Connect with us
https://crm.cytonn.com/events/weekly_real_estate_site_visit

Business

Britam Vs Cytonn Investments Is It A Case Of Business Rivalry

Published

on

Cytonn CEO Edwin Dande

Justice John Mativo’s ruling today to have the case between Britam and it’s former executives to go on full trial, marks the start of a battle that has been floating in the courts since 2016 and one of the biggest corporate battles given that both are investment companies.

British-American Investments Company (Britam) had accused it’s former managers Edwin Dande, Elizabeth Nailantei Nkukuu, Patricia Njeri Wanjama and Shiv Arora over alleged irregular sums from Britam-affiliated accounts to rival companies.

The former managers had challenged the decision by the Director of public prosecution (DPP) to have the case go on full trial as irrational or illegal and their rights infringed, but all these have been dismissed with the judge’s decision to have the case go on trial court.

Britam had accused its former executives of wiring Sh1.16 billion out of Britam in five tranches to multiple accounts held by Acorn at Chase Bank and a further Sh2.78 billion to seven entities that are subsidiaries of Acorn.

I’ve come to notice the fraud cases were raised in 2016, two years after the executives left and formed another investment company;Cytonn which Dande one of the accused is the CEO. Being in the same field, one can’t help notice sprinkles of business rivalry between the two based on the court arguments I’ve seen.

Based on records, the former managers had accused their employer,Britam of engagement in several illegalities such is illegally  using client insurance funds to purchase shares of Britam to rescue a failed IPO, they also claimed that they objected to using insurance funds under their management to purchase a failing bank – a transaction that led to loss of billions of shillings of investors’ funds.

Also claimed they objected to failure to send statements or sending out-rightly misleading statements to investors in the unit linked products, we resisted being forced to put excessive funds into a bank where a relative of a Britam director worked, but what brought matters to a head was an attempt to have them take away from clients a Kshs. 5 billion portfolio, one that they had originated for clients, and gave to the group.

On leaving Britam, the managers were slapped with upto 7 different suits which later came down to two that are the subjects today. The suit was dropped against property development group Acorn and seven of its affiliates following an out-of-court deal.

Related Content:  Cytonn Investments Raises The Bar In Kenya’s Real Estate Industry With Multi Billion Projects And Steady Growth

Britam bought into Acorn in 2014 as the two firms agreed to partner on big-ticket real estate projects It is this joint venture between Britam and Acorn that was the source of a fallout that saw Dande, Ms Nkukuu, Ms Wanjama and Mr Arora exit Britam to found their own company—Cytonn Investments.

The two parties however fell out, with the insurer selling its stake in Acorn. This paved the way for Acorn to team up with a new partner, leading to its deal with Helios in the form of joint ventures.

While the courts have their say and the trial must go on regardless, there are basic questions in a layman’s level that has caught my curiosity in this case. How could a fraud in the scale of Sh9.8b occur in a company just by few executives without knowledge of the senior management I’m talking about the board. You can’t convince me if any fraud of that magnitude would happen then it would escape the top ranks knowledge, they’re either complicit of flipping pages for own interests.

First off, the money Britam claims was illegally transferred was recovered through a different firm Acorn, logically, such a transaction cannot happen without the knowledge of the senior officials not unless Britam lacks the basic channels of operations in any major company.

In a petition filed by the former employees back in 2016, the Executives of Cytonn Investments claimed that their former employer, Britam, has been harassing them for founding a competing firm. In the petition, Cytonn Executives wanted Britam compelled to furnish it with a forensic audit report carried out on the fund manager’s books, and a legal audit done on Britam’s transactions to establish whether the disputed transfer of funds was illegal as claimed by the firm.

Related Content:  RBA Gives Cytonn Investment The Nod To Manage Retirement Benefit Schemes Funds

Mr Dande in that petition held that the sums Britam claims were illegally transferred by its former employees were already recovered from another firm Acorn Group. He said the Sh5 billion was transferred to Acorn’s accounts with the knowledge and approval of top Britam officials.

Which brings me to my biggest concern, if Britam had clean hands, why haven’t they provided these crucial documents that would easily help in solving the case in its infant stages? A forensic audit by an independent audit firm would unearth and ascertain if indeed a fraud occurred and who in the hierarchy was involved.

However, by delaying to do all these while pushing for the case to go on full trial I can’t help but read malice in it and more so given the fact that the former executives have managed to put up a strong business rival in Cytonn that has scaled up in the markets. Reputation is key in these streets and one can easily exploit legal loopholes to damage one’s image like being labeled a fraudster in a sensitive financial space as an investment firm is the last thing one would need and that a rival would want.

As the case now proceeds to full trial and I’ve seen the Cytonn CEO has accepted and is not challenging it so to prove his innocence in court, it is a win for Britam who now has the upper hand. The burden is on Cytonn who’ll now have to sweat in convincing their customers that the suit is out of malice as they’ve persistently claimed.

Related Content:  CBK Fines Standard Chartered Bank, Equity, KCB, Co-operative Bank and Diamond Trust Bank Kenya Sh392M For Laundering NYS Loot

However, while at it to prove and stamp their innocence, their reputation is now in jeopardy. But this is business and according to laws of power,big you find a chance to crash an enemy, you do it completely and Britam will have a sweet revenge on its former employees who thought they were ‘smart’ to put up a rival firm in penis measurement with their bosses.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading
Advertisement

Business

Urithi Adopts A Unique Model To Deliver Affordable Housing In Kenya

Published

on

Urithi Housing Cooperative Society Chairman Samuel Maina handing over the keys to the new owners of one of the houses during the handing over ceremony of Springs View gated community estate in Gatuanyaga Location of Thika East in Kiambu County.

Since President Uhuru Kenyatta unveiled his Big Four Agenda during his inauguration to serve his second term in office, the different sectors that anchor his legacy have been making all necessary alignments to fit into the presidential vision which can only be achieved through collaboration between public and private sector players.

One of the pillars of President Kenyatta’s legacy is affordable housing, with a target of 500,000 new housing units per year.

Opinions and commentaries have been penned but what has stood out is the many experts who have made a strong case that the projected numbers can only be achieved if stakeholders would embrace the socio-economic model of housing provision.

Legend supports this narrative yet fact is that it is not exclusively dependent on this model but that this will largely drive the realization of this pillar. So what is the socio-economic model of housing, how does it work and does any of the current players in property business operate on this model?

The model is entirely dependent on members, whose contributions are key and vital in initiating and executing any project that seeks to provide housing, be it public or private. Upon payment of a pre-determined deposit or down payment, the balance of the cost is spread out and paid over a period of between 12 and 48 months.

Samwel Maina, the Chairman of Urithi Housing Society, the only player that operates on this model, says monthly subscriptions vary from one member to the other depending on their economic ability.

“For the project timelines to be achieved, also entirely depends on the speed of members to make their contributions. However, slow remittance by some members has contributed to delays being experienced as most times the society has to move with the speed of the slowest member in payment,” he says.

Related Content:  Airtel Kenya And Telkom Make Official Their Merger To Face Off Safaricom’s Dominance

“Speed is determined by how fast you get money from members. But due to the uncertainty and unpredictable nature of contributions and cash flows we adjust accordingly.”

The pricing does not change over time “simply because the model mitigates on cost of labor, land and materials. Hence making it affordable without changing the initial price.”

Being an off plan project, there are critical steps, approvals and mandatory procedures that must be undertaken. Market sounding is the first of the many steps and acts a notice of the intention to undertake the project.

Then follows mobilization which entails recruiting members and other stakeholders, which process is followed by pursuit of statutory and other approvals by various government bodies, both national and county level.

Once the necessary approvals have been granted, the groundbreaking marks the beginning of construction work, whose completion is entirely dependent on members’ fidelity to make subscriptions.

“There are incidents where a member pays their subscriptions in full and expect that they would get their units but the principle here is that we pool together to own together.

“The explanation is very simple. While you may have paid yours in full, the model works in such a way that those who pay upfront help kick-start the project and sustain it by making the first commitment which is key to property ownership and the subsequent subscriptions take us through to the tail end,” adds Mr. Maina.

Urithi has over the past six years, completed and handed over thousands of housing units in Springviews in Thika, Plainsview in Juja, Gem1 in Witeithie and Lanet Homes (Nakuru and Juja).

Related Content:  With Sh2B Investment, Taaleri Set To Purchase 20 Per Cent Of Cytonn Real Estate Project

They intend to complete and hand over all housing projects currently under construction in the next 12 months. They include Utange – Mombasa, Gem2 and Rongai Homes which are set for completion in the next quarter for handing over to the members, while investors in the Osteen Terrace Gardens will be delivered by the last quarter of 2019.

“The OTG project is the first-of-its-kind to enable us achieve affordable housing for our members and we are using the socio-economic model. This particular project [OTG] is very timely and it will hugely compliment the government’s efforts in attaining the big 4 agenda – the housing component, by engaging other stakeholders like us,” adds the Urithi boss.

President Uhuru Kenyatta’s Big Four Agenda focuses on expanding the manufacturing sector, Universal Health Care, Food security and Affordable housing.

Under the affordable housing pillar, the government through the National Housing Corporation and collaboration with private sector players, intends to construct 500,000 units annually by using innovative construction methods and low cost building and construction materials.

“The government will achieve its dream fast if they partner with the saccos and cooperatives. Cooperatives and Saccos have structures, a wide geographical reach and most importantly members,” avers Mr. Maina, who believes affordable housing is a major milestone towards achieving the other three pillars of President Kenyatta’s legacy plan.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading

Business

Airtel Kenya And Telkom Make Official Their Merger To Face Off Safaricom’s Dominance

Published

on

Telkom Kenya Limited and Airtel Networks Kenya Limited, today announced the signing of a binding agreement that will see the shareholders of the two companies enter into an agreement to merge their respective Mobile, Enterprise and Carrier Services businesses in Kenya to operate under a joint venture company to be named Airtel-Telkom.

Telkom Kenya Limited’s real estate portfolio and specific government services will not form part of the combined entity. The final shareholding will be determined at the closing of the transaction. Telkom Kenya has the option of holding up to 49 per cent of that shareholding.

The merged company will be chaired by Telkom Kenya Limited CEO, Mr. Mugo Kibati while Airtel Networks Kenya Chief Executive, Mr. Prasanta Sarma, will be appointed Chief Executive Officer.
The finalisation and closure of the transaction is subject to approval by the relevant authorities.
Airtel Networks Kenya Limited (Airtel Kenya) and Telkom Kenya Limited (Telkom Kenya) will see no immediate changes to their operations which will continue as usual.

Similarly, there will also be no change to the current respective leadership and management, legal, organisational and staffing structures. Additionally, both brands: ‘Airtel’ and ‘Telkom’, as well as their respective products and solutions, will continue to co-exist. Similarly, service delivery to the respective companies’ customers as well as engagement with all business partners of both companies will continue to operate as usual.

As per the agreement, both the partners will combine their operations in Kenya and establish an entity with enhanced scale and efficiency, larger distribution network and strategic brand presence, thereby enhancing the range and quality of products and service offerings in the market, and greater choice and convenience to the consumer.

Related Content:  Expert Analysis: Interest Rates Capping, A Populist Move By President Uhuru Built On Sand Disastrous To The Economy In Long Run

The combined entity will see sustained investments in networks to further accelerate roll out of future technologies. The Enterprise and Carrier Services businesses will get a boost with a larger fibre footprint and increased number of enterprise customers – including both large corporations and SMEs who would have access to a diverse portfolio of world-class solutions.

Commenting on the agreement, National Treasury Cabinet Secretary, Mr. Henry Rotich said:
“This move is well aligned with the government’s agenda to optimise the value of the assets that it holds in trust, on behalf of Kenyans, while cementing the country’s position not only as a regional business hub but also as an international investment magnet.”

ICT Cabinet Secretary, Mr. Joe Mucheru commented: “ICTs remain a vital link to achieving Kenya’s economic goals and our national development agenda, particularly with respect to service delivery. Such mergers have had positive impact on the development of the sector and service levels to consumers in other markets. Similarly, we look forward to this merger leading to the introduction of new technologies and telecommunication products which will, in turn, support the growth of other business sectors of our economy, thereby spurring national production to meet the growing demand locally and beyond.”


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Continue Reading

Business

RBA Gives Cytonn Investment The Nod To Manage Retirement Benefit Schemes Funds

Published

on

Investments Manager at Cytonn Maurice Oduor.

Cytonn Asset Managers Ltd (CAML) says it has been registered and authorised by the Retirement Benefits Authority (RBA) to manage retirement benefit schemes funds.

The Capital Markets Authority (CMA) also licensed CAML in March 2018. The Cytonn arm said it will “further grow its regulated products portfolio to include fund management services for retirement benefits schemes” following the nods.

“Despite the retirement benefits assets under management growing to about Sh1.2 trillion as of June 2018, only 15 per cent of Kenyans belong to a registered pension scheme and there is a vast opportunity to increase this,” said Cytonn Asset Managers principal officer Maurice Oduor.

“With this licence, we look forward to adding value to the retirement benefits industry by reaching more Kenyans and enabling them to save for their retirement and securing their future.”

According to Zamara, a pension fund administrator, pension funds only earned 9% p.a in the last year. The entry of Cytonn into the pensions industry brings high yielding products earning upto 18% p.a into the industry.

Cytonn Asset Managers earlier acquired Seriani Asset Managers Ltd.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
Related Content:  With Sh2B Investment, Taaleri Set To Purchase 20 Per Cent Of Cytonn Real Estate Project
Continue Reading
Advertisement

Most Popular