Safaricom loses Sh93m in banking-linked dealer fraud

Telecoms operator Safaricom has lost nearly Sh100 million in a fraudulent banking scheme it accuses its agents of hatching and executing.

Kenya’s leading telecommunications service provider has sued 13 former agents for obtaining goods worth Sh93 million using banking slips that were later found to have been forged.

READ: M-Pesa drives Safaricom as profit declines to Sh12.8bn

The dealers were to deposit cash, banker’s cheques or make a bank transfer and present deposit slips to the telecoms firm before receiving goods.

But Safaricom says it later discovered that no payments had been made by the 13 dealers, making their actions fraudulent.

The dealers have denied the charges even as some contest the jurisdiction of the court to hear the dispute.

Safaricom says each distributor was obliged to ensure that the payments were made directly to a specified account at Barclays Bank and deposit slips presented at its retail outlets.

Upon receiving the deposit slips, Safaricom employees were to credit each dealer’s account with amounts equivalent to what was reflected in the deposit slips, paving the way for release of products.

But the telecoms operator now says that on diverse dates between October 2010 and May last year, the 13 dealers presented deposit slips to its employees that were believed to have been issued by the bank only to find out later that they were fraudulent.

“Safaricom reasonably believed that funds had been deposited in its accounts and subsequently credited the dealers’ accounts to access the products,” the telecoms firm says through its lawyers.

On realising that there was a problem with the payments, Safaricom says it conducted a review of its accounts for purposes of reconciling the dealers’ bank statements and receipts arising from the deposit slips presented between October 1, 2010 and May 10 last year.

The forensic audit conducted by consulting firm Deloitte established that several deposit slips that the distributors had presented could not be traced in Safaricom’s account, causing the telecoms firm to terminate the services of the affected dealers.

The audit revealed that the distributors used fake deposit slips to fraudulently obtain goods worth Sh93 million.

That is the turn of events that has landed Alfa Gates Communications, Amal Communications and Angel Beauty Spot Limited in court against Kenya’s most profitable company.

Also facing fraud and breach of contract charges are Cimu Mobitel, Gaturi Mobile Experts, Inter Middle, Kaso Communications, Olkitira Enterprise, Plust International, Pioneer Enterprises, Silver and Gold Investment, Taqwa Communications and Well Communications.