Crooked Cops Stung Using Data From “Africa’s Venmo”

M-Pesa mobile payments data uncovers millions of dollars in bribes
May 27, 2016 at 3:50 PM ET

Kenya’s police force is scrambling to cover their digital tracks as a corruption scandal unfolds in the world of M-Pesa, Africa’s first massive mobile payments platform.

In a nutshell, a large number of junior traffic police did what millennials do in any hyper-connected society—they transferred money using their phones via Africa’s equivalent of Venmo. But, the money they transferred was ill-gotten bribe money extracted from bus drivers, and flowed upwards through M-Pesa to senior officers. Now that the records are being scrutinized, it’s all coming out in a massive investigation, the first of its kind in Kenya.

Following the firing of 63 officers in October, another wave of 238 policemen has been implicated in a bribery sting that’s being unpicked using mobile phone records. The investigations, which are being led by the country’s National Police Service Commission, are focusing on how money from those low-level bribes trickled up the chain of command, bringing to light the funding of mistresses, and other improprieties including involvement in drug trafficking.

At the top sit several police commanders in senior positions, including one who managed to amass a fortune of 50 million Kenyan shillings, or around $500,000, on a salary of just over USD $7,000 a year. Chief Inspector Abubakar Bakari claimed it was from a family chicken-farming operation. Another high-ranking officer, Sergeant Boniface Kyalo Muthini, had nearly 100 million shillings worth of transactions uncovered, which he claims are all work payments and a loan, but which were conducted over M-Pesa for convenience purposes.

M-Pesa was a mobile banking sensation when it was launched in 2007, turning Kenyan mobile operator Safaricom into Kenya’s biggest banking institution almost overnight. It predated the likes of Venmo by several years, and enabled users with even low-grade mobile phones to send and receive money using their mobile phone accounts without having to visit a bank. In the first nine months of 2013, the most recent data available, more than $6.7billion was transferred using M-Pesa. Just last week, its founders were announced to have won Africa’s Financial Medal of Honor for their contributions to the field of mobile payment innovation.

M-Pesa revolutionized a society dominated by cash and with a substantial informal (read: shady, untaxed) economy. The massive adoption rate of M-Pesa meant that a huge chunk of Kenya’s financial exchanges were suddenly formalized and documented. But the ubiquity of M-Pesa also meant that informal transactions, including the bribes that lubricate and corrupt many aspects of Kenyan daily life, could also be tracked, potentially shedding light on illegal money flows that have been able to go largely unreported despite common knowledge of its existence.

Kenya ranked within the bottom 15th percentile on Transparency International’s most recent Corruption Perceptions Index. Another recent report from the global NGO showed that while levels of bribery have improved since 2010, as much as 93 percent of individuals chose not to report bribes conducted by either government officials conducting business or providing a service. In 2014, 58 percent of the Kenyan population surveyed stated they did not feel the government was doing enough to fight corruption, the highest percentage recorded since 2010. Bribery by police officers, in particular, was found to be on the rise.

Panic broke out in November when police in the coastal city of Mombasa found out that their M-Pesa records and the records of their spouses and children were to be investigated. “If they do that, we will be caught,” one officer told the Kenyan newspaper The Daily Nation, admitting to how junior officers regularly collected bribes to send to their bosses through the service.