December 11, 2023

Kenya’s Asset Recovery Agency (ARA) plan to withdraw its second case against African fintech giant Flutterwave has been struck down by the High Court, the country’s third highest court.

Last August, the agency froze $3 million from Flutterwave, Hupesi Solutions and Adguru Technology Limited on suspicion of money laundering and fraud. Two months ago, the ARA froze another $52.5 million in funding from Flutterwave and six other companies. The ARA filed suit after each seizure, the first of which was formally withdrawn in March of this year.

High Court Judge Nixon Sifuna rejected the request to withdraw the second lawsuit, noting in a ruling seen by TechCrunch that the ARA, as a public funding agency, failed to give reasons for the withdrawal, including “negotiations or settlements, or the terms of such negotiations or settlements.”

That’s despite the fact that the agency provided investigators’ affidavits and a trove of documents, including bank statements, proving that millions of dollars in the fintech bank and mobile money accounts were the proceeds of crime and money laundering. The judge sought to understand why the agency claimed it no longer had any evidence of an alleged crime.

Judge Sifuna declined to withdraw, saying: “Institutions tasked with combating corruption, economic crime, organized crime and similar vices, including money laundering, should not abdicate their sacred duties or become complicit in such vices.” He added that proceedings would be determined upon receipt of an affidavit sworn from the agency’s chief executive or senior official.

He said the agency must be guided by the public interest and its decisions or actions must be “open and above reproach” in the public eye.

The ruling will further delay its prospects of obtaining a license to operate in Kenya. TechCrunch has reached out to Flutterwave for comment.

In both cases, Flutterwave’s bank accounts were used as conduits for money laundering under the guise of commercial services, the agency said. It said Flutterwave failed to provide evidence to verify customers’ retail transactions. It also added that there was no evidence of a settlement with the alleged businessman.

Flutterwave was founded in 2016 by Iyinoluwa Aboyeji, Olugbenga “GB” Agboola (CEO), and Adeleke Adekoya to facilitate cross-border payments in Africa. It has since grown into a money transfer service that allows users to send money to recipients to and from the continent; a Shopify-like e-commerce platform for small businesses called Flutterwave Store; and education payments platform Tuition.

Last year, the company raised $350 million at a $3 billion valuation, making it one of Africa’s most valuable startups. It was not without controversy, however, as it had to deal with a range of controversies, including allegations of harassment, misappropriation of funds and mismanagement.