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Investigative Reporting: 2nd Place - Haggai Matsiko and Ian Katusiime, The Independent
Investigative Reporting: 2nd Place - Haggai Matsiko and Ian Katusiime, The Independent
NEWS ANALYSIS
Kampala city
FDCs lack of
money troubles commuter
train service
Muntu
BUSINESS
Bwiso eyes
USE growth
Torment in arcade hell
www.independent.co.ug
Cover story
Mobile money services in Uganda are coming under scrutiny and what is emerging is troubling. At
the centre of the saga in which President Yoweri Museveni is personally involved, is Ugandas biggest telecom operator, MTN, which is battling several allegations of fraud, and suits and counter suits
in the courts. Even the Uganda Revenue Authority (URA) says it was kept in the dark but the cases
and allegations have exposed some details that have interested it to attempt to recover sales tax on
some Shs14 billion worth of airtime sales. MTN apparently did not pay tax because the transactions
were made on mobile money.
useveni has
deployed his
elite Presidential Guard
Brigade forces
to guard key
figures in some of the cases after
it emerged that there were attempts to use assassins to silence
them. One of the targets, Richard Mwami, is a former head of
MTNs Mobile Money department.
He told The Independent that
on the night of November 26,
2014, three hooded attackers
jumped the fence of his home
in the upmarket Muyenga
neighbourhood with intention to kill him. One of the
attackers, armed with a gun,
climbed up to the balcony of
Mwamis bedroom on the second floor.
Mwami said: We heard a
loud bang and when I went to
check, I saw him on the balcony.
I grabbed him and in the scuffle,
his gun fell to the ground. He
fled and they all jumped over the
fence and got away in a waiting
car. Mwami says the attackers
fled when an alarm went off.
Mwami says he blew the whistle at MTN after he became suspicious when several staff from
the MTN Mobile Money and IT
resigned one after the other in
November 2011. He alerted his
bosses and started ferreting around. His
finding
Was in charge:
Themba Khumalo
10
Cover story
about Shs85 billion. That is about three
time the Shs24 billion that was lost in
the Katosi Road saga. But according to
experts, the real danger from the MTN
mobile money saga is even bigger.
President Museveni has taken an
interest in it because it raises national
security issues, aids money laundering,
and threatens macro-economic stability
when unauthorised entities like telecom
companies create money on their virtual money accounts.
Money involved
Shs
Billion
Created fictitiously
and withdrawn through
the MTN Corporate
Liquidity Fund
Shs
Negative money
detected at some
point in 2011
85
Billion
Shs
21
Billion
17
Shs
10
Billion
Shs
5.8
Billion
Shs
18.9
Billion
Number of fictitious
accounts through
which money was
being withdrawn
Money the five
suspects are accused
of defrauding MTN
Money Mwami
is accused of
stealing
Fictitious money
created on the
Adjustment account
for discrepancies
18
Number of mobile
money users
Million
Shs
18
Trillion
Money transacted
through mobile
money by the end of
December 2014
11
Cover story
It also launched a complaint before the
Uganda Communications Commission
(UCC). Both cases are pending.
At this point in 2013, MTN now
decided to slap charges against
Mwami. He faces two counts of fraud,
neglect of duty and conspiracy involving over Shs5.8 billion.
How alleged fraud happened
MTN Uganda maintains an escrow
account in Stanbic Bank and a bank
control account. All MTN Mobile
Money agents deposit an opening
balance of Shs1 million on the escrow
account and use it as a sort of clearing house to either withdraw cash or
deposit. The agents deposit cash to get
e-mobile money or what is technically
called a float and withdraw cash
when they trade-in e-mobile money.
Most of this process is automatic. In
the same way that Mobile Money subscribers can withdraw or deposit with
the agents.
Trouble started when MTN staff
started manually transferring e-money
from accounts during a process called
liquidation. This is when an agent
trades in e-money or float for cash.
Witnessed have told court that some
MTN staff (perhaps following how
MTN was allegedly moving fictitious
money to some of its shops), started
creating fake subscribers and giving
them fake e-money.
Nalukwago, the former MTN worker told court: These subscribers were
getting free money from the system
by somebody sending money to them.
They were not buying from an agent.
She described one case on December
21, 2011.
Adjustment Account for discrepancies (on the MTN e-money system)
had a negative balance of Shs19 billion, she told court, This means that
money was created on this account
when it never existed. Money was
then manually sent to subscribers who
cashed it. The Finance Administrator
would have problems balancing it.
She added: At all times the balance of E-money was supposed to be
equal to real cash. MTN does not print
notes.
But then at that point, she said, The
Bank control account had negative
84.820.903.080/=. This is the money
the MTN mobile money platform has
in Stanbic Bank. Balances on the platform should be equivalent in the bank
i.e. the MTN mobile money account in
Stanbic.
She described how MTN staffers
were manually interfering with the
system to create the fictitious e-money. She also described how, on April 5,
2012, Shs9 billion was created on the
12
Accused
Patrick
Sentongo
Former Finance
Administrator
Former MTN
cashier
Brian
Okurut
Former MTN employee
whose position is
unclear
Angella
Ayo
Revenue Analyst
Eriya
Baryamwijuka
Revenue Analyst
Richard
Mwami
Senior Manager
Public Access &
Mobile Money
Lack of regulation
MTN
e-money
platform
Escrow
account
(Stanbic Bank)
Float
Cash
2
1
Shs 21 bn
Fictitious Mobile
Money created
and cashed
KEY
AGENT
Threat exaggerated
13