By BRIAN WASUNA, bwasuna@ke.nationmedia.com
In Summary
Auditor-General Edward Ouko has questioned the
appointment of Eliud Muriithi, who has been accused of mismanaging
collapsed Blue Shield Insurance’s assets in his two and a half year
tenure, as statutory manager.
The Auditor-General says in a report on Blue Shield’s
management that when it was placed under statutory management that the
Commissioner of Insurance Sammy Makove appointed Mr Muriithi without
giving documents to prove that he was the best candidate for the job.
The report has also faulted Mr Muriithi and his
successor — Policyholders Compensation Fund (PCF) — who collectively
spent Sh491.4 million in the five years they managed Blue Shield, which
is higher than the Sh477 million they collected in rent from the
underwriter’s Upper Hill tower.
Mr Ouko in the report adds that Mr Makove failed to
produce supporting documents to justify the Sh1.2 million monthly
salary paid to Mr Muriithi from the collapsed underwriter’s coffers
which the former Blue Shield statutory manager increased to Sh1.6
million in December 2012 without justification.
The audit on Blue Shield was ordered by Director of
Criminal Prosecutions Keriako Tobiko, following claims by the
underwriter’s shareholders that receiver managers have diverted Sh200
million from the firm.
Mr Ouko’s report has put Mr Makove, Mr Muriithi and PCF’s representative John Keah on the spot for several irregularities.
The report adds that Blue Shield’s receiver
managers may have dug into the underwriter’s call deposit accounts to
sustain their heavy expenditure, a move that could have bled the firm
dry.
“There was no documentary evidence indicating the
criteria used for the appointment of Mr Muriithi, how he was evaluated
among other potential statutory managers to assure that he was the most
qualified and competent. Further, no criterion was availed [sic]
indicating how the remuneration of the statutory manager was
determined.”
Mr Ouko said “we were not able to ascertain whether
he was the most qualified and competent statutory manager and therefore
could not establish whether the remuneration of Sh47.2 million paid to
him was commensurate to his competence.
Blue Shield was placed under statutory management
on September 16, 2011 after several years of complaints by clients whose
claims had been delayed.
The firm was the biggest insurer of PSVs — matatus
and motorcycles — by the time it was taken over by the regulator. The
underwriter’s life insurance arm — Shield Assurance — was acquired by
British firm Prudential Plc for Sh1.5 billion in 2014.
Mr Makove appointed Mr Muriithi to run the collapsed underwriter who was replaced by State-owned PCF in July 2014.
“The Commissioner of Insurance has abused the
statutory provisions to arbitrarily deprive the shareholders their
property of interest,” says Apollo Mboya, the shareholders’ lawyer.
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