Economy

Ex-Britam director Rawat ‘to sue if Kenyan assets are sold’

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Britam’s shareholder Dawood Rawat who is wanted by the Mauritian government for allegedly perpetrating a Sh67.2 billion Ponzi scheme. PHOTO | COURTESY

Former Britam director Dawood Rawat has given the government of Mauritius three months to pay $1 billion (about Sh98 billion) for “illegally” seizing his business empire.

The move is part of a legal battle he has begun in France that seems headed for an arbitral tribunal or a court of law.

Mr Rawat is demanding immediate restitution and has threatened to sue anyone involved in selling off or buying any of the seized assets.

The most valuable of these is a large stake in Kenya’s Britam that was taken over by a Mauritian State insurer ahead of plans for its disposal.

International financial news agency Bloomberg on Thursday reported that PwC have begun the process of “selling off BAI assets in Kenya” to help pay the insurer’s creditors and policyholders.

“The administrators expect to raise 12 billion rupees ($341 million or Sh33 billion) from the sale of BAI’s (Kenyan) assets,” Mushtaq Oosman, a PwC partner who replaced BAI administrator Sattar Hajee Abdoula as the insurer's special administrator, was quoted as saying.

Rawat’s business empire, which also included smaller operations in Botswana and Malta, was taken over in April this year after a subsidiary, Bramer Bank, ran into liquidity problems.

Authorities who stepped in “to safeguard client interests” at Bramer Bank and at sister company BAI (Mauritius) also claimed to have uncovered evidence of a massive ‘Ponzi’-type fraud at the insurer.

Mr Rawat now says the liquidity crisis at Bramer Bank was caused by the Mauritian government, with key State institutions and officials withdrawing funds in concert in a “campaign of premature encashment”.

This, the 71-year-old businessman says, was a politically motivated act meant to precipitate the current situation where his assets have been seized and are being sold off.

He hopes to prevent this with a legal fight-back intended to scare away any prospective buyers and others involved in selling any of his assets.

“The investor reserves the right to bring claims against any persons or companies involved in the disposal of misappropriated assets and interests,” his lawyers say in a recent notice of dispute delivered to the Mauritian government.

“The list includes, but is not limited to, the Republic of Mauritius, (the conservators) PricewaterhouseCoopers and any purchasers.”

The Mauritian, who also holds French citizenship, is hoping to find protection from a 1973 Treaty for the Promotion of Investments between the two countries which, he says, prohibits seizure of an investor’s property.

His lawyers also argue the sale of some BAI group assets to the Mauritian State “was not in line with guidelines formulated in the United Nations Commission on International Trade Law”, saying “the expropriation was unjustified and not accompanied by equitable compensation”.

The government of Mauritius in late April enacted changes to the Insurance Act enabling a special administrator to move against both troubled insurance companies and “related companies”, making anything Rawat owns fair game.

Two special administrators were appointed to the BAI group, PwC’s Oosman and Yogesh Basgeet with the mandate to sell off assets to pay off debts.

They have solicited financial offers for key subsidiaries — including Iframac, Courts and the Apollo Bramwell hospital — with a deadline set for Friday June 19. Local media reports show strong interest in the hospital from 15 potential buyers, and competition for Courts from a few interested parties, including its former owner.

Iframac is looking less attractive having recently lost the Mercedes, Peugeot and Mitsubishi franchises it held before the crisis.

No timeline has been set for the sale of the BAI Group’s most valuable asset — the stake in Britam — but, as reported earlier by Business Daily, there is no plan to hold the stake for a long time.

Britam shares closed at Sh21 on Thursday, valuing the BAI stake at about Sh10 billion ($102 million).

The financial services group recently passed a resolution at its AGM changing its articles of association to deny the holder of the stake veto power on the hiring of a CEO or CFO.

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