Flutterwave’s Troubles In Kenya Have Resurfaced After Short-Lived Respite

By  |  June 14, 2023

As dissatisfied individuals and businesses make claims on the massive funds accumulated by the company in local banks, a Nairobi court has taken action to freeze 45 bank accounts and 10 mobile money wallets owned by Flutterwave, a prominent Nigeria-born fintech company that has been embroiled in multiple allegations of money laundering over the past year.

Last week, Judge Alfred Mabeya of the High Court issued directives to freeze the accounts of Flutterwave Payments Technology, reports local publication Business Daily, following allegations from a collective of 2,468 Nigerian nationals. The group claims that the company was involved in a scheme that defrauded them of USD 12.04 M (equivalent to approximately KES 1.6 B).

The group of Nigerians has filed a lawsuit against Flutterwave, identifying six financial institutions as interested parties that hold the company’s funds. These institutions consist of five banks, namely United Bank of Africa, Access Bank, Guaranty Trust Bank, Equity Bank, and Ecobank, along with Safaricom, the platform where Flutterwave operates 10 paybill numbers. Flutterwave has appointed Mahmoud Gitau Jillo Advocates to represent it in the case.

“The application is certified as urgent… The application will be served for directions on 21.6.2023. In the meantime, prayers 2-9 [seeking freezing of bank accounts, bank keys and mobile money wallets] are granted for 14 days only,” Justice Mabeya ruled.

Although the exact sums held in the bank accounts and mobile money wallets are not mentioned in the court documents, the plaintiffs in the lawsuit believe that the amounts are substantial, potentially reaching millions of dollars.

Last year, the Assets Recovery Agency (ARA) obtained freezing orders against Flutterwave and eight additional Nigerian companies, whose bank accounts collectively held KES 6.2 B (~USD 49 M).

The Assets Recovery Agency (ARA) was investigating several companies, including RemX Capital Ltd, Pumicells Ltd, OIT Africa Ltd, Multigate Ltd, RemX Investment Partners Ltd, Avalon Offshore Logistics Ltd, and Kandon Technologies Ltd., for alleged money laundering involving the proceeds of credit card fraud. Initially, freezing orders were obtained against these companies.

However, in February 2023, the ARA withdrew its case against the companies, allowing them access to the billions held in their accounts.

Following a hint that first entered the public domain in September 2022 that some of the charges were being thrown out, a Kenya High Court document seen by Bloomberg and confirmed by Robert Gitau, an attorney for Flutterwave, announced the dismissal of the accusations levied against Flutterwave earlier this year.

This came as a boost to Flutterwave which had been embroiled in scandals involving its leadership under CEO Olugbenga Agboola and operational setup over the past year while trying to remain unshaken in its bid to expand its international payments business and go public on a major exchange.

Currently, Flutterwave boasts a clientele that spans over a million businesses including Microsoft, Uber, MTN, Wise, Chipper, PiggyVest, etc., handling transactions in more than 30 currencies and processing 500,000 payments daily. The company also says it has processed close to USD 20 B in payments and 100 million transactions since inception, across over 33 African countries where it currently operates.

However, as the Assets Recovery Agency (ARA) which filed the case kept mum on the circumstances of the dismissal, there were murmurs among observers and insiders that some political manoeuvring was at the heart of the matter, potentially on both sides, in the run-up to—and following—the presidential elections in Kenya.

Flutterwave, which became Africa’s highest-valued startup last year on the back of a staggering USD 250 M round that tripled its valuation to USD 3 B in just 12 months, looked to put these matters in the rearview, but some of the troubles have now resurfaced.

Per court documents, the individuals involved in the lawsuit invested funds into a sports betting platform known as 86 Football Technology Ltd, aiming to capitalize on their nation’s thriving gambling sector. The court papers also mention alternate names for the betting company, including 86W, 86FB, and 86Z.

The company stands accused of deceiving unsuspecting bettors by falsely claiming to utilize intricate scientific formulas to predict football results. Furthermore, the betting firm made bold assertions about its purported strong connections with the City Football Group, the entity overseeing various clubs, including English Premier League champions Manchester City.

However, it was ultimately exposed that the betting company operated as an extensive Ponzi scheme, deceiving countless individuals. It was covered in reports last year that the suspected fraudulent scheme had managed to accumulate over USD 400 M (equivalent to KES 55 B) from Nigerian citizens. It is alleged that 86 Football Technology facilitated the transfer of billions of ill-gotten gains through Flutterwave.

On June 7, 2023, Justice Mabeya issued an order instructing the 2,468 victims of the Ponzi scheme to serve Flutterwave Payment Solutions and the six institutions holding their funds with the necessary court papers.

A hearing is scheduled for June 21, where the involved parties will appear before Justice Mabeya to receive further instructions on how to proceed with the case. Additionally, the judge will decide whether to extend the existing freezing orders.

Morris Ebitimi Joseph played a key role in leading the Nigerian victims to join the ARA case last year. Unfortunately, when the ARA case was withdrawn, the victims’ claims were effectively thwarted.

The same group of individuals has initiated another legal case in Nigeria in an attempt to reclaim their lost funds. According to Joseph, the identified bank accounts and mobile money wallets are part of the traced assets belonging to Flutterwave.

Flutterwave and its seven subsidiaries are also facing another legal dispute with Hong Kong’s Lae Technologies. Lae Technologies alleges a breach of contract and is seeking compensation of at least USD 88 M (equivalent to KES 12.2 B). Consequently, Lae Technologies has requested the Nairobi court to freeze multiple bank accounts in anticipation of receiving the claimed amount.

According to court documents, Lae Technologies asserts that the bank accounts held by Flutterwave and its affiliates contain a significantly higher sum than the Sh12.2 billion sought by the Hong Kong firm.

Featured Image Credits: Flutterwave

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