The fraud allegations were revealed in court documents where the DCI successfully got orders to freeze the use of pay bill numbers, USSD codes and short codes that SportPesa offered Milestone in its quest to resume business.
Milimani Senior Principal Magistrate David Ndungi ordered Safaricom to reveal to the DCI the owners of the paybill numbers and codes. The listed telecommunication firm was also ordered to provide financial statements on the money that has flowed to the paybill numbers and codes since October 1.
“The board [the Betting Control and Licensing Board] is of the view that the said paybill numbers are being used in fraudulent gaming activities. We therefore request to conduct investigations as to how these paybill, USSDs and short codes were activated and transferred from SportPesa to Milestone Games Ltd,” the DCI said in its court application.
“The paybill numbers, USSD codes and short codes were activated and transferred from Pevans (SportPesa) to Milestone games fraudulently. The same are being sued to trade fraudulently even though the Betting Control and Licensing Board (BCLB) didn’t approve the licence for SportPesa.”
According to an investigator who filed the court applications, Milestone said it had been authorised by SportPesa Global Holdings Limited (SGHL) to trade under the name SportPesa and also use the domain names, paybill numbers and short codes previously used by Pevans East Africa, the entity behind SportPesa in Kenya.
SportPesa Global owns the European and Tanzania gaming businesses and recently claimed to also own the SportPesa brand, sparking protests from local shareholders who claims that Pevans East Africa owns that betting platform and trade name.
BCLB blocked the Milestone deal on Saturday, saying the trade name is owned by Pevans East Africa, which ceased operations in July last year.
The regulator accused Milestone of seeking to return SportPesa to business, arguing that the trade name is not transferable pending the conclusion of a suit that will determine which between Pevans East Africa and SGHL has rights to the trade name.
The deal with Milestone was arranged on the strength of the brand allegedly belonging to SGHL and not Pevans East Africa, which was last year blocked from operating in Kenyan market seemingly due to a tax row.
SportPesa CEO Ronald Karauri’s Friday announcement of the return of sports betting platform was instantly greeted with enthusiasm on online forums.
Hundreds of bets were also placed on the platform between Friday evening and Saturday midday when the regulator stepped in to block the partnership.
“The BCLB are apprehensive that Kenyans are being defrauded by SportPesa and Milestone using numbers provided by Safaricom,” said the Office of Director of Public Prosecutions.
The criminal pursuit of SportPesa and Milestone comes amid a bitter fallout among wealthy and influential investors behind SportPesa.
The row is anchored on allegations of transfer of $278 million (Sh29.1 billion) from the company’s coffers to overseas accounts and sale of shares in the firm’s holding company, SGHL.
The shareholder fight in the sports betting platform is pitting local majority shareholders against its foreign owners from Bulgaria.
Paul Wanderi Ndung’u and Asenath Wacera Maina, who have a combined stake of 38 percent, reckon they were not informed of the Milestone deal.
Mr Ndung’u, who holds a 17 percent stake in Pevans East Africa and 2.8 percent of SGHL, blew the lid on the shareholder wars that have been simmering since 2017.
He accused Mr Karauri of having allied himself with the firm’s foreign investors to run the sports betting platform without consulting the board, notably local shareholders.
Mr Karauri owns a six percent stake in Pevans East Africa while Mr Nikolov has a 21 percent shareholding in the firm.
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