Controversial betting firm MozzartBet has been cited for money laundering schemes in the country as its Serbian and Zimbabwean directors face deportation by Cabinet Secretary for Interior and Coordination of National Government Fred Matiang’i.
This comes after embattled gaming firm lost Sh300 million after the High Court ruled that the funds, which were frozen two years ago, are proceeds of crime.
The betting firm associated with former East African Community Cabinet Minister Musa Sirma, Zimbabwean Emmanuel Charumbira who owns Open Skies Management, Loncar Koviljka a Serbian and Melentijevic Branimir.
Justice Esther Maina ruled that the money held in three bank accounts was part of a money-laundering scheme and should be forfeited to the government.
The three are; Diamond Trust Bank, Nation Centre Branch held in account number 064662201 belonging to Kimaco Connections Limited amounting to Sh251,154,214 and NCBA Bank account number 8443240011 amounting to Sh2496,670 under account name Pescom Kenya.
Another Sh50million was held different bank belonging to Kimaco Connections Limited.
According to documents filed in court, MozzartBet used its paybill number 290059 to send the money to Kimaco Connections to its paybill 311372.
The highest amount sent was Sh50 million in a single day while the lowest was Sh1.8 million.
The Financial Reporting Centre (FRC) will seek to establish if the billions of shillings earned from the online betting craze in Kenya were declared to the gaming regulator, the Betting Control and Licensing Board (BCLB) to establish possibility of tax evasion by the firm’s management.
Under the Proceeds of Crime and Anti-Money Laundering Act of 2009, which created FRC, those found guilty risk asset seizure, fines and jail terms or both.
Individuals, for instance, face maximum imprisonment of 14 years, a fine of up to Sh5 million or the value of the property involved in the offence, whichever is higher.
For companies, the fine could reach Sh25 million or the amount of the value of the property involved in the offence, whichever is higher.
For international crimes, Kenya can seek co-operation of other jurisdictions in investigations and enforcement actions, including asset seizure.
Such requests for extradition and mutual legal assistance are principally channelled through the office of the Attorney-General.
The government deported Sportpesa foreign directors notably American Gene Grand and Bulgarian Guerassim Nikolov who used to live in Kenya alongside other foreign investors in betting firms that were accused of not paying taxes.
Assets Recovery Agency (ARA) said that MozzartBet sent a total of Sh256 million within five days, flagging the funds as suspicious.
The firm had defended the millions saying it had contracted another firm to supply an IT software for use in the betting business.
“The applicant (Assets Recovery Agency) has adduced evidence that proves that the 1st respondent (Kimaco Connections Ltd) was a shell company incapable of even paying rent for the premises it occupied,” the Judge said.
The judge wondered why the betting firm would pay a third party to procure the software, from a sister company, unless the intention was to launder money.
MozzartBet had claimed that it paid the millions to acquire software from Kimaco Connections, which the latter says it subcontracted another firm– Open Skies Connections—to deliver the IT platform.
The State, however, pointed out that Peter Kiilu, the proprietor of Kimaco Connections, did not avail the agreement or contracts he alluded to in his statement between Mozzartbet Kenya ltd and Open Skies Management Services.
The money includes Sh251 million in an account at Diamond Trust Bank , Sh2.4 million at NBCA Bank and another Sh50million held in a separate bank.
The betting firm said the money was contributions from their shareholders and that it entered into a contract with Kimaco for the supply of IT software. The software was not supplied after the funds were frozen.
In the judgment, Justice Maina said it was instructive that some of the funds also ended up in the pockets of some directors of MozzartBet including former legislator Musa Sirma.
“Clearly, the fact that the 1st respondent filed nil return to the Kenya Revenue Authority during the period is issued is sufficient proof that it was not engaged in any business,” the Judge said.
She added that a letter from the DCI allegedly clearing the firm is a decoy.
The investigations by ARA showed that Kiilu moved Sh150 million to a fixed deposit account and left a running balance of Sh101 million.
The company had between February and June, received Sh384 million from the betting firm and the amount was banked, with Sh50 million put in a fixed deposit account and a running balance of Sh269.7 million.
The agency revealed in the court documents that the monies were later distributed to various companies associated with directors and shareholders of the betting firm.
The shareholders of MozzartBet Kenya as per CR12 attached to the court documents are Sirma with zero shares, Mid Logistics ltd with 300 shares, and MozzartBet Africa, registered in Mauritius holding 700 shares.
The agency flagged the transactions saying there are reasonable grounds to believe that the bank accounts and M-Pesa paybills were used as conduits of money laundering.
The agency said the use of mobile money transfer services to transfer funds from MozzartBet Kenya Ltd and Kimaco Connections Ltd was adopted to circumvent or evade the reporting threshold and Central Bank of Kenya prudential guidelines for account holders to declare the source of funds.