Ethics and Anti-Corruption Commission v Jamal Bare Mohamed [2017] KEHC 3172 (KLR) | Asset Freezing Orders | Esheria

Ethics and Anti-Corruption Commission v Jamal Bare Mohamed [2017] KEHC 3172 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MISCELLANEOUS APPLICATION NO. 31 OF 2016

IN THE MATTER OF: AN APPLICATION BY ETHICS AND ANTI-CORRUPTION COMMISSION FOR AN ORDER UNDER SECTION 56 OF THE ANTI-CORRUPTION AND ECONOMIC CRIMES ACT, NO 3 OF 2003 TO PROHIBIT THE WITHDRAWAL, TRANSFER OR DISPOSAL OR OTHER DEALINGS (HOWSOEVER DESCRIBED) WITH THE MONIES AND PROPERTIES BELOW:

KSHS.26,193,071. 70 HELD IN ACCOUNT NO. [………………] IN EQUITY BANK LIMITED, THIKA SUPREME BRANCH IN THE NAMES OF JAMAL BARE MOHAMED

WHICH MONIES AND PROPERTIES IS SUSPECTED TO HAVE BEEN ACQUIRED AS A RESULT OF CORRUPT CONDUCT

BETWEEN

ETHICS AND ANTI-CORRUPTION COMMISSION............APPLICANT

VERSUS

JAMAL BARE MOHAMED...............................................RESPONDENT

R U L I N G

1. This application was brought under certificate of urgency by  way of Notice of Motion pursuant to Section 56 (3) of the Anti-CorruptionandEconomic Crimes Act, No. 3 of 2003 dated 12th April 2017 by the Ethics and Anti-Corruption Commission (herein the Commission).  The application seeks that the preservation orders issued by the Court on the 14th October 2016 and were due to expire on the 13th of April, 2017 be extended.  The grounds on the face of the application are that investigations into the unlawful and irregular payments of Kshs.26,193,071. 70 held in Account No. [……………]in Equity Bank Limited, Thika Supreme Branch in the names of Jamal Bare Mohammed were yet to be completed.

2. It is submitted that upon the lapse of the preservation orders, there would be no order prohibiting the Respondent from transacting in any way with the amount in the aforesaid account. The Commission was therefore apprehensive that if the Preservatory orders in place were not extended, the Respondent would transfer, withdraw, dispose of or otherwise deal with the aforesaid funds in a manner which could frustrate the conclusion of investigations and defeat the intended recovery proceedings and prosecution of any persons who may be found culpable for corrupt conduct.

Applicant’s submissions:

3. The application was supported by the affidavit and a further affidavit of Paul Mugwe, a forensic investigator in the employ of the Commission, dated 12th April 2017. He averred that the investigations in to the subject amount were very complex and involved interviewing and recording statements from many witnesses. That on the 6th of March, 2017, the Applicant served the Respondent with a Notice pursuant to Section 26 of the Anti-CorruptionandEconomic Crimes Act, No. 3 of 2003, requiring him to explain the disparity between the value of his assets and his known legitimate sources of income within 30 days.

4. It was submitted the Commission on the 9th of January 2017, wrote to the National Police Service Commission requesting them to provide the Applicant with the Respondent’s certified copies of pay slips for the period between 2014 to 2016 and all appointment, deployment/transfer/signals and promotion letters. The said Commission had only supplied the documents in part. The Commission on the 24th January, 2017 wrote to the Police Service Commission requesting for the outstanding documents to be supplied and were still awaiting the response to conclude investigations.

5. The investigations by the Commission regarding the subject funds in the names of Jamal Bare Mohammed were said to be at an advanced stage and would be concluded within the next one month. Further that in the absence of a Court Order under Section 56(3)of the ACECA in the intervening period, the Respondent may and/or will transfer, withdraw, dispose off, waste or otherwise deal with the funds, and the entire investigations by the Commission and the intended institution of civil proceedings will be rendered nugatory.

6. In a further affidavit dated 29th May 2017 Paul Mugwe, averred that the Respondent claimed to be legitimately carrying on business as set out in paragraphs 4, 5 and 6 of his reply. Notably however, the funds deposited in Account No. [……………….] were hardly, if ever, withdrawn for purposes of purchasing the said livestock, thus inviting suspicion. The Commission was in the process of interrogating the Respondent’s letter in response to their Notice under Section 26 of the ACECA. It would therefore be prejudicial to their investigations for the Court to delve into the sufficiency or otherwise of the evidence against the Respondent at this time.

7. The Commission contended that from the month of April, 2015 to December 2015, the Respondent did not make any withdrawals from the subject account, but in the same period he deposited approximately Kshs. 200,000/= every week. This, was inconsistent with monies applied for genuine business purposes and although the Respondent did provide an explanation as to the source of his assets vide his letter dated 5th April, 2017, this was subject to verification hence the application for extension of time.

8. The Commission urged that the Respondent would not be prejudiced by their application, for reasons that the Respondent insisted that his wealth was drawn from legitimate sources. The Commission did not interfere with those sources in any way and they should be accessible to him. The Commission argued that the Respondent proposed that from the Ksh. 26,193,071. 70, there should be deducted Kshs.5,428,120. 00 which the   Commission had acknowledged was the total value of his declared income and assets, yet this was the value of his land, 268 goats, 217 camels and 180 cows, all of which did not form part of the funds in the subject account and could therefore not be deducted there from.

9. The Commission pointed out that the cash declared in the Respondent’s declaration of Assets and Liabilities for the year 2015 which was Kshs. 948,120/= was his salary and allowances for the year 2015 and the said money was deposited directly in to his salary account no. 0190101390586 which account was not subject of this application.

10. The Commission argued that the Respondent’s contention that the preservation orders crippled his livestock business could not hold, since from the date the account was opened, the Respondent deposited large amounts of money, with little or no withdrawals. The Respondent had other accounts being his salary account No. […………………….] and account No. [……………………] both of which were available for his use and support of his dependants.

11. The Commission contended that what the Respondent was seeking in paragraph 11(a) of the Replying Affidavit would involve the court reviewing the evidence so as to ascertain whether Ksh. 5,428,120/= was indeed the value of assets legitimately owned by the Respondent. That the Respondent was under the mistaken belief that the Kshs. 5,428,120/= was uncontested. Further that the prayers hereinabove ought to be made in a separate application, where the parties can respond accordingly before determination by the court and ought not to be sneaked in via the replying affidavit

Respondent’s submissions:

12. In a Replying Affidavit dated 27th April 2017, the Respondent averred that he took the role of managing the inheritance and catering for the responsibilities left by his father after his demise. He dealt with most of the assets in his own name acting as a trustee on behalf of his family and relatives and they were content with him having custody of the assets.

13. The Respondent submitted that at different times, with the assistance of family members, he sold the inherited livestock at markets such as Garissa and held a significant part of the proceeds of these sales in trust. According to the Respondent, livestock in Wajir and Garissa is relatively cheap and attracts good returns when transported and sold in urban markets where the demand for meat is always high. That together with close family members, they purchased livestock and upon resale he held the money as a custodian of the family and close relatives.

14. The Respondent alleged that he had engaged in the business of buying and selling cows from 1995 to 2016. The business began with the sale of majority of the inherited livestock and later evolved into the business of buying and selling livestock and thus the proceeds under scrutiny did have a genuine and valid explanation. That vide a letter dated 10th April 2017 he explained the source of his assets in response to a Notice dated 27th February 2017 by the Commission which required him to explain the alleged disproportion between his assets and income. In his view the explanation clarified the legitimacy of the frozen assets.

15. The Respondent contended that he is prejudiced by the application dated 12th April 2017 for the extension of the preservatory orders for reasons that; the Commission acknowledged that Ksh. 5,428,120/= was the total of his declared income and assets and did not contest this amount. It should thus be deducted from his alleged total assets. He submitted that the refusal to allow him to access the said sum was prejudicial to his economic rights and he ought not to be denied access to what was acknowledged by the Commission. The Respondent also contended that he continues to incur losses as the subject frozen funds would have earned significant interest of 10% per month, which  translates to about Ksh. 2,600,000/= as  profits to the business.

16. Lastly, it was submitted that the preservatory orders granted had for the last 6 months crippled the livestock business and this had not only affected him, but also his dependants. He had struggled to cater for the daily expenses of his dependants who were about 20, most of whom were school going children, who required school fees and daily upkeep. Further that the fate of all his dependant’s and  relative’s survival and welfare had been adversely affected and continued to be under threat of continued deterioration as long as the orders were extended or not varied.

17. The Respondent prayed that the Applicant’s motion be dismissed, as it had not put forth satisfactory reasons to explain the delay in concluding investigations, to warrant the extension of the freezing orders. He prayed that in the event that the court was inclined to grant the orders sought, the said orders be varied to the extent that;-

a) The uncontested assets of Ksh. 5,428,120/= being part of the Ksh. 26,193,071. 70 held in account No. [………………….]in Equity Bank Limited, be made available to him for withdrawal.

b) The monies held in account No. [………..........] in Equity Bank Limited, be held in a fixed deposit interest earning account and the interest earned be part of the assets of the Respondent for purposes of these proceedings.

Analysis and determination:

18. Having carefully considered the submissions and arguments that have been raised by the parties, the issue that forms for determination is whether the court should extend the preservation orders as prayed by the Applicant, or vacate the preservatory orders as prayed by the Respondent.  Learned State Counsel Mr. Kagucia represented the Commission while learned counsel Mr. Ngacha represented the Respondent.

19. Section 56 of the Anti-corruption and Economic Crimesunder which this application was brought provides as follows:-

“(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 if it is satisfied that there are reasonable grounds to suspect 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 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.” (emphasis added).

18. The wording in Section 56(3) of the Anti-Corruption and Economic Crimes Act is “may”, which implies that the Court has discretionary powers to grant the extension of preservation orders already in place. The burden however is on the Applicant to satisfy the court that it is deserving of the orders sought. In the case of Ethics & Anti- Corruption Commission –vs- Johncele Insurance Brokers Limited. Kisumu Misc. Civil Application No. 178 of 2014 (2015) eKLRthe Court held thus:

“…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 it……in the premise 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;

1. The Application dated 20th February 2015 is allowed only to the extent the applicant is hereby granted 3 months (90 days) to conduct and conclude their investigations from the date of this ruling…”

20. On the application by the Commission, this Court on 14th October, 2016 granted ex-parte orders preserving the subject funds for a period of six (6) months.  The said Orders were to lapse on the 13th of April 2017 but were temporarily extended on the 9th of January 2017 for 14 days.  Later still on the 27th of April 2017 the orders were extended till the hearing date. The effect of this is that the Applicant’s investigations into this matter, have never been interfered with since the preservation orders have remained in force. It is now about 10 months since the Respondent’s bank account was frozen.

21. Mr. Ngacha argued that the Respondent is unable to pay his legal fees as his account was frozen and that he ought not to be deprived of the right to representation. Counsel prayed that if the court was inclined to extend the preservation orders, they should be varied and made conditional to the following:

i) that the Respondent be permitted to withdraw 2. 4 million to restock his livestock business,

ii) that the Respondent be permitted to pay Kshs. 700,000/= by way of banker’s cheque to his advocates on record and that;

iii) a reasonable sum of Kshs. 600,000/= be provided to him and his extended family for their daily upkeep until December. He submitted that these withdrawals would not in any way be prejudicial to the Applicant for the reason that in an interest earning account, the money would have attracted an interest of 10% from October 2016.

22. I note from Mr. Kagucia’s admission the Respondent’s explanation of his wealth came on 5th April 2017 while this application came a week later. Further that within the three months intervening, the Commission concluded the investigations and was about to sue for recovery of a sum amounting to Kshs. 47 million. This amount does not include the Respondent’s salary and livestock of which he had provided a declaration himself and which the Commission says it has not interfered with.

23. Indeed variation of orders is an application by itself under Section 56(3) of the ACECA. The Respondent has in passing asked the Court to vary the orders and release more than Kshs. 3 million to him. The application for variation of the preservatory orders is substantive and should have been made formally to allow a response from the Applicant for the court to consider both sides of the arguments.

24. Upon consideration of the rival arguments, I am satisfied that the Applicant has discharged its onus of proof by showing that considerable progress has been made in investigating this case. This includes interviewing and recording the statements of several potential witnesses as well as obtaining documentary evidence. The Commission has also demonstrated that more time is required to complete the investigations and institute the necessary recovery proceedings.

25. I note however from the proceedings that the application was filed on 12th April 2017 and was heard on 10th July 2017.  Mr. Kagucia submitted that in the intervening period the Commission had completed its investigations and on 10th July 2010 was no longer praying for extension for six months, but for only one month to enable the filing of the suit for recovery.  It is therefore safe to state that the application has been over taken by events since we are in the month of October.  The Commission should have by now concluded investigation and instituted the necessary recovery proceedings, if it is so minded.  For the foregoing reasons the application is denied.

Each party shall bear its own costs.

DELIVERED, DATED and SIGNED at NAIROBI on this 4th day of October2017.

………………..

L. A. ACHODE

JUDGE