How the business worked
The company is a wholesale distributor in Kisumu, Kenya. Its customers buy goods on account and pay later, by bank transfer or by mobile money. Paying a supplier by mobile money is normal in this market.
The scheme
Between October 2020 and July 2021, according to the prosecution, customers were told to pay into accounts that did not belong to the company. In the prosecutor’s words, customer payments were “allegedly redirected to bank and mobile money accounts … instead of the company’s official accounts.” These accounts were linked to two members of the accountant’s family. Wholesale goods were also diverted.
How it was hidden
The accountant used his access rights in the accounting system to create fictitious transactions, change company records and hide transactions. On paper, customer balances looked settled. In the bank, the cash was missing.
How it unravelled
- October 2020 – July 2021 — customer payments and goods are diverted, according to the prosecution.
- Audit — an audit report and a forensic examination of documents find KSh 113,227,529 unaccounted for.
- Trial — company staff, customers, bank officials, forensic examiners and investigators give evidence. The defence says the payments were “legitimate business arrangements”; the court rejects this.
- 24 October 2026 — a court in Kisumu convicts all three accused on all six counts.
- November 2026 — the court sentences all three to prison terms of up to 10 years, to run concurrently.
Why the controls failed
- No external confirmation of payment channels. Balances were checked internally, but customers were not asked where they paid.
- No segregation of duties in the order-to-cash cycle. One person could record, change and hide transactions.
- Weak access and change controls in the accounting system.
- Mobile money outside the main reconciliation. Till and paybill numbers were not reconciled with the same care as bank accounts.
- No stock-to-sales reconciliation strong enough to reveal diverted goods.
Suggested procedures and data to request
| Test | Data to request |
|---|---|
| Confirm the account, not just the balance | Customer master file; approved list of company bank accounts and mobile money till and paybill numbers; customer contact details from a source independent of finance |
| Match every receipt to an official account | Cash receipts journal; bank statements and mobile money statements obtained directly from the bank and provider |
| Review who can create, change and delete entries | User access and role matrix; system change log; manual journals; credit notes; write-off approvals |
| Goods out vs. sales | Warehouse dispatch records; stock movement report; sales ledger |
Interview questions
For finance and sales staff
- Which accounts and mobile money numbers do we give to customers? Who can change them?
- Has any customer ever asked to pay into a different account? What happened?
- Who can post a customer receipt? Who can change or reverse one?
- Who reviews manual adjustments and write-offs on customer accounts, and how often?
- How do we reconcile mobile money tills and paybill numbers? Who does it, and who checks it?
For customers (in writing)
- Into which account or mobile money number do you usually pay us?
- Has anyone from our company asked you to pay into a new or different account?
The lesson
Ask customers where they pay, not only how much they owe.
This case file is based on public reporting of the prosecution’s statement and the court’s decisions. Individuals and the company are referred to by role only. All three accused were convicted on all six counts and, in November 2026, sentenced to prison terms of up to 10 years, to run concurrently; they have 14 days to appeal. The US dollar amount is an estimate. Ledger entries and invoice numbers shown in the video are illustrative. Educational content only, not audit, legal or investment advice.