Ethics And Anti-Corruption Commission v Isika & another [2022] KEHC 3327 (KLR) | Preservation Orders | Esheria

Ethics And Anti-Corruption Commission v Isika & another [2022] KEHC 3327 (KLR)

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Ethics And Anti-Corruption Commission v Isika & another (Anti-Corruption and Economic Crimes Case E031 of 2021) [2022] KEHC 3327 (KLR) (30 June 2022) (Ruling)

Neutral citation: [2022] KEHC 3327 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes Case E031 of 2021

EN Maina, J

June 30, 2022

Between

Ethics And Anti-Corruption Commission

Applicant

and

David Kinyae Isika

1st Respondent

Wanga-Tech General Enterprises Ltd

2nd Respondent

Ruling

1. By the Originating Motion dated 1st April 2022 brought under Section 56 of the Anti-Corruption and Economics Crimes Act, the Ethics and Anti-Corruption Commission/Applicant seeks an order of extension of the preservation orders issued herein on 13th October 2021 which were to lapse after six months on 13th April, 2022. The said preservation orders pertained to the Respondent’s bank Account No. 01161487799500 at Co-operative Bank Limited in the name of Wanga-Tech General Enterprises Limited. The Ethics and Anti-Corruption Commission/Applicant made a similar application in ACEC Misc. Application No. E025 of 2021 which involves the same parties. The application in ACEC Misc. Application No. E025 of 2021 is dated 23rd March, 2022 only that the same pertains to the Respondents’ Bank accounts No. 011487799500 and No. 01150487799500 which are also held at Co-operative Bank of Kenya Limited in the name of Wanga-Tech General Enterprises Limited.

2. The gist of the application is that the orders which were granted on 13th October, 2021 (in respect to E031 of 2021) and on 29th September, 2021 (in E025 of 2021) were to last for six months which period has lapsed; that this court has power to extend the orders; that investigations against the Respondents are still ongoing and that so far the investigations have established that the funds preserved may be proceeds of crime. Further that as a result of the investigations the Applicant has issued statutory notices to the Respondents under Sections 26 and 55 of the Anti-Corruption and Economic Crimes Act as read with Section 13(c) of the Ethics andAnti-Corruption and Economic Crimes Act and their Counsel on record in the matters requested for additional time to respond to the same and it is therefore necessary that the preservation orders be extended for a further period of six months to enable the Commission to exhaustively conclude the investigations and institute recovery proceedings.

3. The applications are both supported by affidavits sworn by Margaret Wambeti Ngari, a Forensic Investigator at the Ethics and Anti-Corruption Commission, sworn on 1st April, 2022 and 23rd March 2022 respectively. The same merely rehash the grounds set out on the face of the application and I need not therefore reproduce them here.

4. The Applications are vehemently opposed through the Replying Affidavits sworn by the 1st Respondent on 12th April, 2022 in ACEC MISC E031 of 2021. As can be discerned from the Replying Affidavit the respondent opposes the applications for reason that it has been almost 12 months since the Applicant commenced investigations against him; that by a letter dated 26th August, 2021 the applicant caused him to be suspended from his employment and to date he has not been reinstated; that it is evident that the applicant is not keen to expedite the investigations; and that it is unfair and a grave injustice for the applicant to seek an extension of another six months which if granted would have given the Applicant 18 months to undertake investigations. Further the Respondent brings to the attention of this court that he has challenged the orders freezing the account and the application is yet to be decided.

5. The applications were canvassed by way of written submissions. Those of the applicant are dated 11th April, 2022 and those of the 1st Respondent 9th May, 2022.

6. Learned Counsel for the Applicant submitted that the Commission is investigating allegations of corruption and economic crimes more specifically allegations of embezzlement or misappropriation of public funds, conflict of interest and abuse of office by the 1st respondent who is a public officer and Senior Deputy Director Supply Chain Management in the State Department of Development (Ministry of Transport, Infrastructure, Housing, Urban Development and previously the Senior Supply Chain Management Officer in the Ministry of Lands, Housing and Urban Development Nairobi Metropolitan Development. Counsel submitted that it is further alleged that the 1st Respondent has accumulated illicit wealth through corrupt conduct; that the 2nd respondent, a company associated with the 1st Respondent was awarded multiple tenders and was paid through the IFMIS by among others the State Department of Housing and Urban Development where the 1st Respondent is the Senior Deputy Director, Supply Chain Management. Further that the 1st Respondent’s spouse and relative are directors of the 2nd Respondent hence there is a conflict of interest which is an offence under Section 42 of the Anti-Corruption and Economic Crimes Act. Further that investigations revealed that the aforestated state Departments where the 1st Respondent worked are the sole source of funds to Account No. 01148487799500 at Co-operative Bank Keya since the account was opened in 2014 and that a summary of the transactions in that account shows it was purposely opened to receive monies from the two state Departments as no other substantial amounts have ever been received in the account.

7. Learned Counsel submitted that this application was filed before the orders sought to be extended expired; that this court has power to extend the orders under Section 56(3) of the Anti-corruption and Economic Crimes Act. Counsel stated that the orders sought are discretionary and all the Applicant needs to demonstrate is that there are plausible reasons for extension of the order. Counsel relied on the case of Ethics and Anti-Corruption Commission v Gladys Gathoni Chege t/a Digiage Agency[2017]eKLR where the court held:-“The word used here is ‘may’ which means it is discretionary. The burden is therefore on the Applicant to satisfy the court that it is deserving of the orders sought. The initial preservation order was issued on 15th June, 2016 for six (6) months. The orders were to lapse on 15th December, 2015. The said orders were temporarily extended on 15th December, 2015. ”

8. Counsel submitted that the Applicant has demonstrated the necessity for extension of the order through the facts brought forth in the grounds and the supporting affidavits.

9. Counsel disputed that the Applicant has deliberately refused to conclude the investigations and that the 1st Respondent has not even attempted to demonstrated how he acquired the total sum of Kshs.11,965,407. 21 held in the listed bank accounts and cited the case of Ethics & Anti-Corruption Commissions (EACC) v Beatrice Kagwiria Mugambi [2018] eKLR where the court held that the absence of such an explanation gives rise to reasonable grounds to suspect that the funds were as a result of corrupt conduct.

10. Counsel argued that the investigation involves a lot documents as admitted by the 1st Respondent and pointed out that the Applicant will also be required to consider the responses by the Respondents which also have many documents.

11. Counsel asserted that the issue of suspension of the 1st Respondent on half pay is lawful as it is provided for in Section 42(7) of the Leadership and Integrity Act and Regulations 25 and 36(6) of the Public Service Code of Conduct and the Public Officers Ethics Act 2013. Counsel submitted that suspension was deemed necessary so as to ensure that the investigations are conducted without interference.

12. Counsel further submitted that it stands to suffer immensely should the application be rejected as the money in the accounts may be transferred withdrawn or disposed in a manner which could frustrate and defeat the ongoing investigations. Counsel placed reliance on the case of Ethics & Anti-Corruption Commission v Dennis Njau Kimani & Another [2019] eKLR where the court observed that money moves fast. Counsel contended that the 1st Respondent will not suffer any prejudice as he has other sources of income and that he has not in any event explained the source of the money.

13. Counsel also cited public interest as a ground upon which this court ought to exercise discretion in the Applicant’s favour. Counsel stated that investigations on corruption, and economic crimes touch on public interest; that it is in the public interest that corruption cases are investigated and public money recovered and that where there is a conflict between private interest and public interest the latter must prevail. For this submission Counsel placed reliance on the case of Susan Waithera Kariuki & 4 others v Town Clerk Nairobi City Council & 3 others [2013]eKLR where it was held: -“Their rights, however, are limited by the requirement in Article 24 that 'the enjoyment of rights and fundamental freedoms by any individual does not prejudice the rights and fundamental freedoms of others.' A balance is thus always required under the Constitution between private rights and the public interest. Where there is a conflict between the private interest and the public interest, the public interest must prevail. As the court observed in James Joram Nyagah & Another -vs- The Attorney General & Another High Court Misc. Civil Application No. 1732 of 2004:'Clearly, the rights and freedoms of the individual are not absolute but are subject to other people's rights and the general public interest at large.Counsel urged this court to allow the application and to grant the order sought.

14. For the 1st Respondent it was argued that the applicant seeks an order for extension of the preservation order issued on 29th September, 2022 for an indefinite period. That prayers 2 and 3 of the application dated 23rd March 2022 are contradictory in that whereas prayer 2 seeks extension for an indefinite period prayer 3 seeks extension for 6 months.

15. Learned Counsel for the 1st Respondent submitted that the order sought is in the discretion of the court which discretion ought to be exercised judiciously. Counsel submitted that the prayer is not granted as a matter of course but that the Applicant must demonstrate that it is deserving of the orders. Counsel stated that in determining whether the Applicant has discharged the burden the court must interrogate the conduct and actions of the applicant and must also balance the rights of the Respondent vis a vis public interest. For this proposition Counsel cited the case of Ethics & Anti-Corruption Commission v Johncele Insurance Brokers Limited [2015] eKLR where the court allowed an extension of 3 months and stated:-“My understanding of the above quotation is that it is the commission to satisfy the Court on the necessity to extend the order for another period. There ought to be Plausible reasons to permit extension. In short, it is the discretion of the Court to exercise it if it deems fit. - In the premises and taking into consideration the circumstances herein and the fact that the extension prayed by the appellant is discretionary and taking cognizance of the Respondent's Constitutional liberties and rights as well as the need to enjoy its economic rights, I do order as follows:........”Counsel also cited the case of National Super Alliance (NASA) Kenya v Independent Electoral and Boundaries Commission [2017] eKLR where the court discussed judicial discretion.

16. Counsel argued that the Applicant had not demonstrated adequate reasons for extension of time; that 1 year is a long period for any kind of investigations; that the respondents’ account have been frozen for 8 months and further that the applicant has been on suspension for 8 months. Counsel asserted that proceedings under Section 56 of the Anti-Corruption and Economic Crimes Act were not designed to punish suspects or to violate their right to be presumed innocent. Counsel also urged this court to note that only six parcels of land, four motor vehicles and two bank accounts are under investigations and that those assets are not many to warrant the applicant to take more than 12 months to finalize investigations. Counsel cited the case of Ethics and Anti-Corruption Commission v Jamal Bare Mohammed [2017] eKLR where he stated the court found that a period of 10 months was a long period and refused further extension of the preservation order. Counsel stated that a similar finding was made in the case of Ethics and Anti-Corruption Commission v Gladys Gathoni Chege t/a Digiage Agency [2017] eKLR. Counsel urged this court to dismiss the application.

17. It is not in doubt that the orders issued to preserve the 1st Respondent’s accounts on 13th October, 2021 and 29th October, 2021 were to last for six months with a possibility of extension by the court upon application by the commission. That is expressly provided in Section 56 of theAnti-Corruption and Economic Crimes Act. The Section states:-“(1)On an exparte application by the commission, the High Court may make an order prohibiting the transfer or disposal of or other dealing if it is satisfied that there are reasonable grounds to suspect that the property was acquired as a result of corrupt conduct.(2)..........(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.”

18. As submitted by Counsel for the parties, the use of the word ‘may’ connotes that extension of the order is in the discretion of the court. However again as correctly submitted by learned Counsel for the Respondents the discretion of the court must be exercised judicially. The manner of the exercise of judicial discretion was discussed in the case of National Super Alliance (NASA) Kenya v Independent Electoral and Boundaries Commission [2017]eKLR where the court observed:-“Discretion vested in the court is dependent upon various circumstances, which the court has to consider among them the need to do real and substantial justice to the parties to the suit. Discretion must be exercised in accordance within sound and reasonable judicial principles. The King’s Bench in Rookey’s case (6) stated as follows:-“Discretion is a science not to act arbitrarily according to men’s will and private affection; so the discretion which is exercised here is to be governed by rules of law and equity, which are to oppose, but each, in its turn, to be subservient to the other.....”

19. The discretion is not to exercise arbitrarily but within certain legal principles one of which is that the Applicant must demonstrate reasonable grounds for exercise of the court’s discretion in its favour. My finding finds support in the case of Ethics and Anti-Corruption Commission v Gladys Gathoni t/a Digiage Agency [2017] eKLR where the court held:-“The word used here is "may" which means it is discretionary. The burden is therefore on the Applicant to satisfy the Court that it is deserving of the Orders sought. The initial Preservation Order was issued on 15th June, 2016 for six (6) months. The Orders were to lapse on 15th December, 2016. The said Orders were temporarily extended on 15th December, 2016. ”

20. Section 56(3) of theAnti-Corruption and Economic Crimes Act does not provide the conditions or grounds upon which the extension of the order ought to be granted and my finding therefore is that the application must be considered on a case to case basis and each case must be determined on its own merits and circumstances.

21. The Applicant has averred that the investigations in this case involve a lot of documents hence the reason it has not been able to conclude the same, that the Respondents were served with statutory notices and have asked for time so as to respond on that very ground thereby conceding that the investigations require time; that the Respondent has not in any event demonstrated the source of the funds the subject of the preservation orders and further that it is in the interest of justice that the orders be extended. Counsel relied on the case of Ethics & Anti-Corruption Commission v Equity Bank of Kenya & Another [2017] eKLR where the court stated:-“It is in the interest of justice to determine whether the moneys acquired by the 2nd Respondent from Kilifi County Government were rightly acquired and whether the Respondents are culpable of any corruption or economic crime. 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 reservation orders. On the other hand, the commission should be as quick in its investigations as it is in pursuing orders of preservation. It must be remembered that the presumption of innocence operates in favour of the 2nd Respondent since they have not been tried and convicted nor has the Applicant established any culpability on their part yet.”See also the case of Ethics and Anti-Corruption Commission v Beatrice Kagwiria Mugambi (supra) where the court held:-'From the circumstances of this case and as was rightly contended by the Applicant in their further affidavit filed in court on 9th March 2018, a cursory perusal of the Respondent's bank account indeed shows that from April 2013 to November 2017, the Respondent's account had received approximately Kshs 35 million from her employer. Without commenting on the propriety or otherwise of these transactions, I note that no attempt has been made in the Respondent to explain the deposits. In the circumstances, I find that the Respondent has shown reasonable grounds to suspect that the funds were as a result of a corrupt conduct. the question now is this: whether the orders should be extended?' (emphasize mine)

22. On the other hand, Counsel for the Respondents has urged this court not to grant the order and has argued that the applicant has had more than 12 months since the preservation orders were issued to conduct the investigations and that the rights of the Respondents must be balanced with the public interest. Counsel has also drawn this court’s attention to the fact that the 1st Respondent was suspended at the instigation of the Applicant. Counsel stated that the Applicant has not met the threshold for grant of the order. In support of his submissions Counsel relied on the case of Ethics and Anti-Corruption Commission v Jamal Bare Mohammed (Supra) where the court held that a period of 10 months since commencement of investigations was a long period and declined to extend the order and the case of Ethics and Anti-Corruption Commission v Gladys Chege t/a Digiage Agency (supra) where the court ruled that 9 months was a long period to have an individual’s bank account frozen and extended the period for only 100 days.

23. I have carefully considered the application, the grounds thereof, the replying affidavit of the 1st Respondent, the rival submissions, the cases cited and the law. I am satisfied that the Applicant has demonstrated reasonable grounds to warrant this court to exercise its discretion in its favour. The applications before this court were filed before the orders had lapsed. That is not however to say that the orders could not be extended as Section 95 of the Civil Procedure Act and Order 50 Rule 6 of the Civil Procedure Rules provide for enlargement of time even where the order has lapsed. The Applicant has placed before this court sufficient proof of the fact that investigations in this case are on-going and may take a while, a fact that is demonstrated by the respondents asking for extension of time to reply to the statutory notice served upon them by the 1st Applicant on account of the sheer number of documents involved. While the period of close to a year taken to do the investigations may seem long it is my finding that it is not inordinate given the circumstances. It would be just that the Applicant be granted more time to conclude its investigations. I am also of the view that this would also benefit the respondent if in the end the investigations were to acquit him. He shall therefore suffer no prejudice because as I held in the ruling dated 7th April, 2022, he has other means of earning income other than those the preserved funds. Moreover, his private interest in those funds does not outweigh the public interest as the funds if finally found to be proceeds of crime shall be forfeited to the state for the benefit of the public. The 1st Respondent’s suspension on half pay is a requirement of the law.

24. In the upshot the application is allowed and the preservation order is extended for a further six months from today’s date. Costs in the cause and this order shall apply mutatis mutandis in HC Misc. Application No. E025 of 2022. It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 30TH DAY OF JUNE 2022E N MAINAJUDGE