On March 6, 2026, managers at Naivas supermarkets, Kenya’s largest retail chain by branch count, received an internal memo from the retailer’s operations support office instructing them to stop doing business with FlexPay.

Beginning the next day, stores were to stop accepting transactions from the instalment-payment platform, which had operated inside Naivas branches for five years. Employees were told to stop onboarding customers, remove FlexPay promotional materials, and prevent its staff from working inside Naivas stores.

The directive also affected goods that customers were already paying for. “Any items that have been labeled as ‘SOLD’ under this arrangement should be reactivated back into normal inventory for sale,” said the internal memo reviewed by TechCabal.

The memo described the move as an “immediate suspension” caused by “ongoing operational challenges.” Those words marked the breakdown of a relationship in which FlexPay and Naivas had helped customers buy goods in instalments for five years.

FlexPay’s lawyers say the partnership processed more than KES 3 billion ($23.1 million) in transactions. A Naivas insider familiar with the arrangement, who asked not to be named because they were not authorised to speak publicly, confirmed the lawyers’ claims.

“The relationship subsisted for approximately five (5) years and was highly successful. Over that period, the platform processed customer transactions exceeding Kshs. 3 billion and drove substantial footfall to Naivas outlets countrywide,” FlexPay said in court filings.

According to correspondence reviewed by TechCabal, the companies could not agree on who owed whom money. Within days, lawyers were exchanging demands over roughly KES 30 million ($231,000). That figure was equivalent to about 1% of the more than KES 3 billion ($23.1 million) the partnership had processed over five years. FlexPay questioned the accounts and alleged that its systems had identified more than KES 300 million ($2.3 million) in suspicious transactions involving Naivas employees.

The police then became involved.

A Directorate of Criminal Investigation (DCI) official familiar with the matter told TechCabal that Naivas sought the agency’s help in pursuing Martin Kariuki Maina and Johnson Gituma Mwangi, the founders of FlexPay, over the disputed funds.

“This issue was reported in April, and it was high-stakes. Naivas wanted DCI to help recover the money from FlexPay,” the officer said.

According to the officer, the founders received repeated calls from police officers over the following months. Some calls allegedly involved threats and demands for money. The allegations could not be independently verified.

The pressure continued until police arrested the founders in Nairobi’s Roysambu area on September 2, according to one account. Other records reviewed by TechCabal say DCI officers arrested Maina and Mwangi on September1 and that they spent the night at Kilimani Police Station before being released on police bond the following day.

Naivas and the DCI did not immediately respond to TechCabal’s email requests for comment.

The Naivas-FlexPay dispute is part of a growing pattern in which Kenya’s criminal justice system is used to address commercial disputes. In July, Citibank Kenya went to the High Court seeking to stop the DCI from investigating its chief executive, Martin Mugambi, over a disputed KES 261 million ($2 million) loan to the Kenya Tea Development Agency (KTDA), a company owned by 600,000 smallholder farmers, for Kiru Tea Factory in Murang’a, a county 80km north of Nairobi.

Citibank argued that investigators were criminalising a commercial decision and using police powers as leverage in a civil dispute.

TechCabal reconstructed the breakdown of the Naivas-FlexPay relationship using contracts, internal communications, demand letters, police statements, correspondence with prosecutors, court documents, and interviews with a Naivas insider and a DCI source.

The records do not establish that no crime occurred. They do show, however, that before FlexPay executives were publicly accused of theft, the money at the centre of the investigation was already the subject of an unresolved commercial dispute.

Billions over five years

The partnership began in February 2021, when Naivas engaged Flexitech Group Limited, which trades as FlexPay, to operate a digital platform that allowed customers to select goods and pay for them in instalments through the fintech.

Under the arrangement, once goods were collected, FlexPay was required to remit payment to Naivas by the close of the following day, less a 5% discount. The structure meant FlexPay was settling Naivas before it had finished collecting instalments from customers. Naivas employees involved in FlexPay sales also received a 1% incentive, according to FlexPay’s letter to the Office of the Director of Public Prosecutions (ODPP).

The contract was scheduled to run for seven years, until February 2028. In its letter to the ODPP, FlexPay’s lawyers said the platform processed more than KES 3 billion over the course of the relationship.

The arrangement became more complex in December 2023, when the companies amended their agreement to accommodate loyalty points for FlexPay customers shopping at Naivas. FlexPay says it pre-funded those points and was supposed to be reimbursed by Naivas.

By March 2026, a FlexPay audit had placed the unreimbursed amount at more than KES 24 million ($185,000). TechCabal has not independently audited the figures.

The partnership continued for another two years after the 2023 amendment. Toward the end of 2025, however, Naivas sought to change the terms.

FlexPay says Naivas wanted to reduce its commission from 5% to between 0.5% and 1% as part of a cost-cutting effort. FlexPay countered with 3%. According to FlexPay’s representations to prosecutors, Naivas never accepted the proposal.

Around the same time, FlexPay says its systems began showing unusual transactions. A KES 10,000 ($77.11) purchase would appear as KES 100,000 ($771), then later disappear.

FlexPay alleged that some Naivas employees inflated the value of goods entered on its platform and later reversed the transactions as “typographical errors.” The additional zero would have increased the incentives paid to Naivas employees for sales through the platform.

FlexPay’s lawyers said an audit eventually identified more than KES 300 million ($2.3 million) in transactions displaying this pattern. TechCabal has not independently established that the transactions were deliberately manipulated.

FlexPay says it raised the transactions with Naivas and requested a joint investigation. According to the DCI officer and a letter seen by TechCabal, FlexPay later lodged a complaint with the DCI’s Economic Crimes Unit on April 2.

Naivas wanted its money

By March 3, Naivas wanted FlexPay to remit KES 29,573,326.15. The supermarket said the money was outstanding under their agreement and warned that it would terminate the contract unless the balance was cleared.

Six days later, the law firm Bowmans, acting for Naivas, demanded KES 30,211,825.25 ($234,000). The lawyers calculated that FlexPay had generated KES 49.8 million ($386,000) in February sales but paid KES 26.3 million ($204,000), leaving KES 23.48 million ($182,000). Another KES 6.73 million ($52,000) was attributed to March.

FlexPay’s lawyers asked for 10 days to respond and said the company wanted an amicable settlement. In earlier correspondence, FlexPay had committed to regularising the outstanding amount and providing a bank guarantee.

By March 17, FlexPay’s lawyers disputed the KES 30.2 million ($234,000), although they said the company was willing to settle if given time. They also claimed that FlexPay had generated KES 940 million ($7.3 million) in sales for Naivas in 2025.

Before the lawyers could agree on the terms or determine the amount owed, Naivas had already suspended the platform.

The March 6 memo stopped FlexPay transactions from the following day. The formal termination notice, however, came on March 17 and gave 30 days’ notice ending on April 16. By then, Naivas was demanding KES 31,213,700.95 ($242,000).

Within two weeks, the amount demanded had risen from KES 29.6 million ($229,000) to KES 30.2 million ($234,000), and then to KES 31.2 million ($242,000).

FlexPay’s position also developed. By March 31, its lawyers argued that the account could not be reduced to customer money collected but not remitted.

They cited the loyalty points, which FlexPay said Naivas had not reimbursed, as well as commissions, alleged staff manipulation of transactions, and payments already made.

Naivas maintained that FlexPay had failed to remit funds as required under the contract. FlexPay maintained that the balance had to be reconciled against money it claimed Naivas owed it and transactions it disputed.

The contract’s dispute-resolution clause called for negotiation and consultation, followed by mediation and, if necessary, arbitration. FlexPay executives asked to meet, but no meeting took place and the companies never agreed on a final figure.

According to court filings and DCI complaints, FlexPay executives then began receiving threats and police summonses.

A commercial debt or suspected theft

When Dennis Karanu Mwangi, FlexPay’s finance executive, met with a DCI officer to record a statement on May 5, he was also questioned as a suspect.

A DCI statement says investigators were examining allegations of “stealing by an agent”, an offence covering theft of property entrusted to a person’s care. Mwangi was cautioned that he did not have to say anything and that anything he said could be used as evidence.

He told investigators about the commercial relationship described throughout the correspondence, including the five-year arrangement with Naivas, the loyalty points, and the disputed accounts and transactions that he believed Naivas employees had inflated.

The dispute was now proceeding on two fronts. Naivas had approached investigators over money it said FlexPay had failed to remit. FlexPay, meanwhile, had reported Naivas employees to the DCI over the suspicious transactions.

FlexPay had also begun asking prosecutors to intervene. On March 31, its lawyers wrote to the ODPP under the subject “Misuse of the criminal justice system.” They alleged that police were being used to pressure the company into paying KES 30.2 million ($234,000) arising from a contractual dispute.

They wrote again on April 9. On April 14, the ODPP asked the DCI’s Nairobi Area office to provide an update on its investigation so prosecutors could respond to FlexPay’s complaint.

The ODPP’s intervention did not establish that police had been misused. It did show that prosecutors had been formally alerted to the dispute months before the arrests.

FlexPay continued responding to police summonses. Its lawyers say that on April 21, the company provided investigators with the contracts, loyalty-point audit, suspicious-transaction audit, and correspondence between the companies.

On May 5, FlexPay also transferred KES 3.07 million ($23,800) to Naivas by RTGS, a real-time interbank payment system. Its lawyers later alleged that the supermarket neither acknowledged nor credited the payment. The investigation continued.

Five months of pressure

The DCI officer who spoke to TechCabal described the months that followed as a period of repeated pressure on FlexPay’s founders.

According to the officer, calls came unpredictably. Some involved demands that the company resolve the money claimed by Naivas, while others included threats and demands for bribes, the officer said.

TechCabal could not independently verify those allegations, and the DCI did not immediately respond to questions.

The investigation itself remained active for months. DCI officers arrested Maina and Mwangi on September 1, according to court-related records reviewed by TechCabal. They spent the night at Kilimani Police Station before being released on police bond the following day. Their lawyers said both men had previously honoured police summonses.

Images of the executives later circulated online alongside allegations that they had stolen from a retailer. The commercial dispute had become a public criminal case.

On September 9, FlexPay’s lawyers filed a 15-page document asking the Director of Public Prosecutions (DPP) not to approve charges. They also asked prosecutors to consider the company’s complaint concerning Naivas employees.

The dispute is now before the courts. FlexPay has sued Naivas, the DCI, and the ODPP after months of arguing that a disagreement over the companies’ accounts should not have led to the arrest of its executives on September 2.

The court will have to consider whether the matter was a commercial dispute that became a criminal case, or a crime concealed within the disputed accounts.