Korapay Technologies Ltd., a Techstars-backed fintech startup with Nigerian roots, is among the latest Nigerian-led companies to be rattled by the authorities in Kenya – barely a week after the fintech unicorn, Flutterwave, had its bank accounts frozen following a court order in the same country.
According to recent reports in the local media, the accounts of two Nigerian businesses that are alleged to have smuggled more than KES 6 B (~USD 50 M) into Kenya have been frozen by the High Court.
In two separate lawsuits brought by the Asset Recovery Agency against Korapay Technologies Limited and Kandon Technologies Limited over allegations that they are complicit in international money laundering operations involving fraudsters, Lady Justice Esther Maina issued the orders to restrict access to the bank accounts tied to the companies.
Justice Maina froze USD 249.9 K (KES 29.5 M) in the Equity Bank account belonging to Korapay, which describes itself as a business that enables local and global businesses to sell, build and scale with payment solutions. In the second case, Kandon had its KES 15 M (~USD 126.8 K) split between two accounts at UBA bank blocked.
“The court issues preservation orders prohibiting the respondents or their agents from withdrawing or transferring the money in the stated accounts for six months to allow Asset Recovery Agency [ARA] complete investigations in the allegations of money laundering,” ruled Justice Maina.
In its lawsuit against the two businesses, the ARA claims they are assisting an international fraud ring that was funneling untraceable amounts of illicit funds through Kenyan banks.
The State agency claimed that it had determined that Korapay’s founders, Gideon Oghenetega Orowiroro and Dickson Chukwuma Nsofor, had been receiving millions of shillings in their accounts before the money was distributed to others.
“We established that they received the KES 29.5 M in a single transaction which raised suspicion as to the source of the funds,” said the agency.
In the case against Kandon, which is co-owned/co-led by Uzoamaka Pauline Okoro and Ayowole Oluwasen Ayodele, the ARA claimed that they siphoned KES 5.5 B () which was transacted through their bank account at UBA in a period of seven months between October 2021 and April this year.
“Our investigations revealed that their account had transacted KES 5.5 B (~USD 46.5 M) in seven months and by the time we got intelligence information that they were engaged in money laundering, they had transferred the funds to other jurisdictions with only Sh15 million remaining,” said ARA.
The two companies, according to the ARA, are connected to five other Nigerian businesses and a Kenyan businessman, whose 62 bank accounts, totalling more than KES 6 B (~USD 50 M), were frozen last week due to suspicions that they were involved in card fraud and international money laundering.
The main accusation in the fresh allegations is that Flutterwave participated in the laundering of some money that was wired into Kenya from Nigeria, and that the startup was operating in Kenya without a valid license from the country’s monetary regulator, the Central Bank of Kenya (CBK).
Although Flutterwave denies any wrongdoing and distances itself from any impropriety, a court froze USD 56 M across the company’s multiple bank accounts in Kenya.
As it turns out, another Nigerian firm had been embroiled in a similar skirmish in Kenya before the Flutterwave issue, though it was the case around the well-known fintech unicorn that understandably stirred a ruckus.
Two months ago, Kenya’s Assets Recovery Agency (ARA) started looking into the allegedly fraudulent transfer of USD 221 M from Nigeria to Kenya between October and November 2020. RemX Capital Limited, which kicked off in 2020 as a multi-currency payment platform for African businesses, was the subject of the investigation.
RemX Capital has since denied the allegations but the court has frozen KES 5.6 B in six accounts belonging to RemX Ltd and other companies linked to the suspicious transactions that may well be down to compliance shortcomings. It remains to be seen whether the picture painted by the recent wave of cases against Nigerian financial services providers in Kenya points to orchestrated impropriety or shrewd financial manoeuvring.
Feature Image Credits: MarketWatch