Nigerians in court battle over shell firms and billions

Nehikhare Eghosasere — a RemX director — in an affidavit filed in a Hong Kong court, admitted to using falsified documents in moving billions of dollars from Kenyan banks to Citibank in a ploy to skirt strict anti-money laundering laws. 
RemX Ltd is owned by Mr Eghosasere and Demuren Olufemi Olukunmi. The two together with Olubunmi Akinbanjo Akinyemiju have registered money remittance companies in Kenya without Central Bank of Kenya licences, court filings show. 
Two separate cases filed in Nairobi and Hong Kong by Lae Technologies Hong Kong Ltd seeking payment of $88 million (Sh12.2 billion) for a banking software reveal a cross-continent operation that involved presenting fake agreements to banks, evading regulators dragnet. 

But what started as a dispute involving contract breach allegations has now shed light on the legal grey areas that the three Nigerians and their local contacts used for at least three years to trick Kenyan and American authorities into authorising the movement of at least Sh80 billion whose source may be questionable. 
The new court documents filed by Lae Technologies reveal new information that Kenyan authorities may have missed during the money laundering investigations leading to the withdrawal of the cases. 

Under the contract, RemX was to become Lae Technologies’ exclusive distributor in Kenya and Nigeria. The deal involved the distribution of software developed by the Hong Kong company. 
The software distribution rights were to be acquired through RemX Ltd, a Kenya-registered company, for $100 million (Sh13.8 billion).
 The contract was signed on November 14, 2020, and involved seven pieces of software that were to be distributed in Kenya and Nigeria.

Exclusive distributors

Through RemX Ltd, Nigerian nationals were to become exclusive distributors of the technology developed by the company. 
Nigerian national Eghosa Nehikhare signed the contract on behalf of RemX Ltd. Mr Nehikhare is a shareholder of Kenya-registered RemX Ltd, alongside his compatriot Kunmi Demuren. 
Seven days after the contract was signed, RemX Ltd wired $12 million (Sh1.66 billion) from one of its Equity Bank accounts to another operated by Lae Technologies in Hong Kong. 

RemX Ltd was to pay the $88 million (Sh12.2 billion) balance by January 23, 2021. But no further payments have been made to date, prompting Lae Technologies to file a breach of contract claim in the Hong Kong High Court. 
Under the contract, the Hong Kong courts were to handle any disputes arising from the alleged breach. 
The court documents reveal a complex scheme through which RemX and other registered firms could have moved billions without being detected by banks and the CBK. 

“One dummy agreement alone may not suffice, and banks may raise questions regarding a documented relationship between the sender and the recipient of funds. In this case, since funds had to be transferred to Legacy Trust NS instead of LAE directly, a dummy agreement between RemX and Lae may not suffice, because that does not show the relationship between RemX and Legacy Trust NA, the recipient of funds,” Mr Eghosasere said in an affidavit explaining how the company moved funds cross border. 
The companies – RemX Capital Ltd, Pumicells Ltd, OIT Africa Ltd, Flutterwave Payment Technologies Ltd, Multigate Ltd, RemX Investment Partners Ltd, Avalon Offshore Logistics Ltd and Kandon Technologies Ltd – present financial institutions with non-existent contracts to justify the exchange of massive amounts of money. 

In some instances, the money is held by the companies in trust for other individuals looking to move large amounts of funds offshore without triggering regulatory alarm bells. 

Under Kenyan law, any transfer of funds above Sh1 million done via financial institutions must be justified with a detailed description of the sources of the funds and the purpose of the transfer, a requirement that involved the provision of contracts or other written documents like invoices as evidence. 
Financial institutions are regulated by the Central Bank of Kenya and the Financial Reporting Centre, which also monitor the suspicious movement of funds. 

To beat the requirement, companies under the RemX network allegedly use contracts to show that they have provided services to each other, justifying the need to exchange billions.  Some of the funds are then used to finance the purchase of cryptocurrency. 
Cryptocurrency trade is largely anonymous, making it difficult for authorities to track or monitor the movement of large sums of money.

Such loopholes have opened the door for money laundering, reports by several finance experts including the CBK indicate. 

Documents in cases filed by the Assets Recovery Agency seeking forfeiture of billions showed that some of the agreements used to move funds involved tour companies. The cases have since been withdrawn by investigators.

There is, so far, no evidence to show that the tour companies actually provided any services to any of the fintech firms that were under investigation last year. The tour companies do not have local operations as well. 

WhatsApp conversations

While seeking to pay the Sh1.2 billion downpayment, RemX Ltd Director Eghosasere Nehikhare was engaged in WhatsApp conversations with Lae Technologies, part of which has been filed in court. 

 “Okay-Is there anyway (sic) we have a “dummy agreement” with the trust (through which Lae Technologies would receive funds)? Because Citibank will always ask for documented relationship between sender and beneficiary. I’m more concerned about ensuring we have the right documents in place to answer any question that Citibank will have,” Mr Nehikhare posed in a WhatsApp group chat on October 9, 2020.

The arrangement would include having multiple fake agreements to dupe banks into thinking that the two companies involved in the transaction had a long-term business relationship. 

“Equity Bank is the sending bank. Citibank is the corresponding bank. And they [Citibank] always give the sending (and receiving banks) “headache”. If we have some sort of dummy agreement with the trust,” Mr Nehikhare said in the chats. 

“…Just to present to Citibank (whenever they ask questions) that will be great… I’m happy with this option but just want to put measures in place to ensure it’s sustainable and doesn’t become problematic down the line when Citibank starts asking questions. They would usually come to ask questions in 1-2 years after the transaction lol. They are such an annoying bank.”

However, Lae Technologies raised concerns about the nature of the transactions, asking the fintech to comply with all regulations to avoid legal issues.

Mr Nehikhare has since admitted in an affidavit filed in a Hong Kong court that the WhatsApp chats are legitimate correspondence between officials representing RemX and Lae Technologies.

In their schemes, Citibank was the correspondent bank in the US while the payments were being processed from Equity Bank, Kenya, where the firms had accounts.

The court papers also show that Mr Nehikhare made trips to Nairobi in 2020 to meet Equity Bank and GTB officials, around the same time RemX moved outsize amounts of money into and out of Kenya. 

On March 7, 2023, Lae Technologies filed a suit in the Milimani High Court, Kenya seeking orders to freeze 59 bank accounts that RemX and its affiliate companies hold in local bank accounts.

In its application, Lae Technologies says that in the alternative, RemX and its affiliates should deposit the demanded Sh12.2 billion in a joint interest-earning account pending the determination of the case.

In its application, Lae Technologies says that in the alternative, RemX and its affiliates should deposit the demanded Sh12.2 billion in a joint interest-earning account pending the determination of the case.

Lae has sued RemX Ltd, and listed eight affiliates of the Nigerian-owned firm as interested parties. They are RemX Capital Ltd, Pumicells Ltd, OIT Africa Ltd, Flutterwave Payment Technologies Ltd, Multigate Ltd, RemX Investment Partners Ltd, Avalon Offshore Logistics Ltd and Kandon Technologies Ltd. 

Other interested parties in the suit are Equity Bank, United Bank of Africa (UBA), Guarantee Trust Bank (GTB), Ecobank Kenya Ltd and Binance Kenya Ltd. 

The four banks have been listed on account of money deposits they hold on behalf of companies in the case. 
Binance Kenya Ltd, a crypto-currency dealer, has been listed because companies in the scheme have accounts with it. 
Lae Technologies wants all funds that companies affiliated with RemX hold with the various financial institutions frozen pending the determination of the case. 
The Hong Kong-registered company is confident that RemX and its affiliates have much more than the claimed Sh12 billion in the identified bank accounts.
Lae Technologies has filed several documents in the Nairobi suit, including pleadings in the Hong Kong case and mobile phone correspondence that implicates the Nigerians in suspicious inter-trading between related companies in a bid to beat strict banking laws. 

Last year, the High Court in Nairobi froze 62 bank accounts operated by RemX and other Nigerian Fintechs including Flutterwave following an application by the Assets Recovery Agency (ARA) which was investigating the Nigerian-owned firms for alleged money laundering. 
At the time, ARA claimed the funds could be proceeds of credit and debit card fraud being laundered through Kenya-registered companies and banks.  The accounts were unfrozen in February 2023 after  ARA asked the High Court to allow it to investigate the money laundering claims.
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