CMA declines out-of-court deal with illegal online forex firm

An online currency trading company accused of operating illegally and defrauding Kenyans of millions of shillings tried to cut a deal with the Capital Markets Authority (CMA) to avoid prosecution.

Interweb Global Fortune Limited operated from the 14th floor of View Park towers in Nairobi before they were shut down after a crackdown.

CMA, in court documents, said it rejected Interweb Global’s bid to withdraw the criminal charge and settle the licence hitch out of court.

The firm committed to refund millions of shillings received from forex investors and stop tapping new clients until it obtained regulatory licence as a condition to CMA agreeing to the out-of-court settlement.

CMA turned down the offer on grounds that it would set a bad precedent and compromise a criminal investigation where there were complainants.

“The petitioners have written to CMA acknowledging that they were trading illegally and were offering to reimburse monies to investors,” CMA lawyer Githendu Timothy said.

After failing to cut a deal, the company has now filed a petition against CMA and the Directorate of Criminal Investigations (DCI) claiming harassment.

In the petition it points out that the authorities searched and seized its servers.

The firm’s boss Manases Kuria said he had been arrested and detained at Central, Nairobi Area, Kilimani, and Railway police stations and at the DCI headquarters on Kiambu Road in the guise of carrying out separate investigations about the same matter already in court.

But CMA said it had not conducted a search and seizure operation on the premises and that the offices were closed before the regulator visited the premises for investigations.

It also denied freezing the company’s bank accounts and claimed ignorance of the arrests and harassment of Mr Kuria stating that he had only been arrested twice and was charged and allowed bail within 24 hours.

Mr Githendu asked the court not to grant stay orders to the company as it was unlawfully holding funds illegally obtained from the investing public.

In May last year after media reports on the operations of the company CMA launched an undercover operation that established Interweb Global Fortunes was collecting money from the public, offering a 20 percent monthly return on forex trading.

During the covert operation, the CMA sleuth said he saw several people with cheques and investment contracts issued by the company.

This led to the conclusion that the company had collected large sums of money from the public on pretence they were conducting forex trading yet they did not have a licence to conduct the regulated business.

Kenya has had a history of losing money to online forex traders who disappear without a trace.

Online forex trading firm VIP Portal owned by Alfred Wangai and his wife Mercy Nkatha started out in Limuru in 2013 and within one year, it had received over Sh1 billion from people looking to improve their fortunes.

The couple was arraigned in 2014 and has since been trying to convince judges to drop the charges. Last year they promised to refund investors but to date, few have been paid.

Two weeks ago CMA, Central Bank of Kenya, Insurance Regulatory Authority, Retirement Benefits Authority, Sacco Societies Regulations Authority and State Department of Cooperatives issued a joint statement warning Kenyans against falling prey to unlicensed firms offering forex trade services.