Flutterwave, one of Nigeria’s biggest digital unicorns, is currently facing claims of “insider trading, fraud, and perjury” and is under intense public scrutiny. This was exposed in an inquiry report on the company titled “Flutterwave: The African Unicorn Built on Quicksand” published by independent investigative journalist David Hundeyin.
The report accused the company of fraud, dishonesty, and insider trading, casting a pall over one of Africa’s most coveted tech businesses.
Flutterwave Alleged Fraud : Highlights of the Story
The narrative was based on conversations with three former Flutterwave employees, with whom the investigative journalist said he had a lengthy conversation before publishing the story. Mr Olugbenga Agboola, the founder of Flutterwave, was the focus.
Flutterwave’s Mr Agboola was accused of “insider trading” for proposing to buy “stock options” from employees at a “lower” price than the “market price.” According to US law, this was a crime that may result in jail time.
One such claim was impersonation and double-dealing by the creator, Mr Agboola, using his contact as an employee of Access Bank (Nigeria’s largest bank by asset base) to give deals to Flutterwave unknown to naïve clients and Access Bank itself.
Mr. Agboola was also working for Access Bank at the time, according to the story, while developing his Flutterwave.
Flutterwave was also accused of engaging in “fraudulent” acts by negotiating with Arik Air without “paperwork,” thereby facilitating transactions without adequate documentation, according to the article.
“Basically, someone at Arik formed a payments company to process payments for him, but he was using Flutterwave to do it.” So he got a percentage of every Arik sale – and Arik transactions were among Flutterwave’s highest – but there was no reseller agreement.
Read Also : Reactions Trail Flutterwave Fraud Allegation
Mr Hundeyin further accused legal firm Banwo and Ighodalo “B&I” of caving into the demand of Flutterwave by advising a customer to abandon a case against the Tech company after they had earlier warned the client otherwise,
The investigation also accused Flutterwave investors of mainly disregarding some of the allegations, despite the fact that they were aware of them.
This is the second in a series of pieces about Nigeria’s technology ecosystem. In the last two weeks, Tech Cabal released a “toxic workplace” piece accusing Ebunoluwa Okunbanjo, the now-suspended CEO of Bento Africa, of workplace harassment. Okunbajo has apologized for his actions.
Flutterwave’s Success Story
The 37-year-old Agboola is one of Africa’s most well-known entrepreneurs, thanks to Flutterwave’s status as an early mover in Nigeria’s online payments sector and its unparalleled $3 billion value.
He has a reserved demeanour and offers few media interviews, although he appears on a number of lists aimed at highlighting African achievement, including Quartz Africa’s 2019 innovators, Fortune’s 2020 list, and TIME’s 2020 list (2021).
Agboola’s profile has grown beyond his leadership at Flutterwave in the last year, thanks to a flurry of personal investments in other African firms. He received a Business Insider award for “Tech Investor of the Year” a few hours after the West Africa Weekly piece was published.
Flutterwave has also ventured into corporate venture capital, co-leading a $3.4 million deal for Dapio, a UK-based fintech. The company’s $250 million financing in February would be used to fund investments and aggressive marketing.
However, suspicions about Agboola and Flutterwave have grown in recent days after a former employee, Clara Wanjiku Odero, accused Agboola of bullying and the company of incompetence that led to fraud.
Despite Flutterwave’s denial, Odero, now the CEO of a Softbank-backed Kenyan fintech Credrails, openly stood by her assertions. A story that appeared to depict her in a negative light while celebrating Flutterwave’s unicorn voyage may have led her to write about her experience at the company. During a retreat in Ghana this year, the company’s leadership, including Agboola, were interviewed for the piece.
Following that private trip, the company is now facing public scrutiny over a number of issues raised in this week’s exposé, including a rumored US Securities and Exchange Commission ethics inquiry.
Foreign investors, who are rapidly pouring money into African businesses, are concerned that they would be discouraged.
When Flutterwave needed to finance $100 million in January 2021, it presented investors with a compelling set of numbers. Between 2018 and 2020, its revenue increased from $5 million to $55 million. With a margin of 48 per cent, gross profit was $26 million. Thanks to the efforts of approximately 270 employees, its services were utilised in 20 countries.
The company anticipated that it would hit over half a billion dollars in gross profit by 2025, with a margin of over 50%, based on these data (as reported in an investor presentation), the licenses it had in six African nations, and plans to offer additional goods.
In March 2021, Tiger Global and other investors gave Flutterwave $170 million, valuing the company at a billion dollars for the first time. It marked a meteoric rise for a company that had been valued at $150 million just 18 months before. Flutterwave has raised more money and is now worth more than $3 billion, making it Africa’s most valuable and talked-about tech company.
What Does All of These Mean for African Startups?
However, with the focus on Flutterwave—and African startups in general—becoming less flattering this month as a result of allegations of financial and personal misconduct against CEO Olugbenga Agboola, attention on Flutterwave—and African startups in general—has shifted away from sugar rush valuations.
For the first time in African IT, corporate governance, ethics, and culture are the most talked-about topics among investors.
Meanwhile, investors and other African tech aficionados argue that Agboola’s alleged conduct should not be used to discredit Flutterwave, describing the situation as more akin to a Travis Kalanick Uber moment than a Theranos disaster. Two former Flutterwave investors feel Agboola should be fired as CEO, but that the claims will have no impact on the company because it is already a major player in Africa’s digital economy.
“Telling these stories is actually vital in how we expand our ecosystem into self-sustainability,” Jason Njoku, one of Nigeria’s pioneering internet pioneers and CEO of IrokoTV, was quoted as saying. That’s all that matters in the long run. What we have now is hyperbole taken to its logical conclusion. It’s something I’ve been saying for years. Money from emerging markets is flowing into Nigeria, with no checks and balances in place.”
The piece has also gone viral on social media, with discussions taking place on Twitter spaces and ClubHouse, among other places. Mr Hundeyin also agreed to an audio chat on Twitter Spaces, where he discussed the story with listeners.
Mr Ayo Ogunjobi, a social critic and blogger, said there are no perfect companies or persons in a conversation with him. “If the lights of investigations and criticism were to be shone on all companies, practically every one of them would have one or more terrible stories,” he claims. Because success brings scrutiny, jealousy, and attacks, I will not pass judgment on Mr Olugbenga Agboola.
Furthermore, the head that wears the crown is uneasy. It’s possible that the story is true, but it’s also possible that it isn’t. That, in my opinion, should have no bearing on Flutterwave’s success as an economic organization. However, I will caution Nigerian journalists to be selective in their reporting because there are far more positive stories about African technology to share than negative ones. That is not to say that the media should not report the truth, but a deluge of bad headlines from our media might suffocate Africa’s fledgling tech sector.”
