Ethics & Anti-Corruption Commission v Equity Bank of Kenya & Capital Solutions Limited [2017] KEHC 2407 (KLR) | Asset Preservation Orders | Esheria

Ethics & Anti-Corruption Commission v Equity Bank of Kenya & Capital Solutions Limited [2017] KEHC 2407 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

ANTI-CORRUPTION & ECONOMIC CRIMES DIVISION

MISCELLANEOUS APPLICATION NO. 26 OF 2017

IN THE MATTER OF: ANTI-CORRUPTION AND ECONOMIC CRIMES ACT (CAP.65)

-AND-

IN THE MATTER OF: SECTION 180 OF THE EVIDENCE ACT (CAP.80)

-AND-

IN THE MATTER OF: AN APPLICATION BY ETHICS AND ANTI-CORRUPTION COMMISSSION FOR AN ORDER UNDER SECTION 56 OF THE ANTI-CORRUPTION AND ECONOMIC CRIMES ACT TO (CAP.65); SECTION 11(1)(J) OF THE ETHICS AND ANTI CORRUPTION COMMISSION ACT (CAP.65A), TO PROHIBIT THE TRANSFER OR DISPOSAL OF OR OTHER DEALINGS CONNECTED AND/OR INCIDENTAL TO EQUITY BANK KENYA LIMITED, MALINDI BRANCH, ACCOUNT NUMBER 045029480735:-

-BETWEEN-

ETHICS & ANTI-CORRUPTION COMMISSION...............APPLICANT

VERSUS

EQUITY BANK OF KENYA.......................................1ST RESPONDENT

CAPITAL SOLUTIONS LIMITED...........................2ND RESPONDENT

R U L I N G

1. The Applicant brought before the Court an application by way of an ex parteNotice of Motion dated 8th June, 2017, under Section 56(3) of theAnti Corruption and Economic Crimes Act and Section 11(1)(j) of the Ethics and Anti Corruption Commission Act, 2011 seeking orders that  the Honourable Court be pleased to extend the preservation orders issued on 13th January, 2017 for a further period of four months; thereby prohibiting the Respondents, by themselves or through their agents, servants or assigns from transferring, disposing off, wasting or in any way dealing with bank account number [particulars withheld] in the name of Capital Solutions held at Equity Bank Kenya Limited, Malindi Branch.

2. The Application is supported by the Affidavit of Jacquilline Kimani and the Supplementary Affidavit sworn by Taabu Lwanga, both being investigators with the Ethics and Anti-Corruption Commission (the Commission). The Application is premised on grounds that the Applicant is investigating allegations of fraudulent acquisition of assets including public finds by the 2nd Respondent, and the ongoing investigations have established that the 2nd Respondent has corruptly acquired public funds from Kilifi County Government through unclear circumstances, which calls for the 2nd Respondent’s satisfactory explanations as to how they acquired Kshs. 226,816,276. 25/=. The Applicant is therefore reasonably apprehensive that unless the preservation orders issued on 13th January, 2017 are extended, the respondents herein may initiate and facilitate withdrawal, transfer or in any other way, dispose of funds deposited in bank account no. [particulars withheld], in the name of Capital Solutions held at Equity Bank Kenya Limited Malindi, to the prejudice of the state, the general public and the Applicant in the discharge of its statutory duty and constitutional mandate against corruption and economic crimes.

3. This Application is opposed by a Replying Affidavit sworn by Sarah Musyimi, director of the 2nd Respondent Company and dated 12th June, 2017, on grounds that the Applicant has produced no evidence or documents including bank statements as annexures in support of its claim. The prayers sought by the 2nd Respondent are that the Application be dismissed because the extension orders prayed for by the Applicant are tantamount to infringing on the 2nd Respondents right to property as provided for under Article 40of theConstitution of Kenya.

4. The Applicant, in its submissions, indicated that its Application was based on the provisions of Section 56 of the Anti Corruption and Economic Crimes Act which states:

“(1) On an ex parte application by the Commission, the High Court may make an order prohibiting the transfer or disposal of or other dealing with property on evidence that the property was acquired as a result of corrupt conduct.

(2) An order under this section may be made against a person who was involved in the corrupt conduct or against a person who subsequently acquired the property.

(3) An order under this section shall have effect for six months and may be extended by the court on the application of the Commission.”

5. The Applicant made reference to the case of Ethics and Anti Corruption Commission v Equity Bank Kenya Limited & Another (2017) eKLRwherein the court upheld the principle that investigations on corruption and economic crimes touch on public interest.

6. The Applicants submissions relied on the Affidavits sworn by Taabu Lwanga and Jacquiline Kimani  to argue that the ongoing investigations have established that the 2nd Respondent acquired monetary assets through corrupt conduct and is yet to explain the circumstances and basis under which it acquired the sum of Kshs. 226,816,276. 25/=.

7. The Applicant indicates that the 2nd Respondent has failed to honor the invitation issued by the Applicant so as to explain the money in its account and has not provided any documentation or recorded any statements. It is the Applicants submission that it has the legal mandate to promptly recover the established unexplained assets acquired by the 2nd Respondent through corrupt conduct if upon conclusion of the Applicants ongoing investigations it is established that the 2nd Respondent has failed to satisfactorily explain how it acquired Kshs. 226,816,276. 25/=.The Applicant makes reference to Article 79 and 252(1)(a) and(d) of the Constitution of Kenya, 2010 as read together withSection 11(j)of the Ethics and Anticorruption Commission Act and Sections 51, 52, 55 and 56Cof Anti Corruption and Economic Crimes Act in support of this.

8. The Applicant submits that public interest consideration requires the Applicant to conduct exhaustive and conclusive investigations in a bid to establish whether or not the 2nd Respondent corruptly acquired Kshs. 226,816,276. 25/=and urges the Court to extend the Preservation Order for a further period of four (4) months pending the conclusion of the Applicant’s exhaustive case. The Applicant urges the Court to allow the Application because the Applicant has discharged its onus of proof by showing that considerable progress has been made in investigating the allegations against the 2nd Respondent.

9. The 2nd Respondents submissions identify the issue for determination as being whether the Applicant has fulfilled the threshold for the Court to extend the Preservation Order issued on 13th January, 2017 for a further period of four (4) months.  The Respondent makes reference to Section 107 and109 of the Evidence Act  submits that the burden of proof lies with the Applicant to prove that public funds were irregularly and corruptly paid into the 2nd Respondents bank account.

10. Under Section 107 (1)and(2) of the Evidence Actprovide that whoever desires any 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.  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 109 expounds 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 2nd Respondent cited the cases of Ethics and Anti Corruption Commission v Johncele Insurance Brokers Limited Kisumu Misc. Application No. 178 of 2014andEthics and Anti Corruption Commission v Jimmy Mutuku Kiamba Misc. Civil Application No. 804 of 2014and submitted that the Applicant has failed to produce evidence to the effect that they have made progress in their investigations against the 2nd Respondent.

12. The 2nd Respondent argues that the investigations have been ongoing for eight months and there has been no significant progress. There are no statements recorded and no significant documentary evidence has been adduced to show that the moneys in the 2nd Respondent’s account were obtained through corrupt dealings.  The Applicant has failed to establish any reasonable basis to conclude that the listed transactions were corrupt payments from Kilifi County Government and the Respondents therefore urge the Court to dismiss the Application as the Applicant has failed to prove their case against the 2nd Respondent.

Determination:

13. This Court has taken into consideration the application, the response thereto, the submissions of the respective parties and the authorities cited. The issue for determination here is whether sufficient reasons have been provided by the Applicant commission to warrant an extension of the preservation orders.

14. In the Affidavit sworn by Jacquiline Kimani on 6th June, 2017 she indicates that the 2nd Respondent has been called upon by the commission several times to provide information. Invitations were extended on 16th January, 2017; on 5th May, 2017 and on 29th May 2017 all of which the 2nd Respondent did not honour. The 2nd Respondent has given reasons as to why she has not been in attendance and indicates that the letters of invitation went directly to their advocates and not directly to 2nd Respondent.

15. The court notes that the advocates of the 2nd Respondent did attend a meeting on 30th January, 2017 however, the relevant officers of the commission were not available and the meeting was deferred to 1st February, 2017.  The commission extended an invitation to the Respondent on subsequent dates of on 5th May, 2017 and on 29th May 2017 which the 2nd Respondent did not attend.

16. This can only be determined if the Applicant is given an opportunity to complete its investigations. It is the finding of the Court that the purpose of the investigations will be defeated if this Court fails to grant the orders sought by the Applicant for the extension of the preservation orders.

17. It is noted that the Applicant has been conducting investigations into this account for the past eight (8) months.  Whereas it is in the interest of justice to determine whether large sums of the money acquired by the 2nd Respondent from Kilifi County Government were rightfully acquired and whether the Respondents are culpable of any corruption or economic crime.  It must be remembered that no wrong doing has been established on the part of the 2nd Respondent as yet.  The 2nd Respondent must therefore not be unfairly kept out of its funds.  I therefore allow the Application and extend the Preservation order dated 13th January, 2017 limited only to four (4) months from the date of the expiry of the initial preservation orders granted on 13th January, 2017 to enable the Applicant conclude its investigations.

There are no orders as to costs.

DATED, SEALEDandDELIVEREDatNAIROBIthis3rd day of November, 2017.

L. A. ACHODE

JUDGE