July 17, 2024

Kenya’s Digital Banking Showdown: Kiwipay vs. Ecobank

kiwipay

Kiwipay Kenya Limited is currently embroiled in a court dispute with four foreign firms—Futuregate Labs Ltd (Cyprus), A&M Le Mont Venture Ltd (Cyprus), Airwallet Payments (Singapore), and Goldenpay DMCC—seeking a substantial $5.82 million (Sh811 million). This intricate dispute was ignited by allegations asserted in court papers by the foreign firms, contending that they engaged kiwipay kenya limited as an online payments service provider.

However, kiwipay purportedly failed to remit the agreed-upon funds, totaling Sh898 million collected from thousands of transactions.These funds were purportedly deposited in three bank accounts at Ecobank’s Muthangari branch in Nairobi, opened by kiwipay kenya limited. According to the foreign firms, kiwipay kenya limited, entrusted with collecting funds from their clients, allegedly declined to transfer the monies as agreed.

 Maxwell Otieno, an official from the Directorate of Criminal Investigations, recently sought court orders in Nairobi to scrutinize the bank accounts at ecobank kenya ltd, in a move prompted by the complaints from the aforementioned foreign firms. In his petition, Mr. Otieno requested the submission of account initiation records, bank statements covering the period from March 1, 2020, to June 30, 2023, and comprehensive details encompassing Real Time Gross Settlement (RTGS), Swift, and electronic transfer transactions, as well as customer transfer transactions, for the specified three bank accounts during the mentioned timeframe.

On December 19, the four firms took action by filing an application to freeze the accounts, a move that swiftly followed High Court Judge Alfred Mabeya’s decision to grant kiwipay access to funds. In his ruling, Judge Mabeya affirmed that Gregory Schmidt, the Frenchman and CEO of kiwipay kenya limited, possessed the authority to conduct transactions of any magnitude on the accounts, citing existing board resolutions supporting this authority.

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Subsequently, the billions held in these accounts were subjected to a freeze, initiated through an application by the Asset Recovery Agency (ARA), alleging a connection between the funds and an international card fraud syndicate. Although the freeze orders were eventually lifted, a contentious legal battle ensued when Rashi from Laos and three Kenyans—Stephen Maina Njenga, Felix Rantuu Lekishe and Solomon Joseph Maina,  laid claim to the contested billions, sparking a fierce courtroom clash.

The ongoing legal dispute involving kiwipay kenya limited and ecobank kenya holds considerable implications for the Kenyan economy. At a macro-economic level, uncertainties arising from the dispute may impact the overall financial stability of the country, influencing market dynamics and investor confidence.

The investment climate could be affected, potentially altering the flow of domestic and foreign capital. On a micro-economic scale, consumer spending patterns may change as uncertainties regarding the financial stability of the involved entities influence trust and transaction behaviors. 

Furthermore, fluctuations in employment within the financial sector are anticipated, contingent on the outcomes of the legal proceedings and operational adjustments by kiwipay kenya limited and ecobank kenya.