A dispute between insurance giant Britam and some of its former executives who left the firm and set up a rival investment management firm called Cytonn has been on and off for the last four years. Recently a judge ruled that a criminal case would continue in the courts.
After that decision, Cytonn CEO Edwin Dande issued a personal statement on the long-running case as he set out to absolve Cytonn, which is known for its real estate property developments and financial industry reports, from the case against its four executives who had been at Britam. He writes on the reasons behind the dispute and their departure which he says was due to insider attempts to destroy a Kshs 5 billion portfolio of client funds that they had brought to Britam (excerpts) :
- .. the resignation was due to an operating environment that was fraught with illegalities and unethical business practices that we did not agree with…
- we could not agree to be part of actions such as illegally using client insurance funds to purchase shares of Britam to rescue a failed IPO, we objected to using insurance funds under our management to purchase a failing bank – a transaction that has now led to loss of billions of shillings of investors’ funds..
- ..following our resignation, Britam launched a full-scale assault in an attempt to ruin our careers by filing 7 different suits claiming up to Kshs. 9.8 billion in stolen funds…
- The suits were obviously malicious and designed to achieve only two objectives: first was to punish the former team for daring to leave as a team, and second was to deter competition.
He writes that his statement was released was to reassure Cytonn’s 500 employees and 3,000 clients who had invested over Kshs 20 billion in various investment products.
Britam has been silent on the dispute other than their 2014 annual report which mentions the litigation; The British-American Asset Managers Limited is the Fund manager of a Limited Liability Partnership (LLP) which has been mandated to invest in property. The LLP loaned Shs 3.9 billion to various third parties to purchase property. The company on behalf of the LLP has instituted legal suits to recover the above amounts plus costs. The court cases are ongoing and we expect that the outcome will be favourable
EDIT/ Update October 12: The Court of Appeal granted stay orders on October 11, meaning there is no prosecution action against the four Cytonn executives for now.