How Amaco bagged Sh190m City Hall tender

• Nov 30, 2021

An insurance company linked to Deputy President William Ruto has won a Sh190 million deal with the Nairobi County.

The Africa Merchant Assurance Co. Ltd (Amaco) was awarded the tender to provide insurance cover for the county's motor-vehicles and motorcycles.

The company was awarded the tender following a court ruling in which two other companies had challenged the decision by Nairobi County to give the tender to AMACO.

In her ruling, Justice Pauline Nyamweya approved the tender which had been cancelled by the county's procurement office.

The judge argued that the office had no powers to quash the tender.

“The ex parte Applicant (AMACO) is therefore entitled to the orders sought of certiorari to quash the said decision, in light of the applicable principles as regards the grant of this remedy,” ruled the judge.

The tender, which had been awarded in early 2020, was cancelled after the two insurance firms argued that they had not received notices on the cancellation of their bids.

AMACO, however, moved to court challenging the cancellation of the tender.

This tender offers a lifeline to the insurance company which is on the verge of bankruptcy following a Sh10 million debt owed to six individuals.

In November 2020, the court had sanctioned the process of shutting down the firm after a protracted battle over the payments.

The six who included Elizabeth Karithi, Anisia Muthoni, Faith Muthoni and Silas Kinoti among others claimed that the firm had not paid their dues and in some cases issued bouncing cheques.

The closure order was, however, suspended days later after settling a debt of Sh4.3 million.

“Whereas the company has outstanding liabilities, we remain committed to settle all of the genuine ones as per our contractual obligation. From 2017 to date, AMACO has paid out a total of Sh4 billion in claims and legal liabilities despite the prevailing economic conditions,” the firm explained at the time. Last year, a judge temporarily stopped the liquidation of 22-year-old Africa Merchant Assurance Company (Amaco) over a Sh10.2 million debt, offering a sigh of relief to the firm associated with Deputy President William Ruto.

Justice Margaret Muigai temporarily put on hold the process to wind up of the company to allow the underwriter to appeal the ruling to liquidate it.

The judge had a few days ago ordered the liquidation of the company after it failed to pay a debt it owes six people.

The six including Elizabeth Karithi, Anisia Muthoni, Faith Muthoni and Silas Kinoti, filed cases against the company before courts in Embu, Runyenjes and Ngong seeking various amounts following accidents.

“The court grants temporary stay of liquidation of the company pending hearing and determination of the application,” said Justice Muigai.

“Further directions shall be on December 9, 2020.”

The court also heard that the judgments and decrees obtained by the six have been served on the company and have never been set aside nor appealed.

They also revealed that plans to attach the company’s properties have been unsuccessful, leaving them with no other option but to wind up the firm.

“It is clear that the company is unable to pay its debts and it is just and equitable that company should be wound up in the interest of justice,” the petitioner’s said.

According to the Insurance Regulatory Authority’s 2019 report, Amaco reported 1,649 cases of unsettled liability claims with none settled compared to its second quarter’s 1,705 cases during which 169 were settled.

Outstanding non-liability claims stood at 2,005 cases up from 1,907 reported in the quarter during which 444 fresh claims were made and 346 claims paid.

In 2018, Amaco recorded a Sh75 million after-tax profit mainly boosted by lower operating costs.

Liabilities decreased to 17 per cent to stand at Sh1.8 billion compared to Sh2.1 billion the previous year.

The firm drew up to 62.6 per cent of its business worth Sh2 billion from motor premiums.

Last year, Amaco recorded a Sh75 million after-tax profit mainly boosted by lower operating costs.