Court of Appeal suspends Sh372 million case against Safaricom

The Court of Appeal has suspended an earlier ruling by the High Court requiring Safaricom to pay five dealers Sh372.5 million.

This is after the telco giant terminated the distribution contracts of the said firms on allegations of fraud.

A three-bench judge comprising of Justices Hannah Okwengu, Sankale ole Kantai, and Francis Tuiyott ruled that the amount involved in the case was a huge sum and if Safaricom won the appeal, the five organisations involved in the case would be unable to repay the large amount required considering their financial woes.

“The finding sheds light on the precarious position of the respondents (the dealers), and it has not been demonstrated to us that this position has since changed. The applicant’s apprehension that it may not be able to recover the decretal amount should it succeed on appeal, is therefore not unfounded,” said the judges.

The dealers are Laiser Communications Ltd, Wirsoft Agencies Ltd, Ayoon Communications Ltd, Emerald Ltd and Shashamoney Ltd.

The five won the case against Safaricom last month after High Court judge Alfred Mabeya gave a ruling that the mobile network operator wrongly terminated the 2011 distributorship deals arguing that it destroyed their businesses. Justice Mabeya ordered Safaricom to pay Laiser Communications Ltd Sh40.6 million, Wirsoft Agencies ltd, Sh31.2, Ayoon Communications Ltd Sh30.8, Emerald Ltd Sh14.1 million and Shashamoney ltd 47.9.

Safaricom was unsatisfied with the judge’s decision and moved to the appellate court.

In accordance with the contract signed, the dealers were supposed to distribute Safaricom’s products and services such as  airtime and M-Pesa but it was terminated in July 2011 on claims by the communication giant that the firms had allegedly allowed a fraudster to obtain the company’s receipts and collude with Safaricom’s rogue employees to reward themselves money on various goods without delivering the said products.

The  defrauder by the name  Abdifatah Ali Wario, had payments directly made to his account for goods not received.

According to Safaricom, payments purportedly made directly by the telco to Abdifatah were reflected in the dealers’ portals, the same as goods delivered to Abdifatah by the dealers.

The telecom giant after discovering all these happenings, reversed all the transactions, froze the dealers’ accounts and terminated the agreements.

The director of Shashamoney Limited was, however, not satisfied with the court of appeal ruling saying that Safaricom had shattered their businesses for the last 10 years. He also stated that they are capable of recovering the money in case the communication giant won the case.