CIC meets capital markets regulator over fraud claims

CIC Insurance has held a meeting with the capital markets regulator, after claims of investor fraud at the insurer.

The CIC managing director, Mr Nelson Kuria, confirmed the meeting with the regulator, but said the agenda was to discuss the company’s listing plans.

Sources familiar with the meeting, however, said recent claims of fraud by a CIC agent were also discussed, as the Capital Market Authority (CMA) sought assurances over the safety of investors’ funds.

“These (the discussions) were confidential matters", said Mr Kuria.

Regarding CIC’s listing plans, Mr Kuria said the insurer “will let the public aware of the details they need to know when we get full approval.”

CIC has different trust funds under management, including money market fund, fixed income fund, balanced fund and equity fund that are regulated by CMA.

The insurer received a license from CMA to sell unit trusts in May last year. The CMA chief executive, Stella Kilonzo, had not responded to our queries by the time of going to press.

The fund products have come under the regulator’s radar following admission by CIC that one of its products had been used to fraudulently acquire money from the public.

READ: Investors lose Sh100m in fresh pyramid scheme-like scandal

A former CIC agent allegedly used Mavuno Policy, which was withdrawn from the market in June 2010, to get money from investors with the promise of weekly returns of between seven to 10 per cent.

Those who had put their money in the scheme, however, were in for a rude shock in January when the agent who had been serving them could not be traced, while the insurer denied having received such amounts.

Mr Kuria assured holders of the Mavuno Policy before June 2010 and other policy holders that their investments were secure.

Mr Kuria, however, noted that investors’ complaints reported to them totalled Sh9.8 million, although former clients who spoke to Business Daily said they had lost up to Sh100 million.

Customer statements seen by Business Daily reporter showed one client had put into the scheme Sh5.8 million, another Sh3.9 million, another Sh2.2 million and another one Sh1.2 million.

“This matter is under investigation. It was reported to the CID, Central Division, Nairobi. Only three people (as at Wednesday) have recorded statements alleging to have paid money to the agent. From the statements, the total amounts paid to the agent were Sh9.8 million,” said Insurance Regulatory Authority (IRA) in response to queries by the Business Daily on an update of the investigations.

CIC has insisted that it provides computer-generated receipts for cash transactions done in its premises.

However, the claimants said statements for amounts invested were printed on paper bearing CIC letterheads.

The insurance sector regulator, IRA, has forwarded the complaints to its fraud investigations unit. The agent who was said to have been behind the scam is still on the run.

He had worked with CIC since 2004 and had risen to be one of its star performers — an achievement that complainants linked to the success of the Mavuno project which they were also recommending to relatives and close friends.

CIC has already received shareholders consent to list in the Nairobi Securities Exchange (NSE) and is now awaiting the capital market regulator’s approval.

“The initial application was filed with Capital Markets Authority in February 2012 and the board is optimistic that it we will be allowed to list our shares very soon. This will enable the shareholders to realise the true value of their shares,” said the company in its annual report.

Last year, the company raised Sh1.5 billion through a private placement, with a share being offered at between Sh22.50 and Sh27.50 each.

gngigi@ke.nationmedia.com