Britam seeks to recover Sh3.9bn from ex-employees

CORPORATE NEWS

Acorn Group CEO Edward Kirathe (right) with Cytonn CEO Edwin Dande during the announcement of the appointment of Cytonn as the lead transaction advisor in a Sh40 billion real estate deal on October 8. PHOTO | DIANA NGILA  

By DAVID HERBLING, hdavid@ke.nationmedia.com

Posted  Friday, October 31   2014 at  00:00

IN SUMMARY

• Britam is accusing four former executives of British-American Asset Managers (BAAM) of fraudulently transferring the money to bank accounts held by Acorn Group.
• The investment firm is seeking to recover Sh3.94 billion from the former executives who quit its asset management unit in August, causing suspicion of major fallout whose details have now emerged from the courts.
• The firm says it unearthed the alleged fraudulent dealings at BAAM, a wholly-owned subsidiary, following a forensic audit by KPMG and law firm Coulson Harney.

Investment firm Britam has opened a multi-billion shilling battle against former employees who left the company two months ago with one of the largest real estate financing deals it had in the pipe
line.

The Nairobi Stock Exchange-listed company is seeking to recover Sh3.94 billion from former executives who quit its asset management unit in August, causing suspicion of major fallout whose details have now emerged from the courts. 

Britam is accusing the former executives of British-American Asset Managers (BAAM) of fraudulently transferring the money to bank accounts held by Acorn Group.

Suit papers filed by Nairobi lawyer Fred Ngatia says the four former executives, including Edwin Dande (chief executive), Elizabeth Nkukuu (portfolio manager), Shiv Arora (investment analyst) and Patricia Wanjama (head of legal) defrauded the company of the money earlier this year.

“The first to fourth respondents fraudulently, irregularly and without authority transferred the cumulative sum of Sh3,944,558,634.00 being money belonging to the applicants (BAAM) to bank accounts operated by the 8th to 12th respondents,” Britam says in a sworn affidavit.

The firm further says that Mr Dande and his team in July wired Sh1.16 billion in five tranches to multiple accounts held by Acorn at Chase Bank and a further Sh2.78 billion to seven entities that are subsidiaries of Acorn.

The seven Acorn affiliates are listed as Edenvale Developments LLP, Starling Park Properties LLP, Crimson Court Development LLP, Sinopia Properties LLP, Mikado Properties LLP, Crescent LLP and Spring Green LLP.

“I discovered that the respondents had in their instructions to the administrator fraudulently passed the payment of Sh1.16 billion as being on account of expenses, yet they had signed a schedule indicating that the payment was an approved investment by the BREF Investment Committee,” said Jude Anyiko, acting CEO of BAAM, in court papers.

READ: Former Britam staff take Sh40bn real estate deal

Britam says it unearthed the alleged fraudulent dealings at BAAM, a wholly-owned subsidiary, following a forensic audit by KPMG and law firm Coulson Harney.

The former BAAM executives have since set up a real estate-focused private equity fund dubbed Cytonn and teamed up with Acorn to snatch a Sh40 billion property deal from Britam, their previous employer.

Loss of the multi-billion shilling real estate project has opened what promises to be a bruising battle pitting Britam against its former employees for control of the lucrative projects that were to be developed by Acorn – where Britam owns a 25 per cent stake.

High Court judge David Onyancha on Thursday issued restraining orders barring Acorn and Cytonn from transferring the disputed funds and developing any of the planned 10 real estate projects until November 12 when the case will be heard.

“An injunction is issued restraining all the respondents from withdrawing, assigning, alienating or transferring monies from the five accounts they hold at Chase Bank pending determination of the suit,” he ruled.

Acorn chief executive Edward Kirathe expressed shock that Britam, a minority shareholder in the firm, had taken to the courts despite ongoing negotiations to settle the differences through mediation.