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Cameroon |
ECONOMY
How not to run a company
At its inception, the Assurances Mutuelles du Cameroun (AMACAM) represented a positive step on a national basis towards insuring property and people. But from 1985 onwards, its business and operating capital dwindled from 4 billion CFA francs to a miserable 1.5 billion francs by 1993. Its pioneer general manager was French-born Mr Peninou François, who was also general manager of a similar concern in Côte d’Ivoire. On 2 May 1964, he met Mr Obam Mfou’ou Jeremie, who was then director of Cooperation in the Secretariat of State for Agriculture in Yaounde, and Mr Mba Ephraim who was president of the Chamber of Agriculture in Yaounde. So it was that Cameroon’s first assurance and insurance company took off about two months later, with Mr Peninou as its first General Manager. At the time of its legal registration, AMACAM had 448 employees, 60,000 shareholders, 14 branches, 12 regional offices and 42 business agents.
AMACAM‘s first financial downfall came in 1975 under Mr Pierre Moulet. In a move to get a building for AMACAM, rather than asking for a bank loan, he delved into AMACAM‘s coffers and helped himself to a considerabla sum of money with the blessings of its general manager Mr. Mba Ephraim. When AMACAM‘s board of directors met in general assembly, they unanimously condemned the act, and this led to Mr Moulet’s and Mr. Mba’s resignations.
As the years went by, the French expatriates in AMACAM were leaving, thus giving the opportunity for Cameroonians to manage the company. Mr Mboumi Thimothy replaced Pierre Moulet. So as to put some order into the company, he only allowed his assistant director and his financial director to sign financial engagements up to 5 million CFA francs.
Found out
On 21 June 1985, just as the AMACAM was about to computerise its activities, Mr Mboumi resigned. By then, its operating capital had risen to 9.4 billion CFA francs. In order to ensure that the changeover to computerisation was done correctly, an auditing team of chartered accountants from the firm of Kooh and Mure were brought in. These noticed that from 1975 to 1985, in spite of its increased operating capital, during that period, a great deal of money seemed to have gone «missing» from the Bank’s accounts.
This led to another auditing inspection from the General State Inspectorate. Its report corroborated Kooh and Mure’s report and went on to accuse some senior AMACAM officials of mismanaging some 750 million CFA francs. In 1987, there was a mysterious fire in the offices during which a number of incriminating documents were destroyed. On 11 April 1988, a team of judicial police investigators came in to find out the causes of the fire. As a result, 15 senior officials (including the former general manager Mr Mboumi) were detained in order to «help the police with their inquiries». When the matter came up in court, twenty defense lawyers showed up for the accused. During the court appearance, other charges were laid against the accused such as instituting and receiving financial kickbacks from businessmen dealing with the company. The court discovered that six of AMACAM‘s staff had been receiving enormous sums of money with the knowledge of Mr. Fute Raphael, AMACAM‘s third assistant general manager. This was described by many as Cameroon’s first ever major financial scandal.
Down and out
In 1991, the government of Cameroon wanted to put AMACAM‘s house in order and prescribed a five-year redressment programme which consisted mainly in cutting down on management costs. But during the programme’s third year, the company was still not making any progress in emerging from its financial difficulties. Indeed, as the years went by, it was clear AMACAM was gradually becoming insolvent. In 1982, a report issued by the French Development Fund and the Inter-States Conferences on Insurances in Africa made it clear that it was only a matter of time before AMACAM would cease to exist. By 1993, AMACAM‘s financial resources had dropped to an all-time low. On 28 February 1996, when the Central African Insurance Code (CIMA) was being launched within the sub-region to regulate the insurance business, AMACAM owed its workers some ten months’ salaries and was in debt to its business partners to the tune of about 20 billion CFA francs.
It was clear the end had come. A chartered accountant from the finance company ORREX firm, was brought in to liquidate AMACAM‘s assets, under the norms of the Central African Economic and Monetary Union (UDEAC). But his report was sharply criticized by the National Order of Chartered Accountants in Cameroon, saying: «He is a novice in the profession of winding up businesses».
But after all, AMACAM‘s sad story is perhaps an example of how not to run a company!