Hackers Target Kenyan Money; Court To Rule On Bond For Sh4bn KRA Fraud Suspect

Mr Alex Mutungi Mutuku: man accused of hacking into KRA systems and stealing Ksh3.9 billion. Image source: Daily Nation

Kenya’s government says it has unearthed a hacking syndicate that has been stealing money from its online financial systems.

Alex Mutungi Mutuku and his co-accused

BBC Africa Live report continues:

The revenue authority has been the major victim in the scam, reportedly losing nearly US$40m (£32m) this year.

IT expert Alex Mutungi Mutuku, 28, appeared in court today accused of electronic fraud but he denies any wrongdoing.  

Other government agencies affected by alleged hacking include the e-citizen online payment portal where people pay for government services.  

The cybercrime investigations unit has revealed that Kenya lost US$165m through hacking last year.  

The government has admitted that its officials, including police officers, have been colluding with hackers. Police spokesman Eric Kiraithe told the BBC the government has now embarked on a thorough background check of employees.

Earlier this month, a group of people, including foreign nationals, were arrested in Kenya's capital, Nairobi, over their alleged involvement in the theft of money through hacking. A total of 10 suspects have so far been charged in court. 

The government maintains there is a larger ring, including expatriates from the United states and other countries, which is involved in the hacking. 

Court To Rule On Bond For Sh4bn KRA Fraud Suspect

In Summary

*Mr Alex Mutungi Mutuku pleaded not guilty to a charge of electronic fraud.

*The IT expert is accused of fraudulently causing the loss of Sh3,985,663,858 from the KRA through interfering with the taxman’s computer systems.

*Prosecution lawyers claimed that data analysed so far indicates that Mr Mutuku has been working with suspects outside the country.

Baily Nation reports that a 28-year-old man alleged to have hacked into the taxman’s systems, leading to the loss of nearly Sh4 billion, will know next week whether he will be detained for 40 days or freed on bond.

Mr Alex Mutungi Mutuku pleaded not guilty to a charge of electronic fraud.

His lawyer Tacey Makori protested against the prosecution request to have him detained for a further 40 days and nights.

“Due to the slow pace of extracting information per gadget which is not less than five hours, to provide quality evidence, we need at least 40 running days and nights to generate a forensic report,” they said.

The IT expert is accused of fraudulently causing the loss of Sh3,985,663,858 from the Kenya Revenue Authority through interfering with the taxman’s computer systems.

Mr Mutuku was arrested after a multi-agency security operation was conducted within Nairobi and after the police received information that financial institutions were losing cash through suspicious electronic transactions.

Gadgets Seized

The court was told that several electronic gadgets including mobile phones, computers, hard drives, digital video recorders and servers were seized and taken to the cyber forensic laboratory for analysis.

Prosecution lawyers Edward Okello and Eddie Kadebe claimed that data analysed so far indicates that Mr Mutuku has been working with suspects outside the country and so he is a national security threat.

They urged the court to have him detained while claiming that he has the potential to interfere with the servers remotely through an external source.

“He travels a lot and frequently, he seems to walk in and out of Tanzania. He has visited India, Uganda as well as Burundi. He is a frequent traveller and the likelihood of him running away is real,” they added.

Pending Case

Even though Mr Mutuku has a pending case on a cybercrime related offence, Ms Makori protested against his further detention, saying that the police had not shown evidence of what had been gathered in the 14 days he has been in custody.

She further claimed that the police have not ruled out the possibility of intruders accessing the seized gadgets and termed the sum of monies said to have been lost as “ridiculous”.

She also urged the court to consider the penalty for the offence allegedly committed, which is a jail term of three years or a maximum fine of Sh200,000, instead of the value of the monies in the charge he is facing.

“The charge which implies the loss is exaggerated. How that figure was reached is unclear because the forensic report has not been produced, it is merely meant to hoodwink the court,” Ms Makori said.

Mr Mutuku was arrested with six others who were not present on Tuesday.