Vicious fight erupts over Sh800m held at Ecobank in Nairobi

Eco Bank

A signage outside an Ecobank branch in Nyeri town. The cash is being held at the bank's Muthangari branch in Nairobi.

Photo credit: File | Nation Media Group

Detectives are investigating three bank accounts belonging to a payment solution firm as the fight for billions that had initially been frozen over suspicion of an international card fraud syndicate escalates.

Mr Maxwel Otieno, an officer at the Directorate of Criminal Investigations, sought orders from a Nairobi court in December to investigate the bank accounts at Ecobank Kenya Ltd following complaints by four foreign firms, which are seeking $5.82 million (Sh811 million), from the billions belonging to Kiwipay (K) Ltd.

Kiwipay (K) Ltd is majority-owned by Kiwipay PTE, a  firm registered in Singapore.

In his request, Mr Otieno sought account opening documents, bank statements from March 1, 2020 to June 30, 2023, all Real Time Gross Settlement (RTGS), Swift and electronic transfer and customer transfer transactions for the three bank accounts, for the stated period.

Futuregate Labs Ltd (Cyprus), A&M Le Mont Venture Ltd (Cyprus), Airwallet Payments (Singapore) and Goldenpay DMCC say in court papers that they hired Kiwipay as an online payments service provider but the firm never remitted the money as agreed.

“That the honourable court be pleased to issue orders to preserve all amounts of money in the bank accounts number held at the respondent, for the period of 30 days pending completion of the investigations,” Mr Otieno pleaded.

The four firms claim that the monies collected from thousands of transactions were deposited in the three bank accounts opened by Kiwi (K) Ltd at Ecobank’s Muthangari branch in Nairobi.

“In 2022, the complainants entered into agreements with Kiwipay PTE for online payments collection,” the firms said in a letter to the DCI through their lawyers at Kimani, Kiarie & Associates.

“In the contract, parties agreed on the settlement date and Kiwipay PTE is required to transmit the funds it has collected to various designated merchants whose websites, and purchases were made by customers.”

The letter said the payment service provider, thereafter, was required to pay cumulated funds to individual merchants on regular basis, less a nominal agreed fee that it charges for the service.

The firms claim that Kiwipay collected the Sh898 million from thousands of their clients, but had declined to transfer the funds to them.

“In summary, complainants state that part of the monies deposited in the aforementioned bank accounts of Kiwipay (K) Limited are monies belonging to the complainants, that (cash) they are entitled to recover in full,” the letter to the DCI stated.

The four firms also filed an application seeking an order to freeze the accounts on December 19, shortly after High Court Judge Alfred Mabeya had granted Kiwipay access to money.

In the decision, the judge also ruled that Frenchman and Kiwipay’s Chief Executive Officer Gregory Schmidt had the authority to transact any amount on the accounts after finding that there were board resolutions to that effect.

“Unless the honourable court revisits the orders sought in the notice of motion applications dated June 27, 2023 seeking to preserve the funds in the said accounts, the applicants (Futuregate Labs, A&M Le Mont Venture, Airwallet Payments and Goldenpay) will suffer grave injustice,” the firms said in the application.

The billions were frozen following an application by the Asset Recovery Agency (ARA), which said the funds were linked to an international card fraud syndicate.

 The orders were lifted later but since then, Rashi from Laos and three Kenyans claimed the billions, sparking a vicious court fight.