DCI narrow down on Old Mutual, Sedgewick top managers in multi-million tendering fraud involving Kenya Pipeline

Top Old Mutual General Insurance Limited, a subsidiary wing under the Old Mutual Holdings PLC and Sedgwick Insurance Brokers (SIB) top managers profiled as prime suspects in the multi-million tendering fraud by the Directorate of Criminal Investigations (DCI) could soon serve as guests of the state for masterminding an illegal premium adjustment mega scam, The Informer Media Group can authoritatively reveal.

The ongoing investigations has been narrowed down to Old Mutual and SIB.

Preliminary police findings show that SIB and Old Mutual, formerly UAP colluded premiums adjustments to make a total of USD. 911,755.66 suit the market price.

Of interest to detectives is the controversial death of Sedgwick Insurance Brokers’ former Chief Executive Officer Sedgwick Insurance Brokers Sammy Methu Kiragu, who allegedly plunged to his death on the day he was to appear before DCI’s Insurance Fraud sleuths.

Although details on Methu’s actual cause of death and corroborated evidence on the motive and circumstances surrounding his alleged suicide remains scanty, the timing of his demise has widened detectives scope of investigations.

Primarily, the insurance managers from both Old Mutual and SIB are facing conspiracy and contravention of the Insurance Act in a 2023 tender for the provision of insurance services to the Kenya Pipeline Company (KPC) between July 2023 and June this year.

When contacted by us on whether they had recorded statements with the DCI, at the time of going to broadcast, neither Arthur Oginga, Group Chief Executive Officer Old Mutual Holdings PLC nor Japheth Ogalloh, Managing Director Old Mutual General Insurance had responded to our queries.

Old Mutual and SIB were the lowest bidders in the tendering process won the tender to provide services to the corporation.

“We kindly and urgently request that UAP Old Mutual Insurance nominates a person conversant with the matter to appear before the Head of Insurance Fraud Investigations Unit for an interview and statement recording,” former DCI Head of the Insurance Fraud Investigation Unit (IFIU), Daniel Kandie, stated in the letter to Old Mutual.

Sources said Kiragu was frustrated and had sought the assistance of other people to stop the probe against him and the company over the tender.

Previously, in March 2023, the Managing Director, KPC advertised the tender for the provision of insurance brokerage services in the local dailies.

At the end of the preliminary evaluation, Four M Insurance Brokers Limited and Sedgwick Kenya Insurance Brokers Limited’s bids, along with 29 others, were found to be responsive.

The two, together with 15 others, were also found responsive to the technical evaluation criteria and were eligible to proceed to the financial evaluation stage.

SIB bid was evaluated as the lowest at this stage and they were on June 7, 2023 notified of being the successful tenderer.

Through a letter dated 21st June 2023, the MD informed SIB that it had been awarded three (3) insurance policies. Sedgwick accepted by a letter dated June 26, 2023.

Subsequently, by a letter dated 7th September 2023 and sent to MD KPC, the applicant forwarded Old Mutual General Insurance Kenya Limited’s confirmation of cover for the subject tender as the underwriter.

Kenya Pipeline instead awarded the tender to Four M Insurance Brokers Limited on September 7, 2023, and entered into a contract for the all risks industrial insurance cover with them on October 2, 2023.

SIB then filed a request for Review before the PPARB.

PPARB made its ruling on November 2, 2023, and inter alia ordered that the letter of award to Four M be nullified and set aside.

Four M thereafter instituted judicial review proceedings before the High Court at Nairobi on November 6, 2023, being Judicial Review Application No. E121 of 2023.

The Judge of the High Court held, inter alia, that the Request for Review by the SIB offended Section 167(1) of the Act and Regulation 203(2)(c)(iii) of the Public Procurement and Asset Disposal Regulations.

It also ruled that Sedgwick lacked the requisite capacity to provide cover to KPC at the price they set in their bid document, and it sought to adjust/vary the price and qualifications that had been set out in the bid document after the event, which was an act of illegality for want of approval in accordance with Section 139(1)(a) of the Act.

The High Court consequently granted an order of certiorari quashing the appellant’s decision and directed KPC to proceed with the implementation and performance of the contract dated October 2, 2023 entered into with Four M.

It was said that the SIB bid was tainted with illegality contrary to section 20 of the Insurance Act. This is because their underwriter’s lead insurer is an international insurer not registered under the provisions of the Insurance Act.

SIB’s underwriter, Swiss Reinsurance, informed KPC that it would only place cover on behalf of Sedgwick at USD 2,237,039 FY 2023/24 and USD 2,535,583 – FY 2024/2025, and that this was a clear expression on the part of Sedgwick that it lacked requisite capacity to provide cover to KPC, at the price set out in its bid document, and thus unable to enter into a contract as per its bid document.

The court also ruled that SIB lacked the requisite capacity to provide cover to KPC at the price set out in its bid document, and it was seeking to adjust the price and qualifications that had been set out in the bid document after the event.

The Insurance Company, which has been in the market for the last 40 years, has drawn clients from diverse professions in the public and private sectors including airlines, air charter companies, power and energy providers, tour operators, airport authorities, construction companies, media houses, financial institutions, Non-Governmental Organizations (NGOs), hotels and golf clubs, agricultural and manufacturing concerns, exporters, among others.