A former leader of the Zimbabwe National Liberation War Veterans Association (ZNLWVA) has made sensational claims of corporate governance deficiencies and fraud against Progressive Holdings (PH), which manages a funeral policy for 8 000 of the war heroes.
First Funeral Assurance, a unit of PH, manages the scheme.
Shadreck Makombe, the former ZNLWVA secretary-general, claimed in a trove of documents to the Zimbabwe Anti-Corruption Commission (Zacc) that the scheme must be probed.
But a PH spokesperson claimed Makombe became vindictive after the firm stopped paying him “chief agent fees” after leaving the ZNLWVA leadership in 2014.
“Through several engagements with the group CEO of Progressive Holdings, which is the holding company for Progressive Insurance Brokers (PIB) and First Funeral Assurance (FFA) concerning the funeral scheme, I discovered a lot of illicit, forgery and fraudulent activities, perpetrated by these companies bringing into question the going concern status of Progressive Group of Companies as a whole and the War Veterans Funeral Scheme, in particular,” Makombe, the funeral scheme's chief agent, claimed.
He alleged PH is owned by Maxwell William Katunga, who is also the group CEO, and his family members.
The report claimed Gavin Allan Katunga, who is also the managing director of First Funeral Assurance, is his son.
In terms of Insurance and Pensions Commission (Ipec) statutes as documented in the Ipec directive on system of governance and risk management — March 2017, FFA is in breach of Clause 4.2.5 which states that: “No individual or individual and his or her close relatives shall own or control, directly or indirectly more than 40% of voting shares of an insurer.”
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Makombe contends that PIB could be financially unsound in violation of insurance laws.
“With the policy set to mature imminently, I have come to discover that PIB /FFA do not possess premium reserves as mandated by insurance law that will enable war veterans to continue to be buried after policy term maturity. In addition to lack of premium reserves and prescribed assets, the current levels of service delivery being offered to the war veterans’ policyholders have deteriorated to a deplorable state causing me as the principal/chief agent of the funeral scheme to raise queries with the group CEO as part of my responsibilities,” his dossier reads.
After the deliberations to rectify the situation failed, Makombe said he reported the matter to the Insurance and Pensions Commission (Ipec). He claimed no action was taken. But when reached for comment, Ipec said: “The commission is conducting an inspection on the said entity, focusing on some of the issues raised by the complainant. We are unable to comment further on the subject until the matter is finalised.”
Makombe’s report to Ipec, dated June 28, 2023, highlighted a lack of a clear policy contract, lack of premium reserves, poor service delivery to policyholders, unfair premium pricing, and unilateral change in benefits to the funeral scheme.
It claimed there was a breach of section 4.2.6 of the Ipec directive on system of governance and risk management which states that: “No individual or such individual and his or her close relatives who have, directly or indirectly, significant ownership and control as defined in 4.2.1 shall be an employee or director of the insurer.”
Makombe told Ipec all senior managers of that same company were relatives of the Katungas except for the general manager for finance.
“In fact, the assurer pays out claims out of premium receipts which is illegal and not prudent for a regulated company, which is required by law to be fully capitalised as per Ipec statutes. This highlights the assurer’s insolvency and incapacity,” Makombe’s report highlighted.
“This also points to the fact that premiums are being abused and diverted for other things other than enhancement of the policy as mandated by insurance regulations. One can only wonder about the fate of policyholders and their beneficiaries, once the policy term matures and no premiums are received. The First Funeral Assurance is insolvent and has proven incapacity to continue handling the funeral scheme, evidenced by the rampant poor service delivery offered to policyholders.”
“The matter is very worrying to me as by its nature this is a highly politically sensitive book with widespread implications if not handled well. The environment is aggravated as coupled with the fact that I am inundated by voluminous complaints from my comrades in arms against poor service delivery,” he said.
“In addition to insurance regulatory matters as reported to Ipec, Progressive Insurance Brokers this time in connivance and collusion with some government pensions office members of staff have been perpetrating signature forgeries in that they have been signing fraudulently for the increase of premiums without the knowledge of policyholders in contravention of the law purporting to be war veterans.”
The PH spokesman said the firm was doing everything above board.
However, a letter addressed by the ZNLWVA to the pensions master said Makombe had no mandate to complain on behalf of the veterans and accused him of ‘serious fraud’.
“We were made aware and shown evidence of serious fraud … by their (PH) GM finance and our former SG Mr Shadreck Makombe and we are seized with the matter,” claimed the November 6, 2023 letter, which was copied to the ruling Zanu PF politburo.
“We are not aware of any complaints or outcry against PIB."
PIB started burying our comrades 12 months before any pension contribution was paid to them. We are eternally grateful for this gesture. We have no money and pleaded with them to understand that…they have been burying our comrades without problems. We held several meetings with them over the unviable premiums that our members are paying to them for these policies.
“Mr Makombe was removed in 2014 and holds no office in the War Veterans League or Association. We find it bizarre that our comrades would complain to pay half of what they are supposed to be paying or in some instances, even less than half of what they signed for.”
In a letter to the pensions master dated November 6, 2023, PH claimed that after his executive left in 2014, Makombe “continued throwing his weight around, threatening and harassing staff at PIB”, saying he was the chief agent for the scheme.
“The company discovered massive fraud and extortion perpetrated by the same gentleman,” the letter said.
“Instructions were given by the above-mentioned comrade to pay for hotel accommodation at top hotels, travel expenses, fuel etc for his girlfriends and wives.”
“Thousands of USD were paid at Crowne Plaza for presidential suites for comrade Makombe and his girlfriends/wives. He connived with the GM Finance to siphon a lot of money from the company using different means currently under investigation. The comrades who came to your offices to complain against premium reviews are being used by this gentleman,” the letter said.
When contacted, Makombe said he had an agreement with PIB.
“To me that is scare crow and hogwash. I will furnish you with the agreement and the computing method used. They are actually owing me US$81 000. My lawyers are seized with this,” he said.
But in a letter addressed to Makombe and Katunga on June 16, 2023, the firm’s lawyers Chambati&Mataka Attorneys at Law queried his credentials as a chief agent.
“Our clients want to know whether Mr Makombe is a registered insurance agent. Our clients checked with Ipec and records there show that Mr Shadreck Makombe was not registered for the past five years, or even more because they only checked for a period of the past five years. Our clients believe that this agreement was done by way of coercion, blackmail, and outright extortion,” the letter said.
“Our clients believe that this extortion, blackmail, force and bad behavior has taken place for a long time and it is time to stop it.”
