CIC sends eight managers packing over fraud claims
A client is served at the CIC Insurance offices. CIC has sent eight managers packing over fraud claims. PHOTO | FILE
What you need to know:
The eight senior and middle-level managers are accused of defrauding the company of an undisclosed amount of money during the fencing of land it owns in various locations and the setting up of IT infrastructure for its new building.
Information memorandum for the insurer’s Sh5 billion bond offer of September 2014 shows that the group had a combined 714 acres in Kajiado and Kiambu counties.
CIC’s action against employees comes in the wake of a rising wave of fraud in corporate Kenya in which billions of shillings are lost annually.
CIC Insurance Group has sacked eight senior and middle-level managers accused of defrauding the company of an undisclosed amount of money during the fencing of land it owns in various locations and the setting up of IT infrastructure for its new building.
The company’s deputy chief executive, Tom Gitogo, says in a memo dated December 17 that a forensic audit had found the eight employees liable for losses in connection with the two projects, causing the board to recommend their sacking.
“The purpose of this communication is to inform you that after comprehensive deliberations, the Audit & Risk Committee and the Main Board resolved to terminate with immediate effect, the employment services of all the officers found to have been adversely mentioned in the forensic audit report. The officers have been informed of this board’s decision,” said Mr Gitogo. “I would like to confirm that management will ensure minimum interruption of customer service in the affected areas,” the memo concluded.
It did not indicate the amount of money involved or finer details of how the eight committed the fraud.
Mr Gitogo confirmed the authenticity of the memo, but said he could not, for the time being, comment further on it. Information memorandum for the insurer’s Sh5 billion bond offer of September 2014 shows that the group had a combined 714 acres in Kajiado and Kiambu counties.
Real estate investment was to take up 34 per cent or Sh1.7 billion of proceeds from the bond sale. The remaining portion of Sh3.3 billion was reserved for regional expansion, setting up of a medical facility, re-capitalisation and other corporate activities.
The bond was oversubscribed by 27 per cent after it got offers worth Sh6.34 billion against a Sh5 billion target.
CIC’s action against employees comes in the wake of a rising wave of fraud in corporate Kenya in which billions of shillings are lost annually.
The theft, mostly perpetrated by employees, mainly involves electronic transfer of funds (also known as cybercrime), accounting and procurement.
A 2014 Global Economic Crime Survey by financial consultancy PricewaterhouseCoopers (PwC) found that asset misappropriation and accounting fraud afflict companies the most.
“Along with asset misappropriation, accounting fraud and bribery and corruption, our survey results reveal high levels of cybercrime and procurement fraud. This shows that the threats and trends of economic crime are constantly evolving, particularly with the increased use of technology and technology-enabled processes across organisations,” said PwC.
The report said that 55 per cent of companies surveyed lost a maximum of $100,000 (Sh9 million) to economic crimes while 34 per cent estimated losses of between $100,000 (Sh9 million) and $5 million (Sh450 million).
PwC’s report also found that 54 per cent of economic crimes were committed by middle-level managers followed by junior staff who accounted for 28 per cent.
Safaricom and KCB are other Nairobi Securities Exchange (NSE)-listed companies that sent employees home for economic crimes in 2014.
Safaricom sacked 56 employees after conducting 32 audit reviews that showed staff involvement in fraudulent expense claims, asset misappropriation, under-invoicing and other malpractices across its 12 divisions.
The telecoms operator also reported some of the cases to law enforcement agencies. It sacked 33 employees the previous year and in 2012 sent home 70 employees.
KCB, Kenya’s largest bank by assets, also released a sustainability report showing that it fired around 90 employees for various types of frauds.
Pan Africa Life Insurance took three insurance agents to court for faking a death claim for a policy holder in October 2014.
