Olugbenga Agboola claims that he is a Nigerian and was born in Lagos State in 1985. The tech community refers to him more commonly as GB. GB is a veteran businessperson. In 2016, GB founded Flutterwave alongside Iyinoluwa Aboyeji. When his partner stepped down to concentrate on helping other entrepreneurs establish their enterprises and giving back to the community as a whole, he took over as the CEO of Flutterwave, which is known as an organization dedicated to creating businesses in emerging economies.
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The CEO of Flutterwave is being investigated for possible financial malfeasance.
Flutterwave, the most valued startup in Africa, is under fire for what are allegedly questionable commercial and private activities by Olugbenga Agboola, the company’s founder and CEO.
According to a story written by Nigerian journalist David Hundeyin and posted on April 12 on West Africa Weekly, a Substack newsletter, Olugbenga Agboola is accused of creating a fictitious “co-founder” identity to give himself more shares in the company’s early years and of offering shares at prices below the company’s valuation to employees who wanted to exercise their vested options. According to the narrative, these employee stock transactions moved to an investment vehicle under Agboola’s supervision.
Other accusations against him include failing to tell Access Bank, his previous employer, that he was concurrently constructing Flutterwave and working for them, unfairly taking advantage of his position and assets at the bank. At Flutterwave, there were rumors of sexual interactions with female staff members in lower positions.
When Quartz hears back from Flutterwave with an official statement, it will revise the report appropriately.
Agboola and Flutterwave: what is known about them?
The $3 billion valuation of Flutterwave, a pioneer in the Nigerian online payments market, and Agboola’s age of 37 make him one of the most well-known businesspeople in Africa.
Although he tends to stay quiet and offers few interviews to the media, he is included in several that aim to highlight African achievements, such as Quartz Africa’s 2019 innovators and lists by Fortune (2020) and TIME (2021).
Agboola’s popularity has grown over the past year beyond his role as CEO of Flutterwave as a result of a personal investment binge in other African entrepreneurs. After yesterday’s West Africa Weekly article went live, he won the “Tech Investor of the Year” award from Business Insider.
Additionally, Flutterwave entered the corporate investment space by co-leading a $3.4 million deal for the UK-based fintech Dapio. The $250 million that the company raised in February will go toward investments and persistent marketing.
The wings of Flutterwave start to develop flaws.
But over the past week, suspicions about Olugbenga Agboola and Flutterwave have grown after a former worker, Clara Wanjiku Odero, accused them of bullying and incompetence that resulted in fraud. Despite Flutterwave’s denial, Odero, who is currently the CEO of the Softbank-backed Kenyan fintech Credrails, did not respond to Quartz’s requests for comment.
She may have been inspired to write about her experiences at the company by a piece that seemed to portray her negatively while extolling Flutterwave’s unicorn voyage. Interviews with the company’s leadership, including Olugbenga Agboola, conducted this year during a retreat in Ghana served as the basis for the story.
In the wake of this week’s exposé, the business is now under public scrutiny for several matters, including a rumored ethics inquiry by the US Securities and Exchange Commission in 2018 (Flutterwave is incorporated in Delaware and has its headquarters in California). The SEC cited privacy laws as their justification for neither confirming nor denying the probe. The former co-founder of Flutterwave, Iyinoluwa Aboyeji, acknowledged the existence of one but disagreed with the journalist’s assessment.
The majority of observers are once again outraged by Nigerian companies’ terrible workplace cultures and corporate dysfunction.
Some worry that the foreign investors who are pouring hot money into businesses in Africa might be alarmed. If Flutterwave answers the accusations, what happens next might be a dance between damage control and course correction by interested parties, or it might be a vindication for Flutterwave and the ecosystem.
Or, as Matt Flannery, the co-founder of Branch, the loan app that operates in Nigeria and Kenya, expects, further revelations that amplify already-sparked shockwaves.
Examining Olugbenga Agboola’s two most significant accusations
Olugbenga Agboola, “GB”, the CEO and founder of one of Africa’s unicorn companies, Flutterwave, has been accused of fraud, insider trading, sexual harassment, and several other things in the previous 48 hours.
Investigative/freelance Journalist David Hundeyin released the most recent issue of his newsletter, the West Africa Weekly, on Tuesday, April 12, 2022. He crafts a tale in it using screenshots of emails, Slack communications, WhatsApp conversations, and official-looking documents, but it has left more questions unanswered than it has brought up.
Does forced stock option sales by employees count as insider trading?
Employee stock options were compelled to be sold, claims Hundeyin, to an alleged Olugbenga Agboola, investment vehicle.
According to Hundeyin’s report, they engaged in insider trading by selling their shares for less than the Olugbenga Agboola-determined market price.
But first, let’s talk about how employee stock options function.
How do stock options for employees operate?
An employee may get compensation in the form of employee stock options (ESOs) from their employer. This potentially offers them access to company shares at a defined price. However, the stock must have been vested before they can obtain those shares.
Simply put, vesting indicates that you can now exercise or purchase business shares. If the contract specifies a four-year vesting time, you won’t be able to completely exercise your stock option until four years have passed since the contract’s signing.
You may occasionally have access to the portion that has vested. I’ll give you an example. ESO is owned by Chike an XYZ firm. The contract stipulates that he must have been employed by the business for four years before exercising his option. He has access to 25% of the stock for the first year. If he chooses not to, he can access half of the ESO in the second year, and so on until the fourth year, when he can access 100%.
ESOs are only worthwhile if the company’s stock price increases above the agreed-upon price. Therefore, if Chike was told that the stock could be purchased at $3 when it rose, he could do so for $3 if it rose to $4.
Employees typically wait until liquidity events like an Initial Public Offer (IPO) or a merger, or if they’re impatient, they can find someone willing to acquire their stock option.
So, did insider trading occur?
According to an image Hundeyin posted, this employee appeared to have exercised his option to buy shares but then desired to sell them. The screenshot was dated February 28, 2021. They are given the option to sell at $3.4999, which they accept by rounding up to $3.5.
A hazy video purportedly from a potential Flutterwave investor detailing how he arrived at a probable share market price is also attached in the post. Shares would be worth $52 at Series D. Series B is $4.47 while Series C is $20.25.
What the SEC filings reveal
Using information from our archives, we can see that Flutterwave announced a Series B financing in January 2020, a Series C round in March 2021, and a Series D round in February 2022.
The date of the first sale for the Series C, when Flutterwave first started receiving money, was February 2021, two days before the employee’s sale, according to records with EDGAR (a US Securities and Exchange Commission company search portal). On March 12, 2021, the last filling was completed.
So let’s put this all together. In February, Flutterwave starts financing Series C. In February, the employee sells for $3.5 less than the possible $20. In March 2021, Flutterwave completes the Series C round of funding.
Who purchased those shares, then?
Although the following screenshot shows the employee speaking with Kayinsola Adepoju, the investor relations manager for Flutterwave, Hundeyin claims it was Olugbenga Agboola.
Techpoint Africa was informed by sources close to the situation that current shareholders, who were exercising their first right of refusal, purchased the stock, not Olugbenga Agboola.
According to the rules of the US Securities and Exchange Commission (SEC), might this be categorized as insider trading?
As a result of its incorporation in the US state of Delaware, Flutterwave is subject to US legal guidelines.
It is unlawful for anyone to cheat or deceive someone, including by misrepresenting material information regarding the sale or purchase of securities, per SEC Rule 10b-5, which addresses insider trading.
Essentially, any important information that could plausibly affect the share price or the decision of the individual wanting to buy or sell stock cannot be withheld by the company’s officers, directors, or insider personnel.
Does insider trading apply to privately held businesses?
The SEC v. Stiefel Laboratories Inc. case from 2011 seems to provide the answer.
GlaxoSmithKline purchased the family-owned private company Stiefel in 2009. However, the corporation misled stockholders of $110 million before the sale by concealing crucial facts regarding the valuation of the shares held by Stiefel workers and the sale of the business.
Due to this, the corporation was able to repurchase these shares at a deceptively low price, and the Securities Exchange Act of 1934’s Section 10(b) and Rule 10b-5 were both broken.
What then is true?
Fact 1: Insider trading is illegal when material information that could affect the sale of a security or the buyer’s or seller’s judgment is withheld.
Fact 2: Flutterwave as a private company can be investigated by the SEC for insider trading, following the Stiefel case.
Fact 3: Flutterwave began raising its Series C and filed its first sale on February 26, 2021, two days before the employee sold their shares at $3.5.
Fact 4: Flutterwave closed Series C and filed with the SEC on March 12, 2021, and share prices supposedly increased.
Whether the shares were sold to Olugbenga Agboola or the investors and if there was any compulsion are still up for debate. Can this be considered insider trading?
Verdict? The timing between the first raise’s filing date, the employee’s share sale agreement, and the day Flutterwave notified the SEC that the raising was complete is unquestionably damning.
We cannot, however, establish beyond a reasonable doubt that there was insider trading without access to further evidence, such as internal memos between the employee and Flutterwave, emails, and texts, which the SEC would have a legitimate right to. It would be necessary to thoroughly research this.
There is still some clarification needed regarding Hundeyin’s article, and it relates to Agboola’s employment at Access Bank.
Was any of this known to Access Bank?
Olugbenga Agboola worked at Access Bank from November 2014 to May 2016, according to his LinkedIn profile. Additionally, it states that he founded Flutterwave in May 2016 and that he became CEO in 2018.
However, according to Hundeyin, Agboola didn’t leave his position as Head of Digital Factory and Innovation at Access until 2018. In addition to not resigning, he used Access Bank resources to construct Flutterwave without disclosing this to his managers.
Olugbenga Agboola does not specify the day he left Access Bank in an interview with Big Tech This Week that was published on April 3, 2022, but he does state that he had started working on Flutterwave at a co-working space. The former CEO and Co-founder of Flutterwave, Adekoya, and Iyin Aboyeji, were then recruited.
Oddly, Olugbenga Agboola asserts that Aboyeji had left Andela. Aboyeji claimed in a tweet from April 13, 2022, that he was still employed by Andela as of May 2016, when Flutterwave was incorporated “by his hand.”
According to Hundeyin’s story, Olugbenga Agboola, Aboyeji, and Herbert Wigwe, the CEO of Access Bank, flew to the US for an SEC hearing in early 2018 and swore under oath that Agboola never simultaneously worked for Flutterwave and Access Bank.
Why would Wigwe take Agboola and Aboyeji to the US?
In a subsequent tweet on April 13, 2022, Aboyeji acknowledges that he did travel to the US for an SEC hearing, but says he did so on his own.
He clarifies in a subsequent tweet that the hearing was over in 2017, not 2018, as Hundeyin asserts.
On the other hand, Olugbenga Agboola asserts in the interview with Big Tech This Week that he traveled to the US with Wigwe when they were attempting to get Uber as a client. Even though he doesn’t provide a date, Uber joined Flutterwave in 2016.
However, there’s another side issue here with Flutterwave and the money that Access Bank is purportedly owed.
The letter was sent by Access Bank for what reason?
In a letter dated August 30, 2018, Access Bank asserts that Flutterwave owes the bank $530,000, according to Hundeyin’s story.
According to Hundeyin’s source ‘Ose’, Access Bank learned that Flutterwave had been paid for transactions but wasn’t providing the bank its part during an examination for the Access-Diamond merger in the third quarter of 2018.
This is a deal between Flutterwave and Access Bank, which Olugbenga Agboola refers to as their “first acquiring bank.” Additionally, he speaks of Wigwe’s assistance in attracting new customers who would later domicile their conventional businesses with the bank.
An acquiring bank makes it possible for a merchant to accept electronic payments.
Coincidentally, two months after Access Bank’s letter was sent, Aboyeji resigned.
What are the facts?
Fact 1: Olugbenga Agboola worked at Access Bank.
Fact 2: Wigwe traveled to San Francisco for several meetings.
Fact 3: Aboyeji says there was an SEC hearing that only he traveled for.
Fact 4: Flutterwave and Access Bank had a partnership that meant transactions would pass through the bank.
Fact 5: Wigwe knew that Olugbenga Agboola was at Flutterwave.
Fact 6: There was a Flutterwave-related SEC hearing
Who is lying, then? Why did the SEC hold a hearing? Does Wigwe’s knowledge imply that the Access Bank board was aware?
Verdict? According to the information we have, Wigwe undoubtedly visited the US for a Flutterwave-related purpose. It is still unclear whether it was for an SEC hearing, client acquisition, or a combination. Based on the Olugbenga Agboola as an advisor claim, it is also unclear whether he was aware or employed. The letter from Access Bank to Flutterwave, however, seems to imply that either only Wigwe, rather than the bank’s management, was aware of the initial arrangement, or that there was a dispute over it.
Many questions remain unanswered, as we stated at the outset (Verdict 1 include. Still, while we wait for an official response from all parties involved, we can make assumptions based on the information that we have validated.
A screenshot of an email written on March 1, 2021, by Adepoju, Flutterwave’s investor relations manager, to another employee regarding the chance to take part in a secondary process was posted by Hundeyin on Thursday, April 13, 2022, at 1:13 p.m. (WAT).
This presents a piece of fresh and damning information that suggests Flutterwave was soliciting employee sales of their shares at a discount while seeking cash for a Series C that would raise the share price of the company.
Tech billionaire Olugbenga Agboola’s Flutterwave denies allegations of money laundering.
Olugbenga Agboola, a prominent software billionaire and entrepreneur who founded the Nigerian technology company Flutterwave, has denied any involvement in a $59 million money laundering scam that led to the closure of the startup’s bank accounts.
The business reaffirms that, to maintain compliance, it adheres to the highest regulatory standards and takes the initiative to communicate with regulatory organizations.
The company has not yet disclosed the specifics, but it said that it had records to back up the claim that “financial improprieties involving the company in Kenya are entirely false.”
The CEO of Flutterwave, Agboola, stated, “We are a financial technology business that maintains the greatest regulatory requirements in our operations. “One of the ‘Big Four’ consultancies frequently audits our anti-money laundering procedures and operations. To continue to be compliant, we are proactive in our interactions with regulatory agencies.
“Flutterwave has a responsibility to ensure the integrity of the ecosystem, and we pledge our commitment to continue working with all stakeholders to uphold this,” he said. “We are attempting to ascertain the reason for the false claims and are working to have the records corrected.”
The announcement follows the Kenyan High Court’s less than 24-hour freezing of 62 bank accounts totaling more than $52.5 million in cash deposits that belonged to the Nigeria-based firm and four Kenyans on suspicion that they were the proceeds of card fraud and money laundering.
The Assets Recovery Agency requested to prohibit any transfers or withdrawals from the accounts while a petition to have the $52.5 million deposit forfeited to the government was being filed. The deposit was distributed over Guaranty Trust Bank, Equity, EcoBank, KCB, and Co-operative Bank accounts.
The agency claimed in a court document that its investigations showed the funds were wired under the pretense of payments for products and services. Flutterwave responded to these accusations by stating that it was investigating the motivation behind the untrue statements and seeking to have the records cleared up.
Agboola was charged with repeated financial crimes, including insider trading, fraud, and perjury in April following a West Africa Weekly investigation.
Agboola was accused of impersonation, insider trading, and unprofessional conduct at work after being made public by writer and founder of West Africa Weekly David Hundeyin.
The 86FB investment platform accused the fintech company of being at fault for its inability to function effectively and pay its investors in the same month. In a statement, the platform admitted that Flutterwave had maliciously blocked its cash, preventing it from paying back its investors.