Liberty in a spot over ‘quiet changes’ at Stanlib Kenya, profits fall

Stanlib regional director James Muratha with Stanlib Kenya chairperson Claire Mwangi at a past function.

Quiet staff dismissals have been effected at asset management firm, Stanlib Kenya, over alleged breaches that exposed clients’ investments, it has emerged.

According to South African newspaper, the Sunday Times, the management changes were made by parent company, Liberty Holdings, following operational issues relating to impaired bank exposures.

South African-based Liberty Holdings is the principal shareholder of Liberty Kenya Holdings Limited, a company which is listed on the Nairobi Securities Exchange and whose other local subsidiaries, apart from Stanlib Kenya, are Heritage Insurance and Liberty Life Assurance Limited.

On Friday, Liberty Holdings failed to ease concerns about the future of the 50-year-old insurer founded by business doyen Donald Gordon at its results presentation, where it reported a 38 per per cent fall in annual earnings.

The group, which is controlled by Standard Bank Group, has experienced a drop in share price of more than a third from its peak almost two years ago in the face of a weakening South African economy and internal management problems, the paper reports.

According to Jason Weir, a trader at BayHill capital, the changes to the Kenyan subsidiary were as a result of investment of client money “in instruments that were exposed to second-tier banks, which subsequently became illiquid.”

Though he did not mention the lenders by name, two Kenyan banks, Imperial Bank and Chase Bank, have in recent times been in trouble over internal governance issues, which led to their placement in receivership last year.

Imperial Bank’s fortunes remain unchanged even as shareholders put the spotlight on the Central Bank of Kenya and the Kenya Depositors Insurance Company, accusing the apex bank of seeking to dispose off their assets without exploring all legal avenues for a  more reasonable solution.

According to the Sunday Times, Liberty gave an assurance it had taken steps to ensure that the Kenyan business was on a good footing.

Weir said the revelation of mandate breaches in the business pointed to problems with the group’s hiring processes. The company needed to look at the problems in Kenya from the ground up and not just from a managerial perspective as the flaws in the Kenyan business seemed inherent throughout.

The paper says Liberty CEO Thabo Dloti confirmed there had been several dismissals as a consequence of these breaches. However, this simply presented yet another management change, which Brad Preston, chief investment officer at Mergence, was quoted by the paper as saying was becoming too commonplace.

Weir says the changes raise a red flag about the business’s hiring practices.

“The board would need to monitor more closely the likes of their Stanlib business model going forward as well as the calibre of the compliance teams and management involved,” Weir says.

Apart from the changes in Kenya, Stanlib’s CEO, Seelan Gobalsamy, has been redeployed to head the company’s emerging-markets division. He will, however, stay on as CEO until a replacement is found for him.

Stanlib Kenya was officially launched in October 2013 after rebranding from Stanbic Investment Management Services.

It claims to manage assets worth over Sh121 billion as at 31 December 2014.

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