A Federal High Court in Abuja has turned down a request by the Inspector General of Police (IGP) to force around twelve banks and financial institutions to reverse billions of naira allegedly taken from a Flutterwave account at Wema Bank….READ FULL ARTICLE...READ THE FULL ARTICLE HERE ▶▶
The funds were reportedly withdrawn after a system glitch on October 12 and 13, 2023.
The IGP’s legal team filed an ex parte motion (meaning it was done without notifying the other parties involved) on July 17, 2024, under case number FHC/ABJ/CS/1015/24.
They claimed that about 244 people had illegally withdrawn billions from Flutterwave’s account and moved the money into various bank accounts belonging to people who are either hard to trace or completely untraceable.
However, the court rejected this request, stating that the banks involved needed to be heard first.
“Should I order them [the banks] to reverse the funds without hearing their side of the story, based on your one-sided account? If I grant the reversal, what is left of this case? You did not file a motion on notice. Once I reverse it, that is the end of the matter,” citing the necessity of a fair hearing, particularly from the banks involved,” Justice Lifu said.
The court also noted that the IGP had failed to file a motion on notice, which would have given the banks a chance to respond.
The Flutterwave Glitch Incident
Earlier in the year, reports suggested that Flutterwave lost N11 billion due to a security breach, according to an article from Tech Cabal.
Flutterwave, however, stated that while there was an incident, the breach was ultimately unsuccessful. The company detected unusual activity on one of its platforms, affecting only a small group of customers, and immediately notified law enforcement.
They provided details, including IP addresses, to help identify the offenders. Flutterwave also claimed to have blocked the attempted intrusion.
Despite these efforts, court documents revealed that Flutterwave sought police help to recover the stolen funds.
The police’s initial investigation showed that fraudulent transactions were carried out using Flutterwave’s POS terminals on October 12 and 13, 2023.
Flutterwave requested that Wema Bank freeze its settlement account, where large sums were moved into various individual accounts.
According to data from the Nigeria Inter-Bank Settlement System (NIBSS), 9,633 erroneous transactions were conducted on the Flutterwave POS platform during the system glitch, involving 814 Flutterwave POS agents.
Flutterwave was exposed to a potential loss of N21.2 billion. However, through working with banks, the company managed to freeze accounts and preserve N7.2 billion.
The IGP’s office reported that some of the POS agents involved in the fraudulent activities had been arrested.
Court’s Focus on Fair Hearing
During the court hearing, the IGP’s lawyer, Victor Okoye, asked Justice Peter Lifu to approve the ex parte motion and order the banks to reverse the funds to Flutterwave.
However, Justice Lifu questioned the fairness of approving the request without hearing from the banks. He stressed the importance of following the constitutional right to fair hearing.
“If I reverse the funds, what’s left of the case? You didn’t file a motion on notice. Once I reverse it, the case is over,” the judge said, emphasizing the need to give the banks a chance to respond.
Okoye argued that the defendants were hard to trace, but the judge insisted that the banks should have been informed and given the chance to respond, as they are the ones responsible for reversing the funds.
In the end, the judge denied the ex parte motion, calling it a violation of Section 36 of the 1999 Constitution, which guarantees the right to a fair hearing.
Lawyers’ Opinions
Barrister Michael Okejimi, speaking to Nairametrics, explained that while judges can decide whether or not to hear the other party before granting an ex parte motion, fair hearing is a fundamental right.
He noted that there are exceptions where notifying the other party could cause serious harm, but in general, everyone deserves a chance to be heard.
Another lawyer, Barrister Opeyemi Owolabi, also told Nairametrics that submitting an ex parte motion without a motion on notice suggests that the case is still in the early stages.
He explained that ex parte motions are usually filed to allow security agencies or applicants to investigate accounts before funds can be withdrawn.
However, he agreed that motions on notice and the right to fair hearing are strong reasons for the court to refuse an ex parte motion.
Fraud in Fintech and Banking
Flutterwave isn’t the only company dealing with fraud. In 2022, MTN, Africa’s largest mobile network provider, lost N10.5 billion to cybercriminals.
A report from the Financial Institutions Training Centre (FITC) also showed that Nigerian banks lost N2.09 billion to fraud in the fourth quarter of 2023, with mobile channels being the main method used by fraudsters….READ FULL ARTICLE
