Kenya: Safaricom Spells Out Tough Measures for Dealers following fraud

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Safaricom has completely severed links with three dealers whose services it terminated this week over fraud, CEO Bob Collymore said. Surviving dealers will now wait longer to receive their commissions after Safaricom revised its payment method to ensure such payments are only after the mobile operator establishes that a newly-sold line is in the hands of an actual subscriber. "We will not work with thieves," Collymore told The Star. "I'd rather have fewer dealers than work with people who are stealing from us."

In the issue that broke out this week, Safaricom discovered a scheme where dealers were pre-activating lines by loading airtime and then claiming commissions on the basis that the lines had been sold to new subscribers.

Dealers buy a line for Sh100 from Safaricom and then receive a commission of Sh350 once the line is activated by a subscriber. Safaricom discovered the scam after an investigation to establish why rising numbers of subscribers did not show corresponding increase in revenues. "We were looking at the numbers and saying this should be good news but the revenue is not rising," Collymore said. "So we carried out an investigation." On Tuesday terminated three dealers (Phones U Like, Zertot and Telesoft) and suspended seven others.

As a result, the CEO admitted Safaricom's numbers could be inflated but it was too early to establish by how many subscribers. From now, Collymore said, Safaricom would only pay dealers commissions after establishing actual usage of a line. "We will not pay on activation."

The CEO left the door open for suspended dealers who he said should reconcile their books with Safaricom. Collymore said he intends to establish a heightened level of ethics and integrity at Safaricom both within his staff and with the company's business partners.