Assets Recovery Agency v Aboudi [2023] KEHC 25662 (KLR)

Assets Recovery Agency v Aboudi (Civil Application E016 of 2023) [2023] KEHC 25662 (KLR) (Anti-Corruption and Economic Crimes) (16 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25662 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Civil Application E016 of 2023

EN Maina, J

November 16, 2023

Between

Assets Recovery Agency

Applicant

and

Athman Abdulrahman Aboudi

Respondent

Judgment

Introduction 1. This matter concerns the Originating Motion dated 19th June 2023 for forfeiture of two motor vehicles Registration Numbers KDB 728F and KDE 361R which are alleged to have been acquired by the Respondent through proceeds of crime.

2. According to the Applicant on 31st May 2022 the Respondent was arrested and charged with the offense of Trafficking in Narcotic Drugs contrary to Section 4(a)(ii) of the Narcotic Drugs and Psychotropic Substances (Control)(Amendment) Act 2022 in the Chief Magistrates Court at Malindi vide Criminal Case Number E351 OF 2022.

3. Subsequently on 15th March 2023 the Applicant sought and obtained a preservation order from this court in respect to both vehicles.

4. By an Application dated 28th September 2023, Mahat Osman Ibrahim, an Interested party filed an application seeking to be enjoined to the suit so as to object to the forfeiture application, to arrest delivery of the judgement and to have the Motor vehicle KDB 728F excluded from the forfeiture application or in the alternative, be granted leave to file his response to the forfeiture application out of time. The application was premised on the ground that the Motor vehicle KDB 728Fdid not belong to the Respondent; that it had been purchased from the Respondent by one Muturi Ngari for a consideration of Kshs. 700,000 and its ownership and possession had been transferred on 25th May 2021 and later sold to Mahat Osman Ibrahim, the Interested Party, on 12th July 2021, two years before the forfeiture application was filed in this court.

5. On 8th November 2023, Ms Irari, Learned Counsel for the Agency conceded that indeed the motor vehicle KDB 782F had been sold prior to the filing of the forfeiture application and prayed that it be removed from the proceedings and be released to the Interested Party with no orders as to costs. Learned Counsel for the Respondent, Mr. Rajoro intimated that the Respondent was not opposed to the order being granted and the application dated 28th September 2023 was therefore allowed and an order was issued that the motor vehicle KDB 782F be removed from these proceedings and be released to the Interested Party without delay.

6. Counsel for the applicant confirmed that they were no longer interested in the other prayers in the application and the same was therefore marked as compromised. This judgment therefore pertains to motor vehicle Registration No. KDE 361R Nissan Station Wagon.

The Parties In The Main Application 7. The Applicant is the Asset Recovery Agency established under Section 53 of the Proceeds of Crime and Anti Money Laundering Act (herein after referred to as the POCAMLA) as a body corporate with the mandate of identifying, tracing, freezing and recovering proceeds of crime. The Agency has authority to institute civil proceedings for the recovery of proceeds of crime and seek orders for forfeiture of assets to the government where there are reasonable grounds to believe that such assets are proceeds of crime. The agency also has policing powers under Section 53A of the POCAMLA to enable it investigate, identify, trace, freeze and recover proceeds crime.

8. The Respondent is the accused in Malindi Chief Magistrates Court Criminal Case No. E351 OF 2022. He allegedly works as a driver and conductor in the public transport (matatu) business in Malindi.

The Applicant’s Case 9. The application for forfeiture of motor vehicle KDE 361R is brought under Sections 81, 90, 92 and 131 of the Proceeds of Crime and Anti-Money Laundering Act and Order 51 Rule 1 of the Civil Procedure Rules:-i.That this Honourable Court do issue an order declaring that Motor Vehicles Registration Numbers KDE 316R, Nissan Station Wagon, Chassis/Frame Number HFC26-215580, Engine Number MR20-SM23-551701B and Moto Vehicle Registration Number KDB 782F Toyota Probox, Chassis/Frame Number NCP51-0329240, Engine Number 1NZ-E690127 are proceeds of crime liable for forfeiture to the Applicant.ii.The honourable court be pleased to issue orders of forfeiture of the Motor vehicles in prayer 1 above to the Assets Recovery Agency on behalf of the government.iii.The honourable court be pleased to issue an order directing that the Director of NTSA transfer ownership of the Log book of the Motor Vehicles in favour of the Applicant.iv.That the honourable Court do make any other ancillary orders that it deems fit and just for the proper execution of its orders.v.That costs be in the cause.

10. The application is based on the following grounds;i.That the Applicant has the mandate of identifying, tracing, freezing and recovering proceeds of crime.ii.That under Part VIII of POCAMLA, Sections 81,82,90 and 92 of the proceeds of Crime and Anti-Money Laundering Act Authorizes the Agency to Institute Civil Forfeiture Proceedings for the recovery of proceeds of crime and seek orders for forfeiture of assets to the government where there are reasonable grounds to believe that such assets are proceeds of crime.iii.That under section 90 of POCAMLA, where a preservation order is in force, the Applicant may apply to the High Court for an order of forfeiture to the Government of all or any of the property that is subject to the preservation order.iv.That the Respondent is a resident of Malindi County and the registered and known owner of the subject Motor Vehicles/v.That subject to the arrest and arraignment in court of the Respondent for charges of Trafficking of Narcotic Drugs, the Applicant commenced investigations to trace assets acquired through proceeds of the trade.vi.That during the arrest, a search on the Respondent’s house discovered 467 grams of heroin with a market value of Kshs. 401,000. vii.That the Applicant received information on 17/2/2023 that the Respondent acquired the subject Motor vehicles using proceeds from the illegitimate trade of trafficking Narcotic Drugs and opened an inquiry file and preliminary investigations established reasonable grounds to believe it.viii.That it is in the interest of Justice that forfeiture orders issue forfeiting the Motor Vehicles to the Applicants.ix.That if the orders are not issued, the Respondent shall illegitimately enjoy the economic advantage derived from crime.x.Any other ground to be adduced at the hearing.

11. The application is supported by an affidavit sworn on 19th June 2023 by JACKSON KIMANI, an investigator with the Applicant. In the Affidavit the Investigator reiterates the grounds on the face of the application and further deposes that the Motor Vehicle KDE 361R was purchased by the Respondent on 23rd November 2021 from Auto Gateway Trading Limited, Mombasa at a consideration of Kshs. 1,360,000; that the Respondent paid a cash deposit of Kshs. 1,000,0000 and cleared the balance within three days also in cash; that investigations also revealed that the Respondent did not own or operate any bank accounts and has no known legal business; that he acquired the assets through trafficking in narcotic drugs; that on 31st May 2022, during a search of his house conducted in his presence, a brownish powdery substance and documents relevant to the case were recovered; that the substance was submitted to the Government chemist and upon analysis the same was found to be Diacetyl morphine (heroin) which is a narcotic drug.

12. It was further deposed that the Respondent has never filed income tax returns since the year 2015; that on 8th June 2023 the Respondent recorded a statement with the Applicant but he did not give a reasonable explanation as to how he acquired the money to purchase the subject motor vehicle; that the claim that the motor vehicle was purchased by the Respondent’s father has not been demonstrated.

The Respondent’s case 13. The respondent opposed the application through a replying affidavit dated 24th June 2023. He deposed that he has not been convicted by any court of law; that no formal report or evidence has been tabled by the Applicant implicating the Respondent to have acquired the subject assets through proceeds of crime; that he earns his livelihood as an employed driver and conductor of Motor Vehicle KDE 361R which is a matatu plying the Mombasa/Malindi route and that the matatu is owned by his father. He contended that he makes daily remittances to his father.

14. He also deposed that the phone records to confirm the aforesaid daily remittances were unavailable as his National Identity Card was impounded by the Applicant’s investigators.

15. He stated that the Applicant summoned his father for questioning but the officer who was conducting the investigation stopped the questioning mid-way and asked them to return on another day, but a different date was never fixed.

16. It is the Respondent’s case that the proprietors of Auto Gateway Trading Limited where the vehicle was purchased were also questioned by the Applicant and they had confirmed their long standing relationship with the Respondent’s father and confirmed that the purchase of the vehicle was by his father.

17. The Respondent deposed that the Applicant’s reluctance to conclude investigations demonstrates malice, is in bad faith and is an abuse of the Court process.

18. He also deposed that he is a famous driver at the matatu terminus where he operates yet the applicant refused and/or neglected to engage anybody at that stage to shed more light on the ownership of the vehicle in question.

The Applicant’s Submissions 19. Ms. Irari, Learned Counsel for the Applicant, submitted that the subject Motor Vehicle is a proceed of crime because of the following facts: The Respondent is the registered and known owner of the Motor vehicle.

The Applicant received information from the Director of criminal Investigations of the Respondent’s dealing in Narcotic drugs.

The Respondent and his wife were arrested on 31st May 2022 and during a search of their home 467 grams of what was confirmed by tests conducted at the Government chemist to be heroin with a Market value of Kshs. 401,000 was recovered.

On 6th June 2022, the Respondent and his wife were charged with trafficking narcotic drugs.

The Applicant opened an inquiry and established that the Respondent is the registered owner of the subject motor vehicle and that it was him who paid for it.

The Applicant’s investigations also revealed that the Respondent does not operate any bank account, has no known legal business and has never filed any tax returns.

20. Counsel submitted that trafficking narcotic drugs is a cash intensive trade, and the use of such funds to acquire assets intended to conceal and disguise the source of the funds contrary to the provisions of the POCAMLA; that in the statements recorded on 8th June 2023, the Respondent alleged that he ran a cash intensive business but there was no evidence that such cash was banked with any institution.

21. The Applicant further submitted that when preservation orders are in force, the High Court may issue an order of forfeiture of all or any part of the property subject to the preservation order, if the court finds on a balance of probabilities that the assets are proceeds of crime.

22. Learned Counsel asserted that the POCAMLA introduces measures for combating crime which include the identification, tracing, freezing, seizure, and confiscation of the proceeds of crime, and that the subject motor vehicle falls under that definition. In support of this submission Counsel cited the case of Schabir Shaik & Others -v- State Case CCT 86/06 (2008) ZACC 7 where the court stated: -“One of the reasons for the wide ambit of the definition of “proceeds of crime” is, as the Supreme Court of Appeal noted, that sophisticated criminals will seek to avoid proceeds being confiscated by creating complex systems of camouflage”. The Supreme Court of Appeal held that a person who has benefitted through the enrichment of a company as a result of a crime in which that person has an interest will have indirectly benefitted from that crime.”

23. Counsel stated that the explanation offered by the Respondent as to the source of the funds used to acquire the subject vehicle was not satisfactory and did not discharge the evidential burden of proof placed on the Respondent.

24. Learned Counsel for the Applicant submitted that the Applicant has proved its case on a balance of probabilities and urged this court to allow the application.

25. Counsel also relied on the following cases amongst others: Assets Recovery Agency -v- Joseph Wanjohi & Others (2020) eKLR.

Assets Recovery Agency -v- Pamela Aboo, EACC Interested party (2018) eKLR.

KACC v James Mwathethe Mulewa & Another [2017] eKLR.

Nguku v Republic [1985] KLR 412.

Prosecutor General v New Africa Dimensios & Others, High Court of Namimbia Case No. POCA 10/2012.

Assets Recovery Agency v Quarandum Limited & 2 Others [2018] eKLR.

26. Counsel urged that these proceedings are not directed at punishing the Respondent but rather at the confiscation of the proceeds of crime. To this end Counsel cited the case of Teckla Nandjila Lamech & Anor vs President of Republic of Namibia & Others (54 of 2011) [2012] NAHC 31 (20 February 2012) which states:-“.... Assets forfeiture is, as is stated in Section 50 of POCA, a Civil remedy directed at confiscation of the proceeds of crime and not at punishing an accused. Chapter 6 proceedings are furthermore not necessarily related to a prosecution of an accused. Those proceedings are spent to the State to invoke whether or not there is a criminal prosecution..... even if there is a prosecution, the remedy is not affected by the outcome of the criminal proceedings. The remedy is thus directed at the proceeds and instrumentalities of crime and not at the person having possession of them. This is in furtherance of the fundamental purpose of these procedures referred to above.”

The Respondent’s Submissions 27. Learned Counsel for the Respondent, Mr. Mosi, submitted that he who alleges must prove and stated that that is a maxim intended to protect vulnerable parties from frivolous allegations; that under Section 92 of the POCAMLA, the Applicant has to prove, on a balance of probabilities that the subject asset has been used, is intended to be used or is a proceed of crime and the Applicant did not discharge that burden.

28. Counsel relied on the case of Ethics and Anti-Corruption Commission -v- Jimmy Mutuku Kiamba Misc/Civil Application no. 804 of 2014 where the court stated:-“... investigations ..... should not block a desiring party from accessing his property just because investigations have not revealed the source. At most the Applicant can only say that the source is suspect. However, suspicion alone, however strong, is not evidence.”

29. Counsel stated that Section 82 of the POCAMLA requires an application for forfeiture to be based on reasonable grounds; that this application is bereft of reasonable grounds and only contains generalized allegations. Counsel contended that Article 40 of the Constitution guarantees the right to property and its enjoyment without unreasonable and unjustified interference and that the orders sought infringe on the Respondent’s right to property. Counsel contended that the Applicant has not demonstrated sufficient grounds for forfeiture of the vehicle.

30. On the issue of costs, the Respondent submitted that since costs follow the event, the Applicant should bear the cost of the application as it has not proved its case.

Issues for Determinationi.Whether the Motor Vehicle KDE 361R is a proceed of crime; andii.Whether the Motor Vehicle KDE 361R should be forfeited to the State.

Analysis and Determination Issue (i) - Whether The Motor Vehicle Kde 361r Is A Proceed Of Crime. 31. The Applicant contends that the Respondent acquired the vehicle through income derived from trafficking in narcotic drugs; that the Respondent and his wife were arrested on 31st May 2023 and charged with the offence of trafficking Narcotic Drugs and that a search in the Respondent’s home by law enforcement officers yielded a powdery substance which upon analysis by the Government Chemist was confirmed to be heroin with a street value Kshs. 401,000.

32. The Respondent did not controvert the above facts. His contention being that he has not been convicted for trafficking in narcotic drugs. He also contends and that the vehicle belongs to his father. That it was his father who purchased it with proceeds from his matatu business.

33. It is not disputed that the vehicle is registered in the Respondent’s name. There is also evidence on a balance of probabilities that it is the Respondent who paid the consideration for the motor vehicle. It was his contention that he did so from funds from his father’s matatu business; that he is employed in that business by his father. In his replying affidavit he averred that he could not access the records of the daily remittances he made to his father from the matatu business because his national identity card was impounded by the Applicant. He did not however disclose which service provider held the records. Neither did he demonstrate that he made any effort to obtain the records from the said service provider but was turned away for lack of an identity card. His assertion that his father had a thriving matatu business therefore remains a mere allegation not supported by evidence. In the premises, his assertion that he bought the motor vehicle with proceeds of a matatu business is not backed by evidence and is not convincing. He did not adduce evidence of any other source of income and he did not controvert the Applicant’s assertion that he has no bank account and that he has not filed any tax returns. Failure to file tax returns is prima facie proof that one does not have an income and moreover even those with no income are required to file a nil return at the least.

34. Auto Gateway Trading Limited, Mombasa, who sold the subject vehicle to the Respondent recorded a statement with the Agency and confirmed to have sold the vehicle to the Respondent at Kshs.1,360,000 out of which he paid a deposit of Kshs. 1,000,0000 in cash and cleared the balance cleared within three days also in cash. The National Transport and Safety Authority (NTSA) records which are attached to the Applicant’s supporting affidavit also show that Respondent is the owner of the motor vehicle KDE 361R. There is therefore prima facie evidence that it is he who is the owner of the vehicle but not his father. This finding resonates with Section 8 of the Traffic Act(Cap.403) which states:-“The person in whose name a vehicle is registered shall, unless the contrary is proved be deemed to be the owner of the vehicle.”

35. It is my finding that the Respondent has not adduced evidence to rebut that presumption of ownership. There is no evidence that he purchased the motor vehicle for or on behalf of his father using money belonging to his father. There is however evidence that it is he who paid for the vehicle and the fact that he then registered it in his name is proof on a balance of probabilities that it belongs to him. In any event he did not offer an explanation for registering the vehicle in his name rather than in his father’s name.

36. Having found that the motor vehicle belongs to the Respondent the next question is whether it is a proceed of crime.

37. Section 2 of the POCAMLA defines proceeds of crimes as follows:-“"proceeds of crime" means any property or economic advantage derived or realized, directly or indirectly, as a result of or in connection with an offence irrespective of the identity of the offender and includes, on a proportional basis, property into which any property derived or realized directly from the offence was later successively converted, transformed or intermingled, as well as income, capital or other economic gains or benefits derived or realized from such property from the time the offence was committed.”

38. From the above definition, proceeds of crime include assets acquired through funds derived from crime, as well as income generated from those assets.

39. The Respondent has not demonstrated how he could afford to pay for a motor vehicle valued at Kshs.1,360,000/- in cash. It is his evidence that he is a matatu conductor. He intentionally kept mum on his earnings and knowing that he could not justify ownership of the vehicle he preferred to say it belonged to his father. However, as I have already stated both the facts and the law point to him being the owner of the vehicle. There is evidence which proves on a balance of probabilities that heroin was found in his house. It is no wonder then that he could afford to purchase the vehicle in cash.

40. As to whether he has been convicted or not, Section 92(4) of the POCAMLA makes it clear that civil forfeiture is not dependent to a conviction. This as was held in the case of Director of Assets Recovery Agency & others -v- Green & Others [2005] EWHC 3168 where it was stated:“In civil proceedings for recovery under Part 5 of the Act, the Director need not allege the commission of specific criminal offence but must set out the matters that are alleged to constitute the particular kind or kinds of unlawful conduct by or in return for which the property was obtained.”

41. I am satisfied that in this case the Applicant has, on a balance of probabilities, demonstrated a nexus between the acquisition of the motor vehicle and an unlawful activity which is trafficking in illicit drugs. The guilt or otherwise of the Respondent is not the primary issue in these proceedings. The intent of these proceedings is to ensure that the vehicle is not used to the benefit of a person accused of committing a crime. The Respondent’s argument that he has not yet been convicted therefore does not hold water as lack of such conviction is not a determinant of whether the subject asset is a proceed of crime and whether it should be forfeited to the Applicant. This is best illustrated in the decision of Onguto J in the case of Republic v Director of Public Prosecutions & another Exparte Patrick Ogola Onyango & Others where he stated:-“it would appear to me therefore, and I so hold, that the prosecution need not prove, prior to any charges of money laundering, that there has existed a conviction or an affirmation of a predicate offence. The prosecution need not consequently show a determination by a court of law that there was theft or forgery or fraud that led to the acquisition of the proceeds or property the subject of the money laundering proceedings. ....”

Issue (ii) - Whether The Motor Vehicle Kde 361r Should Be Forfeited To The Applicant. 42. The Respondent asserted that the present application violates his right to property guaranteed under Article 40(1) of the Constitution which states: -“(1)Subject to Article 65, every person has the right, either individually or in association with others, to acquire and own property—(a)of any description; and(b)in any part of Kenya.”

43. However, Sub-Article (6) of the Article expressly states that the right does not extend to property that is acquired from unlawful sources. The sub-article states: -“The rights under this Article do not extend to any property that has been found to have been unlawfully acquired.”

44. In the case of Assets Recovery Agency v Ali Abdi Ibrahim [2022] eKLR it was held that:-“Once this court makes a finding that the assets or property of the Respondent are proceeds of crime - . . . it is left with no alternative but to make an order for forfeiture. That is my reading of Section 92(1) of the Proceeds of Crime and Anti-Money Laundering Act. . . I am also not persuaded that an order of forfeiture is a violation of the Respondent’s right to property guaranteed in Article 40 of the Constitution.”

45. In the premises having come to the conclusion that the motor vehicle registration No. KDE 361R is a proceed of crime, I have no difficulty in making a finding that it is liable for forfeiture to the State.

46. Accordingly, the Originating Motion dated 19th June 2023 is allowed and judgment is entered for the Assets Recovery Agency/Applicant against the Respondent as follows:-1. That a declaration be and is hereby issued that Motor Vehicle Registration No. KDE 316R, Nissan Station Wagon, Chassis/Frame No. HFC26-215580, Engine No. MR20-SM23-551701B is a proceed of crime.2. That the Motor Vehicle Registration No. KDE 316R, Nissan Station Wagon, Chassis/Frame No. HFC26-215580, Engine No. MR20-SM23-551701B be and is hereby forfeited to the State.3. That the Director NTSA be and is hereby directed to transfer ownership in the Logbook of the motor vehicles in prayers 1 and 2 above in the name of the Interested Party in favour of Assets Recovery Agency.4. That costs of these proceedings shall be borne by the Respondent.Orders accordingly.

DATED, SIGNED AND DELIVERED VIRTUALLY ON THIS 16TH DAY OF NOVEMBER 2023. ............................E. N. MAINAJUDGE