Michael Kibuchi Gituto v Ethics & Anti-Corruption Commission [2020] KEHC 1406 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT

AT EMBU

CIVIL APPEAL NO. 51 OF 2019

MICHAEL KIBUCHI GITUTO.....................................................................APPELLANT

VERSUS

ETHICS & ANTI-CORRUPTION COMMISSION..................................RESPONDENT

JUDGMENT

1. The respondent herein was the plaintiff in the Chief magistrate’s court Civil Case No. 72 of 2017, in which it sued the appellant claiming the sum of Kshs. 2,469,184. 90 cts plus costs and interest.

2. In its further amended plaint dated 23rd day of August, 2016, the Respondent pleaded that in the financial year 2005/2006, the appellant who was at that material time employed as Accounts Assistant in the Ministry of Finance and deployed to Kirinyaga District Treasury as a cashier, in the course of performing his official duties embezzled, misappropriated, lost and/or otherwise failed to account for Kshs. 2,469,184. 90 cts being funds collected on account of the Ministry of Water and Irrigation.

3. The respondent averred that the appellant was under a duty to keep full and accurate accounts and/or ensure that full entries of all receipts and payments or accounts of the foresaid ministry were made in the cash book and that all the monies collected into an account maintained on behalf of the said ministry as required by the Government Financial Regulations and prudent accounting.

4. The respondent further averred that by a fraudulent scheme contrived to conceal and/or misappropriate the funds surrendered to the appellant on account of the said ministry, he made falsified entries in the cash book purporting to have made appropriate bankings or receipted revenue but failed to make the necessary entries in the cash book or has failed to account for the revenue receipted by him. The particulars of falsified purported bankings and those of fraud were set out on paragraphs 6 and 7 of the plaint.

5. By reason of the matters aforesaid, the respondent claimed the Kshs. 2,469,184. 90 cts from the appellant as stated in the further amended plaint.

6. The appellant denied the respondent’s claim vide his statement of defence dated the 30th June, 2008. In the said defence he averred that the particulars set out in the further amended plaint are so general that he cannot be able to give a valid answer to the same. He stated that the duration in issue is so diverse to be able to give a correct answer.

7. The appellant further stated that the duty to keep full and accurate accounts of all the receipts of payments was upon every other accountant and internal auditor and was not his sole duty. He denied the particulars of fraud and contended that he never misappropriated revenue surrendered to him on account of the Ministry of Water and Irrigation as alleged by the respondent. He also denied the particulars of falsified purported bankings and revenue received but not entered into the cash book and put the respondent to strict proof thereof.

8. In sum, he denied owing the appellant the claimed sum or any other money or at all. He averred that the memorandum referred to by the respondent is illegal as the same was obtained through intimidation, coercion and undue influence. The particulars of the said intimidation, coercion and undue influence are set out in paragraph 10 of the defence. He stated that there were criminal cases pending in the Chief Magistrate’s court at Nyeri being Case No. 654, 655, 656, 657, all of 2007, and that he was the accused in one of those cases.

9. He urged the court to dismiss the respondent’s case with costs to him.

10. At the hearing, the respondent called five (5) witnesses in support of its case. The District Accountant for Kirinyaga testified as PW1. It was his evidence that the cashier in charge of the Ministry of Water and Irrigation had anomalies and that there was cash shortage in that, the cash book had more money than was in the cash box. They decided to audit his books, and found that money had been collected but it was not banked. He made a report to the police following which, the appellant was arrested. According to him, the alleged amounts did not reach the bank despite records showing that the money was removed from the cash book and taken to the bank on various dates.

11. PW2, adopted her witness statement as her evidence in chief. In the year 2003 – 2006, he was based at Kirinyaga District Treasury and his work included examining vouchers and supervising the staff at the treasury. In the course of her work she discovered there was a shortage in that there was money said to have been banked but it was not reflecting in the bank statement. She made a report to the District Accountant. According to her, it was the appellant who was supposed to account for the money as he was the one responsible for the Ministry of Water.

12. PW3, adopted his witness statements as his evidence in chief. In the year 2003 – 2006, he was based at Kirinyaga District Treasury as one of the cashiers. She confirmed that the appellant was one of the cashiers in the Ministry aforesaid; and his duty was to maintain the cash book for the Ministry of Water. It was her evidence that there was loss of cash in the books handled by the appellant which loss was discovered by a Mr. Njiru and PW2, and confirmed by KENAO and the treasury following which, the appellant was arrested.

13. PW4 who was the principal auditor at the material time, testified that he would audit all government Departments in Central Province, which audit included revenue and expenditure. He stated that they received a letter from the District Accountant, Kirinyaga, reporting a loss of Kshs. 9. 8 million. That, following the said letter they carried out an audit of five departments namely Water and Irrigation, Judiciary, Environment and Natural Resources and Kshs. 7,648,028. 15 cts was found to be missing in the Ministry of Water, the main areas being money collected was not all reflected in cash and falsified banking in that, money said to be banked was not banked.

14. PW5 was working in the Office of Auditor and Controller General in Nyeri at the material time. He stated that he was in the team that carried out the audit in the province. That after the exercise, they found loss of revenue cash but did not point out at any particular person.

15. On his part, the appellant testified in support of his case but did not call any witness. It was his evidence that he did not falsify the cash book and that he banked all the cheques in the amount in issue and the same was verified by a Mr. Njiru, the Senior Accountant. That the Internal Auditor also did verify and in order for them to do so they had to see the bank slips. He stated that though he was charged in criminal case No. 654 of 2007 at Nyeri, he was not convicted. He maintained that he worked according to the government Financial Regulations and Procedures.

16. At the close of the hearing, parties filed written submissions and in a judgment delivered on the 19th day of August, 2019, the learned magistrate entered judgment for the respondent for the claimed sum less Kshs. 52,351. 55 cts totaling to Kshs. 2,416,833. 75 cts plus the costs of the suit and interest. The said judgment is the subject of the appeal herein, which was filed by the defendant/appellant vide the memorandum of appeal dated the 9th September, 2019 in which, he has set out six (6) grounds of appeal.

17. The appeal was canvassed by way of written submissions which this court has duly considered.

18. It was the respondent’s case that in the financial year 2005 – 2006, the appellant, in the course of his official duties embezzled, misappropriated, lost or otherwise failed to account for Kshs. 2,469,184. 90 cts being funds collected on account of the Ministry of Water and Irrigation. The respondent set out the particulars of falsified purported bankings on paragraph 6 of the further amended plaint which particulars included the date, cash book folio number and the amounts, all totaling to Kshs. 2,469,184. 90 cts. On his part the appellant denied the claim and averred that he worked according to the Government Regulations and Procedures.

19. In his submissions, the appellant submitted that there was no evidence that would have formed the basis of the court entering judgment against him for the reasons that; the respondent’s contention that the appellant did not keep the bank slips in safe custody, is an indication of the fact that they agree that the appellant banked all the money and got banking slips because, all the bankings the respondent is questioning had been verified and verification could not have been done without the banking slips. According to him, the signatures meant that Mr. Njiru indeed counter-checked the previous transactions and he could not have done so without having seen the documentary evidence which were the banking slips before appending his signature to indicate that the entries in the cashbook were accurate and in line with such documentary evidence.

20. It was his further submission that though the banking slips were not appearing in the bank statements, the bankings had been made and the banking slips generated as those were the documents that the appellant’s seniors were using to verify each and every banking.

21. The appellant urged that the trial magistrate erred by not finding that the respondent did not prove the allegations of fraud and by not applying the clear and unequivocal standard of proof. Reliance was placed on Section 107 of the Evidence Act and in the case of Central Bank of Kenya Limited Vs Trust Bank Limited & 4 Others NAI Civil Appeal No. 215 of 1996 (VR) in which, the court considered the standard of proof where fraud is alleged and stated that the onus of proof was much heavier than in the ordinary civil cases.

22. In addition, the appellant relied on the cases of Denis Noel Mukhulu Ochwada & Another Vs Elizabeth Murungari Njoroge & Another [2018] eKLR quoted in Richard Akwezere Onditi Vs Kenya Commercial Finance Company Limited Civil Appeal No. 329 of 2009 and that of R.G. Patel Vs Lalji Makanji [1957] EA 314 on the standard of proof in cases where fraud has been alleged.

23. It was also submitted that the learned magistrate shifted the burden of proof to the appellant when he stated that the appellant was at liberty to call the Bank Manage.

24. It was also the appellant’s contention that the money said to have been embezzled was in the form of cheques and the cheques had the name of the account and not that of the appellant. He submitted that the drawers of the cheques ought to have been called to testify whether the money was drawn from their accounts and by who.

25. The respondent on its part submitted that sufficient evidence was adduced before the trial court to prove the case against the appellant. That the respondent produced documentary evidence in support of its case to wit; the cash book of the ministry of Water and Irrigation covering the year 2005/2006; a certified copy of the Bank Statement, Inspection and Audit Report and a letter disclosing the appellant’s employment particulars.

26. The respondent further submitted that the appellant admitted that he was the cashier in charge, was in custody and possession of cash book for the Ministry of Water and Irrigation at all material times relevant to this case. That he also admitted that maintenance of the cash book involved making entries in the cashbook in which he recorded monies received and funds disbursed/expended on a daily basis. It was also submitted that the appellant made entries in the cashbook indicating that he had deposited the cheques in issue but the bank statements were clear that no such cheques were deposited in account No. [xxxx].

27. On the issue of shifting the burden of proof, it was submitted that the same was not shifted as alleged by the appellant. Reliance was placed on Section 112 of the Evidence Act.

28. On the issue of verification, the respondent submitted that the verification process was irregular in that, in some cases, instructions were being given orally by the District Accountant for the cashiers to proceed without verification and therefore, the appellant could not claim that the verification process done was proof that the funds were banked.

29. The court has duly considered the grounds of appeal and the submissions of the parties. This being the first appeal, the duty of this court is to re-evaluate the evidence on record and reach its own conclusion in the matter (see the case of Selle & Another Vs Associated motor Boat Company limited) [1968].

30. It should, however, be appreciated that an appellate court will not ordinarily interfere with the findings of fact by the trial court unless they were based on no evidence at all, or on a misapprehension of it or the court is shown to have acted on wrong principles in reaching the findings.

31. In the appeal herein, and in the proceedings before the trial court, it has not been disputed that the appellant was employed as an Accounts Assistant in the Ministry of Water and Irrigation. The appellant admitted that he was the cashier in charge and had the custody and possession of the cashbooks for the aforesaid ministry. He also admitted that maintenance of the cashbook involved making entries in the cashbook, in which he could record monies received and funds disbursed/ expended on a daily basis and that it was his responsibil8ity to balance the cashbook on a daily basis.

32. It was the evidence of PW4 that they received a letter from the District Accountant Kirinyaga reporting a loss of money and following the said letter, a team was constituted to carry out investigations to establish whether any money had been misappropriated and by who. The investigations covered five departments including Water and Irrigation and it revealed that a total of Kshs. 7,648,028. 15 was missing in the Ministry of Water and Irrigation. They found that there was falsified banking, in that, money said to be banked was not banked. His evidence was corroborated by that of PW1, PW2 and PW5.

33. The Respondent has set out the particulars of the falsified banking which included the date, cashbook folio and the amounts. According to PW1, PW2 and PW5, the total amount claimed by the respondent was collected but it was not banked and which was not accounted for. The particulars are as follows:

1) 10/05/2005            3              513,920. 60

2) 16/09/2005            5              370,566. 00

3) 9/12/2005              16            299,076. 00

4) 20/12/2005            18            545,387. 15

5) 10/03/2006            27            497,809. 00

6) 10/03/2006            27            106,160. 00

7) 10/03/2006            27              83,915. 00

Plus a sum of Kshs. 52,351. 15 in cash which was discovered by the appellant’s supervisors.

34. In his defence, the appellant asserted that the District Accountant and cashiers could verify his work on a daily basis and sign the cashbook and in doing so, the supervisor ought to have seen the cashbook and the banking slips. Though according to him the cheques were banked, and the banking verified, the evidence in form of bank statements shows that the money was not reflected which fact, the respondent admitted in his evidence.

35. As the learned magistrate rightly found, the appellant was the one expected to bank the money yet he did not because, if he had, the same would have reflected in the bank statements. The respondent did not offer any explanation as to where the money went and merely saying that it was banked in the wrong account was not sufficient. In my considered view, once the respondent adduced evidence that the appellant received the cheques, the appellant needed to explain where the money went to.

36. I am not persuaded by the appellant counsel’s submissions that the learned trial magistrate shifted the burden of proof to the appellant. It did not matter whether the money was in form of cheques or cash, all what the respondent needed to show was that the appellant received the money in the course of his official duties and on its behalf and that the appellant had not accounted for the money.

37. On the verification of the entries by his supervisors and in particular a Mr. Njiru, the learned magistrate pointed out and rightly so, that the said Mr. Njiru was treated as an accomplice of the appellant and was even charged jointly with him in the criminal case and if he verified the banking slips, that shows they were not genuine as the money was not reflected in the bank statements. Further, in cross-examination, the appellant admitted that in some cases, the District Accountant would orally authorize one to proceed even before verification and therefore his contention that there was verification was not full proof that the transactions were correctly done.

38. As for the sum of Kshs. 52,351. 55 cts, there was no evidence that a handing over was done and so, it does not follow that the appellant must have taken the money.

39. In the end, my considered view is that the learned magistrate analyzed the issues correctly and I have no reason to fault his finding. The appeal has no merits an1d it is hereby dismissed with costs to the respondent.

40. It is so ordered.

Delivered, datedatsignedatEmbuthis2ndday ofDecember, 2020.

L. NJUGUNA

JUDGE

...........................................................for the Appellant

.........................................................for the Respondent