Data firm fails to obtain police report from Safaricom in fraud accusations

Safaricom agent sends Mpesa details of a customer into a phone. FILE PHOTO | NMG

East African Data Handlers has lost an application seeking to compel Safaricom to supply it with a police investigation report on fraud accusations it faces from the giant telco.

Justice David Majanja dismissed the application by East African Data Handlers saying that allowing the application would amount to permitting an “open-ended fishing expedition”.

Safaricom sued EADH, which it had contracted in 2016 to manage its Lipa na M-Pesa and Buy Goods platforms, on claims that the data firm failed to remit Sh20 million collected from clients.

Evidence presented in court showed that the two companies signed an M-Pesa merchant aggressor agreement, which the data handling company was to acquire and manage Lipa na Mpesa merchants on behalf of Safaricom.

The objective was to increase merchant acquisition for Safaricom’s Buy Goods functionality and Pay Bill products.

The data recovery firm was tasked with recruiting merchants to run the Buy Goods function, where it received various amounts from transaction conducted in the platform.

However, EADH allegedly failed to remit the money collected from merchants, while some users wrote to Safaricom, demanding payment of the various transacted amounts. Safaricom then sued the data firm.

But before the case was heard, EADH sought a copy of an investigation report into the unauthorised backend access to its aggregation accounts by Safaricom employees or agents.

EADH also sought from Safaricom all the data from its cloud account hosted on its server and a list of all employees who were fired as a result of the alleged fraud.

Safaricom opposed the application saying the report could be obtained from the police where the matter was reported.

Justice Majanja noted that despite giving the firm time to file an application for counter-claim against Safaricom, EADH has been unable to do so on claims that the information it needed was still being withheld by Safaricom.

He added that what is necessary is grounded on the pleadings on record but a pleading which is yet to be filed cannot form the basis for discovery as the court cannot permit discovery in order to enable the firm lodge a counterclaim.

The data recovery firm has in id defence accused Safaricom of willfully and illegally allowing back-end access into the aggregation system and irregularly and without notice to it, transferring merchants’ accounts.

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