Flutterwave in the mud again, this time not in the hands of David Hundeyin ‘The Goliath Slayer’ but Kenyan authorities. The Pan-African tech unicorn has been accused of conducting suspicious transactions and failing to comply with the monetary laws in Kenya, which led to the freezing of the financial assets of the company to the tune of $56.7 million (Ksh 6.7 billion) in frozen bank accounts and criminal charges filed by Asset Recovery Agency (ARA).
The frozen alleged Flutterwave money laundering accounts are said to be in USD, British Pound Sterling, EURO, and Kenya shillings.
A total of seven companies were entangled in the Flutterwave Money Laundering indictment that came down on Wednesday, which according to ARA, were used by Flutterwave to conduct money laundering in the guise of providing merchant services.
The companies listed alongside Flutterwave were Boxtrip travel and tours limited, Bagtrip travel limited, Elivalat fintech limited, Adguru technology limited, Hupesi solutions, Cruz ride auto limited, and one Simon Ngige.
“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,” ARA alleged in filings.
David Revelation Coincides, Questions Lingers
Recall that in April, independent journalist David Hundeyin published a report that exposed alleged financial, criminal, and ethical lapses against Flutterwave and its CEO Gbenga Agboola “GB,” with a shocking revelation of inside trading, sexual harassment, and workplace bullying.
David gave an analogy into what could be the foundation the African tech unicorn is built on, saying, “Thinking of Flutterwave as simply a business that processes electronic payments would be like thinking of the New York Mafia as a group of pizza shop owners – there certainly is that, but there is also so much more going on under the hood.”
David’s report coincides with the current investigation by ARA into Flutterwave’s operations that began several months ago, as reported by The Star, stating that the authorities obtained warrants to seize the firm’s accounts in April. The provisional seizure permit was granted for 90 days, and the matter will be heard in Kenya’s court on November 7. These two seemingly glaring accusations now call into question the legitimacy of Flutterwave operations.
Without forgetting that Flutterwave CEO Agboola denied the allegations as reported by David but said he would make necessary changes to his management of the firm going forward, and just a few weeks ago, the African tech unicorn made 2 significant changes to its C-suite — hiring ex-Goldman Sachs managing director as its CTO, and former American Express VP Oneal Bhambani as its CFO — we wait to see how the management handles this fresh allegation.
Operating Illegal Payment Service For Disguise
Flutterwave was registered on February 23, 2017, according to court records. Olugbenga Agboola, David Mouko (a Kenyan), and Flutterwave Inc. are identified as its directors.
Isaac Nakitare, an investigator with the Asset Recovery Agency (ARA), said in an affidavit that they received orders to search and examine the accounts of Flutterwave 52 being Kenyan bank accounts, 29 with Guaranty Trust Bank, 17 with Equity Bank, and 6 with Ecobank, all holding about Ksh 7 billion and some of the money was deposited into fixed deposit accounts.
The agency claims that Flutterwave concealed the nature of its company and operated a payment service platform without consent from the central bank of Kenya (CBK), as required by section 12 of the national payment system act. He also mentioned that, under the pretext of offering merchant services, the accounts were exploited as channels for money laundering.
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In the indictment, Mr. Agboola was said to have conducted suspicious transactions to the tune of $101 million (12 billion Ksh) before authorities caught wind of his activities. “Mr. Agboola and his partners in Nairobi were alleged to have hidden under the shadows to exploit the country’s financial system, including conducting about 185 online card payments using the same identification number,” said Nakitare.
Several other suspicious transactions were also flagged by anti-money laundering detectives, including another instance in which Mr. Agboola allegedly conspired with another Nigerian national to launder cash through the Kenyan banking system.
“If indeed the 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 added.
Cracking Down The Flutterwave Money Laundering Chain
Nakitare further reveals the investigation saying –
The company’s Equity account number revealed that it had received 185 online card payments from customers in May 2021, all of which had identical bank identity numbers.
There is a suspicion of card fraud because the transactions were completed using cards from the same bank at the same time on the same day.
For instance, the USD Bank account for Flutterwave equity was started in November 2020. The bulk of the money came from Flutterwave Inc. The account received about Ksh 12 billion between 2020 and 2022; some of the money was transferred to Remix Ltd., while the rest was put in a fixed deposit account.
Justice Maina additionally granted orders prohibiting Boxtrip Travels and Tours Limited from moving or withdrawing the Ksh 460 million ($3.9 million) held in his Eco bank account. Enigma Olufemi, a Nigerian, is named as the company’s director.
ARA states, “The company received the money from Flutterwave ltd in two days. That is 27 to 28 April this year. 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.”
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For Bagtrip travels, the court froze its account, holding Ksh 425 million shillings. The company’s director is listed as Taiwo Soyemi, a Nigerian National. It received the funds from Flutterwave ltd and rainbow solution technology on 28 April and 6 May 2022.
A further Ksh 1.2 million belonging to Elivalat Fintech Limited was frozen. Some of the monies were transferred to Tiware Adrian Simon, who is one of the directors at Elivalat ltd, and to Muoko David, who is one of the directors of Flutterwave ltd.
For Aduru technology limited, the court froze Ksh 100 million held in its Equity account. The directors of the company are listed as Adaeze Okonko and Caroline Muchina, wife to David Muoko, who is a director of Flutterwave.
For Hupesi solutions, the court preserved the Ksh 1.6 million held in its Equity account. The proprietor of the company is listed as Festus Mutuku.
The documents indicate that the company’s equity account received a total of Ksh 143m, of which 54 million was transferred to Flutterwave payments, 45 million to GC Natural PL, and internal transfers of Ksh 26 million.
The transactions were done in tranches below Ksh 1 million to avoid reporting threshold. But by the time the agency obtained orders to freeze, only 1.6 million was left in the account.
The court preserved another Ksh 2.4 million held in the account of Crus ride, a motor vehicle dealer. The company is said to have received the funds from Flutterwave on June 6. The funds were later transferred to Simon Ngige.
“The account had been dormant and had not received any funds from September 2021 to May 2022. However, in June 2022, the account received $269,000 (Ksh 31.7 million).”
The documents indicate that Ngige received $452,000 (Ksh 53.3 million) in his KCB account from Flutterwave, Cavin solutions, and Cruz ride auto. On June 24, Ngige transferred $200,000 (Ksh 23.6 million) to his KCB account. The court stopped him from transferring Ksh14 million left in his account. “An analysis of the statements of accounts established that the accounts received suspicious deposits that indicate smurfing activities hoping to evade detection.”
Flutterwave CEO’s Response To The Allegation
Upon contacting Mr. Agboola on the Flutterwave money-laundering allegations by Peoples Gazette’s spokesperson, Mr. Agboola suggested the charges were politically motivated, saying,
“Why are Nigerian companies in Kenya being targeted by Kenya ARA? This is happening near their election time.” He also said Flutterwave was not the first Nigerian firm to be targeted in Kenya.
