How Munga’s ‘dirty’ Britam deal left Mauritius with Sh 3.9 billion loss

Peter Munga Mauritius Deal: Former Equity Chairman Peter Munga was behind the secretive purchase of some 452.5 million shares of Britam Holdings from the government of Mauritius. This secretive purchase left Mauritius with a Sh. 3.9 billion loss.

This loss and Munga’s role in the deal were revealed by the Port Louis commission of inquiry which investigated the share  transactions. The commission found out that the then Mauritius’ Minister of Financial Services, Good Governance and Institutional Reforms Roshi Bhadain assisted Munga in purchasing these shares at a price of Sh. 7.1 billion in 2016.

Alarmingly, higher bids for the shares had already been issued, with two bids asking to buy the shares at Sh. 11 billion. The two bids were from South Africa’s insurance firm MMI Holdings and Absa Group. The commission established that Munga had claimed that he could match the two bids but eventually failed to do so, and instead too them at a much cheaper price. These shares had been seized by Mauritius in 2015 from its citizen Dawood Rawat. Rawat had been exposed for running a Sh. 71 billion ponzi scheme.

Munga did not stay with the shares for long after acquiring them. he sold the first batch of 104 million shares in 2017 in the open market and followed it up with the disposal of 348.5 million shares to Zurich-based multinational Swiss Re in 2018.

The inquiry report said that before Munga bought the shares, there were several meetings between Britam directors and Mauritian officials in Nairobi and Port Louis. However, the most fundamental meeting was between Munga and Bhadain. This meting was held on Saturday, November 14, 2015.

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“This was the meeting that changed the course of history of this sale which would ultimately end with the big fall from R4.3 billion (Sh. 11 billion) to R2.4 billion or Sh.7.1 billion at the agreed exchange rates],” the commission of inquiry said in its report.

The report said that Munga told the meeting that there was no way the Kenya government would welcome a foreign investor, and that they were better off selling the shares to him. Munga would then, on March 8, 2016, head to Mauritius with his small team to conclude the deal. On March 12, 2016, he signed a formal contract to acquire the shares at 7.1 billion.

At first, the shares were transferred to the National Property Fund Limited (NPFL) on June 10, 2016. Before end of this day, they were were then sold off to Munga.  Munga paid for the shares from April 29, 2016 to June 3, 2016. The money was paid from Equity Bank, which was founded by Munga.

The commission’s report further said that the deal was conducted in Kenya shilling, which was unusual for such a huge deal, and against the norm where intercontinental and international deals are conducted on US dollar terms.

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“If the transaction had occurred in US dollars and a Mauritian bank was involved, that avenue could have been pursued through the co-operation of the US. But the transaction had been done in Kenyan shillings and, what is more, when the money was transferred in US dollars, the bank involved was a Kenyan bank, that of Peter Munga,” the report said.

According to the commission, Mauritius had borrowed R3.5 billion (8.9 billion) from the Central Bank of Mauritius to compensate Rawat’s ponzi scheme victims. This was meant to allow it to sell the Britam shares at favourable terms. However, the shares were sold at a cheaper price than the amount that had been borrowed, and against higher bids that had been made.