An excerpt from a prolific Nigerian investigative journalist David Hundey inThe book “#BreakingPoint” describes how the Assets Recovery Agency (ARA) monitored the suspicious financial activities of fintech company ‘Flutterwave’ and exposed the mishandling of millions of dollars through inadequately documented transactions.
This led to a year-long negotiation, during which the ARA used account restrictions as leverage instead of pursuing prosecution, resulting in the case’s dismissal in July 2023, despite media opposition to bribery and pressure.
The ARA lawsuit strongly implicated Nigerian tax expert and legal practitioner Alexander Ezenagu in fraudulent activities at Flutterwave, and it named him multiple times.
On the one hand, people believe that the then-ruling administration manufactured the case against Flutterwave to thwart Ruto’s presidential bid because of his proximity to the company.
Many had anticipated that the case would be withdrawn following William Ruto’s successful bid for the presidency due to his perceived ties to Flutterwave.
President Ruto is the father-in-law of Alexander Ezenagu, who is married to the president’s daughter, June Ruto.
There was talk of Flutterwave’s alleged role in financing President Ruto’s bid for office.
Ruto frequently appeared close to Flutterwave’s co-founder and CEO, Olugbenga Agboola, during the 2022 election campaign.
Despite Flutterwave’s press release claiming they had been “cleared of wrongdoing,” High Court Judge Nixon Sifuna’s ruling made it clear that the ARA’s withdrawal was due to dishonesty, openly accusing the ARA officials of bribery, racketeering, and corruption.
Flutterwave’s payment trails were anything but clear and simple.
The ARA noticed that millions of dollars were rapidly passing through Kenya’s financial system through a maze of corporate bank accounts belonging to dozens of businesses, without clearly defined reasons for these financial flows, instead of a clearly identified payment for a clearly identified good or service from a recognised entity to another entity.
These were purported payments for services rendered, and the documentation included Service Level Agreements (SLAs) purporting to back them up.
On close examination, many of these SLAs turned out to be poorly edited templates, often direct copies of each other.
That was the first red flag from a regulatory point of view.
Who, on the basis of a few template SLAs that they hurriedly edited, sometimes with spelling mistakes, makes multiple business payments totaling millions of dollars to multiple accounts belonging to multiple businesses that are also paying millions of dollars to each other?
A lot of this money appeared to originate from Nigeria, but what was its true source?
In fact, what was happening was not a series of business transactions, but one of the most egregious instances of ‘layering’ ever caught by an African regulator.
Layering is the process of shuffling money across multiple accounts, banks, and financial institutions in order to obscure the true source of the funds by adding layers of artificial legitimacy.
The idea is that, if the money is sufficiently shuffled around, any underpaid compliance or regulatory staff member whose job it is to spot suspicious transfers will be unable to find the true source of the funds due to the dizzyingly complex maze of transfers that make it extremely difficult to track and locate.
Layering is extremely difficult for a financial regulator to defeat because, short of physically shutting down the infrastructure of modern electronic banking, which permits vast volumes and amounts of transfers to take place almost instantaneously, there are only so many eyeballs and so much computing power to keep track of suspicious financial flows.
However, the true significance of this story lies in the fact that ARA never pursued a proper prosecution, which ultimately led to Flutterwave forfeiting clearly laundered funds to the Kenyan government.
The ARA’s clever folks knew that if they did that, both Flutterwave and the ARA would lose out on the funds going into the Treasury.
It was much better to use the account restrictions as a bargaining chip to force the “Nigerian boys” to the negotiation table. And that’s exactly how it turned out.
There was more than enough documented evidence available for the prosecutors to obtain a criminal conviction for money laundering and ultimately forfeiture of the seized funds, but that was never the intention of the folks at the ARA.
The whole thing was just manufactured drama for the ARA’s bargaining position.
When the negotiations were not progressing smoothly, journalists at the Business Daily would leak a small piece of information from the court files.
These journalists would then publish the story, garnering significant attention. Meanwhile, Wendy, the Flutterwave PR representative, would become agitated, attempting to quell the latest crisis despite her limited understanding of the sources.
Former Nation Media Group journalist Adonijah Ndege resigned due to internal pressure while reporting on the Flutterwave money laundering investigation.
Despite Flutterwave’s attempts to bribe him to stop his reporting, Adonijah continued his investigative work.
He experienced increasing criticism, sidelining, and rejection of his work by his editors, who eventually made it clear that reporting on the Flutterwave-ARA case was no longer a priority.
This pressure, as well as the deliberate obstructions, led him to resign from his position.
Following a year of intense negotiations, ARA ended its prosecution of Flutterwave in July 2023.
Judge Nixon Sifuna furiously rejected the withdrawal and demanded an explanation for the mountain of evidence previously presented, showing Flutterwave’s engagement in money laundering.
Despite his outrage, Hon. Sifuna’s role was limited, and he ultimately had to consent to the case’s withdrawal, albeit with a scathing written judgement accusing ARA officials of bribery, racketeering, and corruption.
He lamented, “Today we file the suit; tomorrow it is alive, and the next day its own initiator, the agency, has suffocated it to death.”
He publicly accused the ARA of striking a deal for a portion of the illicit money that Flutterwave and its associates in Kenya were laundering.
Justice Sifuna said the prosecution should be transparent in their actions, and their motions should not be question-begging and inviting scrutiny.
The court pondered the fate of the numerous documents filed with the lawsuit.
Judge Sifuna noted that when the withdrawal file was brought to him, the agency and lawyers representing the firm requested the case be mentioned in camera because there were ongoing negotiations.
He added that when the prosecution brought up the case, they did not provide any explanation for the withdrawal, only stating that there was no evidence to support the case and therefore no need to “waste judicial time.”
Unsurprisingly, Fluterwave did not mention any of this in the cheerful press release they immediately sent out to newsrooms around the world, announcing that the company had been “cleared of wrongdoing” in Kenya—something that categorically did not happen.
VIA Nyakundi