Two directors of Kenya-based buy-now-pay-later firm Flexitech Group Limited have been arrested in connection with the alleged misappropriation of Sh31.2 million ($242,000) belonging to a leading retail chain.
The Directorate of Criminal Investigations (DCI) said Martin Kariuki Maina and Johnson Gituma Mwangi were arrested in Roysambu following investigations into a complaint filed by the retailer.
Flexitech had been acting as an agent for the retailer, collecting payments from customers who had purchased and collected goods from various branches.
According to the DCI, the company received Sh31,213,700.95 from customers for onward remittance to the retailer. Investigators allege that the funds were instead diverted for the personal use of the two directors, working with other suspects who remain at large.
The arrests were made by detectives from the DCI Nairobi Regional Office as they traced the funds and investigated the alleged involvement of other individuals.
Maina and Mwangi are being held ahead of their arraignment at the Milimani Law Courts, where they are expected to face charges of stealing by agent under Section 283(b) of the Penal Code.
Flexitech operates in Kenya’s consumer-financing market, providing buy-now-pay-later services that allow customers to acquire goods and pay for them over time. The sector includes other consumer-financing players such as Lipa Later, which shut down and Aspira. FlexPay is one of the innovative financial service products that has emerged from Kenya, the home of Africa’s first mobile money service, MPESA. FlexPay aims to bridge the affordability gap with practical and affordable financial services thus protecting customers from the dangers of debt.
The case puts a spotlight on the risks involved when consumer-financing companies and their agents handle large volumes of customer payments on behalf of merchants.
The DCI said investigations remain ongoing and detectives are pursuing other people believed to have been involved in the alleged diversion of the funds. The allegations have not been tested in court, and Maina and Mwangi are presumed innocent unless proven guilty.