Business

MTN Uganda Loses ‘Round One’ in Fraud Case

Lubega's submission exposed MTN Uganda's shocking Mobile Money fraudulent activities

The Anti corruption court in Kololo has adjourned to April 3, hearing of the case where 6 of Telecom giant MTN Uganda’s former employees are accused of defrauding money totaling to Shs 10.2 billion in 2011.

Until then, the company will be looking at patching up the immense damage that has been done in daunting revelations made by its own witnesses during this ‘first round’ of the hearing.

The company rushed to court seeking justice against its allegedly thieving workers, pbut a lot of evidence tendered to pin them has only but tightened the noose around MTN’s neck instead.

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As Justice Lawrence Gidudu broke off the hearing, MTN’s central witness Phraise Lubega who in 2011 was head of IT at the MTN towers, had consciously and unconsciously spilled a lot of secrets, tilting more and more culpability toward himself and MTN.

In the final round of cross examining his evidence by the 6-strong defense team, Mr Lubega dramatically confessed to have ignored activating a crucial Anti Money Laundering System.

He also admitted that this was the responsibility of him alone as the head of IT and none of the accused six: not even Mr Richard Mwami who was the overall head of Mobile Money.

Mwami was in fact the first person to sound the alarm when he noticed in December 2011 that billions of shillings had been received dubiously by some 17 subscribers, and he immediately sanctioned investigations.

MTN nonetheless dragged his name onto the charge sheet for allegedly “neglecting his duty of ensuring that verification performance plans and procedures were adhered to by his juniors.”

Mwami’s lawyer A. F. Mpanga however, tactically got MTN’s witness Lubega owning up that he had ignored activating the anti money laundering system despite stern guidance from among others, the company’s partner bank Stanbic, which holds their mobile money account.

Mpanga provided documented evidence showing that Stanbic had warned MTN of serious consequences which included targeted sanctions from Bank of Uganda if fell short of activating the security system.

Among other functions of the system, is blocking transfer of money to fund international Terror groups like Alshabaab.

It has an installed database that entails names of particular individuals and terror organizations who must not conduct any transaction with the mobile money company.

Fraud 

Interestingly Mr Lubega had earlier on Monday confessed that the MTN Fundamo (mobile money computer system) was heavily susceptible to numerous sorts or attacks from foreigners.

He pointed out one such called the ‘Brute force attack” where a hacker would try in several passwords until he got the right one, and access the mobile money accounts.

By not activating the anti money laundering system, counsel Mpanga convinced court that MTN opened itself for attacks from both its workers internally, but also international criminals including terror organizations.

While speaking to ChimpReports earlier this week, one of the accused Patrick Sentongo alleged that the company had filed this case as a cover up of such internal flaws.

He said that the accused six were being used as a shield, which explained why Mr Richard  Mwami the very first whistle blower in the scandal was dragged onto the charge sheet.

Meanwhile as the clock ticks down to April when the hearing resumes, Chimpreports understand that MTN has rushed to hire Chinese technology giants ZTE to undertake a section of its IT department – the operations and maintenance section.

In a memo sent to employees, MTN informed that all workers under this section will be officially employed by ZTE, within the next six months transition period.

There are concerns about the possible loss of employment opportunities.

MTN in its memo did not confirm whether their staff will stay with company after the takeover of ZTE.

“In the interim, all Network Group staff are still formally employed by MTN Uganda until that process is concluded,” the memo reads in part.

The court case is expected to extend to next year, as a number of stakeholders including police investigators who initially handled the matter tender in their evidence to the court.

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