A Kenyan probe into potential money laundering and fraud allegations has focused on the Nigerian fintech unicorn Flutterwave months after accusations of alleged mismanagement, sexual harassment, and significant administrative blunders shook the company.
Numerous bank accounts connected to Flutterwave have been frozen since April by Kenya’s Assets Recovery Agency (ARA), which has started investigations into transactions made by at least 10 companies they suspect to be “conduits of international money laundering.” Over $200 million in funds, according to the ARA, are believed to have been laundered or flagged as suspicious through Flutterwave or affiliated businesses.
The claims have been refuted by Flutterwave. The business asserted in a later-modified statement that the allegations of money laundering are untrue and that it was the object of a “disinformation campaign” The company claimed to have “the records to validate” the transactions listed by the ARA. The corporation has been asked multiple times by Rest of World to provide these records. Although Flutterwave has acknowledged the requests, as of the time of publication, no more details had been given.
The incident has increased pressure on Olugbenga “GB” Agboola, the CEO of Flutterwave, who has remained mute in public regarding the issues at the business. According to a dozen insiders and company sources, there are growing rumblings for Agboola to reevaluate his leadership position at the business he co-founded in 2016. Flutterwave, one of the most well-known startups in Africa with a current valuation of more than $3 billion, offers digital payment infrastructure for organizations and individuals throughout Africa.
Flutterwave has been working hard to right the ship and win back the confidence of its partners and investors ever since the first batch of damning charges became public in April by completely changing its management team. Oneal Bhambani, a new chief financial officer, and two finance experts with background in corporate audits and treasury work were hired by the company from Kabbage, a fintech firm owned by American Express. The moves were perceived by the African tech sector as an effort to stabilize the company’s operations in preparation for an IPO in 12 to 18 months, however that schedule is now less likely given the present state of the world economy.
Gurbhej Dhillon, a new chief technology officer (CTO) for Flutterwave, was also hired. He came from Marcus, a digital banking platform run by the American bank Goldman Sachs. Since Agboola departed the position to become CEO in 2018, Flutterwave had been without a designated CTO.
According to two persons with knowledge of the negotiations but who were not allowed to publicly comment, the nominations were supported by the company’s board rather than by its management. It is hoped that the company will benefit from the experienced recruits in weathering the storm and strengthening its internal controls.
However, fresh accusations against the organization in Kenya, one of Flutterwave’s biggest countries, have eclipsed the appointments. The Kenyan high court froze 52 bank accounts belonging to Flutterwave with a combined balance of $45 million, as well as another 10 bank accounts linked to the business but run by other entities, including Boxtrip Travel and Tours, Bagtrip Travel, Elivalat Fintech, Adguru Technology, Hupesi Solutions, Cruz Ride Auto, and an individual, Simon Ngige. These accounts were among those that were frozen. Court documents dated June 29 and July 1 examined by Rest of World revealed this.
The ARA claimed in the court document that Flutterwave had engaged in card fraud after one of the company’s bank accounts received 185 online payments with the same bank identification number and by “cards issued by the same bank, at the same point, on the same day.” The ARA also claimed that the bank accounts “were used as conduits for money launderings under the guise of providing merchant services.” According to the agency, it did not discover any documentation of settlements to the accused merchants or retail transactions with actual clients paying for goods and services. According to the ARA, Flutterwave “was disguising the nature of [its] business” by allegedly providing a payment service platform without receiving permission from the Central Bank of Kenya.
Fraud Allegations and blocking of accounts
In the course of its investigations, the ARA has since filed charges against and blocked the accounts of two other Nigerian businesses, Korapay and Kandon Technologies.
The ARA said in its court statement, that it began its investigations into “suspicious activity and transactions” in the bank accounts of Flutterwave and other indicted entities a few months ago as a result of a tip.
According to a source at one of the indicted businesses, the investigation into RemX Capital, a company connected to RemX Holding Kenya and a Dubai-incorporated business run by Nigerian businessman Eghosasere Nehikhare, was begun by the ARA in February. Olubukunmi Olufemi Demuren and Olubunmi Akinbanjo Akinyemiju, who are both co-founders of Venture Garden Group and whose startup fund was an early investor in Flutterwave, are listed as two additional directors on RemX.
According to local press sources, the ARA is looking into possible connections between RemX and a “powerful” but unnamed Kenyan politician. Allegations of a potential $215 million money laundering conspiracy are the focus of this investigation.
Allegations of a potential $215 million money laundering conspiracy are the focus of this investigation.
Six bank accounts with a combined balance of $47.3 million that are linked to RemX and other businesses were ordered to be frozen by a court order obtained by the ARA in April. The claims have been refuted by RemX’s Nehikhare, Demuren, and Akinyemiju, who assert that the investigation is most likely “political” and that “perhaps these activities are tied to the approaching elections in Kenya,” which are set for August 9.
Following the discovery of a Kenyan bank account opened by RemX that received over $105 million between 2020 and 2022, primarily through Flutterwave’s international accounts, the ARA claims a connection between the two companies. The money was subsequently transferred to RemX Limited or a fixed deposit account, according to the ARA’s court document.
According to the complaint by the ARA’s lead investigator Isaac Nakitare, the transfers’ nature and where they came from are both believed to constitute “proceeds of crime.”
A complicated network of connections between Flutterwave, members of its management, and some of the businesses charged was revealed by additional reporting by Rest of World. In one instance, the ARA investigation discovered that the digital marketing firm AdGuru gave Flutterwave approximately $47 million between September 2021 and April 2022.
Okonkwo Adaeze Chinenye and Caroline Wanjiku Muchina are listed as directors on the AdGuru website. According to the ARA, Muchina is married to Mouko David Elizapha Omaanya, the head of Flutterwave’s East Africa business. According to reporting by African IT News, Berrywood Integrated Concept, a Nigerian business that the CEO of Flutterwave co-owns, has only one other shareholder besides Chinenye. According to a story published in April by Rest of World, the management of Flutterwave employed Berrywood Capital to purchase stock from departing workers and early angel investors at a discount to its actual value. When Rest of World contacted Flutterwave for comment, no response was given.
In addition, Chinenye owns a large portion of Rainbow Technology Solutions, which partnered with Flutterwave to send money to Bagtrips Travel, one of the organizations charged by the ARA with alleged money laundering. According to information on the business directory service B2BHint, Bagtrips Travel and another indicted company, Boxtrip Travel & Tours Limited, were both incorporated in Lagos on November 24 and 25 of the same year by the same lawyer. Flutterwave gave the companies a total of $7.7 million between April 27 and May 6, and Rainbow Technology Solutions also gave money to Bagtrip Travels.
The ARA claimed that there was “no supporting documentation given to back the transactions,” raising concerns “that the bank accounts were utilized as conduits for money laundering.”