A petition for the release of KES 1.4 B (USD 12 M) held by Safaricom and four banks has been filed in Kenya by more than 2,000 investors from Nigeria who claim they were duped in transactions involving prominent African fintech, Flutterwave.
In a petition, the group of Nigerians who collectively identify as investors in a platform claimed that a sports betting company that used Flutterwave to handle the payments had defrauded them of millions of dollars.
Invoking Kenya’s anti-money laundering laws, the 2,468 Nigerians now demand that the sum of ~USD 12 M be divvied up from the KES 6.6 B (~USD 55 M) that was frozen in July in 62 bank accounts at Guaranty Trust Bank (GTB), Equity Bank, Ecobank, and UBA Bank, as well as in 19 Safaricom paybill numbers.
The Assets Recovery Agency (ARA) was granted permission to freeze KES 5.17 B (~USD 49 M) in 29 GTB accounts, with the remaining funds held in accounts at Equity and Ecobank in Kenyan Shillings, US Dollars, Euros, and British Pounds.
The large sums are alleged to be the proceeds of theft, credit card fraud, and money laundering that were wired under the guise of payments for goods and services.
One of the investors, Morris Ebitimi Joseph, claimed that he and other alleged victims had filed a new lawsuit in Nigeria to seek the return of their funds. They argued that a portion of the money belonged to them and have opposed the attempt to forfeit it to the Kenyan government, as reported by Business Daily Africa.
“I believe that the issuance of an order compelling Guaranty Trust Bank, Equity Bank and Ecobank to deposit the sums excluded in the bank account of our advocates, justice shall be served to the 2,468 interested parties who were swindled of their hard-earned money through the scheme,” he said. The Nigerian claims that they bet on sports using a website called 86 football technology.
Joseph claimed that the investors put money into the investment scheme on the promise of better returns from the betting business, but these never materialized. Before the payments stopped, according to them, everything was fine for about six months. He also shared that after conducting research, he came to the conclusion that the operation was questionable, and now wants to join the case and help the court resolve the issue.
The Nigerian contingent is requesting the Central Bank of Kenya (CBK), which declared in July that Flutterwave is not licensed in Kenya, to ask that the court issue an order directing Access Bank, Safaricom, and United Bank of Africa to deposit the excluded amount in the account of his attorneys.
“The claim made by the applicant/intended interested party represents the interest of 2,468 persons, thus occasioning monumental public interest. Failure to expeditiously determine whether the application is in like fashion constitutes substantive and irreparable injustice,” Joseph says. He contends that there may be more people with an interest in the funds in addition to the 2,468 people who are requesting an injunction.
Flutterwave, founded in Nigeria in 2016 by Olugbenga Agboola and Iyinoluwa Aboyeji, has become a prominent player in the booming merchant and consumer-focused digital payments across Africa and is considered the highest-valued tech startup on the continent. However, the company has been rocked by scandals in the past months with its leadership and corporate governance coming under question.
According to testimony given in court, Flutterwave received KES 12.4 B (~USD 103 M) in one account at Equity Bank between November 2020 and this year, which reflects the relatively huge payments the startup handled.
Nehikhare Eghosasere and Demuren Olufemi Olukunmi, who own Rem X Ltd, received the money from the Equity account later. A separate money laundering lawsuit involving Rem X Ltd resulted in the court freezing KES 5.6 B (~USD 47 M) in accounts in April.
“I have sufficient reason to believe that 86 Football Technology Limited was a fraudulent scheme looking to default unsuspecting investors and traders,” Adebayo Abiodemi, one of 2,468 investors, said. He argued that more people might be interested in the case and asked the court to mandate the publication of an advertisement in newspapers and online.
The money was deposited through a number of platforms, including Marakwe and Sons Ltd, Marasoft Digital Technologies Ltd, also known as Marasoftpay, Hadsol Global Investment Service Ltd, Monotechnologies Nig. Ltd, and Wildcat Global, according to evidence presented in court.
“That I verily believe that the joinder is significant in assisting the court in the just and fair resolution of issues raised, for effectual and complete adjudication of all questions and will provide protection and security for the rights and interest of the applicant/intended interested party who will otherwise be adversely affected by the eventual issuance of forfeiture orders,” Abiodemi said.
In July, the CBK told the public that Flutterwave is not licensed to operate in Kenya, but the startup later clarified that it had put in an application back in 2019, the status of which remains unclear.
“We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements and we look forward to receiving our licence,” the firm said in a statement.
In any case, the requested orders sought by the 2000+ Nigerians were rejected by Justice Esther Maina, who also ordered that the case be heard on October 4.
“That the 1st Respondent’s (Flutterwave) bank accounts received billions in a suspected scheme of money laundering and the same deposited in different bank accounts in an attempt to conceal or disguise the nature, source, location, disposition or movement of the said funds,” said the ARA.
Moreover, the ARA’s freeze order against Flutterwave is valid for 90 days which possibly sets up an important day in court in November.
Feature Image Credits: Stephen Legal