Safaricom Fires Employees over fraud

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Safaricom fired 18 staff members linked with fraud related incidences for the year ended March 2016. This is a significant drop from the 58 staff members who Safaricom's for the same period last year and the company associated the reducing trend of staff linked fraudulent activities to swift action on its side. The company released this information during its Tuesday’s sustainability report, where they also said that the decreased cases of employee terminations were partially due to the company’s tendency to act quickly.

In both years, the company conducted the same number of investigations and still recorded a drop in employee related fraudulent cases. The company expressed its delight at the news on the drop. According to the report, the nature of fraudulent activities within the company is changing from group actions to isolated individual cases, which is a good thing, apparently. During that period, the company conducted 27 investigations into suspected cases of corruption, irregular expense claims and misappropriation of company funds.

According to the company CEO Bob Collymore, corruption is one of the major issues facing big corporations such as Safaricom. The CEO termed these cases as personal matters and declined to explain the exact nature of these terminations.

Court battles

Safaricom engaged in legal battles with its agents four years ago after a scheme where the company lost about a 100 million in a fraudulent banking scheme hatched and executed by its agents. The agents, who had obtained goods worth Safaricom sued millions of shillings using forged banking slips.

PwC stated in its international poll carried in 2012 that Kenya registered a tremendous level of financial crime amid 78 countries last year, with procurement fraud and theft of assets and money at work rising. In Kenya, sacking and prosecution of workers owing to fraud have principally involved public servants and those employed by government run institutions.

Lack of enthusiasm

According to PWC, the lack of enthusiasm by most companies to dismiss or sue employees suspected of fraudulent activities is the fear of loss of reputation. PWC continued to say that the extent of fraud could be appreciated better when the non-financial implications such as low employee morale, business reputation, and loss of customers are considered. This kind of reluctance is also behind the rise in theft at the workplace. Safaricom’s sustainability report highlights the company's performance on social, governance, environmental and economic fronts.

In 2015, Safaricom called off a more than 1B KES tender after Mobinet SAL limited, the awardee (a telecommunication company based in Lebanon) was alleged to have bribed safaricom employees during the tendering process.

The company hired KPMG, a consulting firm to audit its tendering process. The audit is still in progress hence no final results. 

MPESA Fraud

Due to increased cases of suspicious activities in the company’s mobile money transfer platform MPESA, the company in collusion with the police created a unit to look into these fraudulent activities.  The company has been battling fraudulent activities in the MPESA platform since its inception. The company is planning to integrate counter terrorist funding and anti-money laundering rules when assessing fraudulent MPESA activities. 

Social engineering

Fraudsters are always on the lookout for new ways to steal from your MPESA. It is however very hard to penetrate the system; therefore, these fraudsters will resort to a method popularly known as social engineering and other non-technical methods. Social engineering involves taking advantage of an MPESA user’s trust or lack of exposure to swindle them.  These methods could include manipulating unsuspicious people into breaking standard security measures and finally tricking them into withdrawing from ATMs remotely or revealing M-PESA PIN, among other things.

Police investigations have revealed that most mobile phone cash fraud is mostly hatched and carried out in prisons. After it had emerged that prisoners were perpetrating some of these frauds, Safaricom signed a memorandum of understanding with the Kenya Prisons Service last year. The move by Safaricom was aimed at disabling reception in a number of notorious correctional facilities in the country.

Curbing MPESA fraud

Automated payment payouts and computerised payment reversals are also part of the new system that will see MPESA present vast opportunities though the open interfaces. Safaricom also recently launched another system that enables businesses issue instant payment notification with an optional validation step for pay bill to confirm whether to decline or accept inbound payment.

In an attempt to guard their reputations, financial companies tend to under-report cases of employee-related fraud and deal with them internally. This is according to a 2013 banking fraud investigation department report.

A firm will always bend towards protecting their reputations, especially when dealing with fraudulent activities castigated by their employees. This results in low cases of self-reporting on fraud despite the fact that in Kenya, financial companies are more likely to defraud by their employees. Fraud and robbery are among the top issues mobile money agents face in Kenya. This is according to a 2014 survey.  

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