How audit firm exposed Shs11bn MTN fraud  


Mobile money, a new money transfer platform, continues to be threatened by fraud


Audit firm Grant Thornton used 19 days to discover what Mobile Telecommunications giant MTN-Uganda had failed to discover in 3 years of the running of Mobile money platform– that fictitious money was being created by their Fundamo system.

Grant Thornton’s certified public accountant, Jasmine Shah, tabled before court a document that chronicles the fraudulent creation of fictitious money and later liquidating it through MTN’s escrow account.

The document dated 30th January 2011 is titled ‘Report on investigations into Mobile Money operations’ and is tagged ‘secret and confidential’ at the bottom of the page.

Shah told court that their firm had been approached by the MTN chairman Charles Mbiire to conduct an internal audit into the mobile money system.

The meeting was followed by a letter of engagement signed between the two companies on the 11th January 2012.

Shah recalls that the terms of reference for the audit firm were to understand the platform under which the Mobile Money system worked – Fundamo, to outline the mode of operation of the system and identify people involved in Fraud.

They were also tasked to quantify for MTN the losses incurred since the system’s incorporation.

Shah said that despite the company ‘delaying’ with the production of information vital to the investigation, they discovered that accounts had been created and tested to see their efficiency in siphoning money out of the company’s escrow account and also creating new money.

He points out for example the first strange transaction that they noticed was the creation and transfer of 8 million Shillings on the 6th of June 2011 from a general ledger account to the public access account.

The money was later withdrawn at a mobile money point.

Shah said the people behind the fraudulent transaction tested the system with ‘little monies’ and later started taking out huge sums of money to a tune of 11 billion Shillings.

Shah’s testimony further pointed out that the MTN executives did not have adequate knowledge of the mobile money platforms and neglected the idea to create important management reports that would have helped stop the fraud.

Shah said it would have been easy to identify the fraud if the management of MTN had compiled reports like the exceptional transactions exceeding normal withdraw amounts of Mobile Money.

New facts continue to emerge from the case in which MTN is accusing 6 of its own employees of defrauding the company.

The testimony by Shah throws doubt on the management of MTN who, with audit reports indicating fraud, had not acted upon them until the whistle was blown by one of the accused Richard Mwami.

Presiding Judge Lawrence Gidudu asked for a third time why MTN top management executives who knew of the fraud but didn’t stop it were not being prosecuted in the same case.

The question arose after the key witness in the case Phrase Lubega, who is MTN’s head of IT, told court that the company had programmed their money laundering system to curb only people blacklisted by International agencies and as such could not stop the fraud based on money laundering clause.

The witness statement from Grant Thornton, together with their Investigation report, poses queries on the magnitude of the fraud that was being carried out on the Mobile money platform.


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