SMS lotteries expose gaps in war against illicit money

They were supposed to be agents of compassion, but lotteries in Kenya have turned into wheels of fortunes for a cabal of shadowy businessmen riding on weak laws, lax enforcement and protection from senior politicians.

Kenyans are now losing billions of shillings through the lotteries as the Betting Control and Licensing Board (BCLB) - which regulates the punting sector - watches helplessly for fear of stepping on the toes of top government officials and influential businessmen.

Investigations by the Business Daily into the ongoing SMS lotteries that have raised eyebrows for the big prizes being paid out to winners - with little being passed on to charitable causes - pointed to the underworld scheme to fleece gullible Kenyans of their hard earned monies.

It emerged that local casinos were flouting anti-money laundering laws that require gamblers to declare the source of their money, with some of the owners behind the lotteries where participants are winning unprecedented prizes in cash.

BCLB director Amos Kwasi declined to speak to us despite several attempts to seek clarification on several oversights that have led to the abuse of the lottery concept and to have the names of companies running the various lotteries.

In one incident, a lottery company, Flint East Africa that run 6969 was supposed to remit Sh300 million to a charitable home in Mukuru, but has so far paid only Sh7 million.

Correspondence shows Flint East Africa made a gross income of Sh1.2 billion in three months under a lottery promotion known as Shinda Smart 6969.

Under lottery laws which require at least a quarter of the gross income to be donated to charity, Flint was to pay Sh300 million to Cana Family Life Education HIV/Aids based in Mukuru, a Nairobi slum defined by biting poverty.

“We had a promise from the company that they would help us, but we were not aware they would raise the money through the lottery,” said the centre’s executive director, Mary Mambo.

The company has only paid Sh7 million shillings instead of the required minimum sum of Sh300 million.

“We are having meetings to discuss the issue further,” she said.

The center offers refuge to Aids orphans, HIV/Aids counselling service and runs a school for the poor.

A cross section of players said in interviews that the gaming industry had in some cases been infiltrated by transnational criminals using politicians as fronts in exchange for campaign financing, suggesting the many lotteries competing for space on national televisions could be linked to the 2012 General Election.

A Nairobi politician, who lost in the recent by-elections, was mentioned as a key linkman between the lottery merchants and government agencies.

Another politician with an eye on the presidency in 2012 was said to have a beneficial interest in one of the lottery firms.