Fresh controversy

Flutterwave Is Embroiled In A Messy Money Laundering Case In Kenya [Updated]

By  |  July 7, 2022

African fintech champion, Flutterwave, is among seven companies that have had their accounts frozen by a Kenyan High Court for enabling money laundering by foreign nationals, per reporting in the local media.

The order, which freezes 56 bank accounts holding a total of KES 7 B (~USD 60 M) between them, was sparked by investigations by the Asset Recovery Agency (ARA).

The ARA alleges that several accounts held by the firms in question were used as conduits for money laundering in the guise of providing merchant services. It is understood that the accounts that have been frozen are in US dollars, British Pound Sterling, EURO and Kenya shillings.

Apart from Flutterwave which has been embroiled in well-publicised scandals in the last couple of months, other entities fingered in this fresh case include Boxtrip Travel and Tours Limited, Bagtrip Travel Limited, Elivalat Fintech Limited; Adguru Technology Limited, and Hupesi Solutions, and Cruz Ride Auto Limited.

According to The Star, court documents show that Flutterwave held 29 bank accounts with Guaranty Trust Bank, 17 with Equity Bank, and 6 accounts with Ecobank.

“Investigations established that the bank accounts operations had suspicious activities where funds could be received from specific foreign entities which raised suspicion. The funds were then transferred to related accounts as opposed to settlement to merchants,” said the ARA.

It is alleged by the ARA that, in an effort to hide the nature, source, or movement of the monies, Flutterwave received billions of shillings that were then put in various bank accounts. Flutterwave did not respond to a request for comment at the time of publishing but has now shared a statement with WeeTracker (now included in the concluding parts of this article).

Isaac Nakitare, an agency investigator, claims in an affidavit that they received orders to search and examine the accounts on April 4 of this year.

By the time he received the orders, according to Nakitare, Flutterwave’s accounts at Guaranty Trust Bank, Equity Bank held balances of KES 5.3 B (~USD 45 M) and KES 1.4 B (~USD 12 M) respectively, while the Ecobank account also held some millions. He added that some of the funds were moved into fixed deposit accounts.

The Agency also alleges that Flutterwave masked the nature of its business by purportedly offering a platform for payments without receiving permission from the Kenyan central bank. They claim that under the pretext of offering merchant services, the accounts were exploited as channels for money laundering.

“If indeed the Flutterwave was providing merchant services, there was no evidence of retail transactions from customers paying for goods and services. Further, there is no evidence of settlements to the alleged merchants,” Nakitare averred.

It is also contained in the court documents that Flutterwave’s Equity Bank account may have been involved in suspicious activity given that in May last year, it received 185 online card payments, all of which share the same bank identification number. There is a suspicion of fraud because the transactions were completed using cards from the same bank at the same time on the same day.

Further details show that after opening the Equity Bank USD account in November 2020, Flutterwave received approximately KES 12 B (~USD 101 M) and the funds were either transferred to Remix Ltd or were invested in a fixed deposit account. The funds received were mainly from Flutterwave Inc.

It remains to be seen whether the picture painted by the allegations signals orchestrated impropriety or creative financial maneuvring. However, Flutterwave finds itself in the middle of another controversy in what has been a chaotic few months since the fintech unicorn became the continent’s highest-valued tech startup after closing a USD 250 M Series D at a USD 3 B valuation in February.

In the months that have followed, Flutterwave’s big plans to accelerate digital financial services in Africa (as conveyed in the ambitious Flutterwave 3.0 project) have been overshadowed by a PR nightmare which has its CEO/Co-Founder, Olugbenga “GB” Agboola, in the middle of allegations of impropriety, misconduct, and questionable dealings.

One notable controversy came about following the submissions of a former Flutterwave employee, Clara Wanjiku Odero; a  Kenyan national who now leads Credrails.

Wanjiku played an important role in Flutterwave’s expansion efforts in Kenya but revealed mistreatment at the hands of the company’s leadership, including an episode in which Flutterwave’s negligence put her in a messy case of fraud that drew the attention of Kenyan police even though she had left the company. She had sued Flutterwave for damages but the matter of how much is due remains unresolved.

Further explosive investigative reporting by award-winning journalist, David Hundeyin, and a follow-up investigation by Rest of World painted a disturbing picture of bullying, mismanagement, subterfuge, costly administrative errors, and questionable governance at Flutterwave.

Fresh allegations of money laundering prosecuted by the Kenyan ARA will add to the pile of trouble at Flutterwave and undermine efforts to fix its image which has taken a battering lately.

Additionally, Justice Maina also granted an injunction preventing Boxtrip Travels and Tours Limited from moving or withdrawing the USD 3.9 M (KES 460 M) stored in its Ecobank account. One Enyioma Olufemi, a Nigerian national, is listed as the Director of Boxtrip.

“It received the money from Flutterwave Ltd in two days. That is 27 to 28 April this year. No explanation nor supporting documents were provided to justify the transactions therefore reasonable grounds to believe that the accounts were used as conduits for money laundering,” said the ARA.

The Star also reports that the court froze the bank account of Bagtrip Travels holding KES 425 M (USD 3.6 M). Another Nigerian national, one Taiwo Soyemi, is listed as Director. Bagtrip is said to have received the monies from Flutterwave Ltd and Rainbow Solution Technology on 28 April and 6 May 2022.

Another KES 1.2 M (~USD 10 K) belonging to Elivalat Fintech Limited was frozen. The funds are reported to have been transferred to one Tiware Adrian Simon who is listed as one of the Directors at Elivalat Ltd and to one Muoko David who is listed as one of the directors of Flutterwave Ltd.

Similarly, the court froze another KES 100 M (~USD 850 K) held in the Equity Bank account of For Adguru Technology Limited. The directors of the company are listed as Adaeze Okonkwo, and Caroline Muchina, noted to be the wife of the earlier-mentioned David Muoko who is listed as a Flutterwave Director.

The court also placed the KES 1.6 million (~USD 14 K) held in the Equity Bank account of Hupesi Solutions. The documents indicate that the company’s equity account received a total of KES 143 M (~USD 1.2 M) of which KES 54 M (~USD 457 K) was transferred to Flutterwave payments, KES 45 M (~USD 381 K) was transferred to GC Natural PL and internal transfers of KES 26 M (USD 220 K).

The transactions were done in tranches of below KES 1 M to avoid reporting threshold, but by the time the agency obtained orders to freeze, only KES 1.6 M was left in the account, the ARA alleges.

The court withheld another KES 2.4 M (~USD 20 K) held in the account of Cruz Ride, a motor vehicle dealer. Flutterwave is reported to have been the source of the funds in a transaction dated June 6, with one Simon Ngige later receiving the sum.

“The account had been dormant and had not received any funds from September 2021 to May 2022. However, in June 2022, the account received 269,000 US dollars (31.7 million shillings),” said the ARA.

The documents indicate that Ngige received USD 452 K US (KES 53.3 M) in his KCB account from Flutterwave, Cavin solutions and Cruz Ride Auto.

On 24 June, Ngige is said to have transferred USD 200 K (KES 23.6 M) to his KCB account. The court stopped the transfer of the KES 14 M (~USD 118 K) left in the account.

“An analysis of the statements of accounts established that the accounts received suspicious deposits that indicate smurfing activities hoping to evade detection,” the ARA alleged.

The orders granted by the court will remain in effect for a period of 90 days, meaning it could be November by the time the case proceeds further.

UPDATE: Flutterwave has shared a statement with WeeTracker in response to the allegations as follows:

“Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this.

We are a financial technology company that maintains the highest regulatory standards in our operations. Our Anti-money laundering (AML) practices and operations are regularly audited by one of the Big four firms. We remain proactive in our engagements with regulatory bodies to continue to stay compliant.

Through our financial institution partners, we collect and pay on behalf of merchants and corporate entities. In the process, we earn our fees through a transaction charge, records of which are available and can be verified. As a business, we hold corporate funds to support our operations and provide services to all our customers.

By facilitating payments for the biggest organizations in the world and everyday businesses, we process significantly large volumes of money and contribute to growing the economy in Kenya, and the rest of Africa.

Flutterwave has a responsibility to ensure the integrity of the ecosystem, and we pledge our commitment to continue working with all stakeholders to uphold this. We are working to ascertain the motive behind the false claims, and have the records straightened.

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