Press release
Dutch Court of Appeal does not clear Dahabshiil of Terror and Criminal Allegations
- Click here Press release
Dutch Court of Appeal
Journalist Dahir Alasow wins important case for press freedom in Somalia against Dahabshill in Dutch Court of Appeal
- Read more
ALSO IN THE NEWS

Hormuud Telecom Group commit such a crime and then walk away with it?

0
Monday October 28, 2019 - 03:34:05 in Latest News by Super Admin
  • Visits: 441
  • (Rating 5.0/5 Stars) Total Votes: 1
  • 1 0
  • Share via Social Media

    Hormuud Telecom Group commit such a crime and then walk away with it?

    17. ZAAD Service is not available exclusively to customers. Like customers, service providers (Telesom, Hormuud and Golis) also make payments to vendors and employees with ZAAD service. Unlike customers, however, these providers do not need to have a

    Share on Twitter Share on facebook Share on Digg Share on Stumbleupon Share on Delicious Share on Google Plus

File Attachment
Size: 6 MB
17. ZAAD Service is not available exclusively to customers. Like customers, service providers (Telesom, Hormuud and Golis) also make payments to vendors and employees with ZAAD service. Unlike customers, however, these providers do not need to have a positive ZAAD ac-count balance in order to make a payment with ZAAD service. When making a payment to their vendors, employees or creditors, ZAAD Service operators simply type numbers into a computer, hit the RETURN key and the payee receives SMS message confirming the transfer to his mobile account.
18. Therefore, the electronic digits in the users’ ZAAD Service accounts do not represent a specific pile of cash sitting in the provider’s ac-counts nor do they represent an actual cash payment made by the company. Every month Al-Barakat Telecoms (Telesom, Hormuud and Golis) make payments to some 10,000 employees and hundreds of vendors with ZAAD Ser-vice. However such payment transactions do not effect on the Company’s accounts. For in-stance, if the company had cash balance of $3,000,000 and it paid its employee $500,000 via ZAAD Service, the company’s cash balance would not change i.e. it will remain to be $3,000,000 rather than $2,500,000. This indicates that, by paying its employees, the Company created $500,000 of new money out of nothing!
19. Mobile money in Somalia therefore created an unregulated alternative to the traditional bank-ing system- a system in which there are mil-lions of subscribers and hundreds of thousands of businesses involved in this so-called ZAAD Service with authorities failing to recognize that they had allowed the power to create money to slip into the hands of unregulated terrorist entities, namely, Al-Barakat Telecom (aka Telesom Company, Golis Telecom and Hormuud Tele-com).
20. If you still cannot believe the fact that such criminal activities take place behind closed doors, let me give you a real life example. In 2012, Telesom Company fired one of its ZAAD service operators. The employee while still serving on a notice period made a deposit of $10,000 in his mobile account when his coworkers were performing their sunset prayer. He went out before other employees came back from Mosque and then with the help of an accomplice, he immediately cashed-out all $10,000 from three different mobile money stores (MMS) then within an hour or so, the perpetrator fled from Somaliland to his hometown in Khatumo State. Although the Police later apprehended the perpetrator, his mis-sion went off without a hitch and he succeeded to create USD 10,000 out of nothing by typing numbers into a computer. This is a true incident and to this day, internet posts by the perpetrators’ supporters while he was behind bars and following his trial for fraud can be found here, here, and here.
Shop Related Products


21. How can Al-Barakat Telecom (Telesom, Golis, and Hormuud) commit such a crime and then walk away with it? Well, two factors have permitted Al-Barakat Telecom to be able to create and supply new money into the financial system. The first factor relates to the regulatory vacuum in which they operate- the fact that these companies operate in an entirely unregulated environment. In Somalia there is no existing regulatory framework for the oversight and supervision of ZAAD Service transactions nor is there a central bank with effective monetary policy to help control the supply of money into the economy or stop companies and individuals from committing financial crimes. These telecoms therefore took advantage of the weaknesses of state institutions.
22. Another factor that granted Al-Barakat Telecom the power to create new money and avoid detection is linked with the users’ tendency to maintain positive account balances. Users do not frequently cash-out mobile money but rather keep balances in their account and use this money to perform transfers, purchases or make payments thereby allowing it to circulate indefinitely. For instance, a ZAAD service employee told me that on 30 October 2015, in Telesom alone, 70% of ZAAD users had a positive balance in their mobile account, $59 on average while some 66% of users had a positive average balance of $58 in their mobile accounts throughout the year. I multiplied this by some 700,000 active users and then found, USD 26,796,000. This is not all of it because during the same period, 92% of some 16,000 retail businesses had maintained a positive average balance of $571 throughout the year- giving raise to additional 8.5 million US dollars!
23. Due to the above, Telesom alone, which is just one segment of the three sister companies, could have in 2015 created USD 35 million of new money and supplied it into the economy. Now think about how much of new money, when combined, can Telesom, Hormuud, and Golis create or have created in the last six and half years. The newly created money will re-main circulating in the system without effecting providers’ physical cash flows as long as Al-Barakat Telecoms exist and customers are will-ing to continue maintaining such huge balances in their mobile accounts. For instance, had the perpetrator, instead of cashing out, kept the stolen $10,000 in his mobile account or had he used it to perform transfers or make payments, it would not have led to a decrease of Tele-som’s cash balance and the newly created $10,000 would have indefinitely remained in circulation passing from one user to another.
24. Many organizations and individuals who write about mobile money in Somalia often likens ZAAD Service to Safaricom’s M-Pesa system. Such writers are surprisingly ignorant about the fact that unlike Kenya’s Safaricom, Al-Barakat Telecoms operate in unregulated environment and that their financial activities are shielded from the Central Bank’s scrutiny. They cannot be scrutinized because there are no local bank-ing laws to regulate nor there exist strong state institutions to do that. Let alone regulating, the hosting governments (Somaliland, Puntland and SFG) cannot even access their records or levy taxes on their revenues. Another difference is that in the case of M-Pesa, customers’ cash-in and cash-out ratio is almost equal whereas customers’ cash-in and cash-out ratio is reportedly 0.2 to 1 for Al-Barakat telecoms. In other words, M-Pesa’s customers immediately cash out and do not maintain positive bal-ances in their mobiles account whereas Al-Barakat’s ZAAD service users indefinitely maintain very large account balances in the system.
25. With government supervision and without hav-ing customers who are willing to maintain enough account balances, M-Pesa is not in an enabling position in which it can create new money out of nothing. Even if it does, customers will at the end of the day demand physical cash and Safaricom shall pay the company’s cash for customers’ mobile account balances. On the contrary, every new dollar that Al-Barakat telecoms create will indefinitely circulate in the system, hence- it will serve as a long-term loan except that it does not bear an interest nor does it have a due date or claimants. This increased the amount of money in the economy, pushing up prices and, among other problems, destabilizing financial system throughout the country.


Leave a comment

  Tip

  Tip

  Tip

  Tip

  Tip


Copyright © 2009 - 2019 Sunatimes News Agency All Rights Reserved.
Home | About Us | Diinta | Reports | Latest News | Featured Items | Articles | Suna Radio | Suna TV | Contact Us