Safaricom sues data firm over Sh20m M-Pesa loss

Safaricom #ticker:SCOM has sued East African Data Handlers, a company it hired to manage its mobile money payment platforms, following the loss of clients’ money amounting to Sh20 million.

The cash was lost two years ago in transactions conducted through the telco’s Lipa na M-Pesa and Buy Goods platforms.

In the case to be mentioned later this month, Safaricom said it engaged the company in the business of data management and recovery in March, 2016.

In the agreement, the data company was to recruit merchants to the Buy Goods platform and it received various amounts from transaction conducted through the service.

However, in breach of the terms, the data company allegedly failed to remit the money collected from merchants and some users wrote to Safaricom demanding payment of the various transacted amounts.

The telco has accused the company of failing to reconcile all payments received on the M-Pesa platform and failing to settle the merchants’ accounts directly after receiving a withdrawal request instruction.

Safaricom says this has exposed it to losses, with the telco claiming Sh20.3 million from the data firm. Safaricom terminated the data firm’s contract in the wake of the row.

In reply, East African Data Handlers accused Safaricom of wilfully and illegally allowing its employees back-end access into the aggregation system. The telco’s workers made irregular transactions without notifying the data firm, it further alleged.

“Despite being aware of the fraud committed by some of its staff, which fraud we pointed out as far back as 2017, the plaintiff took no substantive steps to prevent further backend access but instead chose to blame us for the loss of the merchants’ funds and terminate the contract,” the data firm’s CEO George Njoroge said.

Justice David Majanja directed the parties to exchange documents and appear before him on February 19.