Airtel, Standard Bank fined over K100 million after fraudsters steal customer’s money

Standard Bank of Malawi

Airtel Malawi and Standard Bank have been ordered to pay over K100 million to a customer whose K24 million was stolen from a Standard Bank account following a swim swap conducted by Airtel Malawi.

Judge KT Manda delivered the ruling yesterday following a complaint from Billy Milimbo, who operates a construction company called DBM Construction.

According to a court ruling, on October 13, 2019, Milimbo left three cheques at Standard Bank with instruction and authorization for the bank to cash cheques. He then left for South Africa. He later messaged a bank official that all transactions had to be put on hold until his return.

Around the same, an employee at Airtel gave Milimbo’s details to a fraudster who managed to replace Milimbo’s sim card in a process known as sim swap.

The fraudster, who also had Milimbo’s cheques, then signed on the cheques and went to Standard Bank Blantyre Branch to cash two cheques for the amounts of K14.2 million and K9.8 million. Apart from signatures and IDs, one of the ways the bank verified the cheques was by calling the number that was being controlled by the fraudster.

After his return, Milimbo reported the matter to police and this led to the arrest of Hope Scott, a former employee for a company contracted to manage Airtel’s call centre. Scott revealed that he was paid K400,000 to facilitate the swim swap for Milimbo’s card. Scott worked with an employee of the contractor in swapping the sim card.

Two tellers who handled the cheques at the bank also provided evidence in court and one of the tellers admitted that the signatures on the cheques were not consistent with the samples which were in the bank’s system. However, she said the signatures were similar.

Milimbo told the court that the bank refused to refund his money after the fraud but since the money was for an EU project his company was conducting in 19 districts, is company lost K71.9 in remobilization and demobilization from the sites.

Judge Manda in his analysis noted that the two cheques bore forgeries and Standard Bank did not have mandate to pay out the two cheques as per the law.

He added that Milimbo was robbed of the money after Airtel shared his details with fraudsters but the bank can also not escape liability when they pay out forged cheques since other banks have put in systems to alert them.  He gave the example of FDH Bank which blocked Milimbo’s accounts after the swim swap and advised him to physically go to the bank.

“I believe that banks are duty bound to put in place systems which will curb this fraud.  This is more so considering that, in terms of the law, money drawn on a forged cheque does not belong to the customer but to the bank.

“Besides a system that alerts banks whenever there is a sim swap, it is also imperative for banks to introduce a two step process for verification of cheques where the bank should not only be asking a client to confirm a cheque but also to provide either a pin code or password,” said Manda.

He then entered judgment against Airtel and Standard Bank for the sum of K98.9 million plus interest.

Milimbo will be refunded K24 million with Airtel and Standard Bank paying half of the amount each. Airtel will pay K6 million for breaching statutory duty towards Milimbo while Standard Bank will pay K71.9 million as demobilization and remobilization costs incurred by Milimbo when the bank refused to pay back the K24 million.