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Take a flutter on the African tech ecosystem: The Flutterwave debacle

Flutterwave debacle: Take a flutter on the African tech ecosystem - Startup Lagos

Flutterwave: Troubled waters

The African tech ecosystem has been awash with news of all kinds: the good, the bad, and the downright ugly in recent times. Flutterwave has topped the trends list.

There have been allegations and counter-allegations, and interjections from different stakeholders in what is the world’s fastest-growing tech ecosystem at the moment. Maxime Bayen and Max Cuvellier, both put this growth in perspective when they track over $1.8 billion that has come into the ecosystem within the first quarter of this year — a remarkable growth of over 2.5x from last year’s first quarter. Even in the wake of this growth, and the flurry of raises across the ecosystem, the virtual corridors of social media platforms have not been spared the most grotesque of violent clashes, by different groups of the aggrieved, the concerned, and the guilty.

This chain of events had been set in motion by Techcabal’s expose of the tyrannical workplace culture of Bento Africa, and the chief protagonist of the entire plot, Ebun, CEO and Co-founder of the Nigerian payroll startup. Twitter was agog with insights and perspectives on the #HoribbleBosses trend that captured the entire cynosure of attention of Africa’s tech arena. While the cauldron was still boiling away, Clara Wanjiku, an ex-employee of Flutterwave, one of, if not arguably, Africa’s biggest and brightest startup, published a damning Medium piece and a series of tweets on the excesses of her former boss and the Flutterwave CEO, Olugbenga (GB) Agboola. In what she describes as ‘5 years of constant harassment,’ Clara implicates the CEO in explosive accusations of harassment, belittlement, and calumny.

Reeling from this barrage of issues, the tech ecosystem was only just starting to recover its balance, and like the prodigal son, set off anew on a more righteous path. However, David and his lethal stone were not to let Goliath take a rest. In a well-researched and deeply revealing investigation, David Hundeyin, self-touted as the purveyor of words, uncovered an intricate web of allegations of “insider trading, fraud and perjury” occurring at Flutterwave over a period of four years. Olugbenga Agboola was further implicated in cases of sexual harassment and impersonation.

Responding to the allegations

Before Hundeyin’s explosive piece, Agboola and some key members of Flutterwave had granted an interview to Getrevue. In the interview, just hours before Clara Wanjiku’s medium article, GB had explained:

You know when it rains, it pours. It was a rollercoaster of multiple things at the same time. An ex-employee who led one of our country expansions sued us for negligence and emotional trauma for not removing their name as the contact person in the country. So anytime there was a merchant enquiry, they were called. They said this was emotional harassment. We tried to resolve this amicably, but it was impossible. They asked for $900,000 to quash the lawsuit. We refused because we didn’t believe $900,000 in damages represented the cost of the alleged negligence. They proceeded with the lawsuit, and the judge awarded them an equivalent of $2,500 for damages. When it was time to cut the check, they declined it and said they’d appeal. 

In the wake of the Hundeyin expose, nonetheless, Flutterwave had released a statement to TechCabal, saying that:

The blog post in question is based on recycled and previously addressed claims and several others that are false. As part of our commitment to operating an ethically responsible company in compliance with all applicable laws, we take all claims of this nature seriously and are conducting a thorough review. We will take action as and when appropriate. This enables us to maintain the highest workplace standards and remains focused on our mission to create financial possibilities for companies and consumers across Africa.

Following the publication of the allegations, Iyinoluwa Aboyeji, former CEO of the heavyweight fintech, who had been singled out in the article as a ‘corporate front’ for GB, responded with a barrage of tweets, defending his integrity and claiming that the allegations were malicious and false. In a later article with TechCabal, however, he corroborated some of the allegations made by the article in question, especially with regards to the fictitious Co-Founder and CTO, ‘Greg’ character, which had earned the Voldermort sobriquet, He who must not be named. However, onlookers were yet intent on a response from the man implicated at the center of all the chaos.

CEO and Co-Founder of Flutterwave, Olugbenga Agboola has been the butt of heavy allegations concerning conflict of interest, insider trading and deception in what has proven to be a major shake-off for the African tech ecosystem.
CEO and Co-Founder of Flutterwave, Olugbenga Agboola has been the butt of heavy allegations concerning conflict of interest, insider trading, and deception in what has proven to be a major shake-off for the African tech ecosystem.

In a mail to employees, on the night of 19th April 2022, finally, GB responded to various claims in the West Africa Weekly article. Firstly, he starts by saying,

The fact that the allegations of financial impropriety, conflict of interest and sexual harassment have been proved false or have already been reported, investigated and addressed by management matters less to me than the reality that these claims may have shaken your confidence in the company. 

As founder and CEO, it is my responsibility to address the concerns you may have, and this will be a priority for me moving forward.”

Responding further to allegations of how the company was founded, GB pointed out that those allegations were untrue. He also mentioned that on insider trading indictments, he had created an investment vehicle that dealt with share prices sold below the company’s valuation to employees with stock options. He stated categorically that all legal processes and procedures were followed, in the approval of the sale of shares. Furthermore, on the issue of the SEC hearing, GB corroborated the account of Iyin of visiting the SEC in 2017 for an inquiry with which Flutterwave was in full compliance. He disclosed that the SEC visit was with regards to having some unaccredited investors under U.S. law and not on insider trading investigations as Hundeyin’s article had alleged.

Concerning sexual harassment allegations as well, the CEO of Flutterwave went on to disclose that previous investigations on sexual misconduct had been made, of which he had been cleared, and that these had birthed the We Hear You and whistleblowing policies within the company presently.

In spite of these responses, GB failed to address the allegations regarding deception and false pretense raised, concerning a ‘fictitious’ character, Greg, who had been allocated shares, and of which Iyin had acceded in his early interview with TechCabal. Allegations also concerning conflict of interest that implicated Banwo & Ighodalo (B&I) were not addressed by either Flutterwave or the popular law firm.

Stakeholders weigh in

This is, under the heat of opinions, counter opinions, and comments from various stakeholders in the African tech space. Investors have not hesitated to highlight the urgency of the matter, with Eghosa Omoigui, Founder and Managing General Partner of Investment Firm, EchoVC, highlighting that the market in Africa needs a wake-up call. As he continues,

All ecosystems go through this but we need to be aware when behaviors start to be corrosive. Mission, culture, integrity, ethics, [and] team building are all elements of great companies and founders.

Showing concern and outrage, social media has been agog as well with responses from various parties weighing in on the matter. For some, this would only invite a ‘dark cloud’ on valuations and tech, within the African ecosystem. For others yet, this was only a passing moment–a Travis Kalanick moment, that would only allow an Uber to learn and grow from the mistakes of her chief protagonist–rather than a Theranos moment.

Ethics and culture: Curbing rogue behavior in Africa

However, even as the African tech ecosystem is jolted heavily by all the news of these scandals that have filled the air in recent times, foremost, being the Flutterwave imbroglio, it is apposite to note that this is not new to business ecosystems. The history of corporate misdemeanors has often proven that Founders, in a clamor to meet their responsibilities to shareholders, are often pressured to take irrational decisions and cut corners to push their companies forward.

The case of Adoboli, one of the traders in UBS, who had engaged in reckless trading and exposed his organization to staggering losses of over $2.3 billion is a case in point. Adoboli later had to speak extensively about the deceptive effects of pressure on managers to take irrational and unethical choices. In Nigeria and in Africa, it is easy to see how the undue pressure of faking it till one makes it, places managers and startup founders on dangerous pedestals. In the hurry toward the next raise, these founders are willing to do anything possible, to get their startups up the ladder of growth. And so, in the wake of their startup’s growth comes a long trail of bad managerial decisions.

Yes. Some would argue that these decisions or choices were crucial to taking the company to where it was at the moment. Or like Adoboli, argue strongly for the case that he was making money for the bank, even while unethically engaging in reckless trading. However, these successes are only short-lived. This is because they are not long-lasting and sustainable. As Romain Diaz, Founder and CEO at Satgana, shares during our Q1 Startup Growth Series webinar with Inqumax Incubator,

We are at a very interesting time in the history of business. There used to be a trade-off between being profitable and doing the right thing or being impactful – there are more and more examples of companies doing the right thing and are profitable as well.

Consequently, the myth, especially in harsh economic environments like Nigeria’s, that one cannot do profitable business without engaging in unethical activities is dangerous. What this does is perpetuate a vicious circle of evil, through illogical justifications of wrongdoing. While standing on the ethical pathway can be tough and difficult in many African countries, where Founders and Business Managers are struggling with many a demon of failure, unethical actions will only invite disaster.

Also, recent events have only shown that investors and stakeholders must be cautious of the euphoria of tech innovation, without the more grounding edge of environmental, social, and governance (ESG) consciousness. Over the years, businesses, startups, and yes, even unicorns have fallen like Lucifer from the skies, and some have dragged a third of other associated companies in their wake. It is important for the African tech ecosystem that the lessons from corporate scandals are learned. These pieces of scandal are useful for correction, as well as, for growth. In Hegelian lingo, it is understood that the dialectics of growth is about conflict: a thesis meets its antithesis, to birth a synthesis–a new thesis. From these issues, Flutterwave charts a course forward.

Flutterwave going forward

The company appears to have decided that it will go on its growth trajectory with GB still at its helm of affairs. However, changes have been fixed to assist the company with communicating more transparently on key issues. There are also hinted improvements on HR policies, with input from audit and advisory firms, to ensure inclusive workplace experiences for all staff, particularly female employees.

In spite of all these, there are still persisting concerns in the minds of people, as Flutterwave stands its ground in dismissing the allegations in Hundeyin’s article. While the company may have offered some response to what had been a week-long of suspense in the wake of the revelations, it has not done much, as yet, to assuage the doubts that a lot of ecosystem stakeholders have about what had transpired.

As GB ends his mail to the employees,

I’ll end by saying that when we started the company in 2016, our mission was to simplify payments for endless possibilities for businesses, consumers, and especially our customers. That remains our mission, of which all of you are a crucial part in making a reality.

I will always put Flutterwave first. And Flutterwave is all of you. Like I always say our people are the secret sauce of Flutterwave and I mean that.

…Thank you for reminding me that to whom much is given, much is required. I will live up to your expectations of me.

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