State holds Sh150m ATI claim settlement on grounds of graft

ATI chief executive George Otieno and chief underwriting officer Jef Vincent during the release of 2015 results at the Sarova Stanley Hotel on July 6, 2016. PHOTO | DIANA NGILA 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• Kenya has stalled settling the claim with the African Trade Insurance on grounds that it had released cash associated with the contract.
• This means the claimant should not have been paid by the political risk underwriter.
• ATI which covers insurers firms from delayed payments from government under political risk cover is at the same time pushing for payment of Sh1.5 billion from its member states.

The Kenyan government has delayed settling a Sh150 million claim with the African Trade Insurance (ATI) on grounds of corruption.

The Treasury has stalled settling the claim with the political risk underwriter on grounds that it had released cash associated with the contract, meaning the claimant should not have been paid by the ATI.

ATI and the claimant have proved the payment was not received by the contractor creating query on the final recipient. The Treasury is expected to forward the issue to investigative agencies to trace the funds.

“It has been dragging on for some time; the problem is that there is a fraud involved — the government wants to know what happened to the money because the Treasury provided for it before settling the amount,” said ATI chief underwriting officer Jef Vincent.

ATI which covers insurers firms from delayed payments from government under political risk cover is at the same time pushing for payment of Sh1.5 billion from its member states.

It has 10 member states with Kenya being the largest shareholder. Others are Tanzania, Uganda, Rwanda, Burundi, Benin, Malawi, Zambia, Madagascar and Democratic Republic of Congo.

Malawi, which is currently experiencing a cash crunch is the main defaulter.

Shareholding in the insurer has been expanding with entry of development agencies such as Italy’s export credit agency SACE, UK Altradius and most recently British Export Finance tightening their grip.

ATI hopes Ethiopia, Zimbabwe and Cote d’ Ivoire which have expressed interest will join in. Entry of new countries will not only boost its capital base but also its jurisdiction.

It hopes to incorporate West African countries following decision by Ecowas countries to drop forming a similar institution to cover its members in favour of joining ATI.

The institution, formed in 2001, is banking on its profitability in the last four years to attract more countries and development institutions such as World Bank investment arm IFC.

Last year, ATI recorded a 36 per cent growth in net profit to Sh470 million following a doubling of returns from underwriting business.

It collected Sh2.3 billion in gross premium up from Sh1.7 billion in 2014 resulting in an 89 per cent growth in underwriting profit to Sh228 million.

Kenya’s share of contribution in the business dropped to 33 per cent from 43 per cent which management attributed to aggressive marketing in other member markets.

ATI said it had noted a drop in demand for political violence covers by about 40 per cent