Ethics & Anti-Corruption Commission v Obado & 19 others [2022] KEHC 10296 (KLR)

Ethics & Anti-Corruption Commission v Obado & 19 others (Anti-Corruption and Economic Crimes Civil Suit E010 of 2021) [2022] KEHC 10296 (KLR) (Anti-Corruption and Economic Crimes) (21 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10296 (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 E010 of 2021

EN Maina, J

July 21, 2022

Between

Ethics & Anti-Corruption Commission

Plaintiff

and

Zachary Okoth Obado

1st Defendant

Evelyne Adhiambo Zacharia

2nd Defendant

Dan Achola Okoth

3rd Defendant

Scarlet Susan Okoth

4th Defendant

Jerry Zachary Okoth

5th Defendant

Jared Peter Odoyo Oluoch Kwaga

6th Defendant

Misoft Limited (Formerly Kwagetec Communications Limited)

7th Defendant

Dankey Press Limited

8th Defendant

Atinus Services Limited

9th Defendant

Deletrack ICT Services

10th Defendant

Tarchdog Printers Limited

11th Defendant

Mactebac Contractors

12th Defendant

Seletrack Consultants

13th Defendant

Joyush Business Limited

14th Defendant

Swyfcon Engineering

15th Defendant

Dolphus Software Limited

16th Defendant

Kajuly Business Limited

17th Defendant

Pesulys Suppliers Limited

18th Defendant

Victorious Investments Limited

19th Defendant

Oliver Okeno Odhiambo

20th Defendant

Ruling

1. The Notice of Motion dated 12th May 2021 is brought under Sections 1A,1B,3A of the Civil Procedure Act and Order 40 Rule 1 and Order 51 Rule 1 of the Civil Procedure Rules. It seeks the following reliefs that:-“1)This application be certified as urgent and service thereof upon the Defendants/Respondents be dispensed with in the first instance.2)Pending the hearing inter partes and determination of this Application the Defendants/Respondents by themselves, their agents, servants and/or employees or any other person whosoever be restrained from alienating, selling, charging or further charging, leasing, developing, sub-dividing, wasting, transferring, disposing or in any other way dealing with property known as Loresho Ridge House No.C1 on L.R. No.21080/38 (Title Number I.R.74363).3)Pending the hearing inter partes and determination of this Application the 1st, 3rd, and 20th Defendants/Respondents by themselves, their agents, servants, and/or employees or any other person whosoever be restrained from selling, wasting, transferring, disposing, or in any other way dealing with Motor Vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B.4)Pending the hearing and determination of this Suit, this Honourable Court be pleased to grant an order directing the 1st, 3rd and 20th Defendants/Respondents themselves, their agents, servants, and/or employees or any other person in possession thereof to surrender the Motor Vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B together with their logbooks to the Plaintiff/Applicant within 7 days of the order failing which the Plaintiff/ Applicant be at liberty to seize, tow and detain the motor vehicles for purposes of preservation.5)In The Alternative,to prayers 3 and 4 above, pending the hearing and determination of the suit, this Honourable Court be pleased to grant an order appointing a licenced auctioneer to seize and sell by way of public auction motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B and the proceeds less the auctioneer's expenses and fees be deposited in a joint earning interest account in the name of the Plaintiff and the 1st Defendant, for purposes of preservation of the said motor vehicles.6)In The Alternative,to prayers 3, 4 and 5 above pending the hearing and determination of the suit, this Honourable Court be pleased to grant an order appointing a licenced valuer to value the motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser VS Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B AND an order against the Defendants to deposit with the Plaintiff security in form of a bank guarantee for the current value of the motor vehicles.7)Pending the hearing and determination of the Suit, the Honourable Court pleased to grant an order that the monthly rental income of Kshs. 143,000/- derived from renting out Loresho Ridge House No.C1 on LR No.21080/38 (Title Number I.R. 74363) be deposited in the joint earning interest account in the name of the Plaintiff/Applicant and the 1st Defendant/Respondent.8)Pending hearing and determination of this Suit, the 1st and 6th Defendants/ Respondents by themselves, their agents, servants and/ or employees or any other person whosoever be restrained from alienating, selling, charging or further charging, leasing, developing, sub-dividing, wasting, transferring, disposing or in any other way dealing with property known as Loresho Ridge House No.C1 on L.R. No.21080/38 (Title Number I.R. 74363).9)Pending hearing and determination of this Suit, the 1st, 3rd, and 20th Defendants/ Respondents by themselves, their agents, servants and/ or employees or any other person whosoever be restrained from selling, wasting, transferring, disposing or in any other way dealing with Motor Vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B.10)This Honourable Court be pleased to issue any other or further orders it deems fit and just to preserve the suit property pending the determination of the suit.11)The costs of this application be provided for.”

2. The Application is made on the following grounds stated on its face thereof and in the supporting affidavit of Ann Murigih sworn on 12th May, 2021:“a)The Plaintiff/ Applicant is mandated under section 11(1)(d) & (ii) of the EACC Act, 2011 to conduct investigations into allegations of corruption or economic crimes, and in appropriate cases to institute civil proceedings against any person for the confiscation and/or restitution of proceeds of corruption or related to corruption and/or the recovery of assets acquired from proceeds of corruption and economic crime.b)Pursuant to its investigations, which covered financial years 2013 - 2017, the Plaintiff established that the 1st Defendant, in abuse of his position of trust and conflict of interest of his position as Governor, amassed assets valued at Kshs. 73,474,376/-, to wit,a)A sum of Kshs. 38,949,376. 90 wired to the 3rd - 5th Defendants for their University Tuition Fees and upkeep, and a portion of it was used to purchase two luxury motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B, registered in the names of the 3rd and 20th Defendants, respectively.b)A sum of Kshs. 34,525,000/- traced to Kenya Power Pension Fund for the purchase of a property known as Loresho Ridge House No. C1 on L.R. No.21080/38 (Title Number I.R. 74363). The lease agreement is between the Pension Fund and the 6th Defendant but the rental income is payable to and/or collected by the 2nd Defendant. Investigations established that the acquisition of the aforesaid assets was facilitated by the 7th - 19th Defendants, who received public funds from the County Government of Migori, being proceeds of contracts predicated on corruption and economic crimes.c)Investigations established that the Defendants colluded and devised a scheme, to misappropriate and embezzle public funds from the County Government of Migori. The scheme involved the registration of 16 related companies including the 7th - 19th Defendants under the control of the 6th Defendant to secure procurement contracts from the County, to channel the proceeds to the 1st Defendant. The 7th - 19th Defendant companies channeled the proceeds of the procurement contracts to the 1st Defendant through his children and by the purchase of properties through his kin and proxy, characteristic of a kickback scheme.d)Financial investigations of the bank statements of accounts operated by all the 16 companies revealed a money laundering scheme with the intent to disguise the source of the said money. The transactions showed huge cash withdrawals and several wire transfers from the respective bank accounts to the 6th Defendant for onward transmission to the 1st Defendant indirectly through his children and for the purchase of properties.e)The assets aforesaid are proceeds of crime within the meaning of Section 47 ACECA, 2003; Section 11(1)(j) EACC Act, 2011; and Section 2POCAMLA and are therefore liable for forfeiture to the Government.f)It is therefore just and fit to prohibit the Defendants, their agents, servants, and/ or any other persons be restrained from alienating, wasting, transferring, disposing, or in any other way dealing with the properties known as Loresho Ridge House No.C1 on L.R. No.21080/38 (Title Number I.R. 74363), two luxury motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Chassis No. VIN. JTMHV05]504200550 Reg. No. KCK 722B pending the hearing and determination of this Application and Suit to obviate dissipation of the assets and or rendering these proceedings nugatory altogether.g)The Plaintiff obtained preservation orders on 6th November 2020 vide ACEC Miscellaneous Application No. 14 of 2021 in respect of the aforesaid properties for a period of six months. The said preservation orders lapse on 5th May 2021. h)The Plaintiff/ Applicant is reasonably apprehensive that unless the orders sought in the aforesaid Notice of Motion application are granted expeditiously pending the hearing and determination of the Plaintiff's suit, the Defendants/ Respondents herein are likely to transfer or in any other way, dispose of the aforesaid properties thereby frustrating the civil recovery proceedings filed herewith.i)The Plaintiff/Applicant has established a prima facie basis for the temporary injunction to be issued by this Honourable Court.j)No prejudice will be occasioned to the Defendants/ Respondents if the injunction orders sought herein are granted pending determination of whether the Defendants/ Respondents legally acquired the said assets.k)That unless the orders sought are granted, the Defendants/ Respondents herein are likely to transfer, waste, withdraw or otherwise deal with the properties to the detriment of the County Government of Migori who shall suffer an irreparable loss that cannot be compensated by an award of damages.”

The Applicant’s case 3. The Plaintiff/Applicant contends that the 1st Defendant, in abuse of his position of trust and in collusion with the 6th Defendant engaged in an arrangement to conceal or otherwise disguise his private interest in contracts awarded to the 7th - 19th Defendants by the County Government of Migori. In execution of this fraudulent and illegal arrangement, and in conflict of interest of his position as Governor, the 1st Defendant acquired an indirect private interest, to wit, a property known as Loresho Ridge House No.C1 on L.R. No.21080/38 (Title Number I.R 74363), two luxury motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B, and monies received by his children the 2nd, 3rd, 4th and 5th Defendants for their University tuition fees and personal use.

4. The Plaintiff received credible information that a few persons, well known to be proxies of the 1st Defendant registered several companies for the sole purpose of procuring high-value contracts from the County Government of Migori and acquisition of public funds through fictitious or irregular contracts secured uncompetitively through circumvention of the Public Procurement and Disposal Act, 2005 (repealed) and the Regulations made thereunder.

5. In return, the 1st Defendant benefitted from these contracts through monies wired to his children for their school fees and upkeep in universities abroad and purchase of properties and luxury motor vehicles.

6. The Plaintiff pursuant to its legal mandate launched investigations into the aforesaid allegations, which covered financial years 2013 - 2017, and established the fraudulent scheme which was structured as follows: Seven members of the 6th Defendant's family registered 16 companies, including the 7th - 19th Defendants for the sole purpose of securing tenders from the County Government of Migori.

7. The Applicant contends that one family member, Patroba Ochanda Otieno, the proprietor of 14th, 15th, and 16th Defendant companies, was at all material times of the suit, an employee of the County Government of Migori as at 15th September 2015, as a pharmacist at Uriri Sub-County Hospital. Contrary to the provisions of Section 33 of the Public Procurement and Disposal of Assets Act 2005 prohibits employees from entering into procurement contracts with the County, the said proprietor through his 3 companies was awarded contracts of a value of Kshs.163,409,311. 10.

8. Save for the 7th Defendant company that was registered in 2009, the other companies, were registered between 2014 - 2016 after the establishment of the County Government of Migori in 2013 and the 1st Defendant elected to the influential position of the first governor and chief executive officer of the said County. Despite its registration in 2009, the 7th Defendant was not in active trade prior to 2013.

9. Therefore, none of the companies had any commercial presence prior to the establishment of the County Government of Migori. The companies were shell companies as they only existed on paper with no physical offices and employees and were all under the direct control of the 6th Defendant. Further, their bank accounts only received monies from the County Government of Migori and the accounts became dormant in November 2016 with nil balances.

10. The companies were awarded hundreds of tenders including tenders for the provision of Consultancy Services which are highly specialized services that are predominately intellectual or advisory in nature offered by professionals skilled in the field of consultancy. The Plaintiff established that neither the companies nor their proprietors had the capacity to render the high-value specialized services. In a short span of slightly over 3 years 2013 - 2017, these newly registered entities transacted approximately Kshs. 2 Billion exclusively received from the County Government of Migori

11. Financial investigations of the bank statements of accounts operated by all the 16 companies revealed huge cash withdrawals and several wire transfers from the respective bank accounts to the 6th Defendant for onward transmission to the 1st Defendant indirectly through his children and for purchase of properties.

12. In particular, this suit is for the recovery of assets valued at Kshs. 73,474,376/- acquired with proceeds of contracts with the County Government of Migori which were fictitious or otherwise procured irregularly or in circumstances of conflict of interest. These proceeds have been traced to the 1st Defendant from the County Government of Migori through the 7th - 19th Defendants and made up as follows:a)A sum of Kshs. 38,949,376. 90 wired to the 3rd, 4th and 5th Defendants for their University Tuition Fees and upkeep, and a portion of it used to purchase the two luxury motor vehicles.b)A sum of Kshs. 34,525,000/- traced to Kenya Power Pension Fund for the purchase of a property known as Loresho Ridge House No. C1 on L.R. No.21080/38 (Title Number I.R. 74363) whose rent accrues to the 2nd Defendant.

13. The Applicant contends that the assets the subject of this application are proceeds of crime and liable to be forfeited to the government. In that respect, the Applicant obtained preservation orders in respect of those assets on 20th November 2020 in ACEC Miscellaneous Application No. 14 of 2021 which orders lapsed on 5th May 2021. The Applicant subsequently filed this suit seeking the forfeiture orders hence the need for a temporary injunction restraining the Defendants/Respondents from wasting, transferring, withdrawing, or otherwise dealing with the assets to the detriment of the County Government of Migori which shall suffer irreparable loss that cannot be compensated by an award of damages should the orders not be granted.

Response of the 1st Defendant/Respondent 14. Counsel for the 1st Defendant/Respondent informed the court at the hearing of 7th June 2022 that he would not be participating in the application.

Response by the 2nd and 3rd Defendant/Respondents 15. The 2nd and 3rd Respondents filed replying affidavits sworn on 7th December 2021 and 2nd December 2021 respectively.

16. They contend that the 2nd Respondent is not the proprietor of the asset Loresho Ridge House No. C1 subject of these proceedings. They contend that the house belongs to the 6th Respondent who was only a tenant for three years before subletting it to one Jane Mwaura for Kshs. 120,000; a month which rental income is remitted to the 6th Respondent.

17. On his part, the 3rd Defendant/Respondent contends that he has been involved in informal gold mining business since 2014 in partnership with the 6th Defendant and one Isaiah Odungo. That the money sent to his bank accounts by the 6th Respondent was his share of profits from the gold business. He dissociated himself from the motor vehicle KCK 722 B subject of these proceedings and stated that he only imported the vehicle on behalf of his business partner.

18. Further, it is averred that the 7th to 19th Defendants companies transacted with several other entities as per the extracts of the bank statements and drew up a table showing 92 transactions between the period between 18th January 2014 and 27th October 2016. They specifically make reference to the accounts of Misoft Limited and highlight certain transactions made with other entities. They contend that the forensic report of Evans Ronoh produced by the 3rd Respondent shows that the companies received a total of Kshs. 222,021,004. 30/- from sources other than Migori County and that there is therefore need for this court to determine the suit on merit and not grant orders at the interlocutory stage.

19. The Respondents aver that the handwritten note produced by the Ethics and Anti-Corruption Commission/Applicant on the current status of the properties owned by the 1st Respondent is not proof of ownership as no Title Deeds have been produced.

20. They also aver that they stand to suffer double jeopardy by virtue of the ongoing proceedings in Chief Magistrates Court Anticorruption Criminal Case No. 18 of 2021 where they have been charged with corruption offences.

21. Lastly, they contend that the Applicant has not met the threshold for grant of an interlocutory injunction. That the application should be dismissed or stayed pending the hearing and determination of the criminal case at the chief magistrate's court.

Response by the 10th to 16th and 19th Defendants/Respondents 22. The 10th, 11th, 12th, 13th, 14th, 15th, 16th and 19th Respondents filed joint grounds of opposition dated 7th December 2021. They opposed the application on 6 grounds summarized as follows: that the application is fatally incompetent, defective, vexatious and an abuse of the court process; the application seeks mandatory orders at an interlocutory stage and if granted will determine the whole claimant the interlocutory stage thus prejudicing the defendants; if allowed, the application would amount to double jeopardy in view of the pending suit in Nairobi Chief Magistrates Court Anti-Corruption Criminal Case No. 18/2020; the application does not meet the requirements for the grant of interlocutory injunction in Giella vs Cassman Brown; the application is mala fides; the applicant has not disclosed any evidence against the respondents and it is in the interests of justice that the application is dismissed with costs.

Response by the 20th Respondent 23. The 20th Respondent opposed the application vide his replying affidavit sworn on 7th December 2021. He contends that he never received any illegal benefit or monies from any person and in particular the alleged proxies of the 1st Defendant/Respondent. That neither does he hold any interests in the 7th to 19th Respondent companies or know the proprietors thereof.

24. He avers that the vehicle KCK 722B though registered in his name, belongs to the 3rd Defendant/Respondent who bought it in Australia but gave him the documents to facilitate importation, registration, and payment of levies but he has since handed the vehicle to the 3rd Respondent.

25. The 20th Respondent contends that the Applicant had not availed evidence to show that the monies were traced to his bank account and were proceeds of crime. That the interim orders are determinative in nature hence prejudicial to the Respondents. He asked that the application be dismissed.

Submissions by the parties 26. The Applicant and the Respondents made oral arguments at the hearing of 7th June 2022. They relied on their respective written submissions as filed on the judiciary’s virtual registry CTS.

27. The Applicant submits that they have met the threshold for grant of an injunction set in the case of Giella v Cassman Brown co. Ltd 7 Ano [1973] EA 358.

28. They submit that they have established a prima facie case with a probability of success. That the Respondent companies transacted solely with the County Government of Migori and received approximately Kshs. 2 Billion from the said County Government. That with respect to the two assets in issue, the House C-1 Loresho Ridge was paid for by funds paid by the 7th, 8th, 12th and 15th Defendants. They tabulated the amounts paid in 7 installments to the vendors KPLC Ltd Staff Retirement Benefit Scheme a/c no. 01120069041800 Cooperative Bank adding up to Kshs. 34,601,601 slightly in excess of the purchase price of Kshs 34,525,000. The Applicant argues that the Lease for the property is made in favour of the 6th Respondent though is currently being held by the Trustees of the KPLC Ltd Pension Fund. That the delay in the transfer of the lease is a tactic employed by the respondent to defer the registration. They submit further that the rental income on the property was initially paid to the 2nd Defendant a/c no. 01108515320800 Cooperative bank, a daughter to the Governor but the rent payment is currently being made in cash since the filing of these proceedings.

29. In respect of the motor vehicle, they submit that the investigations carried out pursuant to Mutual Legal Assistance, they established that the 3rd 4th and 5th Defendants, children of the 1st Defendant were educated in UK and Australian Universities: Curtin University, Western Australia, University of Aberdeen, Scotland and Kaplan US International using the fuunds derived from Kshs. 106,188,000 wired into the 6th Defendant’s personal account. That the two motor vehicles subject of these proceedings were imported by the 3rd Defendant but he turns around and dissociates himself from the vehicles. On the other hand, the 20th Defendant in whose name the vehicles are registered insists that he was only assisting with importation and he handed over the vehicles to the 3rd Defendant.

30. Accordingly, they submit that the 6th Defendant was the conduit used to get tenders from Migori County through the various Defendant companies related to him and thereafter channeling the proceeds of crime to the 1st Defendant and his children hence a chain of money laundering.

31. On the second limb of Giella v Cassman Brown, the Applicant submits that there is a threat of irreparable injury as the Defendants are likely to waste, dissipate or dispose the assets hence rendering the recovery proceedings nugatory. They submit that the companies' bank accounts went dormant after November 2016 with nil balances showing that they were shell companies. That in the absence of an injunction, the public will suffer great loss.

32. On the balance of convenience, the Applicant submits that the Plaintiff/Applicant will be greatly inconvenienced as they will have to trace the assets to recover the money should they succeed in the suit. They cited the authorities in Ethics and Anti-Corruption Commission v Jimmy Mutuku Kiamba & 4 others and Kenya Anti- Corruption Commission v Stanley Mombo Amuti [2011] eKLR and Shivabhai Nathabai Patel v Manibhai Hathibai Patel [1959] EA 907 in support.

Submissions by the Respondents 33. The 2nd and 3rd Respondents filed written submissions dated 10th May 2022 while the rest of the Respondents did not file written submissions to the Application.

34. The 2nd and 3rd Respondents submit that no attempt has been made by the Applicant to demonstrate that they have a prima facie case with a probability of success and therefore the present application should be dismissed with costs.

35. They submit that the reliefs sought in the Application are final in nature; that prayers 2,3,8 and 9 seek interlocutory orders while prayers 4,5,6, and 7 seek mandatory injunctions, which orders cannot be granted at an interlocutory stage. They cite Magnate Ventures Limited v Eng Kenya Limited [2009] eKLR in support.

36. They submit that the applicant has in its application and submissions averred that sixteen (16) companies were registered by the 6th to 19th Defendants for the sole purpose of securing tenders from the County Government of Migori yet the 2nd and 3rd Respondents have in their replying affidavits stated that they are not familiar with the Companies. That the applicant has failed to provide any evidence or proof that the said companies were registered as alleged or that the same were specifically registered with the aim of illegally obtaining tenders from Migori County as alleged. Further, the allegation that the 16 companies were awarded contracts of a value of Kshs. 163,409,311. 10/= however is not supported in evidence

37. In respect on the rental income for House C-1 Loresho Ridge accrued to the 2nd respondent, they submit that having tenancies where no agreements are signed is not a new or foreign concept in Kenya but is an action that is seen in our day to day lives. In addition, the mode chosen by parties to run their matters/business is their choice and which choice is not illegal and the applicant has not proven any illegality in the said actions. It is evident that the applicant is building its case from the point of mere speculation and malice.

38. With regards to the purchase of two Motor Vehicles, university fees and upkeep, they submit that the applicant has not provided proof that the monies sent to the 3rd respondent by the 6th respondent were illegal or proceeds of crime as alleged or that the 3rd defendant had any knowledge that the monies being sent to him were proceeds of crime. If anything, the amounts sent to the 3rd respondent if any maybe possibly be part of the amounts that were legally obtained by the companies from other sources for which the applicant has not explained to this court how they were expended by the companies.

39. The Respondents submit that the Applicant having failed to establish the prima facie case the next issue is whether the other principles under the case of Giella should be considered. That the Giella principles are sequential and the 2nd and 3rd principle could only be considered where the first one is established. The Applicant having failed to establish the first limb, the present application should be dismissed with costs. They cite a decision by the Court of Appeal in Kenya Commercial Bank vs Afraha Education Society [2001] 1 EA 86 (CAK) at page 89 as relied on by Nambuye J. in Nyanja Holdings Ltd v Finance Bank Ltd [2008] eKLR stated as follows:“The sequence of granting injunction is firstly, that an application must show a prima facie case with probability of success if this discretionary remedy will issue in his favor. Secondly, that such an injunction will not normally be granted unless the Applicant might suffer irreparable injury; and thirdly, when the court is in doubt, it will decide the application on the balance of convenience - See Giella Vs Cassman Brown & Co. Ltd. These conditions are sequential so that the second condition can only be addressed if the first one is satisfied and when the court is in doubt then the third condition can be addressed.” Emphasis added.

40. The Respondents submit that should the court hold that the applicant has established a prima facie case, that the applicant has not established that they will suffer any irreparable damages. That the Applicant has not given any evidence or proof that the Defendant companies were shell companies as alleged nor has the applicant provided proof that these companies only existed on paper or were under the direct control of the 6th Respondent as alleged. No evidence has been adduced to support the applicant's allegation that the companies' bank accounts became dormant in November 2016 with nil balances as alleged in the applicant's submissions. That the 2nd and 3rd respondents have demonstrated that the companies received and disbursed monies from other sources as such disproving the applicant's allegation that these companies only traded with the County Government of Migori.

41. Lastly, the application before the court is bad in law, an abuse of the court process, and should be dismissed with costs. With regard to the principle of the balance of convenience, they submit that the same tilts in favor of the respondents. They cite the House of Lords decision in American Cyanamid Co. v. Ethicon Ltd(1975) 1 ALL ER 504; [1975] A.C. 396 FL as relied on in Tritex Industries Limited & 3 others v National Housing Corporation & another [2014] eKLR held:“It is no part of the court's function at this state of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages on the grant of an interlocutory injunction was that 'it aided the court in doing that which was its great objection, viz abstaining from expressing any opinion upon the merits of the case until the hearing' (Wakefield v Duke of Buccleuch). So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.”

Issues for determination 42. The following issues arise for determination:a.Whether the applicant has met the threshold for grant of a temporary injunction.b.What are the appropriate reliefs?

Analysis and DeterminationWhether the applicant has met the threshold for grant of interlocutory injunction 43. The Applicant obtained a preservation order in respect of the suit properties on 6th November 2020 in ACEC Misc. Application No. 14 of 2021 which lapsed on 5th May 2021 by effluxion of the 6 months period under Section 56 of the Anti-corruption and Economic Crimes Act. The Applicant now seeks a temporary injunction to preserve the suit properties pending the hearing and determination of this suit.

44. The principles upon which a court considers the grant of a temporary injunction are that the Applicant must establish a prima facie case with a probability of success; that the Applicant stands to suffer irreparable loss that cannot be compensated by an award for damages and where there is doubt, the court then determines the application on the balance of convenience. In Giella vs Cassman Brown (supra) the Court stated: -“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience (E.A. Industries vs. Trufoods [1972] E.A. 420. )”

45. In the case of Mrao Ltd v First American Bank of Kenya and 2 others [2003] eKLR the Court of Appeal defined the phrase “Prima Facie” as follows:-“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case.” It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”

46. A review of the pleadings in the main suit and this application reveals that the main contention is that the assets the subject of this case are proceeds of crime arising from offences under Section 47 of the Anti-Corruption and Economic Crimes Act, 2003, Section 11(1)(j) of the Ethics and Anti-Corruption Commission Act, 2011 and Section 2 of the Proceeds of Crime and Anti-money Laundering Act, 2009 for which the Respondents have already been charged in Chief Magistrates Court Anticorruption Criminal Case No. 18 of 2021 hence the assets are liable for forfeiture to the Government.

47. The background of these proceedings is that 1st Defendant/Respondent is a state officer, holding the office of Governor Migori County since the year 2013 to date. The 2nd, 3rd, 4th and 5th Defendants/Respondents are the children of the 1st Defendant/Respondent, the 6th and 20th Defendant/Respondents are male adults residents in Migori County while the 7th to 19th Defendants/Respondents are companies associated with the 6th Defendant/Respondent as the sole proprietors of the respective companies are the 6th Respondent’s wife, mother, brother and sister. It is alleged that the 6th Respondent is a proxy of the 1st Defendant and the 7th to 19th Respondents are just but shell companies with no physical offices or employees.

48. It is contended that the Kshs. 73, 474,376 constitutes partly the value of a house known as Loresho Ridge House No.C1 on L.R. No.21080/38 (Title Number I.R.74363) and two motor vehicles Land Cruiser V8 Chassis No. VIN. JTMHV05J404173096 Reg. No. KCK 997W and Land Cruiser V8 Chassis No. VIN. JTMHV05J504200550 Reg. No. KCK 722B. The Applicant alleges that other funds were spent on the education and upkeep of the 3rd to 5th Defendants in United Kingdom and Australian Universities.

49. The Plaintiff’s/Applicant’s main contention is that the 1st to 6th Respondents unlawfully acquired public funds contrary to Section 45 of the Anti-Corruption and Economic Crimes Act and Section 46 of the Anti-Corruption and Economic Crimes Act which they laundered through the 6th Respondent and the 7th to 19th Respondents.

50. The Respondents on their part contend that out of the Kshs. 2 billion alleged to have been fraudulently or irregularly transacted by the Defendant companies and the Migori County Government, only a sum of Kshs. 73, 474,376 is the subject of the forfeiture proceedings both in the main suit and in the application for temporary injunction, hence an inference arises that the remaining amount is “clean”. In my view, this assertion is immaterial to these proceedings as those other funds are not a subject of these proceedings. The Defendants cannot also plead double jeopardy by virtue of the pending proceedings in Chief Magistrates Anti-Corruption Criminal Case No. 18 of 2021 as these proceedings relate to civil forfeiture which can proceed concurrently with the criminal proceedings as provided in Section 92 (4) of the Proceeds of Crime and Anti-Money Laundering Act and Section 193A of the Criminal Procedure Code.

51. It is my finding that for the purposes of this application the Applicant has demonstrated a nexus between the 6th Respondent and the 7th to 19th Respondent companies which are owned by the 6th Respondent's wife, mother, brother and sister respectively. There is also prima facie evidence, through the bank accounts of the Respondents, of the flow of funds from the County Government of Migori, the 7th to 19th Respondent companies and subsequent remittances to the 2nd,3rd,4th and 5th Respondents. The Applicant has therefore demonstrated that it has established a prima facie case against the Respondents sufficiently for the Respondents to be called upon to make a rebuttal.

52. On the second limb of Giella v Cassman Brown, the Applicant argues that the County Government of Migori will suffer irreparable loss incapable of compensation in damages should the injunction be declined. That the Defendants may not be in a position to refund the funds as their accounts have had nil balances since November 2016. One of the assets in issue is a house C1 Loresho which attracted a monthly rental income of Kshs 120,000 but which rent has since been paid in cash and which cannot be traced and is therefore inaccessible to the Ethics and Anti-Corruption Commission. The Respondents’ response to this is that they are at liberty to deal with their properties however they wish. It is my finding that should the house and vehicles be disposed of by the Respondents the Applicant will have nothing to recover in furtherance of its statutory mandate were the suit to succeed. There is therefore need to preserve the properties pending hearing and determination of the suit. In the case of Kenya Anti-Corruption Commission V Stanley Mombo Amuti [2011] eKLR the court stated:-“An order of forfeiture can only be made if the property was still available for such forfeiture and it follows therefore that if there was no conservatory order, the property may well have ceased to exist thus rendering the success of the appeal pyrrhic.”The loss that would be suffered by the public would be incapable of compensation by an award of damages and the application must succeed on this ground as well.

53. It is also my finding that the balance of convenience tilts in favour of the Applicant. In the case of Ethics and Anti- Corruption Commission v Charles Muia Mutiso [2022] eKLR, the court described the term balance of convenience as follows:“33. What about the balance of convenience? In the case of Pius Kipchirchir Kogo v Frank Kimeli Tenai (2018) eKLR, the court defined the phrase “balance of convenience” as follows: -“The meaning of balance of convenience in favour of the plaintiff' is that if an injunction is not granted and the Suit is ultimately decided in favour of the plaintiffs, the inconvenience caused to the plaintiff would be greater than that which would be caused to the defendants if an injunction is granted but the suit is ultimately dismissed. Although it is called balance of convenience it is really the balance of inconvenience and it is for the plaintiff’s' to show that the inconvenience caused to them be greater than that which may be caused to the defendant’s inconvenience be equal, it is the plaintiff who suffer.In other words, the plaintiff have to show that the comparative mischief from the inconvenience which is likely to arise from withholding the injunction will be greater which is likely to arise from granting”

54. The Applicant has argued that it will be inconvenienced in terms of resources and time in tracing the assets should they be dissipated, wasted or sold by the Respondents, which submission is plausible as that exercise would first of all involve colossal amounts of public funds and secondly there would be nothing to forfeit.

55. Accordingly, I find that the Applicant has met the threshold for the grant of a temporary injunction so as to preserve the suit properties pending hearing and determination of the suit. The application is allowed and prayers 4, 7, 8 and 9 are granted. Costs shall be in the cause. It is so ordered.

SIGNED, DATED AND DELIVERED VIRTUALLY THIS 21ST DAY OF JULY, 2022. E N MAINAJUDGE