We suspect IRA commissioners, statutory managers and financial heads for KeNHA and KeRRA have colluded to defraud shareholders,” the letter from the DCI reads in part.
The shareholders’ application against winding up Blue Shield comes as the IRA seeks to extend the receiver manager’s term that was set to expire today (April 20, 2016). The extension is aimed at allowing the regulator time to commence winding up proceedings.
The Insurance Regulatory Authority (IRA) has resolved to wind up Blue Shield Insurance in a move that could close the curtain on what was once Kenya’s biggest underwriter of public service vehicles.
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.
A special IRA meeting held on Monday resolved to wind up Blue Shield, but shareholders of the collapsed insurer yesterday filed an application seeking to stop the regulator’s move. The shareholders claim the winding up is a ploy by the Commissioner of Insurance Sammy Makove to defeat ongoing investigations into alleged embezzlement of funds by IRA officials and receiver managers of the company.
The shareholders claim that criminal investigations detectives are seeking to arrest receiver managers of Blue Shield Insurance and IRA commissioners over diversion of Sh200 million from the collapsed underwriter.
The Directorate of Criminal Investigations (DCI) has sought the help of Auditor General Edward Ouko in tracing evidence to support its case.
The detectives believe that the receiver managers and IRA officials have pilfered money collected as rent from the troubled insurer’s Blue Shield Towers in Upperhill since 2011.
Blue Shield’s shareholders have made the claims in court. The shareholders have filed as evidence a letter from the DCI to Mr Ouko seeking assistance in gathering evidence.
The letter from the DCI indicates that detectives are seeking to prosecute Blue Shield’s statutory manager John Keah and unnamed IRA commissioners. Also to be prosecuted are finance chiefs of two state agencies; the Kenya National Highways Authority (KeNHA) and Kenya Rural Roads Authority (KeRRA) that are tenants at Blue Shield Towers.
“The matter was reported to CID headquarters on February 2, 2016 for investigation. In order for us to prosecute the statutory managers we are requesting your office to audit the documents already in our possession.
Colluded to defraud
We suspect IRA commissioners, statutory managers and financial heads for KeNHA and KeRRA have colluded to defraud shareholders,” the letter from the DCI reads in part.
The letter from the DCI to Mr Ouko does not identify which IRA commissioners it is probing.
The shareholders’ application against winding up Blue Shield comes as the IRA seeks to extend the receiver manager’s term that was set to expire today (April 20, 2016). The extension is aimed at allowing the regulator time to commence winding up proceedings.
Mr Makove, the Commissioner of Insurance, argues in an application also filed yesterday by the IRA that the shareholders have failed to inject Sh600 million into Blue Shield as was ordered by the court in January this year as a condition for keeping the insurer’s revival hopes alive.
He says the shareholders’ failure to inject the funds and the botched plan to sell part of Blue Shield Towers have left no option to the IRA but to liquidate the insurance company.
“It is not possible within the remaining period of the current term of the statutory manager to prepare the petition for winding up and filing of the same before the High Court. The company revival option has become untenable, leaving the IRA with no other option,” Mr Makove says in court filings.
Blue Shield’s shareholders also want the IRA compelled to appoint a caretaker committee to run the collapsed insurer’s affairs in place of receiver manager Mr Keah, pending a final determination of their application.
