May 23rd 2017

Top Stories / National

Cutomers lose millions as Airtel Kenya staff perpetrate massive fraud

During the December-January period aforementioned, the firm fired some employees directly linked to the loss of Sh11 million through the cheque collection scheme from corporate account clients meant for paying bills but fraudulently encashing the money for merchandise.

By Free Press Reporternewsdesk@kenyafreepress.comFriday, 27 Jan 2017 19:48 EAT

Airtel Kenya chief executive Adil El Youssefi (Photo: Courtesy/Nation website).

As Airtel Kenya CEO Adil El Yossefi was bamboozling journalists with ambitious plans to roll out a 4G internet network in Nairobi today, internally the company is being bled to slow death through rampant mismanagement that has created space for unscrupulous employees to run a scheme of fraud that peaked over the December-January festive season, sending alarm to several affected customers.

Airtel Kenya has been depleted of senior management talent after over two years of staff exodus that left it bereft of visionary managers in the Kenyan telecommunications scene. At least a dozen managers have left to join rival Safaricom and Orange or cross into other industries altogether. That is a story all too well known to watchers of Kenya's corporate scene. What is not known is that Airtel has also been losing huge sums of money in a sophisticated scheme of employee fraud that raises questions about the company's staff integrity, fraud detection systems and management oversight.

The unscrupulous staff have devised various ways of stealing from the company itself and from Airtel Money customers with huge deposits or those betting on the Sportpesa platform through Airtel accounts. Among other elements of the fraud, the employees collected cash from the firm's corporate account customers without remitting the money, created false identities and manipulated message systems to credit or debit customers' Airtel Money and Zawadi (loyalty) points which they eventually pass to themselves without early detection.

During the December-January period aforementioned, the firm fired some employees directly linked to the loss of Sh11 million through the cheque collection scheme from corporate account clients meant for paying bills but fraudulently encashing the money for merchandise. It has also lost over Sh24 million involving fraudulent replacement of customers’ lines and borrowing Kopa Cash; fraudulent crediting of Sportspesa Airtel lines from the backend; and fraudulent creation of agent lines and crediting the e-wallets with floats from the backend.

The scandals were enabled by weak fraud-detection systems that call into question Airtel’s capacity to undertake robust money transfer business to rival MPesa. In each of the cases the Kenya Free Press was briefed on, the company never reported the crimes to the police, fearing that the reporting would trigger damaging investigation by the Banking Fraud Investigation Unit.

However, some panicked customers whose accounts were fraudulently used by the company’s employees reported to the police, forcing Airtel to fire the workers involved through a window of the restructuring it is currently implementing. There are claims, though, that some senior managers have been shielded from accountability for the fraud in their departments, and even some of the suspected employees remain in service.

The root of the crisis at Airtel is alleged to be weak management at the top, following a strategy of 'Indianisation' that involves outsourcing key services previuously undertaken by Kenyans to Indian firms. Airtel did not reply to our email inquiring about specific instances of fraud in the company. However, the firm, according to well-placed sources, has also adopted a policy of not communicating with its subscribers on some recent changes to products despite the fact that the terms of the products that it widely advertised no longer apply.

For example, it made changes to the cost/benefit structure of 'Unliminet' products but informed subscribers only after some users buying low-value airtime had complained. The firm also adjusted benefits on the 5X Bonus product where subscribers receive five times the target, without public information at all. “Staff morale is low, so some of these guys are using fraud to compensate themselves,” said a source. Among those fired are some long-time staff who were familiar with the company’s operations and had therefore identified the weak points.

Some employees, without any care about the company’s credibility, swapped customer lines and then subsequent transferred loyalty (Zawadi) points to other numbers that are later redeemed at Airtel shops for merchandise. Unscupulous shop staff run out loyalty merchandise without actual redemptions. This happens with no reconciliation or records because of the company’s weak processes/systems.

In the most egrogious case of the fraud, the staff fraudulently replaced customer lines and cleaned their bank accounts through online banking in collusion with Barclays Bank of Kenya staff. Some staff also credited fraud lines with Airtel airtime and bundles that are later sold online through social sites (popularly known as ‘bundles mwitu’). The Relationship Manager and RA team’s were involved in ‘Sim boxing’, while some specific unscrupulous employees in the same Enterprise Department headed by Mr Bernard Muteti were also involved in the fraud.

Confronted with the extent of fraud by some staff members, the management responds with threats to intimidate employees from discussing the extent of institutional weaknesses. A recent memo from the CEO fell short of calling all employees ‘fraudsters’, speaking openly about a “resurgence of fraud cases” in the past year when the firm in effect took only ineffectual action to streamline its processes.

Auxilliary to the wider management ineptitude is the corporate and regulatory affairs department that insiders say has also lost forward-looking staffers. That department handles all compliance issues, but it is alleged that the current holder of the office, Joy Nyaga, who joined the firm about two years ago, has been keener on expanding her powers than using the department's resources to ensure full compliance. 

"The department is a toy of the management. Within three years, it has been restructured three times. The current director heads departments previously under two directors, one of whom she edged out," said a source.

Those familiar with the telecommunication regulations informed this website that Airtel Kenya is liable for punishment for not disclosing the risks to the Communication Authority. The fraud, it is reported, threatens stability and confidence the vibrant money transfer system in which Kenya is recognized as a leader globally, with grave ramifications for market confidence and the economy as a whole.

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