How Peter Munga’s “Manowari Project” Left Britam Shareholders With A Multi-billion Financial Dent

In 2004, the late Naushad Merali purchased 60 percent ownership of Bharti Airtel Kenya from the then-largest shareholder, Vivendi, for $230 million (Ksh18.2 billion).

An hour later, he sold the shares to Celtel, making a $20 million profit (Ksh1.6 billion according to the then prevailing exchange rate of Ksh79.2 per US Dollar).

Fast forward to March 12, 2016, when businessman and former Equity Group chairman Peter Munga sought to replicate the same, this time through the Mauritian government, his company Plum Investments and Britam Holdings.

The Mauritian government had just seized 452.5 million shares of Britam Holdings from its citizen Dawood Rawat Bramer who had been running a Ksh71 billion Ponzi scheme.

Mauritius did not want to keep the shares and was willing to sell them to the highest bidder. World Bank Group’s International Finance Corporation (IFC), Barclays Bank (now Absa) and South Africa’s MMI Holdings placed their bids, offering between 4.3 billion Mauritian rupees (Ksh11 billion) and 4.5 billion Mauritian rupees (Ksh11.5 billion).

Read: Inquiry Finds That Peter Munga Pocketed Ksh136 Million From Shares He Did Not Own

Munga’s Plum Investments offered 2.4 billion Mauritian rupees (Ksh6.1 billion), a sum that was too low compared to other bidders.

Nevertheless, Plum Investments won the bid and bought the shares, despite being the lowest bidder, occasioning a Ksh5.4 billion loss to the Mauritian government.

That was not all.

Kahawa Tungu understands that Munga, hoping to execute the deal Merali-style, had borrowed the money he used to buy the shares from the Britam shareholders’ kitty.

Note that Plum Investments bought the shares despite being the lowest bidders. The plan was to resale them almost immediately to a local parastatal at a profit, but that flopped.

With a ‘secret’ debt to pay and a failed deal, Munga was forced to sell the shares to the next available buyers, the international investors, who then bought at a lower price than what Plum Investments paid.

Read: Equity Bank Founder Peter Munga Accused Of Swindling Business Partner Ksh150 Million

The proceeds of the shares sale, though in deficit, was returned to Britam with a loss, that has now been passed to Britam shareholders. This means that Britam experienced a loss in book value, that was pushed to shareholders to protect Munga.

All this happened as the Capital Markets Authority (CMA) watched without any regulatory scrutiny.

According to a presidential inquest by the United Nations Economic and Social Commission for Asia and the Pacific on the sale of the Britam shares, Munga held a series of meetings with Efsar Ebrahim, the ex-deputy managing partner of audit firm BDO.

Ebrahim also introduced Munga to Mauritius Minister of Financial Services, Good Governance and Institutional Reforms Roshi Bhadain. Munga and Bhadain held a closed-door meeting with Bhadain in Mauritius, in what Bhadain described as a courtesy call.

According to the commission, until the deal was concluded in March 2016, nearly everyone in Mauritius was kept in the dark including the Cabinet, parliament, and the public.

Read: Jubilee Party Financier Faces Arrest Over Ksh2.5 Billion Tax Row With KRA

It was also discovered that Plum Investments was hurriedly set up by Munga almost the same day that the deal was struck, on March 12, 2016.

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.

Most notable was fair value losses of Ksh.2.3 billion from sliding stock market valuations and Ksh.2 billion from property impairments.

Another loss was from a 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.

By the time of going to press, Britam had not responded to our email inquiries about the issue.

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