April 18, 2024

Blow for Flutterwave as Kenyan court rejects request to withdraw case

Kenya’s Asset Recovery Agency (ARA) has plans to withdraw its second case against African fintech giant Flutterwave after being shot down by the country’s third highest court, the High Court.

In August last year the agency had frozen $3 million belonging to Flutterwave, Hupesi Solutions, and Adguru Technology Limited on suspicion of money laundering and fraud. The seizure of funds came two months after the ARA froze another $52.5 million belonging to Flutterwave and six other companies. The ARA filed suit after each seizure, the first of which was formally withdrawn in March this year.

The request to withdraw the second suit was rejected by High Court Judge Nixon Sifuna, who noted, in a ruling seen by TechCrunch, that the ARA, as a publicly funded body, failed to give reasons for the withdrawal, including “negotiations or settlement, or the terms of such negotiations or settlement.”

This was despite the agency including an affidavit from the investigator, and a large number of documents including bank statements as evidence that the millions in the fintech’s bank accounts and mobile money were the proceeds of crime and money laundering. The judge asked to know why the agency claimed they no longer had any evidence of the alleged crime.

“The bodies that have the duty to fight corruption, economic crime, organized crime and similar vices (including money laundering) should not abandon their divine duty or be involved in such cases,” said Justice Sifuna in rejecting the withdrawal, adding that the proceedings will be decided on an affidavit sworn by the CEO of the agency or a high-ranking officer.

He said that the agency must be guided by the public interest, and that its decisions or actions must be “open and without shame” in the eyes of the public.”

The ruling is set to further delay his prospects of obtaining a license to operate in Kenya. TechCrunch has reached out to Flutterwave for comment.

In both cases, the agency said Flutterwave’s bank accounts were used as conduits for money laundering under the guise of trading services. He said Flutterwave failed to provide evidence to validate retail transactions from customers. He added that there was no evidence of settlements with the alleged merchants.

Flutterwave was founded in 2016 by Iyinoluwa Aboyeji, Olugbenga “GB” Agboola (CEO), and Adeleke Adekoya to facilitate cross-border payments in Africa. It has since grown to include a payment service that allows users to send money to recipients to and from the continent; a shopify-like e-commerce platform for small businesses called Flutterwave Store, and Tuition, an education payments platform.

It raised $350 million last year at a $3 billion valuation, making it one of Africa’s most valuable startups. It has not been without controversy, however, as it has had to deal with a series of controversies including claims of harassment, misappropriation of funds, and mismanagement.

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