Kenyan government now intends to drop a Ksh6.2 billion forfeiture lawsuit against Nigerian start-up Flutterwave; an Africa-focused financial technology linked to money laundering allegations and card fraud.
The money was frozen by the High Court following an application by the Assets Recovery Agency (ARA) in July last year.
The new twist in the matter emerged in court on Thursday February 9, 2023 when Justice Esther Maina declined an application by one of investors in the firm who had sought to be enjoined in a forfeiture suit to represent 428,000 other investors who claimed they have been affected by the orders of the court to freeze the funds and the subsequent forfeiture proceedings by the ARA.
In her ruling, the judge disallowed the joinder request by the investors on grounds that the ARA has since filed a notice to court seeking to drop the suit against Flutterwave and have the freezing orders of the assets lifted.
"I have carefully considered the joinder application by the proposed interested party and my finding is that it has no merit. This is because ARA has already intimated it wishes to withdraw the suit against the respondents and hence the properties or assets will no longer be liable to forfeiture," Justice Maina ruled.
Nonetheless, the Flutterwave forfeiture suit will be mentioned on February 14, 2023 when ARA is expected to confirm its decision on the withdrawal.
In July last year, the High Court issued orders restricting access to Ksh6.2 billion ($59.2 million) in 62 bank accounts belonging to Flutterwave and some other firms over allegations of card fraud and money laundering.
Two months later, the court froze an additional sum of $3.3 million belonging to the financial technology firm.
The amounts frozen include Ksh110 million in UBA account, another US $ 556,622 (Ksh66.7 million), Ksh29.1 million in Access Bank and Ksh68 million, Ksh112 million and Ksh14.5 million in a total of 19 Safaricom Paybill numbers.
The agency said in court filings that the bank accounts received billions of shillings whose source is suspected to be money laundering and card fraud.
“That the 1st respondent’s (Flutterwave) bank accounts received billions (millions in USD) 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,” ARA said.
ARA also said that Flutterwave was suspected of card fraud as some “transactions were done using cards issued by the same bank, at the same point, on the same day, raising suspicion of card fraud.”
While seeking to have the funds forfeited to the government, the ARA informed the court that the funds in Flutterwave’s accounts were received from specific foreign entities and transferred to specific accounts belonging to the six companies instead of as settlement to merchants.
It said that Flutterwave’s bank accounts were used as conduits for money laundering under the guise of providing merchant services, and that the fintech had no evidence of retail transactions from customers paying for goods and services. It added that there was no evidence of settlements to the alleged merchants.
The agency said it began investigations after suspicious activities and transactions in the seven companies were flagged on suspicion that they were proceeds of crime. The agency also said that the fintech was operating in Kenya without a valid license from the country’s monetary regulator, the Central Bank of Kenya (CBK).
Flutterwave had denied the allegations, saying it had the necessary records to prove its innocence.
“Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this,” the company had said.
“We are a financial technology company that maintains the highest regulatory standards in our operations,” it added.
Flutterwave Payments Technology Ltd is owned by Nigerians Olugbenga Agboola, Adeleke Christopher, Iynoluwa Samuel and Flutterwave Inc which is registered in the United States with an office on 1323 Columbus Avenue, San Francisco.
A Kenyan - David Mouko Elizaphan Omaanya-- is also a director but has zero shares. The Nigerian firm was founded in 2018 by Olugbenga Agboola and Iyinoluwa Aboyeji.
