Safaricom, data firm in M-Pesa staff fraud fight

Justice David Majanja. FILE PHOTO | NMG 

By SAM KIPLAGAT
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Summary

• Safaricom has sued East African Data Handlers for failing to reconcile all payments received through its M-Pesa portal and failing to settle the M-Pesa merchants’ accounts directly, after receiving a withdrawal request.
• Further Safaricom has accused the company of refusing to compensate it for financial losses after failing to settle the merchants directly.
• The telco is demanding Sh20.3 million.

Safaricom is locked in court battle with a data firm over the release of contents of an internal investigations that sought to establish if the telco’s staff stole clients’ money through its Lipa na M-Pesa platform.

Appearing before Justice David Majanja last week, the telco said the report was not available for public consumption.

East African Data Handlers (EADH), one of the companies contracted to manage Lipa na M-Pesa platform, has asked the court to compel Safaricom to reveal contents of the report.

EADH reckons that Safaricom employees facilitated fraud on the platform leading to loss of clients’ money running into millions of shillings.

In the suit, Safaricom has sued EADH for failing to reconcile all payments received through its M-Pesa portal and failing to settle the M-Pesa merchants’ accounts directly, after receiving a withdrawal request.

Further Safaricom has accused the company of refusing to compensate it for financial losses after failing to settle the merchants directly. Safaricom is demanding Sh20.3 million.

But the data company accuses Safaricom of wilfully and illegally allowing back-end access into the aggregation system to its staff who irregularly and without notice transferred funds from merchants’ accounts.

“Despite being aware of the fraud committed by some of its staff, which fraud we pointed out as far back as 2017, the Plaintiff (Safaricom) took no substantive steps to prevent further back end access but instead chose to blame us for the loss of the merchants’ funds and terminate the contract,” Mr George Njoroge, the company CEO said.

Mr Njoroge figures that his complaint prompted Safaricom to launch investigations, whose report the data firm wants made public.

Safaricom lawyer told the court there was no report to share and EADH should instead defend itself over the accusations that led to the cancellation of its contract.

Justice Majanja has set the hearing for March 16.