On Thursday, August 12, Cytonn CEO Edwin Dande wrote to Capital Markets Authority (CMA) CEO Wycliffe Shamiah announcing his intention to sue him and initiate his ouster from office.
Dande accused Shamiah of misleading the public and the government in regards to Cytonn and Private Offerings.
Dande also accused Shamiah of orchestrating attacks through statements that put at risk investments of over 30,000 Kenyans valued at over Ksh20 billion.
It has also emerged that Dande decided to initiate Shamiah’s removal from office following a failed meeting with the regulator which was scheduled for August 5, 2021, with less than 24 hours of notice.
“Last Wednesday (August 4th) at around 11 am, I was informed by a colleague that shareholders and the board of Cytonn Asset Managers Ltd, CAML, had been summoned by the Capital Markets Authority, CMA for a physical meeting to take place the next day at 10 am – as in we needed to appear in person, to discuss a change of name. While I was scheduled to be on leave the next day, I asked the colleague to see if the other shareholders and board members were available at such short notice,” said Dande in a Facebook post.
Read: How Peter Munga’s “Manowari Project” Left Britam Shareholders With A Multi-billion Financial Dent
Three of the key shareholders were not available for the meeting, including a shareholder who is a vice-chancellor of a public university who was out of town attending a conference. Another shareholder was on maternity leave with a newborn and was not available the next day while the third shareholder, a senior government official, was scheduled to meet a boss of his line ministry the next day at 10 am and was not available.
Dande further revealed that a board member who is a senior official at Safaricom and was not reachable, which was the case for another shareholder who was allegedly out of town.
“Unable to raise quorum, my colleague then got back to CMA and informed them that the less than 24-hours’ notice was too short hence we asked for another date. The next thing we saw was a letter on Friday, August 6th, 2021 stating that we had missed the meeting and that they had decided we must change our name or stop acquiring any new clients. And boom!, they released the statement to the public,” adds Dande. He said that “stopping onboarding new clients is like telling a bank to only process withdrawals and not take in any deposits, it’s a clever way to kill a financial institution that you want to eliminate from the market.”
On Sunday, August 15, 2021, the Cytonn boss also cited favouritism to some market players whom he termed as “innocent and liked” by Shamiah.
“Some market players are “scheduled… next week”, yet others are summoned with less than 24 hours… why the different standards? Secondly, for those that are scheduled for next week, he has already started exonerating and defending them even in advance of the meeting next week by saying “shareholders are distinct parties”, yet on the other hand, he is punishing some shareholders who have not even been heard,” said Dande.
Dande’s sentiments were based on the “Manowari Project” saga orchestrated by former Britam chairman Peter Munga in 2016, where Britam shareholders lost billions under CMA’s watch.
Read: Cytonn CEO Edwin Dande To Sue CMA Boss Wycliffe Shamiah, Seek His Removal From Office
It was revealed by Kahawa Tungu that Munga used billions from a fund called Wealth Management LLP, which is overseen by CMA, and use the funds to buy shares from the Mauritius government, which were sold at a loss. The loss, amounting to billions, was later transferred to shareholders, again, under CMA’s watch.
CMA is yet to give an update on the meeting that was scheduled for last week.
“CMA is too important an organization to be left to a discriminative lot. Success or failure in capital markets should not depend on your proximity to or being liked by the CEO, that is cronyism. It should be based on the law, regulatory framework and business acumen. The man needs to leave office because he is using his office to discriminate against players,” adds Dande.
According to Shamiah who spoke to The East African, the regional insurer which is listed on the Nairobi Securities Exchange (NSE) may not have control over the dealings of its shareholders but could have undue influence on the process.
“We have scheduled a meeting with Britam next week (last week) to understand if there are regulatory matters. What we know is that the government in Mauritius feels its officers were comprised when clearing the transaction but our investor indicates that it was based on negotiations,” said Shamiah.
“The problem usually is unless the issuer was directly involved in the transactions, shareholders are distinct parties. The listed Company may not have control on the shareholders,” added Mr Shamiah.
Read: CMA Using Courts As Scapegoat For Its Failure – Cytonn
Mauritian government is estimated to have lost at least Ksh5.4 billion through the sale of the shares.
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 done between Munga and Britam Asset Managers.
Most notable was a loss of 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.
“I will be putting together a forum to push for change, If I fail I fail, but I will give it my all. CMA is too important an organization to be left in the hands of such a lawless bunch,” he added.
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