Sanlam set to pursue bond default directorsThursday January 17 2019
Sanlam Kenya #ticker:PAFR now wants directors of companies that defaulted on Sh1.15 billion through corporate bond issues held personally liable for “misleading” the investment firm.
CEO Patrick Tumbo said the company will take legal action against firms such as Kaluworks, a manufacturer of aluminum utensils and roofing sheets associated with industrialist Manu Chandaria’s family.
“We are going after the persons. We will follow and pursue them through courts… We are going to have individual cases against them,” said Mr Tumbo.
He explained that Sanlam will now move away from such “high toxic” investments and focus on areas such as government infrastructure bonds until the law governing the corporate bond market is strengthened.
“We now consider bonds as a high risk investment in this market. This is a bad show that commercial paper is failing in this country,” he said in Nairobi.
The firm had lent Sh169 million to Kaluworks, Sh574 million to ARM Cement #ticker:ARM, and Sh398 million to struggling Real People Kenya
. It had also extended money to Nakumatt Supermarkets. It was, however, forced to write off the debts, plunging into Sh1.53 billion net loss in the six months ended June 2018. With ARM and Nakumatt under administration and therefore protected from creditors, Sanlam plans to go after individuals it thinks failed in their duties.
Mr Tumbo said that it is questionable that both firms were on an expansion drive only to come tumbling down in a short span.
“We call for strengthening of regulations so that people who take money from the public and run away are severely punished,” he said.
The firm will now be relying on its subsidiary, Sanlam Investments East Africa, to select portfolios that will not expose it to high risks.
With its net earnings for the financial year ended December 2018 set to dip by 25 per cent, the firm is banking on prudent investment decisions and more partnerships with banks to grow both its life and general insurance business.