Betting firm MozzartBet has returned to court seeking to reverse the forfeiture of Sh302 million to the State after the money was declared proceeds of crime.
The firm says in a notice of appeal that it risks losing the millions of shillings meant for the purchase of a software in the upgrade of its betting business.
The company says it had paid Sh256 million, which was part of the money seized and forfeited to the State, to acquire a customised betting software.
Justice Esther Maina last month ruled that the money held in three bank accounts was part of a money-laundering scheme supported by payments through M-Pesa accounts and should be forfeited to the government.
This followed a petition from the Assets Recovery Agency (ARA), indicating that the money was not generated from gambling under MozzartBet, which operates in a sector that has recently come under increased scrutiny from the State.
The agency says that the unclear source and wiring of the cash to a web of accounts, including some owned by MozzartBet and to various companies associated with directors and shareholders of the betting firm point to a money-laundering scheme.
Now, MozzartBet is appealing and has asked for a suspension of the forfeiture, pending the determination of the appeal.
“Should its appeal succeed, the interested party (MozzartBet) will face serious, potentially insurmountable, hurdles recovering them, given, what is a matter of public notoriety, the process of recovering judgments against the government and its agencies,” the company said in the application.
“As a first instance court, which is not infallible and given that the interested party has a right to appeal, this court has got both the jurisdiction and in appropriate case, a duty to preserve the subject matter of such an appeal by granting such interim relief as may be appropriate.”
The ARA dismissed MozzartBet’s explanation that it paid the money to acquire from Kimaco Connections a software, which the latter subcontracted another firm — Open Skies Management Services —to deliver.
Peter Kiilu, the owner of Kimaco Connections, allegedly wired Sh242 million to Open Skies Management Services, which is owned by Zimbabwean Emmanuel Charumbira and a shareholder of Mozzartbet.
Court filings show that MozzartBet used its pay bill number 290059 to wire the millions through another pay bill number 311372 associated with Kimaco Connections.
The highest amount sent was Sh50 million in a single day while the lowest was Sh1.8 million. The ARA says that MozzartBet sent a total Sh256 million within five days to Kimaco Connections, flagging the funds as suspicious. The funds were later moved to an account at Co-operative Bank .
From the account, Mr Kiilu moved Sh150 million to a fixed deposit account and left a balance of Sh101 million.
Some of the money was also wired to Pescom and Power Energy in transfers that were marked by intra-accounts trading.
The agency says in court documents that the use of mobile money transfer services to transfer funds from MozzartBet and Kimaco Connections was adopted to circumvent or evade the reporting threshold and Central Bank of Kenya prudential guidelines requiring an account holder to declare the source of funds.
The ARA told the court that the monies were later distributed to various companies associated with directors and shareholders of the betting firm.
It says that investigations showed that shareholders of MozzartBet Kenya Ltd are Loncar Koviljka, a Serbian, Zimbabwean Charumbira and Musa Sirma, a former MP.
Mr Charumbira is a director of both MozzartBet Africa and Open Skies Connections, the firm that was allegedly sub-contracted to supply the software.
The betting firm maintains that the money was contributions from its shareholders and that it entered into a contract with Kimaco for the supply of IT software. The software was not supplied after the funds were frozen.
The money includes Sh251 million in an account at Diamond Trust Bank , Sh50 million at Cooperative Bank, and Sh2.4 million at NBCA Bank .
Justice Maina, had, however, dismissed the claim saying the money was sent to Open Skies long before the contract was signed and the money ended in the pockets of the directors of MozzartBet.
“The applicant (Assets Recovery Agency) has adduced evidence that proves that the 1st respondent (Kimaco Connections ltd) was a shell company incapable of even paying rent for the premises it occupied,” the Judge said.
The judge wondered why the betting firm would pay a third party to procure the software, from a sister company, unless the intention was to launder money.
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