INTEGRATED funeral services group, Doves Holdings, is under scrutiny from the Insurance and Pensions Commission (IPEC) over possible corporate governance failure and alleged abuse of policyholders’ funds.
IPEC commissioner Tendai Karonga confirmed to The Financial Gazette yesterday that certain allegations had been made against Doves.
“IPEC did not conduct an “investigation” per se, but an onsite inspection on Doves during the period 28 September and 2 October 2017,” Karonga said in an emailed response.
“We are finalising our findings, after which appropriate decisions will be made. Although we have received allegations of poor corporate governance, our onsite inspection will enable us to determine the situation and act accordingly.”
Sources said investigations would focus on Doves’ funeral insurance unit, Doves Funeral Assurance (DFA), which falls under the regulatory ambit of IPEC. DFA, which had total assets of $24,67 million as at June 30, 2017, is the biggest funeral assurance company in the country.
Doves shareholders are said to have acquired automotive and engineering company, Amtec, from the Industrial Development Corporation.
He said the regulator had received information that the acquisition could have been funded using policyholders’ funds.
“They (IPEC investigators) were initially requesting information related to bank transfers from Doves Funeral Assurance,” a source said. “They later went to work from the company’s offices during their investigations.”
IPEC investigators set base at Doves offices for an on-site probe early October last month, conducting interviews with directors, senior managers and other critical staff members, a senior manager said.
The IPEC investigations team includes Urayai Rwatirera, Octavia Mupfupi and Stewart Banda.
The Financial Gazette understands that IPEC also suspected that shareholders may have used DFA cash to purchase Doves South Africa about two years ago.
“They are also looking at possible use of policyholders’ funds for property acquisitions by directors,” he said.
Directors are also said to have authorised the release of cash from DFA to start a microfinance institution, which is to be housed at Amtec. The interviews for staff at the microfinance institution had been conducted by human resources officials from Doves, even though the company is unrelated to the funeral services group.
The source indicated that IPEC was also probing the establishment of a staff welfare fund, which replaced a workers’ pension scheme which was being managed by Old Mutual. The pension scheme was terminated early this year without authority from IPEC, which had also not sanctioned the welfare fund.
Doves, which became the first professional funeral services establishment in Zimbabwe started by David John Morgan in 1902, was taken over by a consortium of businessmen led by Farai Matsika and Phibeon Busangabanye in 2012.
Matsika’s consortium had acquired the business from former Bikita member of Parliament, Munyaradzi Kereke, who had bought the business from Newton Madzika, the first black man to have acquired the business from the founding family at the start of the millennium.
Matsika, a former chief executive officer of Croco Motors, chairs the group’s business development committee and authorises all critical payments from Doves.
Other committee members are young brother Nyasha Matsika and Edson Gatsi, an executive director.
Nyasha Matsika, who was general manager, operations, for DFA, had been transferred to Doves
Funeral Services (DFS) after IPEC investigations started. It was not immediately clear if IPEC had any role in the transfer.
The three are the main signatories to all bank accounts.
Talent Maziwisa, the group chief executive officer, was said to play a peripheral role in the business.
“They requested information on several bank transactions but it was clear this was just a formality.
They already had all the information they wanted,” another Doves employee said, indicating that there was panic among directors. The Financial Gazette