Fraud fears at Old Mutual

Controversy and a veil of secrecy have clouded investigations at Old Mutual Asset Managers over financial irregularities committed by some of its employees.

This is likely to put the firm on the spot, as the market has become hyper-cautious of irregularities on the part of those trusted with investor funds.

Although the magnitude of the irregularities is yet to be made public, the level of those involved could be a pointer. Late last week information indicated that the suspended staff included a manager in finance and officials at different levels.

In a communication to staff, chief executive officer Mr Philippus Albertus van der Walt (Bertie), said appropriate action would be taken.

“In an effort to maintain the integrity of this investigation, a number of measures have been effected; firstly to ensure that no interference in the process occurs, secondly to ensure that sufficient and efficient controls remain in place,” he said.

But in a new turn of events, the Old Mutual (K) Group Chairman Peter De Beyer announced that Mr Van der Walt was preparing to leave office after 18 months at the expiry of his tenure.

“Bertie has brought his considerable skills and experience to the great benefit of Old Mutual Kenya, during a period of great challenge for the business,” said the chairman in a communication to staff.

Investigation

Mr Van Der Walt’s position is to be taken by Tavaziva Madzinga, current managing director of the Life Assurance Company. He will assume the position as well maintain his current title.

Curiously, this announcement is believed to have coincided with the launch of the investigation by Mr Van der Walt.

This also throws into jeopardy his promise to vouch for the integrity of the process if it continues after his exit.

“I am prepared to personally vouch for the integrity and fairness of the process of investigation and we should allow the process to run its course,” he said.

“It therefore does not need our interference as talking and speculating with limited information is particularly bad for the individuals and also for our company.”

However, the latest events continue a trend that preceded Mr Van der Walt’s appointment as CEO in May last year, although he took up the position three months later.

A month to his appointment, the company carried out a botched recruitment exercise to take over from Mr Grant Pote, who was holding acting.

The position had remained vacant for almost eight months following the departure of Stewart Laird Henderson in October 2007. In an unprecedented move, rival firm British American Asset Managers Ltd Managing Director Dominic Kiarie declined the Old Mutual’s hot seat after initially accepting it.

Old Mutual Asset Managers is estimated to be having over Sh75 billion in assets under its management in Kenya and across East Africa.

In an interview with Smart Company immediately after assuming his position, Mr van der Walt conceded that reorganisation was critical if Old Mutual was to compete with emerging rivals.

“If you buy a top-of-the-range vehicle today, it is a brilliant investment,” he said, “But two years down the line, it will not be a good idea because it would be outdated in the face of new technology in the market.”