After a recent High Court ruling, betting firm MozzartBet must pay over sh300 million to the state as the money was from a crime. Justice Esther Maina based her ruling on the fact that the money was held in three separate bank accounts as part of an elaborate money laundering scheme.
Court filings from the proceedings show that MozzartBet sent money to Kimaco Connections using a pay bill with the number 290056. The numbers were astronomical. The highest amount in a single day amounted to Sh50 million, and the lowest was Sh1.8 million. The ARA holds that the total amount sent over 5 days amounted to around Sh256 million. These amounts flagged the funds as suspicious and alerted the relevant authorities.
Hiding their Trail
To cover any tracks, MozzartBet moved the funds into Cooperative Bank. The firm has defended the transactions stating that the money was being used to pay an IT company to supply software. But the ARA pointed out that Kimaco Connections was simply a shell company.
The judge was baffled as to why a sports betting company would look to a third party to procure software from a sister company unless there was some sort of ulterior motives, such as money laundering.
The claim made by MozzartBet was that the money was being used to procure software from Kimaco Connections. Kimaco states that it subcontracted another company, Open Skies Connections, to implement and set up the required IT platform.
The State Fights Back
The state, however, disagreed. They said that Peter Kiilu, the owner of Kimaco Connections, could not provide any evidence of contracts between MozzartBet and Open Skies Connections. The money referred to was also spread out between multiple different bank accounts. Sh251 million was in Diamond Trust Bank, Sh50 million in Cooperative Bank, and Sh2.4 million at NBCA Bank.
MozzartBet went on to argue that the money was simply contributions from their shareholders for the contracting of Kimaco to implement IT software. The software has never been provided. And after the ARA froze the funds, it never could’ve been. The judges were worried some of the funds might have ended up in the pockets of MozzartBet directors had it not been frozen. However, the online betting firm had no reply.
The judge went further to state that the letter issued from the DCI, which allegedly clears the names of all firms involved, was a forgery. The ARA investigations prove that Kiilu moved around Sh150 million to a fixed deposit account. Leaving a running balance of Sh101 million.
A Money Laundering Scheme
The months between February and June were most instructive of what resembles a money-laundering scheme. During this time, the company received around Sh384 million from the betting company. This amount was logged at Cooperative bank. Sh50 million was placed into a fixed deposit account with a running balance of Sh269.7 million. The court documents also show that the money was later distributed to high-ranking members of the betting company. The major shareholders of MozzartBet Kenya are Shirma, with zero shares; Mid Logistics, with 300 shares; and MozzartBet Africa, registered in Mauritius, with 700 shares.
The agency stated that mobile money transactions were made to transfer from MozzartBet and Kimaco Connections. This was adopted only to get around the Central Bank of Kenya’s reporting threshold when account holders declare the source of funds.