profit in 2013, Sh1.6 billion profit in 2014, Sh235 million loss in 2015, Sh2.9 billion profit in 2016, Sh500 million profit in 2017, Sh1.1 billion loss in 2018 and Sh3.1 billion profits in 2019.

In April 2015 the Mauritius government seized Britam shares belonging to Dawood Rawat, a billionaire accused of Ponzi-like schemes in the Indian Ocean country.

Billionaire and top shareholder Peter Munga set up a company called Plum LLP, which bought the 452 million shares or 23.3 per cent stake at Britam and sold 348.5 million shares to Swiss Re in two years.

The price at which the Munga consortium bought and sold the shares has not been disclosed but insiders said he sold at a premium to Swiss Re, a decision that would later haunt the top owner when the ownership tipped the balance over to foreigners.

Britam is also said to have lost up to Sh800 million in Chase Bank and was fined by the capital markets regulator over disclosures in the investment.

New owners' reservations

All these issues were raised by the new group of foreign owners who felt they had bought a shell company that kept issuing profit warnings and low returns, along with a depressed share price and wrong strategy. They also felt the board was too big and earning super scale salaries that kept operational expenses very high.

Some employees also doubled as board members including Mr Muthoga who served in Mozambique board and was Marketing and Corporate Affairs before retiring and returning as the External Affairs Director. Ms Gladys Karuri, who was pipped to replace the MD, also served in Uganda’s board while retaining her position as an employee.

Britam announced it had scrapped several board positions including principal executive director, chief of staff, group chief operating officer, corporate affairs director, chief actuary & product development, chief investment, Britam asset manager, group commercial, finance, head of internal audit, legal and company secretary.

Executive clean-out

It also scrapped executive positions heading life assurance, general insurance and micro insurance.

The firm announced a new 11 man board where only six former board members, James Maitho (Human Resources), Carol Misiko (Risk and Compliance), Ambrose Dabani (Retail), Jackson Theuri (Corporate) Saurabh Sharma (Emerging Consumers Business) and Kennedy Aosa (International Business) made the cut.

Ms Eva Kimani was promoted to director partnerships and digital while Charles Kimani was hired from outside as the new finance director. Three slots - Strategy & Investor Relations, Customer Experience and Legal & Compliance Director - remain unfilled.

The purge has left out Muthoga Ngera, Fridaclare Katusya, Gladys Karuri, Nancy Kiruki, Susan Kariuki, Edward Kuria, Kenneth Kaniu, Jack Maina, Betty Muthoni Mwangi, Steve Magati and Jude Anyiko.

The changes come just two months after the exit of the company’s long serving managing director Benson Wairegi who had led the firm for 40 years.

Mr Wairegi's exit set stage for cleaning shop after he was quickly followed by the board chairman Andrew Hollas.

Britam then hired Tavaziva Madzinga as MD and replaced the Chairman with Mohamed Said Karama in an acting capacity.

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