Ecobank Kenya lost millions of dollars between 2020 and 2022 due to weaknesses in its card operations,which an internal report has revealed. The report, commissioned by a task force in 2023, uncovered critical lapses that left frauds to be committed by both employees and merchants.
These flaws went undetected for two years, raising concerns about the bank’s oversight and technology systems.
According to the report, $43.4 million (KES5.6 billion) was erroneously posted in the bank’s system, while payment service providers like Mastercard rejected transactions worth $162,346. The bank also failed to recover $232,464 in chargebacks.
“There was disregard for procedures in the merchant’s operation of acquiring product GLs (general ledger). Many manual entries posted therein were unprocedural and some erroneous,” the report said.
The investigation found a residual balance of $2.1 million left unsubstantiated in the bank’s general ledger. This figure raised concerns over the nature of the funds and whether they were connected to fraud. The initial balance was $15 million as of July 2022.
The report also exposed major flaws in Ecobank’s internal controls. The maker-checker process, which prevents unauthorized transactions, was weak. The bank’s chargeback monitoring process also failed, allowing discrepancies and possible losses.
The card operations team had a history of failing to upload transaction source documents, worsening the situation. Between July and December 2021, the daily merchant general ledger carried a debit of $34.8 million (KES4.5 billion), with no matching credits.
Errors were not just frequent, but often duplicated. Eleven entries, totaling $16.2 million (KES2.1 billion), were entered twice. These omissions made it nearly impossible to calculate the amounts payable to merchants or to track funds.
Transaction delays further complicated the bank’s reconciliation efforts. For instance, transactions worth $11.6 million (KES1.5 billion) made in March to May 2022 were only uploaded in late June and early July.
Ecobank Kenya did not immediately respond to requests for comment.
