Safaricom defends cancellation of Lipisha service

Thursday November 26 2015

Safaricom Limited Chief Executive Officer Bob Collymore speaks during the release of the company’s full year results at Safaricom house in Nairobi on November 5, 2015.Safaricom has defended its decision to cancel service for two money transfer operators, saying they failed to adhere to the anti-money laundering law. PHOTO | SALATON NJAU | NATION MEDIA GROUP

Safaricom Limited Chief Executive Officer Bob Collymore speaks during the release of the company’s full year results at Safaricom house in Nairobi on November 5, 2015. Safaricom has defended its decision to cancel service for two money transfer operators, saying they failed to adhere to the anti-money laundering law. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

By MAUREEN KAKAH
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Safaricom has defended its decision to cancel service for one money transfer operator, saying it failed to adhere to the anti-money laundering law.

Responding to a suit in which it has been sued by Lipisha and Bitpesa for suspending Lipisha service, the mobile phone operator said since the latter had not obtained necessary authorisation from the Central Bank of Kenya’s money remittance regulations, it has been difficult to account for them.

“Safaricom has stringent reporting obligations of the Proceeds of Crime and Anti-Money Laundering Act, which it could not fulfil in view of Lipisha’s relationship with Bitpesa,” said Mr Isaac Kibere for Safaricom.

BIT COINS TRANSACTIONS

The company faults Bitpesa for not getting the nod from CBK to perform its bit coins transactions and being guilty of failing to disclose that its application in regard to the same issue was rejected.

However, the two firms denied that claims, saying the application being referred to relates to a totally different matter, and that Bitpesa had not withheld any information about its transactions.

The firms insisted that bitcoin transactions are unregulated.

“CBK would have taken action because it is the regulator. It is CBK, which told Bitpesa that bit coins is not regulated in Kenya but Safaricom insists that it produces a licence to that effect,” said Mr Kiragu Kimani for the firms.

Safaricom also denied breach of any rights while suspending the services and insisted that the suit is a commercial row, which should have been taken to a court that handles such matters and not a constitutional one.

The company claimed it had entered into an agreement with only Lipisha and was, therefore, entitled to take the measures it took to protect its business interests.

“A party which freely acknowledges that it has engaged in conduct prohibited by the law can have no standing before the law, a legitimate expectation cannot be derived from an unlawful act,” said Mr Kibere.

SAFARICOM BLAMED FOR ARBITRARY DECISION

But the firms instead blamed Safaricom for taking an arbitrary decision without prior notification and, therefore, violating their right to economic gain, fair administration and consumer rights.

The two companies offer a platform for businesses that enables them to collect, process and integrate payments from customers and clients using mobile money.

The firms sued Safaricom for compelling Lipisha, through alleged intimidation nearly a week ago, to cease offering the services with Bitpesa or face the risk of terminating its business.

High Court Judge Joseph Onguto on Tuesday said he would rule on whether to lift the suspension on December 14, but directed that the status quo is maintained.