Assets Recovery Agency v Kini; Al-Alyaan Motors Limited (Interested Party) [2025] KEHC 3297 (KLR) | Asset Forfeiture | Esheria

Assets Recovery Agency v Kini; Al-Alyaan Motors Limited (Interested Party) [2025] KEHC 3297 (KLR)

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Assets Recovery Agency v Kini; Al-Alyaan Motors Limited (Interested Party) (Anti-Corruption and Economic Crimes Civil Suit E008 of 2024) [2025] KEHC 3297 (KLR) (Anti-Corruption and Economic Crimes) (27 February 2025) (Judgment)

Neutral citation: [2025] KEHC 3297 (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 E008 of 2024

LM Njuguna, J

February 27, 2025

Between

Assets Recovery Agency

Applicant

and

Mohamed Hassan Kini

Respondent

and

Al-Alyaan Motors Limited

Interested Party

Judgment

1. Before this court is a civil forfeiture application dated 17th April 2024 brought by way of Originating Motion under Sections 81, 90 and 92 of the Proceeds of Crime and Anti-Money Laundering Act (herein referred to as the POCAMLA) and Order 51 of the Civil Procedure Rules. The motion is supported by the supporting affidavit sworn by Cpl. Isaac Nakitare and is based on the grounds set out on the body of the application.

2. By the motion, the Applicant seeks the following orders: -1. That this Honourable Court be pleased to issue an order declaring the motor vehicle registration number KCV 894V, Daihatsu, station wagon as proceed of crime.2. That this Honourable court be pleased to issue an order that the motor vehicle registration number KCV 894V, Daihatsu, station wagon be forfeited to the Assets Recovery Agency (The Applicant herein)3. That this Honourable court be pleased to issue an order directing the Director National Transport and Safety authority to effect transfer the motor vehicle registration number KCV 894V, Daihatsu, station wagon be forfeited to the Assets Recovery Agency (The Applicant herein)4. That costs of the suit be provided.

3. Briefly, the Applicant’s case is that following the arrest of the Respondent on the 18th September 2021 at Ganjoni Estate, Mombasa County, and subsequent arraignment in court on the 22nd September 2021, he was charged with the offence of trafficking with Narcotic Drugs contrary to Section 4(a) of the Narcotic Drugs and Psychotropic Substances (Control) Act No. 4 of 1994 in the Chief Magistrate’s Court at Mombasa Law Courts vide Criminal Case Number E1928 of 2021.

4. That during the arrest, a search was conducted in the motor vehicle registration number KCV 894V, Daihatsu Station Wagon and the residence of the Respondent and a total of 678. 9 grams of cannabis and 531 grams of heroin with market value of Kshs.20,364 and Kshs.1,593,000 respectively were recovered.

5. That the Applicant conducted investigations into the activities of the Respondent’s bank and M-pesa accounts for purposes of ascertaining whether he received and laundered any funds and used it to acquire assets that are suspected to be proceeds of crime.

6. That the investigations established that the Respondent received suspicious funds from the illegitimate trade in Narcotic Drugs through M-pesa and bank accounts registered in the name of the Respondent with intention to conceal the source of funds which are proceeds of crime, contrary to the provisions of the POCAMLA 2009 and Prevention of Organized Crimes Act.

7. That the investigations established that the asset/property traced and identified was unlawfully acquired using proceeds from the illegitimate trade in Narcotic drugs substances with the Respondent’s bank accounts used as conduits of money laundering contrary to Sections 3, 4, 7 and 16 of the Proceeds of Crime and Anti-Money Laundering Act, 2009.

8. Further, that following the search conducted on motor vehicle KCV 894V which was in the Respondent’s possession, a package of creamish powdery substance wrapped in a clear cello tape enclosed in a blue non-woven bag packages of plant material wrapped in a red non-woven bag, were recovered from the rear seat of the aforesaid motor vehicle and 22 rolls of plant material suspected to be narcotic drugs were recovered underneath the floor mat of the same vehicle.

9. That the sample of the packages of the dry plant that were recovered were submitted to the Government Analyst and upon testing, they were found to be Cannabis and Heroin and upon that confirmation, the Respondent was arraigned and charged on the 22nd September 2021 before the Chief Magistrate’s court at Mombasa with the offence of trafficking in narcotic drugs.

10. The Applicant further states that an analysis of the bank statement for account number 0161186686 held at Absa Bank in the name of the Respondent established that the same was opened and operated by the Respondent.

11. That further analysis of the same bank account for the period between 20th July 2010 – 24th January 2024 reveals that there were notable suspicious credits and debits amounting to Kshs.6,396,312. 00 and Kshs.5,484,889. 00 respectively which transactions were characterized by cash deposits and cash withdrawals.

12. That the funds in the Respondent’s account are reasonably believed to have been acquired by the Respondent as proceeds from the illegitimate trade in narcotics, and there are reasonable grounds to believe that the Respondent’s account was used as conduits of money laundering.

13. That the Applicant’s investigations further showed that the Respondent is the beneficial owner of motor vehicle registration number KCV 894V which the Applicant seized while in the possession of the Respondent which vehicle is registered in the name of the Interested Party who had sold the vehicle to the Respondent. That upon being summoned by the Applicant to record a statement and explain the source of his income, the Respondent declined and did not offer an explanation.

14. The Respondent filed a replying affidavit on his own behalf and as a Director of the Interested Party. He termed the application as malicious, vexatious and that the same has been brought in bad faith to the extent that it seeks to dispossess a rightful and duly registered owner of property; that the application is tainted by material non-disclosure of facts to the extent that the Applicant has not established any nexus between the purported crime and the Interested Party and therefore, the application is misconceived, mischievous, bad in law and an abuse of the court process.

15. The Respondent contended that neither the Interested Party nor its agents or directors or employees were involved in the investigations alluded to, and that the Interested Party is a stranger to the contents of the affidavit in support of the Originating Motion.

16. That the Interested Party is the registered owner of the subject motor vehicle which the Respondent sought to purchase vide a sale agreement dated the 13th August 2019 by way of hire purchase but the Respondent failed to pay the whole of the purchase price. That as a result, he never acquired ownership of the suit vehicle which entitled the Interested Party to repossess and recover ownership of the same but it was unable to trace the vehicle until these proceedings.

17. That it therefore believes that the suit motor vehicle cannot be proceeds of crime when the same had not even been acquired by the Respondent having defaulted in payment of the purchase price.

18. It was also the Interested Party’s case that no nexus has been established between the impugned bank account and the Interested Party’s vehicle. That from the bank statements, no sum was debited from the said bank account prior to August 2019 that would lend credence to the allegations that the motor vehicle was purchased with funds from the said account.

19. The Interested Party averred that as a cardinal rule, no criminal culpability attaches to the offender and a third party cannot suffer sentence or consequence for the offences of another. That neither the Interested Party nor any of its agents, directors or employees knew, or had reasons to believe that the motor vehicle was acquired through proceeds of crime and that no such grounds have been established herein.

20. The Applicant filed a supplementary affidavit in which the deponent, Cpl. Isaac Nakitare deponed that he sought warrants to investigate phone number 0721 – 413379 and that on the 15th December 2021 in the company of other officers, they visited the Interested Party’s premises in Mombasa with a view to establishing how the Respondent acquired motor vehicle KCV 894V. That the Applicant established that it was purchased for the sum of Kshs.582,400/- which was paid by instalments with a balance of Kshs.54,700 remaining unpaid to date.

21. That the Applicant also established that the Respondent deliberately avoided to use its bank account – number 0160086686 with Absa Bank or use the monies deposited therein to pay for the motor vehicle though some deposits and withdrawals were done on different dates.

22. The Applicant further stated that on analyzing the Respondent’s M-pesa statement for phone number 0721413379, it showed that the M-pesa wallet was opened on the 26th March 2008 with a cash deposit of Kshs.30,000 but on the 13th August 2019 when the deposit for the motor vehicle was paid, the money that was in the M-pesa wallet was not used to pay for the deposit. However, the Respondent used the same M-pesa wallet to settle the balance of the purchase price of the motor vehicle and that between 31st August 2019 to 10th September 2019 the Respondent made unexplained cash deposit totaling to Kshs.79,000, paid out a total of Kshs.111,650 to 23 persons and received a total of Kshs.130,940/- and a cash withdrawal of KShs.17,000 which was made on the 4th September 2019.

23. That upon his arrest on the 18th September 2021, the Respondent recorded a statement under inquiry with the Anti-Narcotics at Kilindini wherein he admitted that he was arrested in possession of 18 rolls of bhang. He also admitted that upon searching his house the police officers recovered a weighing scale and loose dry plant materials, (bhang) which he had bought from one Jabar Das at a cost of Ksh.20,000/-.

24. The deponent has further deposed that the Respondent was summoned on the 2nd February 2023 and he recorded a statement in which he stated that he was a fish monger at Old Town Mombasa and that he had acquired the motor vehicle using proceeds of his fish vending business, support from the family and rents received from the hiring of his boat but according to the Applicant’s investigations, the said information was false.

25. That in view of the above information, the Applicant contends that the Respondent did not acquire the motor vehicle using proceeds of his fish vending business and rents from hiring of the boat as he alleged, but the motor vehicle was acquired using the proceeds of the sale of narcotic drugs and psychotropic substances.

26. The Originating Motion was disposed of by way of written submissions but only the applicant filed its submissions and list of authorities.

Submissions 27. The Applicant distilled three issues for determination as follows:-a.Whether motor vehicle registration number KCV 894V is a proceed of crime and liable for forfeiture to the Government.b.Whether the Interested Party has established an interest in the motor vehicle.c.Who should pay the costs of the suit.

28. The Applicant submitted that it has established that the motor vehicle was acquired using monies obtained from trafficking of narcotic drugs and therefore liable for forfeiture. That it has discharged its burden but the Respondent has failed to show the means with which he acquired the motor vehicle. Reliance was placed on the cases of Pamela Aboo Vs Assets Recovery Agency and Ethics and Anti-Corruption Commission – Nairobi CACA No.452/2018 (unreported) and that of The Queen on the application of the Director of the Assets Recovery Agency Vs Jeffrey David Green & Others (2005) EWHC 3168 (Admin) in which the principle is that the Assets Recovery Agency was required to demonstrate on a balance of probabilities that the “property is a proceed of corruption” and that it was not essential for the Agency to establish the precise form of unlawful conduct as a result of which the property in question was acquired. That the court may be asked to draw inferences from the unlawful conduct established by the agency combined with the proved absence of legitimate capital and income.

29. The Applicant has further submitted that it has established a casual link between the Respondent’s criminal activities and acquisition of the motor vehicle as follows: -1. That the Respondent was arrested in possession of narcotic substances to wit cannabis and heroin.2. A search conducted in his residence recovered items from which, a reasonable inference can be made that the owner engages in the business of trafficking in narcotic drugs.3. That analysis of his bank account shows it had received suspicious credits amounting to Kshs.6,396,312 and suspicious debits of Kshs.5,484,889 for the period between 20th July 2010 and 24th January 2024 and some of the deposits did not make a clear narration of the sources of the funds.4. That the Respondent deliberately avoided to use his M-pesa and bank accounts to pay for the deposit of the motor vehicle.5. That while making his statement under caution he admitted that he was arrested in possession of rolls of bhang and a weighing scale.6. That the Respondent does not have a legitimate source of income.

30. On whether the Interested Party has established an interest in the motor vehicle, the Applicant submitted that the same was not established as required under Section 93(1) of the POCAMLA and relied on the cases of National Director of Public Prosecutions Vs R.O. Cook Properties (Pty) Ltd, National Director of Public Prosecutions Vs 37 Gillespie, Street Durban (Pty) Limited, National Director of Public Prosecutions vs Seenarayan (111/03) [2004] ZASCA 38 on the burden of proof for persons who alleged to have interest in property subject of forfeiture, as that on a balance of probabilities.

31. It was submitted that the Interested Party did not prove absence of knowledge or that it was involved in the commission of the offence or that it acquired the interest of the motor vehicle in circumstances that do not raise suspicion that it was tainted property. That the Interested Party has not demonstrated that it took action to pursue the Respondent for the balance of the purchase price. Further, that the Interested Party has not shown that the sale of the motor vehicle was agreed under hire purchase terms and that the sale agreement does not contain a provision for the bailment of the motor vehicle and purchase upon payment of a nominal sum as contemplated under Section 2 of the Hire Purchase Act. And that even if the sale of the motor vehicle was on hire purchase terms, the Interested Party is precluded from exercising its right to repossess it since more than two-thirds of the purchase price has been paid.

32. Lastly, the Applicant submitted that public interest militates against the release of the motor vehicle to the Interested Party as doing so would be going against the spirit of the POCAMLA which was enacted to discourage criminals from obtaining, using and dealing in properties that had been acquired as a result of or in connection with criminal activities. Reliance was placed on the case of Assets Recovery Agency Vs Waithira; Co-operative Bank of Kenya Limited (Interested Party) (Civil Suit No. E006 of 2023) [2003] KEHC 22509 (KLR) (Anti-Corruption & Economic Crimes) (21 September 2003) judgment in which despite the court having found that the Interested Party was not involved in the commission of offences, held that public interest, militated against the motor vehicle being released to the Interested Party for it had the option of pursuing a claim for the balance.

33. That on the other hand, it would amount to unjust enrichment for the Interested Party to be given the possession and ownership of the motor vehicle yet it has received most of the purchase price with only Kshs.54,700 outstanding.

34. On costs, it was submitted that the Respondent should be condemned to meet the costs of the suit.

Analysis and Determination Issue (1):- Whether the motor vehicle is a proceed of crime and liable for forfeiture to the Government. 35. The court has considered the Originating Motion, the grounds thereof, the respective affidavits and the annexed documents and the submissions by the Applicant.

36. What constitutes Proceeds of Crime is defined in Section 2 of the POCAMLA 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 derived or realized from such property from the time the offence was committed.”

37. The Applicant herein has moved this court for an order of forfeiture of motor vehicle registration number KCV 894V under Section 90 of POCAMLA. The making of forfeiture order is provided for in Section 92 and the High Court has jurisdiction to make the order subject to Section 94. The order can be made if it finds on a balance of probabilities that the properly concerned: -a.Has been used or is intended for use in the commission of an offence; orb.Is proceeds of crime.

38. From the reading of Section 92, the court can only order forfeiture of property if it is satisfied on a balance of probabilities that the said property is intended for use in commission of offence or it is a proceed of crime.

39. The Applicant herein alleges that motor vehicle KCV 894V is a proceed of crime and that it should be forfeited to the Government.

40. From the evidence that has been availed to court by way of affidavits and annextures, the Respondent was arrested on the 18th September 2021 at Ganjoni Estate, Mombasa County and was arraigned in court and charged with the offence of trafficking in narcotic drugs and during the time of arrest he was having possession of motor vehicle KCV 894V. The police conducted a search on the motor vehicle and they recovered bhang and heroin according to the Government Analyst report. The investigations by the Applicant established that the Respondent engaged in illegal business of trafficking in narcotics where he received money being proceeds from the illegal trade and laundered the proceeds through his bank account number 0161186686 with Absa Bank Limited (I will come back to that later).

41. The criminal case is still pending before the Chief Magistrate’s court and even if it had been finalized, its outcome would not have any bearing on this matter as civil forfeiture targets the property but not the person, and are proceedings in rem as opposed to in personam. As such, they are not predicated on the guilt or otherwise of the person. See the case of NDPP v Prophet (5928/01) (2003) ZAW CHC 16, South African case.

42. In fact, a claim for civil recovery can be determined on the basis of conduct in relation to property without the identification of any particular unlawful conduct. In the case of Kenya Anti-Corruption Commission Vs Stanley Mombo Amuti (2017) eKLR the learned Judge while dealing with forfeiture proceedings under Section 55 of the ACECA which is similar to the proceedings under Section 92 of POCAMLA stated:-“92. This is a claim for civil recovery. A claim for civil recovery can be determined on the basis of conduct in relation to the property without the identification of any particular unlawful conduct. The plaintiff herein is therefore not required to prove that the Defendant actually committed an act of corruption in order to invoke the provisions of ACECA.”

43. In the case herein, upon carrying out investigations and inspecting the account of the Respondent held at Absa Bank being account number 0161186686, the Applicant established that suspicious credits amounting to Kshs.6,396,312 was made and suspicious debits amounting to Kshs.5,484,889 was also made between 20th July 2010 and 24th October 2024 and when the Respondent was invited to give an explanation as to the sources of the money, he did not offer an explanation.

44. Indeed, it is worth noting that the Respondent did not defend the Originating Motion and did not bother to explain the source of his income that is reflected in the bank statement of his account held with Absa Bank.

45. However, after the Applicant was served with a replying affidavit, it filed a supplementary affidavit and in it, it went out of its way to gather more evidence against the Respondent by way of a statement that he gave to the police dated 2nd February 2023 in which he explained the source of his income. He stated that the source of the income was his business and support from his family and rental income from renting of his boat.

46. In the pending criminal case, the Respondent filed an application for release of the motor vehicle and in the supporting affidavit, he deposed that he carries out business of a fish monger which is his only source of income and that the vehicle is an integral component of his business as it is the means for transportation of the fish to various locations in the said business.

47. In response to this assertion, the applicant annexed a letter dated 5th August 2024 from the Kenya Fisheries service which shows that the Respondent is not registered with Kenya Fisheries Service as a fisherman and that he does not have any Fishermen’s licence. The letter further stated that Kenya Fisheries Service does not issue certificate of outstanding service to anyone including the Respondent. The letter concluded by stating that Kenya Fisheries Service does not have any other information regarding the Respondent’s involvement in fisheries related business. The said letter was written to the Applicant after it sought to know through their letter dated 22nd July 2024 whether the Respondent is registered with the Authority as owning a motor boat, and if at all he does, for what purpose and certified copies of contract details.

48. The contents of the letter from Kenya Fisheries Service, in my considered view lays to rest the issue of whether the funds that are held in the Respondent’s account at Absa Bank were from a legitimate trade. His explanation for the source of the funds was rebutted by the Applicant and that left him exposed.

49. That being the case, where did the Respondent get the funds for purchasing the motor vehicle in question? The Applicant annexed a sale agreement dated 13th August 2019 for sale of motor vehicle KCV 894V to its supplementary affidavit for Kshs.582,400 and by the time the order of forfeiture was issued, only a balance of Kshs.54,700 was outstanding. The Respondent had already paid the rest of the money. The bank statement shows that his account was receiving money but the source of the monies according to the explanation that was given in the criminal case, (not in this matter) has been seriously rebutted by the Applicant.

50. Upon his arrest, the Respondent recorded a statement under inquiry with the Anti-narcotics unit at Kilindini wherein he admitted that he was arrested in possession of 18 rolls of bhang. He also admitted that when the police searched his house they recovered a weighing scale and loose dry plant materials (bhang) which he had bought from one Jabar Das at Kshs.20,000. The Respondent has not controverted all the evidence that has been brought forth by the Applicant as he did not defend this case.

51. In my considered view and from the totality of the evidence, I find that motor vehicle KCV 894V was acquired through proceeds of illicit trade and therefore proceed of crime and liable for forfeiture to the Government.

Issue (2):- On whether the interested party has established an interest in the motor vehicle 52. In its replying affidavit, the Interested Party has claimed interest in the motor vehicle and has argued that though there is a sale agreement between the Respondent and itself, the Respondent never acquired ownership of the vehicle as he defaulted in payment of the purchase price, as a result of which the interested party became entitled to repossess and recover ownership of the vehicle.

53. It has averred that the vehicle cannot be proceeds of crime when the same had not even been acquired by the Respondent, as he never acquired ownership or title, having defaulted in payment of the purchase price and that the Interested party is the sole owner of the vehicle.

54. The Interested Party argued that from the bank account statement, no sum was debited from the bank account prior to August 2019 that would lend credence to the allegations that the motor vehicle was purchased with funds from the said account. That there is no single transaction in the entire bank statement that matches any installment of the sale of the motor vehicle.

55. At a glance, the Interested Party may be seen to be making a valid point, but one may ask; must the purchase price come from a bank account for it to qualify to be from a legitimate source? This, to me, is a resounding no. As I have explained earlier in this judgment while dealing with the first issue for determination, the source of the funds whether from the bank account held at Absa or whatever other source must be a legitimate source. The source as explained by the Respondent was rebutted by the Applicant which totally demolished the evidence of the Respondent on the source of funds in his bank account or otherwise.

56. In my view, the answer to that issue lies in Section 93(1) which provides:-“93. Protection of third parties(1)Where an application is made for a forfeiture order against property, a person who claims an interest in the property may apply to the High Court, before the forfeiture order is made and the court, if satisfied on a balance of probabilities—(a)that the person was not in any way involved in the commission of the offence; and(b)where the person acquired the interest during or after the commission of the offence, that he acquired the interest—i.for sufficient consideration; andii.without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was, at the time he acquired it, tainted property, the court shall make an order declaring the nature, extent and value (at the time the order was made) of the person’s interest.”

57. The Interested Party failed to exercise its right to move the court under the aforesaid section and claim its interest, if any, in the said motor vehicle wherein it would have proved absence of knowledge that it was not involved in the commission of the offence.

58. Further, as submitted by the Applicant, the Interested Party has not shown that the sale of the motor vehicle was agreed under Hire Purchase terms. Clause 3 of the sale agreement does not provide in definitive terms, that the agreement was made under Hire Purchase arrangement so that it entitles the seller a right to repossess the vehicle in the event of default by the Respondent. The sale agreement does not contain any provision which describes the sale as a hire purchase sale. Even assuming that the vehicle was purchased under hire purchase, the Interested Party is precluded from exercising its right to repossess the same since more than two thirds of the purchase price has already been paid. The only remedy the Interested Party has is to pursue the balance through a civil suit.

59. Finally, public interest militates against the release of the motor vehicle to the Interested Party as that would go against the spirit of enactment of the POCAMLA which is to discourage criminals from obtaining, using and dealing with properties that have been acquired as a result of criminal activities. See the case of Assets Recovery Agency Vs Waithira (Supra).

Issue (3):- On who should bear the costs of the suit. 60. The general rule is that costs follow the event.

61. In the end, the court enters judgment in favour of the Applicant as follows: -a.An order is hereby issued declaring motor vehicle registration number KCV 894V, Daihatsu, station wagon as proceed of crime.b.An order is hereby issued that the aforesaid motor vehicle be an is hereby forfeited to the Assets Recovery Agency, the Applicant herein.c.An order is hereby issued directing the Director National Transport and Safety authority to effect transfer of the motor vehicle registration number KCV 894V Daihatsu, station wagon to the applicant (Assets Recovery Agency)d.The Respondent shall meet the costs of the suit.

SIGNED, DATED AND DELIVERED VIRTUALLY ON THIS 27TH DAY OF FEBRUARY, 2025. ....................................L.M. NJUGUNAJUDGEIn the presence of:-Mr. Wambua for the ApplicantNo appearance for the RespondentCourt Assistant – Adan