Accounts of Nigerian fintech unicorn, Flutterwave have been allegedly frozen by an order from a High Court in Kenya on Wednesday, the culmination of a money-laundering investigation that the Kenyan authorities started in April. the Star Kenya, a Kenyan news outlet reports that the High Court froze “56 bank accounts holding a whopping Sh7 billion suspected to have been laundered by foreign nationals.”
In a statement to the People Gazette, Flutterwave’s co-founder and CEO, Gbenga Agboola implied that the investigation was politically motivated.
“Why are Nigerian companies in Kenya being targeted by Kenya ARA? This is happening near their election time,” he said in the statement.
At the time of reporting, it wasn’t clear how many of the 56 bank accounts were owned by Flutterwave. But the companies affected include; Flutterwave Payment Technology Limited, Boxtrip Travel and Tours Limited, Bagtrip Travel Limited, Elivalat Fintech Limited, Adguru Technology Limited, Hupesi Solutions, Cruz Ride Auto Limited and one Simon Ngige.
The Asset Recovery Agency (ARA), the body that filed for the order, told the court that the accounts owned by the aforementioned were used for money laundering activities rather than merchant services.
“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,” The Star reports from prosecutors filling.
Even though Flutterwave was registered in Kenya in 2017, the reports from the Star say that Flutterwave hasn’t been authorised by the Central Bank of Kenya to provide payment solutions in the country, a requirement by section 12 of the national payment system act of the country.
According to an affidavit seen by the Star, Isaac Nakitare, an investigator with the agency says that as of April 4th, they obtained orders to search and inspect the accounts. At that time, the Star reports that Flutterwave’s accounts with Guaranty Trust Bank had a balance of Sh5.3 billion, Sh1.4 billion at Equity bank and other millions at Ecobank.
“If indeed 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 further adds.
Investigations into Flutterwave’s Equity account number revealed that in May 2021, it received “185 online card payments all sharing the same bank identification number.” Investigators said that their suspicions were further raised when they discovered that all the transactions were carried out with cards from “the same bank at the same point on the same day.”
According to the Star, “ARA says the Flutterwave equity USD Bank account was opened in November 2020. The funds received were mainly from Flutterwave Inc. Between 2020 and 2022, the account received approximately Sh12 billion and the funds were either transferred to Remix Ltd. while the rest were invested in a fixed deposit account. Justice Maina further issued orders stopping Boxtrip Travels and Tours Limited from transferring or withdrawing 3.9 million dollars (Sh460 million) held in its Eco Bank account. The Director of Boxtrip Travels and Tours is listed as Enyioma Olufemi, a Nigerian national.”
“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,” the ARA says.
The agency’s affidavit also says that it discovered from its investigation similar patterns throughout the transaction carried out with the account.
This comes as the company moves forward from the bad press it had experienced earlier this year, recruiting top executives from places like American Express and Goldman Sachs. Reports from the West Africa Weekly, the newsletter run by David Hundeyin, a journalist have both painted a picture of shambolic leadership at the unicorn and also financial and workplace improprieties by top executives at the company.
Flutterwave said at the time it had taken measures to create a better work environment for staff. The orders granted by the court will be in force for a period of 90 days. The case will be mentioned on November 7.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!