Kenyan government to investigate Postapay fraud

Efforts by the Postal Corporation of Kenya to embrace technology have hit a snag, with the government sending forensic auditors to probe the integrity of its electronic money transfer service, Postapay, following reports of millions of shillings lost to fraudsters.

At the center of controversy is an agreement between the Postal Corporation and Afripayments, which allows the public to send money using Postapay and withdraw funds from any post office.

The partnership, as crafted, had left the software supplier with undue control over Postapay operations, exposing the Postal Corporation to heavy revenue losses, said Bitange Ndemo, permanent secretary in the Kenyan Ministry of Information and Communications.

The agreement stipulates that the Postal Corporation is entitled to 20 per cent of profits, while Afripayments receives 80 per cent.

Postapay was launched in 2006 and has since been exposed to fraudsters. Gaining access to the electronic money transfer system, these fraudsters make it appear as if money has been sent when it has not been, enabling them to withdraw funds and causing losses to the corporation.

The government wants the forensic auditors to determine why the volume of business handled by Postapay has decreased from 600 million Kenyan shillings (US$8.6 million) per month in 2006 to 400 million shillings this year.

The auditors are also expected to establish ways in which the agreement is compromising accountability and transparency in the state-owned Postal Corporation.