DPP fights SK Macharia in Sh4bn insurer dispute

Director of Public Prosecutions Noordin Haji has opposed a bid by Royal Media Services owner SK Macharia to privately prosecute 14 directors of Directline Assurance Company Ltd for alleged fraudulent transfer of shares and cash amounting to Sh4 billion.

Mr Macharia, who is a top shareholder in the company, moved to court arguing that the DPP has failed to prosecute the directors over the handling of finances in the insurance firm and alleged fraudulent transfer of shares of the underwriter.

The DPP has petitioned the court to dismiss the case and let Mr Macharia pursue a civil case against the directors.

This marks a fresh twist in the battle for control of Directline Assurance with the media mogul and the Insurance Regulatory Authority (IRA) revealing conflicting ownership records.

Through senior prosecution counsel Celestine Oluoch, the DPP told the court that a review of evidence established that the dispute is a civil suit linked to ownership and directorship of Directline Assurance.

“There was no criminal culpability on the part of those recommended for prosecution”, he said in the application.

The prosecutor added that an inquiry conducted in 2019 relates to shareholding dispute that arose after the death of the main shareholder John Macharia, the media mogul’s son, through his company AKM Investment.

The DPP says Mr Macharia’s complaints are at the centre of pending civil suits over the directorship and control of the underwriter.

Mr Haji wants the court to dismiss Mr Macharia’s case “in totality to safeguard the Constitution, uphold the rule of law and preserve the public interest”.

Mr Macharia moved to court seeking to prosecute, among others, Janice Teresa Wanjiru Kiarie, Victor Blasco Wijenje, Janus Ltd, Harbor Capital Ltd, Kevin McCourt, Sure Invest Ltd, James Gacoka and Triad Networks Ltd.

Mr Macharia accused the DPP of partisanship in the exercise of his mandate and lack of professionalism after failing to prosecute the case in line with the advice of the Director of Criminal Investigations (DCI).

He says the DCI had in December recommended that the directors be charged with criminal offences.

In the application filed by Kamau Kuria & Company Advocates, the applicants that include SK Macharia, Royal Media Services, Royal Credit Limited and Directline Assurance accuse the DPP of partisanship and failure to exercise his constitutional mandate of prosecuting criminal offences.

The alleged offences against the 14 intended accused revolve around three complaints previously filed with the DCI.

The first one is fraudulent transfer of shares in Directline Assurance Company Limited by some of the directors now listed as the intended accused.

Secondly, theft of money belonging to the Directline Assurance by some directors and their associated companies.

And thirdly, obtaining money by false pretences by directors that allegedly bought apartments and land in the name of the Directline Assurance.

The DPP told the court that the issues in contention were directorship and shareholding of Directline Assurance, arguing the row is beyond the mandate of the public prosecutor and will result in misuse of office.

The DPP reckons that there was no evidence to reveal theft by the directors.

The prosecutor says the inquiry disclosed that most of the transactions in Mr Macharia’s complaints were authorised by his son and that a forensic audit by PwC did not establish the theft allegations.

“The forensic audit report by Ernst and Young (EY) submitted by the DCI did not establish stealing and the allegations complained of were not established by the evidence provided in the inquiry file to support recommended charges,” the DPP said.

The battle for control of Directline Assurance became public in 2019 after Mr Macharia staged a corporate coup by declaring himself chairman and ousting the CEO of the troubled insurance firm.

But the IRA froze the changes and declared the firm has six owners with Royal Media Services owning a 10 percent stake and four other investment vehicles having a 20 percent stake, prompting the legal fight.

The regulator has described Mr Macharia as a minority shareholder with a 10 percent stake through Royal Media Services, which does not entitle him to stage a corporate coup.

‘FAKE’ REGISTER

Mr Macharia has termed the IRA shareholder register as fake and blamed the regulator for sleeping on the job on its failure to unmask the real owners of the underwriter.

The businessman says he and his associates are majority shareholders in the insurance firm, which is the largest in the PSV underwriting business

He further argues that the IRA’s version of the shareholder register was a creation of the firm’s directors whom the billionaire reckons had no powers to create and allocate shares.

This implies that Mr Macharia and his family own a 20 percent stake, AKM Investments (48 percent) and Janus Limited (32 percent), an ownership the tycoon argues made him majority owner and gave him the right to stage the corporate coup.