Ethics & Anti-Corruption Commission v Equity Bank Kenya Limited & Geotech Contractors Limited [2016] KEHC 2129 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

MISC. APPLICATION NO. 465 OF 2016

IN THE MATTER OF:    THE ANTI CORRUPTION AND ECONOMIC CRIMES ACT (CAP 65) and THE ETHICS & ANTI-CORRUPTION COMMISSION ACT (CAP 65A) LAWS OF KENYA

AND

IN THE MATTER OF:     AN APPLICATION BY ETHICS & ANTI-CORRUPTION COMMISSION FOR AN ORDER UNDER SECTION 56 OF THE ANTI-CORRUPTION AND ECONOMIC CRIMES ACT (CAP 65) AND SECTION 11(1) (J) OF THE ETHICS & ANTI-CORRUPTION COMMISSION ACT (CAP 65A) TO PROHIBIT THE TRANSFER OR DISPOSAL OF OR OTHER DEALINGS (HOWSOEVER DESCRIBED) WITH MALINDI EQUITY BANK KENYA LIMITED ACCOUNT NUMBER 1290264840913.

ETHICS & ANTI-CORRUPTION COMMISSION ………… 1ST   RESPONDENT

VERSUS

EQUITY BANK KENYA LIMITED ………………....…………2ND RESPONDENT

GEOTECH CONTRACTORS LIMITED …………...……………….. APPLICANT

RULING

BACKGROUND

1. A brief synopsis of the present application is that the applicant, Geotech Contractors Limited was on 2nd December, 2015 notified by the County Government of Kilifi of an award of Tender No. 181117-2015/2016 whose total value is Kshs. 36,345,240. 00. for the construction of Kadzandani – Kamale water project in Magarini sub-county.  The applicant on 2nd December, 2015 accepted the offer.  A local service order for the said amount was prepared and signed on 12th February, 2016 by the relevant officers of the County Government of Kilifi. The applicant thereafter commenced the project.  The applicant contends that after completing more than fifty percent of the project, it applied for part payment and the sum of Kshs. 22,305,324. 45 was paid into the applicant’s bank account No. 1290264840913 at Equity Bank Kenya Ltd, Malindi branch.

2. The said  payment  triggered  action on the part of the 1st respondent, Ethics  and Anti-Corruption Commission who on 16th June,  2016  filed an application  under  certificate of urgency seeking orders to freeze the said  applicant’s bank account for a period  of 6 months pending investigations.  This court granted the orders sought.  The ripple effect of granting the said orders is the present application filed on 6th September, 2016 under certificate of urgency. The application has been brought under the provisions of sections 56(4) and (5) of the Anti-Corruption and Economic Crimes Act, Order 51 rule 1 of the Civil Procedure Rules, Sections 1A, 1B and 3A of the Civil Procedure Act and all other enabling provisions of the law.

3. The applicant seeks the following orders:-

(i) Spent;

(ii) That the Honourable court be pleased to discharge the orders granted on the 17th June, 2016 freezing the applicant’s account No. 1290264840913 at Equity  Bank Kenya Limited, Malindi Branch;  and

(iii) The costs of the application be provided for.

4. The application is supported by the grounds on the face of it and the supporting affidavit of Serah Musyimi filed on 6th September, 2016 and her supplementary affidavit filed on 14th September, 2016.  The 1st respondent filed a replying affidavit on 14th September, 2016 to oppose the application. The 2nd respondent did not respond to the application.

APPLICANT’S SUBMISSIONS

5. Mr. Mutinda, Learned Counsel for the applicant submitted that the tender in issue was awarded to the applicant in accordance with the Public Procurement and Disposal Act after which the applicant commenced the project. This, he informed the court is supported by annexures SM2, 3 and 5 attached to the applicant’s affidavit. He stated that creditors are demanding for payment from the applicant as shown by the annexures marked 6(a) and (b) to the said affidavit.  He argued that the 1st respondent has not shown any good reason for freezing of the bank account of the applicant.  Further, there was no appeal filed after the award of the tender was made. Counsel stated that the award is for supply of water to the residents of Magarini who have a right to safe drinking water in a project funded by the National Government through the County Government of Kilifi.

6. Counsel further argued that the payment of Kshs. 22,305,324. 45 was confirmed to be genuine by the Chief Officer, Kilifi County Government. As a result of the freezing of the account, the applicant is suffering and incurring losses.  He submitted that the 1st respondent has not shown that the project is a ghost project and that procurement procedures were flouted. Counsel cited the case of Ethics & Anti Corruption Authority vs Equity Bank Limited and Mediscope Agencies Ltd, Malindi H.C Misc. Civil Application No. 2 of 2016 where the court lifted freezing orders after a duration of three months.  Mr. Mutinda argued that there is no evidence of corruption in this case.  The court was also referred to the case of Tom Ojienda t/a Tom Ojienda &  Associates Advocates vs Ethics  and Anti-Corruption Commission & 5 Others [2016] eKLR at paragraphs 108- 118, where the court ruled that the applicant should have been given a fair hearing and the court proceeded to discharge the warrants.  With regard to the 1st respondent’s reference to bank the account mentioned in paragraphs 6 of its supplementary affidavit, Counsel stated that the bank account No. 03202919350021 belongs to a different entity/person. He prayed for the application to be allowed.

1ST RESPONDENT’S SUBMISSIONS

7. Ms.  Muriithi, Learned  Counsel for the 1st respondent informed  the court that they  wrote to the County  Secretary,  Kilifi on 12th June, 2016  seeking certain documents for the tender in issue and also to the Registrar of Companies seeking names of Directors of the  applicant  company.  They also wrote to Equity Bank to inquire about a bank account number for the financial statements attached to the tender documents submitted to the County Government of Kilifi by the applicant.  It was submitted that the payment for the sum of Kshs. 22,305,324. 45 was made to a different account.  Counsel informed the court that it will be upon perusal of the reports from the County Government of Kilifi that the 1st respondent will be able to examine the said documents. She stated that investigations are still ongoing.

8. She submitted that the 1st respondent is aware of the rights of the residents of Magarini but they are the ones who had lodged the complaint with the 1st respondent asking for investigations to be undertaken.  In reference to paragraph 10 of the 1st respondent’s affidavit, Counsel submitted that the identity of the informer is protected under section 33 of the Evidence Act.   Ms. Muriithi concluded her submissions by  asserting  the fact that  the 1st  respondent is  acting  within its mandate  to  investigate anti-corruption issues and  thereafter  report to the head office for further action.  She prayed for the court to allow for the orders freezing the account to run for the remainder of the three (3) months to allow uninterrupted investigations.

ANALYSIS AND DETERMINATION

The issue for determination is if this court should discharge its orders of 17th June, 2016 freezing the applicant’s bank account.

9. The exparte order granted by this court on the 17th June, 2016 was so granted under the provisions of section 56(1) and (3) of the Anti-Corruption and Economic Crimes Act.  The applicant  in bringing  the present application has invoked the provisions of sections 56(4) and (5) of the said Act which  provide that:-

“4. A person served with an order under this section may, within fifteen days after being served, apply to the Court to discharge or vary the order and the court may, after hearing the parties, discharge or vary the order or dismiss the application.

5.  The Court may discharge  or vary an order under  sub section (4) only, if the Court is  satisfied, on the balance of probabilities, that the  property  in respect  of which the order is  discharged or varied was not acquired as a result of  corrupt  conduct.”

10. The provisions of section 107 of the Evidence Act provide as follows:-

“1. Whoever desires the Court to give Judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.

2. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”

Section 108 of the said act provides that:-

“The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.”

Section 109 thereof provides that:-

“The burden of proof  as to any particular fact  lies  on the person who wishes  the court  to believe in its existence, unless it is provided by  any law that   the  proof  of that fact  shall lie on any  particular person.”

11. The balance of proof as articulated under the provisions of section 56(5) of the Anti-Corruption and Ethics Act is on a balance of probabilities. The said provisions must be read alongside the provisions of sections 107 -109 of the Evidence Act.  This therefore means that the Court will assess the evidence adduced and decide which case is more probable. The documentation availed by Counsel for the applicant is scanty. It is limited to the award of contract, acceptance of the contract, a local service order and photographs of the work allegedly undertaken and letters from creditors and some Advocates demanding for payment of goods delivered to the applicant. What is discernible from the submissions of the 1st respondent’s Counsel is that the money for the part payment was remitted to a different bank account other than that contained in the financial statements in the applicant’s tender documents.  This court would have in the circumstances expected the applicant to avail a copy of the tender documents to show that the bank account number given in the said financial statements is the same one to which the money in issue was remitted.  This would have resolved the assertion by the 1st respondent that the financial statements attached to the tender documents submitted to the County Government of Kilifi bore a different account number. The affidavit upon which the freezing orders were granted bore allegations of abuse of office by the Chief Officer Water Resources and bid rigging by the applicant.  This court notes that the Chief Officer Water Resources is the same person who wrote a letter on 7th June, 2016 to Equity Bank Malindi, confirming that the part payment of Kshs. 22,305,324. 45 to the applicant was for work done. Much as the provision of water is a constitutional right to the residents of Magarini sub-county, public offices and public officers must be guided by the principles of accountability and transparency as provided in article 10(2) of the Constitution of Kenya. As such where issues of integrity arise in public procurement, the 1st respondent has the right to investigate.

12. The applicant in paragraph 8 of its affidavit dated 6th September, 2016 deposes that the payment for Kshs. 22,305,34. 45 was for completing more than 50% of the project. In addition to the issue of financial statements, the onus was on the applicant to prove that such work was done by attaching a copy of the project implementation report to show the that Project Manager recommended to the Accounting Officer payment of the said amount after the applicant satisfactorily completed 50% of the work. This document, being a public record could have been obtained by the applicant from the County Government of Kilifi as proof that it was partly paid for work that was done.  The circumstances of the instant case bears no semblance to the two cases cited by Counsel for the applicant and they are of no persuasive value to this court.

13. It is my finding that the applicant has failed to discharge its burden of proof on a balance of probabilities.  I therefore decline to discharge the orders that this court issued on 17th June, 2016.  The application is hereby dismissed.  Each party shall bear its own costs.

DELIVERED, DATED and SIGNED at MOMBASA on this 28thday of October, 2016.

NJOKI MWANGI

JUDGE

In the presence of:-

Mr. Mutinda for the applicant

Ms. Abdulrahim holding brief for Ms. Muriithi for the 1st respondent

Mr. Muyala holding brief Mr. Otieno for the 2nd respondent

Mr. Oliver Musundi Court Assistant