How Xplico Insurance Company operates with little regard to law

Insurance Regulatory Authority acting commissioner and chief executive Godfrey Kiptum. He says Xplico has submitted audited returns for the years it has been in operation, contradicting the regulator’s own report which painted a different picture. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • IRA has more than once failed to get critical data from Xplico Insurance Company including the recently released claims settlement figures.
  • The firm’s ownership drama started shortly after the 2011 death of its then chairman, Salim Hussein Dungarwalla.

When the Nation reported that an insurance company was at the centre of an illegal importation of 49 containers of cigarettes into the country, the industry regulator and the taxman were unusually tight-lipped about the oddity.

The import, which attempted to evade some Sh650 million in tax, once again raised questions about Xplico Insurance Company, whose operations have puzzled the industry.

Documents reviewed by the Nation detail years of management wrangles and corporate drama that has largely been kept away from the public, with the Insurance Regulatory Authority (IRA) firmly on the spot.

For instance, IRA has more than once failed to get critical data from the firm including the recently released claims settlement figures in which Xplico’s details were conspicuously blank.

PROVIDE INFORMATION

In its 2016 annual report, the latest on the regulator’s website, the firm is singled out for not providing information.

“All insurers submitted their 2016 (annual) audited and quarterly (unaudited) returns through the ERS with the exception of Xplico Insurance Company, which did not submit their quarter four 2016 unaudited returns,” IRA wrote in its report.

It also remains unknown how many people are insured by Xplico since IRA 2017 data on General Insurance had the company’s row blank.

And that is not all. Their missing numbers on claims received and settled in the period to March 2018 made the firm the centre of ridicule on IRA’s Facebook page.

The insurance company has been at the centre of ownership wrangles that have largely been fought in court, with claims that the original investors and registered officials had been edged out by “strangers.”

BRITISH INVESTOR

Ironically, the British investor on the receiving end of the corporate war has written several letters to major agencies and to President Uhuru Kenyatta over his woes but the dispute remains unresolved.

Since 2012, Xplico has had three major corporate coups, which have seen its shareholding structure altered in a questionable manner, two directors kept out of the country and people keen on exploiting the loophole taking over and continuing to mint millions of shillings while exposing thousands of customers.

Mr Peter Ngethe, for example, told the Nation how he had gone through close to two years of frustration trying to follow up a claim from Xplico in vain.

After the Nairobi-based advocate got involved in an accident in March 2017, his wild-goose chase for compensation, he said, has seen him write letters to IRA and visited Xplico several times all in vain.

NON-PAYMENT

“When I went to IRA, they almost had a special desk for Xplico and you could tell the firm is almost famous there for non-payment of claims. At the insurer, I met so many bitter customers some whose claims had been pending since 2013,” Mr Ngethe said.

IRA, which many enraged clients who spoke to the Nation blamed for handling the company with kid gloves, acknowledged they had received complaints from policy holders or beneficiaries which are being addressed to ensure that the insurer discharges its obligation.

The firm’s ownership drama started shortly after the 2011 death of its then chairman, Salim Hussein Dungarwalla.

Up for grabs was his 25 per cent shareholding allocated to him by London-based investor Mr Altaf Bhurawala who cleverly retained control through power of attorney on all other allocations he made including to his then confidante, Mr Keith Beekmayer.

REPLACING CHAIRMAN

Mr Beekmayer, another Briton who had lived in Kenya, formed a deep network within law enforcement agencies, a muscle he flexed in the first coup targeting the firm’s principal investor, Mr Bhurawala (then the new chairman) in a scheme aimed at altering the shareholding structure and replacing the company’s chairman.

The fraud was successfully done right inside the Registrar of Companies offices in mid 2012, according to documents seen by the Nation.

Even before the move matured, lawyers based in London had sent several letters to at least seven major agencies warning of the impending illegality.

Nothing happened. Mr Beekmayer is alleged to have manipulated the company’s records and made various changes; completing his takeover by inviting a new investor who was promised shares.

Mr Rajeshwar Shahi’s entry into the scene was meant to bolster the takeover which involved ensuring that Mr Bhurawala never set foot in the country. It did not last long.

EXPOSED WEAKNESS
The two accomplices would soon start a war of their own after realising that the firm which was increasingly becoming lucrative was not legally owned by either of them.

Mr Beekmayer, at the time of executing the takeover, had exposed his weaknesses, including an irregular work permit and questionable immigration status, something his new associate “Raj Shahi”, as he is popularly known in business circles, took advantage of.

The fraudulent changes at the Company Registrar’s office were later exposed after two key signatories said to have attended the board meeting swore affidavits to deny their participation while it also emerged that Mr Beekmeyer, who had purportedly chaired the meeting, had resigned from the board long before the events.

The Attorney-General’s office, which had been on the spot for ignoring complaints and taking time to stem the illegal takeover, reacted two years later. The company was reverted to its owners in April 2014 and the changes nullified and termed a “fraud”.

SEVERAL ALARMING LETTERS

Mr Beekemeyer did not relent, making the registrar’s reversal of the company back to its owners insignificant.

The company would even call for another Annual General Meeting, a move that saw several alarming letters written by the London lawyers acting for Mr Bhurawala who was increasingly feeling frustrated by the impunity.

In the second major coup at the firm, Mr Shahi, who had now taken keen interest in taking over the firm, took Mr Beekmayer to court with six counts of obtaining over Sh100 million from him fraudulently and two other counts of forgery in November 2014.

The case pulled in a lawyer who, while advising Mr Beekmayer, introduced “consultants” to help run the firm as the wrangles over ownership climaxed. In the meantime, the British national fled the country while on bail in unclear circumstances, extinguishing the threat he posed to Mr Shahi.

CALLING SHOTS

His escape left the Department of Immigration on the spot having earlier been accused of ignoring questions over Mr Beekmayer’s status and activities.

Meanwhile, the “consultants”, who happen to be the ones calling shots at Xplico today, had grown confident enough to stage their own coup against Mr Shahi, opening another battle front at Xplico.

Mr Shahi’s case against the fugitive Briton has been used by the Registrar and the Attorney-General to prove that he (Mr Shahi) was not coming to court with clean hands — asking the court to uphold changes he has taken Mr Beekmayer to court for.

“In any event, the existence of criminal proceedings instigated by the applicants as complaints is an admission on their part that there was fraud on their part and in effect a vindication of the action on the Registrar of Companies to rectify the register so as to combat fraud,” the court papers say.

DRAGGING DRAMA

The two offices, whose two years of laxity had seen an investor pushed out of his company, had their pasts hunting them, this time for doing the right thing. The case which is expected to put the final piece to the puzzle of Xplico’s ownership has had its own share of dragging drama with a one-day hearing concluded in July 2017 — and for more than a year, judgment is still pending.

Meanwhile, the “consultants” and Mr Shahi regrouped to run Xplico whose management expenses have been growing from the Sh204 million in 2012 to the Sh1.04 billion recorded in 2015.

The four “consultants” are said to be drawing some Sh2.5 million each in monthly emoluments while running the company from an off-site office in Nairobi’s Westlands.

IRA, which has been watching over the corporate coups under its long serving Commissioner Sammy Makove — who has since retired — told the Nation that Xplico is being run professionally and accusations like the illegal importation of cigarettes had not been brought to their attention.

AUDITED RETURNS

IRA acting commissioner and chief executive Godfrey Kiptum added that the company had submitted audited returns for the years it has been in operation, contradicting the regulator’s own report which painted a different picture.

“We read about this allegation in the papers. As at now, there is no evidence that the insurer imported any cigarettes. However, we have taken up this matter with other relevant government agencies to establish the facts. The insurer is continuously being monitored to ensure that it meets obligations, the court matter notwithstanding,” Mr Kiptum wrote in response to queries about the firm’s alleged involvement in cigarette smuggling.

At the Inland Container Depot in Embakasi, the 40-foot containers are still being held with documents showing Xplico insurance was a key consignee under the bill of lading number 961667767.

CONSPICUOUSLY MISSING

Its directors said to have used the house help caught up in the web under a firm Quality GS Limited are conspicuously missing from its website where a glaring blank greets anyone checking its list of managers.

After weeks of e-mails, calls and reminders, Xplico said that IRA had approved all those running it and that the cigarette import allegations were false — despite the documentary evidence seen by the Nation.