Assets Recovery Agency v Hamed [2022] KEHC 16392 (KLR)

Assets Recovery Agency v Hamed (Anti-Corruption and Economic Crimes Civil Suit E017 of 2022) [2022] KEHC 16392 (KLR) (Anti-Corruption and Economic Crimes) (15 December 2022) (Judgment)

Neutral citation: [2022] KEHC 16392 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-Corruption and Economic Crimes Civil Suit E017 of 2022

EN Maina, J

December 15, 2022

Between

Assets Recovery Agency

Applicant

and

Khalid Jameel Ahmad Hamed

Respondent

Judgment

1. The Assets Recovery Agency, the Applicant herein, filed an Originating Motion dated May 17, 2022 which is supported by the affidavit sworn by CPL Isaac Nakitare on even date. The Motion is brought under Sections 90 and 92 of the Proceeds of Crime and Anti-Money Laundering Act and Order 51 of the Civil Procedure Rules and seeks the following orders:“1)That this Honourable do issue orders declaring that cash amounting to USD 977,075 found in possession of the Respondent are proceeds of crime and liable for forfeiture to the Government.2)That this Honourable Court do issue forfeiture orders forfeiting the said funds to the Applicant on behalf of the Government.3)That the Honourable Court do make any other ancillary orders it may deem fit and necessary for the proper and effective execution of its orders.4)That costs be provided for.”

2. The Application is premised on the following grounds set out on the face thereof and in the supporting affidavit:1)That the Applicant is the Assets Recovery Agency established under Section 53 of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) as a body corporate with the mandate of identifying, tracing, freezing and recovering proceeds of crime.

2)That pursuant to Part VIII of Proceeds of Crime and Anti-Money Laundering Act, Sections 81-89 of Proceeds of Crime and Anti-Money Laundering Act, the Agency is authorized to institute Civil forfeiture proceedings and seek orders prohibiting any person, subject to such conditions as the Court may specify, from dealing in any manner with any property if there are reasonable grounds to believe that such property is a proceed of crime.

3)That Section 53A (5) of the Proceeds of Crime and Anti Money Laundering Act grants the staff of the Agency all the powers, privileges and immunities of a police officer while executing the mandate of the Applicant in the identification, tracing, seizure and recovery of proceeds of crime.

4)That the Respondent is a Bahrain National and a holder of Kingdom of Bahrain passport number 2734551 who was traveling to Egypt via EgyptAir flight number MSO841 departing at 07:30am on January 28, 2022.

5)That investigation established that the Respondent arrived in Kenya on January 13, 2022 via Egypt Air Flight MS 849.

6)That the Respondent did not declare any cash upon entry into Kenya.

7)That pursuant to Section 12(4) of the Proceeds of Crime and Anti-Money Laundering Act, there are reasonable grounds to believe that the cash is tainted property and proceeds of crime.

8)That the cash amounting to USD 977,075 was temporarily seized by the customs officer at the Jomo Kenyatta International Airport pursuant to Section 12(4) of the Proceeds of Crime and Anti-Money Laundering Act where there are reasonable grounds to believe that the cash is tainted property and proceeds of crime.

9)That the Applicant is mandated under Section 12(4) of Pocamlato obtain preservation order of the said funds.

10)That Section 12(1) read together with the Second Schedule of the Proceeds of Crime and Anti-Money Laundering Act No 9 of 2009 requires a person intending to convey a monetary instrument in excess of USD 10,000 into or out of Kenya to declare to an authorized officer, at the port of entry or exit.

11)Tha tthe failure by the Respondent to declare being in possession of funds in excess of USD 10,000 in cash and not having a reasonable explanation nor supporting documents to support the legitimacy of the cash raises reasonable suspicion of a money laundering schemes executed in an effort to conceal, the nature, source, location, disposition, or movement of the funds.

12)That Section 12(4) of Pocamladirects the Agency Director to obtain a court order seizing the monetary instrument within 5 days where there are reasonable grounds to believe that the money is tainted property.

13)That on January 28, 2022, the Agency obtained Preservation Orders vide ACEC Application No E002 of 2022 Assets Recovery Agency v Khalid Jameel Saeed Jameel Ahmad Hamed preserving the said funds.

14)That on February 18, 2022, the Preservation Orders were Gazetted vide Gazette Notice No 1810 pursuant to Section 83 of Pocamlawhich requires the Orders be Gazetted within 21 days.

15)That section 90 of Pocamla provides that when a preservation order is in force, the Agency may apply to the High Court for an order of forfeiture to the Government of all or any property or funds that are subject of the preservation order.

16)That it is in the public interest that the orders of forfeiture do issue forfeiting the funds to the Government.

17)And any other ground that may be adduced during the hearing of the application.

3. Additional grounds stated in the supplementary affidavit of CPL Nakitare dated June 29, 2022 are that two invoices produced by the Respondent were unsigned and were not received by the entity alleged to have procured the services; that the letters of appreciation were of no probative value and the invoices from Tanzania were not stamped raising doubts on thier authenticity. As such no evidence was adduced to show that the Pakistani Navy procured the services.

4. The Respondent opposed the Application vide his Replying affidavit sworn on June 13, 2022. He avers that he is the President and C.E.O of The World Seas Shipping Services registered and located in the Kingdom of Bahrain. That the said company offers ship services to the Navy and some of the clients include American Navy, Australian Navy, German Navy, New Zealand Navy, Sandi Royal Navy and Pakistan Navy. He produced a certificate of good conduct issued by the Kingdom of Bahrain.

5. The Respondent contends further that he was contracted in the year 2021 by the Pakistani Navy to offer services along the African Coast. That at the ports of Tema in Ghana, Walvis Bay in Namibia, Durban South Africa, Dares Salaam Tanzania and Mombasa Kenya, he provided services and issued invoices which he annexed to the affidavit; That on January 17, 2022 while in Mombasa he was paid a total sum of USD 106,815 in cash, to which he was issued with a certificate confirming payment; That his various attempts to bank the cash was however unsuccessful; That he was arrested at the airport and later released but his money was taken away. He asserted that he and his staff had worked for the Pakistani Navy for a long time and that the money was legitimate earnings and should be released to him.

Submissions of the parties 6. In its written submissions the Applicant framed two issues for determination:a.Whether the funds subject of the forfeiture application are proceeds of crime; andb.If issue (a) is in the affirmative, whether the funds should be forfeited to the State.

7. The Applicant submitted that the Respondent attempted to leave the country with USD 977,075 which funds were not declared upon entry into Kenya and no documentation was provided to support the source of funds, conduct that is proscribed under Section 12(1) Pocamla.The Applicant, having entered Kenya through a foreign vessel, is considered to be foreign territory and the Respondent was therefore required to have declared the funds upon disembarking the ship, which he failed to do. The Applicant reiterated the averments in the Applicant’s supplementary affidavit and submitted that no evidence was adduced to show that Pakistani Navy procured the services of the Respondent. They cited the authorities in Assets Recovery Agency v Lillian Wanja Muthoni Mbogo & Others [2018] eKLR and Assets Recovery Agency v Ali Abdi Ibrahim [2020] eKLR.

8. The Applicant also contends that on January 22, 2022 the Applicant visited Diamond Trust Bank Nyali and attempted to deposit USD 1,000,000 in Pakistan Community Welfare & Education Centre Account No 0364870002 and have the funds transferred to World Sea Shipping Services Bank account in Bahrain but the bank declined as the funds had not been declared. That this raises suspicions of mischief that the Respondent intended to launder the money. Further that the whole explanation by the Respondent falls flat on its face as it raises suspicions as to why the transaction were not done through the financial system. Learned Counsel for the Applicant placed reliance on the case of Assets Recovery Agency v James Thuita Nderitu and 6 Others [2020] eKLR where the court held:“82. In my view, the applicant has placed material before the court that indicate that funds were transferred to the respondents in circumstances that show, on a balance of probabilities, that these funds are the proceeds of crime. It is correct that, as the respondents argue, the 1st and 3rd respondent have been charged with a criminal offence, but they have not been convicted. However, whether they are convicted or not, under the provisions of POCAMLA, once it is established on a balance of probabilities that the funds in their accounts are proceeds of crime, they have an obligation to show that such funds are legitimate, and that they are not proceeds of crime. This the respondents have not even attempted to do, confining themselves to stating only that they are involved in business far and wide, throughout the world.”

9. Counsel contended that the Applicant has demonstrated on a balance of probabilities that the funds are proceeds of crime subject to forfeiture to the State. That the Respondent failed to prove the source of funds and his explanation was baseless and unfounded. Counsel also relied on the case of Assets Recovery Agency v Phyllis Njeri Ngirita and 2 others; Platinum Credit Limited (Interested Party) & another [2020] eKLR and urged the court to allow the Application.

Submissions of the Respondent. 10. On his part, the Respondent opposed the Application through his replying affidavit sworn on June 13, 2022 and submissions dated September 28, 2022.

11. Learned Counsel for the Respondent begun by reproducing the definition of “proceeds of crime” in Section 2 of the Proceeds of Crime and Anti-Money Laundering Act:

12. Counsel then proceeded to assert that the burden to prove that the source of the funds was as a result of criminal enterprise lay upon the Applicant and that the Applicant had failed to discharge that burden as no evidence of criminal activity was tendered. For this Counsel cited the case of Abdulrahman Mahmoud Sheikh & 6 others v Republic & others [2016] eKLR.

13. Counsel submitted that the impugned funds were paid to the Respondent by the Pakistani Navy Ship (PNS Alamgir); that the ship was docked at the port of Mombasa under diplomatic clearance and it supplied medical facilities to Kenya Navy; that the Applicant was paid in Mombasa port and his failure to declare the funds as he was not familiar with the law should not be a basis for forfeiture. That it is immaterial that the Kenyan Navy officials did not see the Respondent being paid as payments need not be made in public; that the Respondent’s conduct was innocent as he disclosed all information to the Pakistani High Commission where he had handed over the money and was informed that he was to declare it when departing and further that his actions were diligent and innocent and thus protected under Section 19 of the Proceeds of Crime and Anti-Money Laundering Act which states:-“19. Immunity where actions are exercised in good faithA suit, prosecution or other legal proceedings shall not lie against any reporting institution or Government entity, or any officer, partner or employee thereof, or any other person in respect of anything done by or on behalf of that person with due diligence and in good faith, in the exercise of any power or the performance of any function or the exercise of any obligation under this Act.”

14. Counsel further submitted that the Respondent had explained the source of funds on a balance of probabilities; that the use of the phrase “To Whom It May Concern” in the acknowledgment is universally acceptable and that Pakistan Navy need not follow the Kenyan standards on the processing of invoices.

15. Counsel contended that the forfeiture application is in any case incompetent for being filed after the lapse of the preservation order; that the 90-day validity period for the preservation started running on 28th January 2022, and the forfeiture application was filed on the 91st day, therefore incompetent as there was no subsisting preservation order. Finally, that the Applicant failed to serve a notice upon the Respondent as required under Section 83 Proceeds of Crime and Anti-Money Laundering Act. Counsel urged the court to disallow the Application.

Analysis and determination 16. From a consideration of the Originating Motion, supporting affidavit, Replying affidavit and annexures, submissions, authorities cited and the applicable law, the issue that arises for determination is as follows:Whether the funds amounting to USD 977,075 found in possession of the Respondent are proceeds of crime and if so, whether the said funds are liable for forfeiture to the Government. 17. Section 2 of the Proceeds of Crime and Anti-Money Laundering Act defines ‘proceeds of crime’ 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”

18. The funds subject of this suit, USD 977,075 were seized from the Respondent at the Jomo Kenyatta International Airport (JKIA) on 28th January 2022 and subsequently surrendered to the Applicant to commence these forfeiture proceedings. The Respondent was held at the police station but was subsequently released without charges being preferred. Thereafter on 28th January 2022 the Applicant obtained preservation orders in respect of the funds from this court in ACEC Misc. Application No E002 of 2022 Assets Recovery Agency v Khalid Jameel Saeed Jameel Ahmad

19. This court is cognizant of the Government of Kenya’s international obligation under Special Recommendation IX, 2004 of the Financial Action Task Force, to take measures to detect physical cash movements, including a declaration system or other disclosure obligation. Pursuant to this obligation, Section 12 as read with Schedule 2 of the Proceeds of Crimes and Anti-Money Laundering Act creates a concomitant obligation upon any person conveying monetary instruments to or from Kenya for any amounts larger than US $10,000 or its equivalent in any other currency, to make a declaration of those funds at the port of entry or exit. The section states:-“12. Conveyance of monetary instruments to or from Kenya(1)A person intending to convey monetary instruments in excess of the amount prescribed in the Second Schedule to or from Kenya shall, before so doing, report the particulars concerning that conveyance to a person authorised by the regulations for that purpose.(2)A person authorised to receive a report made in subsection (1) shall, without delay, send a copy of the report to the Centre.(3)A person who willfully fails to report the conveyance of monetary instruments into or out of Kenya, or materially misrepresents the amount of monetary instruments reported in accordance with the requirements of subsection (1) commits an offence.(4)Any monetary instrument used in a suspected violation of subsection (3), or which an authorised officer has reasonable grounds to suspect is tainted property, may be temporarily seized by an authorised officer for as long as is necessary to obtain a court order pursuant to section 68 or 82, but not later than five days.(5)An authorised officer making a temporary seizure under subsection (4) shall give the person from whom the monetary instruments are seized—a)a receipt specifying—(i)the name, agency, rank of the seizing officer;(ii)contact information for that officer and agency;(iii)time, date and location of seizure;(iv)description (including serial numbers) of the value of and types of instruments seized; andb)a formal notice of the authorised officer’s intent to initiate forfeiture proceedings under this Act against the seized monetary instruments.”

20. Schedule 2 of Proceeds of Crime and Anti-Money Laundering Act provides:“A person who transports monetary instruments of US $10,000 or its equivalent in Kenya Shillings or any other currency into or out of Kenya shall declare, in a prescribed form, at the port of entry or exit.”

21. The Applicant seeks to forfeit the subject funds under the provisions of Sections 90 and 92 of the Proceeds of Crime and Anti-Money Laundering Act. This court in determining a similar case in Assets Recovery Agency v Muazu Bala ACEC Civil Suit No E005 of 2021 cautioned that civil forfeiture is not dependent on the outcome of criminal proceedings, or of an investigation with a view to institute such proceedings, in respect of an offence with which the property concerned is in some way associated. This is as is provided in Section 92(4) of the Proceeds of Crime and Anti-Money Laundering Act. The court cited the decision of the Supreme Court of Jamaica in ARA & Others v Audrene Samantha Rowe & Others Civil Division claim No 2012 HCV 02120 where the court held:“....that in deciding whether the matters alleged constituted unlawful conduct when a civil recovery order is being made is to be decided on a balance of probability. Civil recovery proceedings are directed at the seizure of property and not the convicting of any individual and thus there was no reason to apply the criminal standard of proof...”

22. That notwithstanding, the Applicant bears the legal burden of proof to show, by way of evidence, that the funds are proceeds of crime within the meaning of Section 2 above, and to the standard set in Section 92(1) of the Proceeds of Crime and Anti-Money Laundering Act: Section 92(1) states:-“92(1) The High Court shall, subject to section 94, make an order applied for under section 90(1) if it finds on a balance of probabilities that the property concerned—(a)has been used or is intended for use in the commission of an offence; Or(b)is proceeds of crime.”

23. The Applicant must first discharge the legal burden before the court can call upon the Respondent to explain that the funds are not tainted. In this case it is alleged that the impugned funds were suspected to be proceeds of crime firstly because the same were not declared and secondly because the Respondent did not deal with the same through the lawful financial system.

24. On his part however the Respondent has in his affidavit averred that he is the President and CEO of The World Seas Shipping Services registered in Bahrain, and provided documents to show that he has provided services to several Navys, including the Pakistani Navy, America Navy, Australia Navy, German Navy et al. He has provided invoices, letters of acknowledgment, tax invoices and correspondences with Tanzania Ports Authority on the shipping services. He has fervently argued that the funds in issue were his legitimate earnings from the shipping services on Alamgir Ship, paid in cash on 17th January 2022 at the Mombasa Port. The Applicant annexed a statement recorded by a Kenyan Navy officer by the name Captain Mohamed Said, who was the liaison officer for the Pakistani Navy Sip. Captain Mohamed confirms that he met the Respondent and that the Respondent told him about the funds and asked him where he could bank it. That he in fact took him to a bank to deposit the money and later informed him that he was going to the Pakistani Embassy in Nairobi to seek assistance. Although the Kenyan Navy officer states that he did not see the money, his statement does in my view corroborate the depositions by the Respondent that he tried to use the legal financial channel but did not succeed. The fact of him having not bypassed the legal financial system cannot therefore per se be considered a reason to conclude that the money is proceeds of crime.

25. Moreover, the Respondent’s explained the transactions leading to the payment and produced documents to prove that the same were proceeds of services rendered. The documents attached though feint are duly signed and hence admissible. The Respondent has, on a balance of probabilities discharged the evidential burden by proffering a plausible explanation on the source of funds hence dissuading the Applicant’s assertion that the funds were suspected to be proceeds of crime.

26. An application for forfeiture cannot be based entirely on suspicions of unnamed unlawful activity. Although the Applicant is not required to allege the actual criminal offence or to prove the commission of an offence, the Applicant must provide evidence of some unlawful conduct, and it has failed to do so in the circumstances of this case. Relying on the case of Director of Assets Recovery Agency and others, Republic v Green & Others [2005] EWHC 3168 the courts here have held as much. In that case the Court stated:-“In civil proceedings for recovery under Part 5 of the Act the Director need not allege the commission of any 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.”

27. I have already stated that the Respondent placed evidence before this court that he made an effort to deposit the money in a Kenyan bank but failed. He has also annexed evidence which proves on a balance of probabilities that the money was lawful payment for services rendered and named the ship which paid him. This he has done by attaching letters of compliment from the various ships to which he rendered services and more particularly one from Anwar Saeed, Captain of the Pakistan Navy Commanding Officer, showing that he had provided services to the ship in the year 2020. There is also a letter from the Navy Supply officer dated January 17, 2022 which outlines the dates he rendered services to the ship and the dates and the payments made to him. Contrary to the Applicant’s assertion that the Respondent’s documents were not authentic as they bore no signatures or stamps this letter has the name, rank and signature of the writer and it also has a rubber stamp of the Pakistani Navy Ship. There was no evidence from the Applicant to controvert its contents hence rebut its authenticity or genuiness and this court is therefore bound by the rules of evidence to believe that it is a genuine document. That to me explains the source of funds on a balance of probabilities. There is therefore no evidence that the funds were tainted.

28. In regard to the issue of declaration of the funds it was the Respondent’s contention, which again was not rebutted, that the money was paid to him in Kenya. He adduced evidence that the ship which paid him was lawfully docked in the Mombasa Port. That being the case he could only have been required to make a declaration at the point of exit from Kenya. There is evidence in his further affidavit that he was arrested and the money impounded as he made a declaration at the JKI Airport which was the point of exit.

29. In light of the foregoing, it is my finding that the Originating Motion dated May 17, 2022 cannot succeed. The Application is therefore dismissed and it is hereby ordered that the seized funds shall be released to the Respondent forthwith.

30. While costs follow the event, I shall make no order for costs in this case.

SIGNED, DATED AND DELIVERED VIRTUALLY THIS 15TH DAY OF DECEMBER, 2022. E. N. MAINAJUDGE