Witness: How fuel station lost Sh86 million through mobile money fraud

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A man holds the new Kenyan banknotes in circulation on June 28, 2019, in Nairobi. The cost of borrowing between commercial banks has jumped to a high of three-and-a-half years amid increased demand for credit, indicating a fresh surge in loan prices amid tightened cash supply in the banking system.

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An accountant has told a court that there were fictitious account entries at a petrol station totalling Sh86 million made through a mobile money payment platform to a bank.

Ms Hanim Hassan said she checked the accounts of Changamwe Service Station, especially the Lipa na M-Pesa account, while comparing it with a bank statement and realised that there were false entries.

“By doing reconciliation for two months, I was able to confirm that there were fictitious entries under Lipa na M-Pesa,” said Ms Hassan, adding that she conducted the reconciliation of the account between 2015 and 2018.

She was testifying before Mombasa Chief Magistrate Martha Mutuku in a case where the company’s former accountant, Mr Omar Mwapita, has been charged with stealing Sh86 million.

Ms Hassan, who is a financial controller at Premium Fuels Kenya Ltd, a sister company of Changamwe Service Station, told the court that she was told to conduct the reconciliation of the account of the service station in January 2021.

The witness told the court she saw a bank statement but there was no reconciliation report and upon getting the reports they did not have opening balance in quick book files.

“That was the first red flag, I saw it as a loophole, it created a room for him to put entries to balance the account,” said Ms Hassan.

The witness told the court that the accused was an administrator of the accounting system and that from the M-Pesa account to the bank, entries were made from the administrator’s log in.

Ms Hassan who was being led in his evidence in chief by prosecutor Alex Gituma told the court that the Changamwe Service Station lacked a proper control system.

During cross examination by defence lawyer Jared Magolo, the witness said she could not confirm if all the money went to Mr Omar.

“There was no way to demonstrate any of the money ended up with Omar,” said Ms Hassan.
The witness also said that a manager would ensure that money collected from the service station is banked and an accountant will not ‘touch’ it.

Previously, Mr Abdusalaan Noorani, the owner of Changamwe Service Station, told the court that between 2015-2018, his company, where he is also a director, was recording losses yet it was making good sales.

Mr Noorani told the court they first asked their group financial controller to conduct an audit before hiring an external auditor and that following the audit, the alleged fraud within the service station was discovered.

“The reports of external and internal auditors discovered loss of funds. We reported to the police in Nairobi,” said Mr Noorani.
Upon cross examination by Mr Magolo, Mr Noorani denied that one of his companies, Indigo Blue, an offshore company, was being used for tax evasion.

“Indigo Blue company is not for tax evasion, it has nothing to do with Changamwe Service Station,” said Mr Noorani.

Mr Noorani said that it was not true that he did not lose any money and denied that he made a report to police for a false insurance claim.

The witness upon further cross examination said that money that was deposited in his bank account by the accused was official.

Mr Noorani also told the court that as a director he is not involved in day to day activities of the company.

“I have never claimed insurance money, insurance cover was Sh1 million and the loss Sh86 million, it was not necessary,” said Mr Noorani.

Mr Mwapita is alleged to have stolen the money on diverse dates between November 1, 2015 and December 31, 2018 at unknown places within the country.

He, jointly with others not before court, stole the money which came into his possession by virtue of his employment as an accountant and administrator of the company’s quick books accounting software.

The hearing continues on June 19.