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.
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.
Amal Communications has dismissed the suit as bad in law and accuses the telecoms operator of material non disclosure of facts that are relevant to the case.
The dealer contends that Safaricom could not release products without confirming from its bank that the funds reflected on the deposit slip had actually been paid and cleared.
It further denies presenting and obtaining products from Safaricom’s retail outlets using fake deposit slips as alleged.
The dealer has dismissed the Sh9.1 million claim demanded by Safaricom adding that it would at an appropriate time file a counter claim against Safaricom.
Another respondent, Alfa Gates Communications, insists that any credits made to its account were genuine having been verified by Safaricom.
“If there was an error it must have been due to negligence on the part of the mobile operator and its employees,” the dealer says.
Alfa further faults Safaricom’s decision to terminate its dealership, saying it was without justification and was only meant to cover up for crimes that occurred within the operator’s premises.
“The defendant denies the contents of the plaint and avers that it has never presented any forged deposit slips to the plaintiff and has never obtained any products from the plaintiff fraudulently and further invites the plaintiff to call the police for forensic investigation,” reads part of the defence by Alfa Gates.
Safaricom has responded to this allegation by stating that it terminated the dealership because Alfa was engaged in corrupt practices.
Safaricom further says that Alfa placed orders to the operator on the Dealer Portal using a secret password and upon confirmation authorised Safaricom to release products to its agents who collected the products from its outlets.
Taqwa Communications, which has been sued as the twelfth defendant, says that the purported payments that form the basis of Safaricom’s claim were made by a Mr Abdi Fatah and Safaricom owed them a duty of care and ought to have verified the payments before crediting the dealer’s portal with “fictitious amounts convincing the defendant to process and release goods to Mr Abdi.”
The dealer through Ahmednasir, Abdikadir Advocates, says that had Safaricom exercised care and caution and taken trouble to verify the alleged payments, it would not have credited its dealer’s portal and they would not have any reason to process and release goods to Mr Abdi.
The dealer adds that once the payments were made to Safaricom, it was reflected on the dealer’s portal, meaning that it was right and the funds had been cleared as they had no other way of confirming that the funds had been received into Safaricom’s account.
And where the credit is done directly by a customer, Taqwa says it had the benefit of seeing the receipt issued by Safaricom and cross-checking the payments with the Dealers’ portal.