Thousands of Safaricom subscribers are under police radar for their involvement in a multi-million-shilling airtime theft that took place last month.
Phone numbers that were used to transfer stolen airtime have been blocked as investigations into the crime proceed.
One of the suspects was on Tuesday charged in court with manipulating the telecoms firm’s computer system and stealing electronic airtime.
The Directorate of Investigations (CID) is reportedly pursuing the masterminds of the electronic theft and about 10,000 Safaricom subscribers who bought the stolen airtime at half the market price. The subscribers face a charge of handling stolen property.
Alex Mutuku on Tuesday appeared before a magistrate at Nairobi’s Milimani law courts where his case was set for hearing on May 19,2015.
Mr Mutuku is charged with collaborating with others, at an unknown place within Nairobi, to steal airtime valued at Sh20,000 belonging to Safaricom.
The charge sheet says the alleged crime was committed by interfering with the functioning of Safaricom’s computer system with intent to procure the suspect an advantage.
Bob Collymore, the Safaricom chief executive, declined to comment on the subject insisting that the matter was under investigation.
“Unfortunately, we cannot make specific comments on this query at this time as the case is still under investigation,” Mr Collymore, said.
He said Safaricom continues to invest heavily in technology and security systems to track and identify fraudulent activity on its network given the evolving nature of opportunistic crimes.
“We constantly monitor our business for fraudulent activity and are aggressively dealing with unlawful activity by pursuing prosecution to the fullest extent of the law,” he added.
Mr Collymore was, however, categorical that the incident is not related in any way to Safaricom’s scratch card suppliers who have been able to uphold the same levels of scrutiny in their business as Safaricom has.
The architects of the fraud are said to have broken into Safaricom’s computer systems and stolen airtime which they sold in the market at half the retail price. Mr Mutuku is, for instance, alleged to have bought airtime worth Sh20,000 for Sh10,000.
The perpetrators of the crime are said to have created a huge market for the stolen airtime by informing friends and relatives where to buy from, causing alarm within Safaricom.
Some of the stolen airtime was traced to friends and relatives of the masterminds, having been sent to them for free. Safaricom has used serial numbers of the stolen airtime to trail their circulation in the marketplace, blocking thousands of consumers found to have handled it.
Unsuspecting subscribers whose phones were blocked and reported inability to use their phones soon found themselves under police radar, facing arrest for fraud.
Most suspects were arrested at Safaricom’s Nairobi headquarters and handed over to CID officers at Parklands Police Station.
The police are relying on Section 84B (b) of the Kenya Information and Communication Act to deal with the suspects.
Safaricom has more recently been battling claims of fraudulent activities on its network.
Last month, the telecoms operator refuted claims that its employees were involved in rigging an online customer’s competition.
The telecoms giant, however, admitted that “the social media activation was compromised by one or possibly several tech-savvy individuals who deployed ‘Internet bots’ to increase their chances of winning in the competition”.
In the year ended March 2014 Safaricom’s total revenue stood at Sh147 billion, with nearly 64 per cent coming from the voice calls segment of the business.
Increased cases of electronic theft have seen Safaricom develop some of the most ruthless anti-fraud regulations in corporate Kenya that saw 56 employees get axed last year compared to 33 a year before.
“Whether you have stolen Sh100 or Sh100,000, or if you have disclosed a customer’s data, fraud is fraud. We have let people go,” Mr Collymore said in a previous interview.
The company also issued 16 employees with warning letters while seven were reported to law enforcement agencies.
Safaricom says in its Annual Sustainability Report 2014 that it conducted 32 audit reviews in the period, three of which were the result of special requests from management.
The investigations covered various frauds, including asset misappropriation, fraudulent expense claims and corruption cases.
The report indicates that Safaricom assessed each of its 12 divisions for risks related to economic crimes.
Procurement fraud, losses during data migration, unauthorised termination of international traffic, underinvoicing and sabotage top the list of crimes under the investigators’ radar.
Safaricom’s sustainability report highlights the firm’s performance on economic, environmental, social and governance fronts.
The telecoms giant is among the few companies that regularly publish fraud statistics in a market where firms, according
PricewaterhouseCoopers (PwC), prefer to remain silent on economic crimes fearing a public relations backlash.
In 2012, Safaricom fought a court battle after it lost nearly Sh100 million in a fraudulent banking scheme hatched and executed by its agents.
It sued 13 former agents for obtaining goods worth millions of shillings using forged banking slips.
Reluctance by most companies to sue or dismiss employees who have committed fraud for fear of reputation loss is also behind the rise in theft at the workplace, PwC said, adding that the extent of fraud could be appreciated better when the non-financial implications are considered, including loss of customers, business reputation, and low employee morale.
In Kenya, prosecution and sacking of workers due to fraud has mainly involved public servants and those employed by parastatals.
PwC said in its global survey conducted in 2012 that Kenya recorded the highest level of economic crime among 78 countries last year, with procurement fraud and theft of assets and money at work rising.