Assets Recovery Agency v Kago & another [2022] KEHC 13497 (KLR)

Assets Recovery Agency v Kago & another (Anti-corruption and Economic Crimes Miscellaneous E043 of 2021) [2022] KEHC 13497 (KLR) (Anti-Corruption and Economic Crimes) (6 October 2022) (Ruling)

Neutral citation: [2022] KEHC 13497 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-corruption and Economic Crimes Miscellaneous E043 of 2021

EN Maina, J

October 6, 2022

Between

Assets Recovery Agency

Applicant

and

Tebby Wambuku Kago

1st Respondent

Felesta Nyamathira Njoroge

2nd Respondent

Ruling

1. On December 14, 2021 the assets recovery agency/respondent moved this courtex parte under section 81 and 82 of the Proceeds of Crime and Anti-Money Laundering Act and obtained preservation orders prohibiting the respondents from transacting, withdrawing, transferring and/or dealing in any manner howsoever in respect of funds and any profits or benefits derived or accrued from funds held in the following accounts:-i.USD 632,071. 67 held in Account No xxxx at Equity Bank Limited in the name of Tebby Wambuku Kago.ii.KES37,000,000 held in AccNo xxxx Equity Bank Limited in the name of Tebby Wambuku Kago.iii.Ksh.5,000,000 held in Acc No xxxx at Stanbic Bank Limited in the name of Felesta Nyamathira Njoroge

2. By the notice of motion dated March 7, 2020 the 1st respondent seeks orders for modification/variation of the above order to provide for reasonable living, legal and travelling expenses in the sum of Kshs 10,672,000/=. The applicant also prays that this court be pleased to grant leave to the 1st respondent to file similar applications in future as and when the need arises.

3. The application is premised on grounds that:-“1. That the applicant is the assets recovery agency established under section 53 of the proceeds of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) as a body corporate with the mandate of identifying, racing, freezing and recovering proceeds of crime.2. That pursuant to part VIII of POCAMLA, sections 81-89 of POCAMLA, 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 the 1st respondent is female adult, a Kenyan Citizen of sound mind and the sole signatory and beneficial owner of bank account numbers xxxx and xxxx at Equity Bank Limited holding USD 631,071. 67 and Kenya Shillings 37,000,000/= reasonably suspected to be proceeds of crime.4. That the 2nd respondent is female adult, a Kenyan citizen of sound mind and the sole signatory and beneficial owner of bank account number xxxx at Stanbic Bank Limited holding Kenya shillings 5,000,000/- reasonably suspected to be proceeds of crime.5. That in the month of August, 2021, the agency received information into a suspected case of money laundering schemes, and proceeds of crime involving multiple money transactions conducting through the bank accounts of the respondents in USADollars and Kenya Shillings mainly from foreign jurisdiction whose source has no legitimate explanation involving the respondents herein and other foreign nationals.6. That the respondents are suspected to be part of a syndicate involved in a complex money laundering scheme involving themselves and foreign nationals and the bank accounts of the respondents are used as a conduit of complex money laundering.7. That preliminary investigations have established that the respondents executed a complex scheme of money laundering designed to conceal, disguise the nature, source, disposition and movement of the illicit funds, suspected to constitute proceeds of crime and which are the subject matter of this application.8. That there are reasonable grounds and evidence demonstrating that the funds held by the respondent’s in the specified bank account are direct or indirect benefits, profits and/or proceeds of crime obtained from a complex money laundering scheme and are liable to be preserved pending filing, hearing and determination of intended forfeiture application in accordance with section 90 of the Proceeds of Crime and Anti-Money Laundering Act, 2009. 9.That there is imminent danger the respondents shall dispose, transfer and dissipate the said assets unless this honourable court issues preservation orders as prayed in this application.10. That it is in the interest of justice that preservation orders do issue prohibiting the respondents and/or their agents or representatives from dealing in any manner with the aforementioned assets.11. That unless this honourable court grants the orders sought, the respondent will continue to enjoy the benefits derived from the proceeds of crime.”

4. In support of the application the 1st respondent has exhibited certificates of birth, a photograph showing a child with a bandaged leg, documents that appear to be medical records, a tenancy agreement and an advocates deposit request note dated January 12, 2022 for Kshs 5,285,000/=

5. The applicant/respondent opposed the application through the affidavit of Fredrick Musyoki sworn on June 3, 2022 in which he deposes inter alia the applicant/respondent is mandated to apply for orders of prohibition ex parte under section 81, 82, 86 and 87 of the Proceeds of Crime and Anti-Money Laundering Act; that the 1st respondent/applicant has not sufficiently demonstrated any reasonable evidence to warrant the setting aside or variation of the preservation order; that she has not proved that she will suffer hardship as a result of the order or that the hardship as a result of the order or that the hardship she will suffer outweighs the risk of the funds subject of the order being destroyed, lost, damaged, concealed or transferred. Further that the applicant/respondent has applied a forfeiture application being Acec Civil Application No E009 of 2022 and as such under section 84 of the Proceeds of Crime and Anti-Money Laundering Act the preservation cannot be vacated as that shall render the forfeiture application nugatory. The deponent also contends that the applicant has not demonstrated how her rights under article 40 and 53 of the Constitution have been violated by dint of that order; and that the funds are presumed to be proceeds of crime and the applicant is not entitled to utilize the same pending hearing and determination of the forfeiture application.

6. Parties canvassed the application by way of written submissions.

7. For the respondent/applicant it was argued that the application is properly before this court by dint of section 8 of the Civil Procedure Act, Order 45 rule 1 of the Civil Procedure Rules and sections 88 and 89 of the Proceeds of Crime and Anti-Money Laundering Act. Learned counsel for the applicant submitted that the order has rendered the applicant incapable of meeting her expenses and that of her close relatives and is therefore entitled to the orders sought; that the applicant is a mother of two children one of who is in Belgium nursing a fractured leg and she needs her and further that article 53(1)(b) of the Constitution protects the rights of the child yet the applicant cannot meet those rights because of the preservation orders. Counsel contended further that as matters currently stand the applicant’s rent, food, house worker’s salary, airfare to and fro Belgium and upkeep and legal fees all amounting toKshs 10,672,000 cannot be met and that these are basic requirements that the applicant needs to satisfy her recurring needs. Counsel placed reliance on the case of EACC v Jimmy Mutuku Kiambu [2018]eKLR and the case of Asset Recovery Agency v Samuel Wachenje & 9 others[2018] eKLR.

8. On his part learned counsel for the respondent argued that the applicant has not brought herself within the provisions of either section 89 of the Proceeds of Crime and Anti-Money Laundering Act or Order 45 rule 1 of the Civil Procedure Rules. Counsel contended that the supporting affidavit contains mere assertions that do not provide evidence that the applicant relied on the preserved funds for her reasonable living expenses, and that in the absence of such evidence this court ought not to vary the orders. Counsel placed reliance on the case of Assets Recovery Agency v Pamela Aboo [2018] eKLR where there court held:-“I note that she has not demonstrated to the court that she relies on the said monies in the account to provide for her reasonable day to day living expenses. Freezing the account therefore will not deprive her of reasonable living expenses, since it is not an account she withdraws money from.The statements on the relevant accounts show that she only made deposits and did not make any withdrawals. It is also noteworthy that although the applicant submits that the funds were from her various businesses, she has not presented to the court any form of proof as invoices and payments from customers, or evidence of payments to suppliers for goods received or services rendered by her businesses, as proof of the existence of such business. .......... Without any supporting documents, or paper trail of transactions that led to these bank deposits, it is my considered view that prima facie, there is reasonable ground to believe that the monies so deposited may have been proceeds of crime.”

9. Counsel also contended that the preservation order cannot be varied where there is a forfeiture application in place; that the funds are presumed to be proceedings of crime obtained through money laundering and the applicant has no right to remain with it. Counsel asserted that the applicant’s arguments that she acquired the funds lawfully should be canvassed at the hearing of the forfeiture application but not at this stage. Counsel pointed out that allowing this application shall amount to allowing a party to benefit from proceeds of crime contrary to the spirit of the Proceeds of Crime and Anti-Money Laundering Act. Counsel also placed reliance on the case of National Bank of Kenya Limited v Ndung’u Njau NBI CA Civil AppealNo 211 of 1996 where the court held:-“A review may be granted whenever the court considers that it is necessary to correct an apparent error or omission on the part of the court. The error or omission must be self evident and should not require an elaborate argument to be established. It will not be a sufficient ground for review that another judge could have taken a different view of the matter. Nor can it be a ground for review that the court proceeded on an incorrect exposition of the law and reached an erroneous conclusion of law. Misconstruing a statute or other provision of law cannot be a ground for review.”

10. Counsel contended that the impugned orders were merited and urged this court to find that no violation of rights was proved and dismiss the application with costs.

11. The issue for determination by this court is:- Whether the applicant has satisfied the threshold for issuance of an order for reasonable provisions

12. The 1st respondent/applicant at prayer number (4) of the application seeks that the court varies the order to make reasonable provision for the expenses enumerated as house rent, food, house worker person, airfare to and from Belgium and upkeep, and legal fees amounting to USD 10,672,000. From the outset, this amount is overshot of the amounts preserved by the order of this court issued on December 14, 2021. For the avoidance of doubt, the funds preserved are USD 631,071. 67 and Kshs. 37,000,000 held inA/c No xxxx and xxxx held at Equity Bank in the name of the 1st respondent and Kshs 5,000,000 held in A/c No xxxx held at Stanbic Bank in the name of the 2nd respondent. It follows therefore that the reasonable expenses ought to be an amount that can be disbursed from the preserved funds and towards such needs that the applicant has proven to be their ordinary and usual expenses.

13. This court’s jurisdiction to make an order for reasonable provision under section 88(2) of the Proceeds of Crime and Anti-Money Laundering Act is discretionary and dependent on the two conditions; that the applicant cannot meet their expenses from the property which is not subject of preservation and full disclosure of their interests. Section 88(2) of the Proceeds of Crime and Anti-Money Laundering Act provides as follows:“A court shall not make provisions for any expenses under subsection (1) unless it is satisfied that—a.the person cannot meet the expenses concerned out of his property which is not subject to the preservation order; andb.the person has disclosed under oath all his interest in the property.”

14. On the variation and rescission of the order, section 89 of the Proceeds of Crime and Anti-Money Laundering Act,2009 and Order 45 rule 1 of theCivil Procedure Rules. Section 89 of the Proceeds of Crime and Anti-Money Laundering Act provides as follows:“89. Variation and rescission of orders1. A court which makes a preservation order—a.may, on application by a person affected by that order, vary or rescind the preservation order or an order authorizing the seizure of the property concerned or other ancillary order if it is satisfied—i.that the operation of the order concerned will deprive the applicant of the means to provide for his reasonable living expenses and cause undue hardship for the applicant; andii.that the hardship that the applicant will suffer as a result of the order outweighs the risk that the property concerned may be destroyed, lost, damaged, concealed or transferred; andb.shall rescind the preservation order when the proceedings against the defendant concerned are concluded.”

15. The 1st respondent/ applicant bears the burden of proving that they are suffering undue hardship due to the preservation order, which hardship outweighs the risk of dissipation of the preserved funds should the order be varied or rescinded.

16. In the case ofAssets Recovery Agency v Lillian Wanja Muthoni t/a Sahara Consultants and 5 others [2019] eKLR, while deciding a similar application the court defined reasonable living expenses as:“30. Reasonable living expenses are the expenses a person necessarily incurs in achieving a reasonable standard of living. This is a standard that meets a person’s physical, psychological and social needs. Is the 1st applicant able to meet this with the funds in the unfrozen accounts”

17. I have considered the application, the grounds thereof, the affidavits of the parties, the rival submissions of learned counsel for the parties, the cases cited and the aforestated provisions of the law.

18. It is my finding firstly that what is sought by the 1st respondent/applicant are not reasonable living expense. The funds she seeks are expressed in US Dollars which would mean that put together the same exceed the amount of money the subject of the preservation order. What would result were this court to grant the orders would not amount to a variation of the order but to a complete annihilation of it. Even were we to presume that there is an error and the amounts are in shillings the same are exaggerated and moreover items such as house worker, airfare to and from Belgium and legal fees are not basic necessities that one cannot do without. As such they are not reasonable living expenses.

19. As to the fact that there is a violation of the rights of the 1st respondent/applicant’s child by reason of the preservation order my finding is that nothing can be further from the truth. This is because nothing prevents the respondent/applicant from travelling to Belgium to be with the child.

20. I am also not satisfied that any hardship likely to be suffered by the 1st respondent/applicant outweighs the risk that the funds may dissipate and therefore render nugatory the application by the assets recovery agency/respondent for forfeiture. Moreover it is not lost to this court that the applicant has either deliberately or by accident failed to disclose to this court whether she has property other than the preserved funds through which she can met her expenses. Accordingly, I find no merit in the application and the same is dismissed with costs to the applicant/respondent.

DATED, SIGNED AND DELIVERED VIRTUALLY ON THIS 6TH DAY OF OCTOBER, 2022. E N MAINAJUDGE