Republic v Stephen Otieno Onyango, Anthony Jordan Hudson, Leonard Karanja, Susan Wanjiru Lee, Cargo Rollers & Hellman Worldwide Logistics Ltd [2015] KEMC 1 (KLR)

REPUBLIC OF KENYA

IN THE CHIEF MAGISTRATE’S COURT

IN THE ANTI- CORRUPTION COURT AT NAIROBI

ANTI-CORRUPTION CASE NO.28 OF 2010

REPUBLIC .........................................................................................PROSECUTOR

VERSUS

STEPHEN OTIENO ONYANGO.........................................................1ST ACCUSED

ANTHONY JORDAN HUDSON........................................................2ND ACCUSED

LEONARD KARANJA........................................................................3RD ACCUSED

SUSAN WANJIRU LEE ......................................................................4TH ACCUSED

CARGO ROLLERS..............................................................................5TH ACCUSED

HELLMAN WORLDWIDE LOGISTICS LTD....................................6TH ACCUSED

JUDGMENT

Stephen Otieno Onyango, the 1st accused person herein, Anthony Jordan Hudson, the 2nd accused person herein, Leonard Karanja, the 3rd accused person herein, Susan Wanjiru Lee, the 4th accused person herein, Cargo Rollers Limited, the 5th accused person herein, and Hellaman Worldwide Logistics Limited, the 6th accused person herein, are all jointly charged with eight [8] separate and distinct Economic Crime and Criminal Offences all arising out of the same transaction.

In the first court, the 1st and 5th  accused persons are jointly charged with the offence of fraudulent failure to pay taxes payable to a Public body contrary to section 45 [1] [d] as read with section 48 of the Anti-Corruption and Economic Crimes Act No.3 of 2003.

The particulars of that offences are also set out in the charge sheet.

In the second count, the 2nd 3rd, 4th and 6th accused persons  are also jointly charged with a similar but separate and distinct, offence of Fraudulent failure to pay taxes payable to a Public Body contrary to section 45[1][d] as read with section 48 of the Anti-Corruption and Economic Crime Act, No. 3 of 2003.  The particulars  of that offecnes are also set out in the charge sheet.

In the third and fourth counts, the 1st and 5th accused persons are  again charged with two [2] similar but separate and distinct offences of uttering of a false document  contrary to section 353 of the Penal Code.  The particulars of those offences are clearly set out in the charge sheet.

In the fifth and sixth counts, the 2nd, 3rd, 4th and 6th accused person are also separately charged with two [2] similar but separate and distinct offences of uttering of false document contrary to section 353 of the  Penal Code.  The particulars of those offences are also clearly set out in the charge sheet.

In the seventh count, the 1st, 2nd, 3rd, 4th, 5th & 6th accused persons are all jointly charged with the offence of conspiracy to committee an offence of corruption or  Economic Crime contrary to section 47[a][3] as read with section 48 of the Anti-Corruption and Economic Crimes Act No.3 of 2003.  The particulars of that offence are clearly set out in the charge sheet.

In the Eight count, the 1st, 2nd, 3rd, 4th 5th & 6th accused persons are again all jointly charged with the offence of conspiracy to defraud contrary to section 317 of the Penal Code.  The particulars of that offence are also clearly set out in the charge sheet.

The particulars of all the afore-stated offences are quite clear and give reasonable information as to the nature of all the eight [8] offences charged separately herein.  It is alleged that, on diverse dates in the month of August, 2008 the accused persons jointly conspired to committee the Economic Crime of fraudulent failing to pay customs duty payable to Kenya Revenue Authority  and to defraud the same authority Kshs.2,448,817 being the customs duty payable on 400 cartons of sealed solar batteries  imported fr om China by Davis & Shirliff Ltd.  It is further alleged that the 1st & 5th accused persons fraudulently uttered a false Import  Declaration Form [Import Declaration Form] No. E0808093853 & a false commercial invoices No.P1080189 by Lodging them into the Kenya Revenue  Authority Electronic Simba System.   It is also alleged that the 2nd, 3rd, 4th & 6th accused persons fraudulently uttered a false Import Entry No.2008 MSA 1315800 and a false National Bank of Kenya deposit slip No.D229634 to Davis & Shirtliff  Ltd.  It is finally alleged that the accused persons fraudulently failed to pay Kshs.2,448,817/= being Customs duty for 400 Cartons of sealed Solar Batteries to Kenya Revenue Authority.

The accused persons denied  committing all the offences as charged.  The Honourable court then entered a plea of not guilty for each accused person following which the case was set down for hearing.  The prosecution then went ahead to call a  total of seventeen [17] witnesses to establish its case against the accused persons as charged.  The evidence of sixteen witnesses was heard and recorded by a magistrate who later on ceased to exercise jurisdiction herein, that is, after he was appointed a Judge of the High Court of Kenya.  This court later took over the case and after complying with the Provisions of Section 200 of the Criminal Procedure Code, proceeded to hear and record the evidence of the Seventeenth prosecution witness.  The prosecution case was subsequently closed.  All the parties involved in the trial then agreed to file written submission.  Those submission were filed by Mr. Daniel Karuri for the Director of Public Prosecution, Mr. Kute f or the 1st accused and 5th accused persons and Mr. Njongoro for the 2nd, 3rd, 4th and 6th accused Persons.  This Court then considered the evidence in support of the charges vis -a vis the written submission and all applicable laws and found that the accused persons had a case to answer.  The accused persons however opted to remain silent and await Judgment on being placed on their defence.

The brief facts of the case are that, at all material times relevant to this case, Cargo Rollers Ltd [The 5th accused person] was a registered clearing and forwarding firm/company and Hellman Worldwide Logistics Ltd [The 6th accused person herein was a registered Freight Forwarding Firm Karen Rono [ PW15 herein] a State Counsel with the Registrar of Companies, office of the Attorney General confirmed the registration of the 5th and 6th accused person and went ahead to avail all the registration records.  Those registration records established that the 1st accused person was one of the Directors of the 5th accused person.  While the 2nd and 3rd accused persons were some of the Directors of the 6th accused person.  The 4th accused person was identified by Dony Mutua [ PW5 herein] and Sammy Syengo Musunza [PW8 herein], her former colleagues as the 6th accused persons Operations Manager.

Sometimes in the month of March, 2008, Davis & Shirtliff Ltd wanted to import 400 cartons of sealed solar batteries from Goston Enterprises Development Ltd of China.  The Procurement and Importation process was handled by Anthony Maina Wang'ondu [Pw11 herein] and David Gatende [PW12 herein], the supply chain Director  and managing Director at Davis & Shirtliff Ltd respectively.  The process was formally commenced on 29. 3.2008 when PW11 raised a purchase order No. FP03121 [P- Exhibit No.16] to Goston Enterprises Development Ltd of China.  That Purchase order was for 400 Cartons of sealed Solar Batteries.  The 6th accused person was then appointed to clear that consignment.

In acknowledgement of the  purchase order, Gaston enterprises Development Ltd issued a pro-forma invoice  No. 1080089 [P-Exhibit No.17] to Davis & Shirtliff Ltd.  That pro forma invoice was for a total of  USD 86,839 being the production and Freight charges.  The pro- forma invoice was then used to prepare a costing sheet for the transaction.  The amount in that costing sheet was Kshs.1,323,086.  PW11      finally signed the costing sheet of 15. 4.2008.

On 18. 4.2008, Davis & Shirtliff Ltd applied for an Import Declaration Form from the Kenya Revenue Authority  for which they paid Kshs.5,000/= through National Bank of Kenya.  The consignment in question was to be financed for Davis & Shirtliff Ltd by their Bankers Standard  Chartered bank.  The necessary application was made to Standard Chartered Bank.  Standard Chartered bank finally issued a letter of credit on 9. 7.2008 guaranteeing payment of USD 86,839 to Gaston enterprises Development Ltd on behalf of Davis & Shirtiliff Ltd.

A  commercial invoice was in the meantime issued by  Guston Enterprises Development Ltd and sent to the Financiers, Standard Chartered  Bank.  A bill of landing No. S ZHAA 3205 was also issued by Maersk Shipping line on 26. 6.2008 for the Freight of 400 sealed Solar Batteries in containers No. POM4904256.

Davis & Shirtliff Ltd finally requested its appointed  Clearance Agent, the 6th  accused person, to clear the goods.  The 6th accused persons were however not licensed Customs Clearance Agents at the Kenya Revenue  Authority.  That notwithstanding they went ahead to acknowledge the appointment and receive all the documents that were in the name of Davis & Shirtiff and were necessary for such Clearance.  The 6th accused person then went on head to sub-contract a licensed Customs Clearance Firm.  The 4th accused person went on to appoint Warton Agencies to clear the goods.  Catherine Karimi Ndege [PW16 herein] received the instructions as the Director Warton Agencies..

PW16 received all the original documents from the 6th accused person.  She then commenced the  clearance process by lodging the documents with K.RA on 4. 8.2008. The K.R. A. Electronic Simba System automatically calculated the total tax payable as Kshs.2,767,260.    Julius Musyoki [PW 1 herein, Simon Muiruri Ndegwa [PW2 herein] and Zephaniah Orina Ochichi [PW7 herein] all Revenue Officers with  K.R.A. confirmed that the Electronic Simba  System calculated the tax due on the declared value of goods and was accurate.  PW16 that lodged Import entry No.2003 MSA 1315800.  PW 16 however cancelled the entry later on when disagreements on payments arose between her and the 6th accused persons.  Pw16 then returned all the documents she had in her possession  over that transaction to the 6th accused person.

Nelson Mwanzia [PW3 herein], the 6th accused person's Chief Accountant, in the  meantime prepared an invoice for Kshs.159, 449 and attached the import entry form generated by PW16.  The invoice was sent to Davis & Shirtliff Ltd.  PW11 received the invoice and made an  advance payment of the invoiced amount was then paid to the 6th accused person.  A cheque No.65383 for kshs.2,767,260 dated 5. 8.2008 was also drawn in favour of the 6th accused person's to cover the duty due.

The 6th accused person then sub-contracted the  5th accused persons to clear the  goods imported by Davis & Shirtliff Ltd.  The 5th accused person commenced the importation and clearing process a fresh.  They first applied for an import Declaration form using a commercial invoice amount of USD 8,412 on 12. 8.2008.  Import Declaration form No.E0808093853 was then issued .  The 5th accused person then proceeded on to lodge Import entry No.2008 MSA 133251 in which tax was calculated at Kshs.323,443/= on 15. 8.2008.  that entry was later on 18. 8.2008 passed by Julian Ngina Muasya [PW10 herein].  PW10 then left the matter to the verifying officers.  Anthony Wafula Wekesa [PW9 herein] and David Ndambuki Muli [PW13 herein] verifying officers with K.R.A. received all the documents from the 5th accused person.  PW9 verified the documentation and noted they were all proper & tallying.  He also confirmed that a duty of Kshs.323,443/= had been paid.  PW13 then did a  partially physical verification of the goods on 18. 8.2008.  The goods were finally released and delivered to Davis & Shirtliff Ltd on 25. 8.2008.  The 6th accused person finally  sent invoice No.1475 dated 24. 8.2008 to PW11 in which the advance payment was  calculated and onto which all the documents in support of payment of Kshs.2,767,260/= as duty were attached.

Later allegations emerged that the 6th accused person was engaged in tax evasion practics.  Abdul Hamid Farooque [PW17 herein] an investigator with the Ethics and Anti-Corruption Commission, was then directed to carry out further investigations on those allegations.  Those investigations started on 9. 12. 2008.  PW11 was  was later contacted since the 6th accused persons were then their known appointed clearing agents.  PW17 collected a bundle of documents and proceeded to National Bank of Kenya where Kelvin Waka [PW4 herein] confirm that 8 of the transactions had their duty paid for through the bank.  PW's confirmation led to PW17 narrowing down his investigations.  Those investigations  touched on the present case.  His investigations revealed that Kshs.2,447,217/= was not paid to KRA for 400 sealed Solar batteries import.  He noted that the accused persons had used false documents to evade payment of tax.  The accused persons were finally arrested and charged jointly with various Economic Crimes and Penal Crimes.

I have carefully analyzed, considered and weighed all the evidence and submissions on record vis -a- vis the applicable laws.  The prosecutions duty in the present case is quite strict.  I am now enjoined to find out  whether the prosecution has discharged that duty by establishing the offences against each accused person with credible evidence in order to prove its case as charged beyond reasonable doubt.

The evidence on record is quite clear and straight  forward.  That evidence addresses all the issues that are for consideration by this court in the present case.  A look at the said issues in relation to the court record including the cross-examination of the prosecution witnesses by the defence reveals that some of those issues appear settled.  That is mainly because the defence either  conceded to some of those issues or failed to dispute or discredit the evidence in support of the same.  Those issues do not require further detailed evaluation of the evidence in support thereof.  It is however necessary to set them out.

First, it is now settled that the 5th and 6th accused persons are duly registered Companies.  PW15 established the afore-stated.  In her evidence by proving the records of the two companies from the Registrar of Companies.  Those records are prima facie proof of registration of the companies in question.  The defence did not even attempt to dispute the afore-said hence the capacity of the two companies to be charged herein as legal persons and in their own names was established.  Secondly, it is settled that the 1st accused person was one of the Directors of the 5th accused person.  PW15 established the afore-said by producing the records from the Registrar of Companies, the 1st accused person did not dispute that evidence.  In fact, it is on re cord that the 1st accused person conceded to his Directorship and proceeded to take place on behalf of the 5th accused person.

Thirdly, it is settled that the 2nd & 3rd accused persons were some of the Directors of the 6th accused person.   PW15 established the afore-stated by producing the records from the Registrar of Companies.  The 2nd and 3rd accused persons did not dispute that evidence.  In fact, it is also on record that the 2nd accused person conceded to his Directorship by taking plea on behalf of the 6th accused person at the beginning of trial.

Fourthly, it is settled that Davis & Shirtliff imported the 400 Cartons of sealed Solar batters as alleged in the charges herein and that the customs duty payable to K.R.A was Kshs.2,767,260/=.  The afore-stated was established by the evidence of PW3, PW5, PW11, PW12 & PW16.  That evidence was not disputed by the defence even during the cross-examination of the witnesses mentioned.

The issues that are now outstanding taken on the Criminal Liability of each accused person for the offences that they face the issues that are therefore in dispute are whether the accused persons fraudulently failed to pay Kshs.2,448,817/= as customs duty to K.R.A and secondly, whether they uttered false documents in furtherance of the stated offence and finally whether all that was done after a conspiracy to commit an economic crime and/or defraud.

The first issue relates to the offences of fraudulent  failure to pay taxes payable to a Public body as charged in the 1st and 2nd counts.  PW11 and PW12 were quite clear in their testimonies.  They  stated that in the months of March to August, 2008, Davis & Shirtliff Ltd was importing 400 Cartons of sealed solar batteries from China and had appointed the 6th accused person as their clearing and forwarding agents.    During that period , K.R.A was running an Electronic Clearance System known as Simba.  It was therefore mandatory for all clearing agents to be registered and licensed in order to access the Simba System to clear goods.  PW1, PW2, PW7 & PW10 all Revenue Officers confirmed that the system was automated and they would only verify the inputs relied upon.

It was however unknown to PW11 and PW12 that the firm they had appointed to clear their good was not licenesed by K.R.A. .  PW5 & PW8 confirmed to this court that the  6th accused persons was indeed not licensed by K.R.A..  they stated that as employees of the 6th accused person.  Their testimony was not disputed.  It therefore follows that the 6th accused persons was not in a position to clear any goods and pay taxes.  It is clear that the 6th accused person through its Directors, the 2nd and 3rd accused persons  herein and through its Operations Manager, the 4th accused person, could not access the K.R.A Electronic Simba System in order to lodge the Import entry.  It is this import entry that triggers the two payment process as it calculates the actual tax payable and is approved by K.R.A Officers such as PW2, PW7 & PW10.  The 6th accused person and its officers could therefore not access the K.R.A Electronic Simba System in order to pay the required taxes.  The 2nd, 3rd, 4th and 6th accused persons can thus not be directly accused of failing to pay tax in their capacity as a Freight Forwarding  Company as is alleged in the 2nd count.

Further, it is clear from the evidence on record that the 6th accused person and its officers routinely engaged third party clearing firms to clear goods and pay all the required taxes.  Such third party clearing firms were identified as Warton Agencies through PW16 and Cargo rollers Ltd through the 1st accused person.

In the present case, PW16's firm Warton Agencies was the first firm to be engaged by the 6th accused person through the 4th accused person on 4. 8.2008.  It is clear that the PW16 received all the original documents obtained by Davis & Shirtliff Ltd during the importation of 400 Cartons of sealed Solar batteries from Goston Enterprises Development Ltd of China.  The documents included the original commercial invoice of 1. 7.2008 and the Import Declaration Form No.E0804040887 all for UDS 84,139.  PW16 relied on those documents to lodge the Import Entry No..2008  MSA BI5800.  Duty was calculated at Kshs.2,767,260.  PW16 could however not pay tax and await a reimbursement from the 6th accused person.  She thus cancelled the Import entry and returned all the documents to the 6th accused person.  The 6th accused person then went ahead to make an advance payment request to Davis & Shirtliff on 4. 8.2008 relying on the Import Entry lodged by PW.16.  Davis & Shirtliff Ltd then issued cheque No.065383 for Kshs.2,767,260/= on 5. 8.2008 which cheque was received at the bank on 6. 8.2008 for clearance.  It is now clear from the afore-going that is at that  point, the 6th accused persons had not engaged in any impropriety.  In fact, there was nothing to imply that they intended to evade paying tax as their request was for PW16 to pay the same and expect a reimbursement.  PW17, the Investigator, was clear that on all the afore-said in his evidence.

It was after the 5th accused person was contracted to clear the goods in question through the 1st accused person that the second import entry No.1332514 was lodged.  It is at that point that a second Import Declaration Form No.E0808093853 dated 12. 8.2008 emerged alongside a second commercial invoice dated 13. 7.2008 both declaring the value of the goods as USD 8,412.  That Commercial invoice even quoted the wrong pro-forma  voice number.  As a result, tax was calculated at Kshs.323,443.  Its that amount that was paid by the 5th accused person's agents on 18. 3.2008.  Tax of Kshs.2,443,817/= was subsequently not paid by the 5th accused person's officers as the K.R.A licenced clearing agents.

The issue now outstanding is whether failure to pay tax by the 1st and 5th accused persons was as a result of fraud.  What is on record is that a false entry No.2008 MSA 1332514 was made by the 5th accused person through the 1st accused person by misrepresenting the value of the goods imported.  That misrepresentation led to the fraud.  The misrepresentation started at the point the 5th accused person started  the clearing process afresh.  The 1st & 6th accused persons in their written submissions acknowledged applying for an Import Declaration Form No. E0808093853 and paying for the Kshs.323,443/= Tax.  Such a move was however not the preserve of a Clearing Agent but that of the Importer/owner.  The Customs & Exercise Act enjoin the importers to declare the goods he intends to import.  PW11 & PW12 stated that Davis & Shirtliff applied for an Import Declaration Form No.E804040887 on 18. 4.2008 after receipt of the pro-forma invoice dated 1. 4.2008.  It is that Import Declaration Form that enabled Guston Enterprises Development Ltd issue its commercial invoice dated 1. 7.2008 following which the same Declaration Number was quoted in the bill of lading that had been used to ship the goods on 26. 6.2008.  The goods arrived at  Consul Base Ltd on 8. 8.2008 and received normally by PW14 and his colleagues since the import had already been declared.

The 1st & 5th accused persons did not discredit PW11, PW12 & PW14's testimony on the Import Declaration Form [Import Declaration Form herein] No. EO804040887.  It is also not clear on how they made a late declaration without involving the importer as is required.  The mis-representation thus started with the Import Declaration Form No. E0808093853 on 12. 8.2008.  That Import Declaration Form was then used to lodge Import Entry No.1332514 where tax was assessed at Kshs.323,443/=.

The Black's law Dictionary 8th edition define fraud as follows:-

“A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment”.

The 1st and 5th accused persons made an application for a fresh Import Declaration Form and then lodged an Import entry using uttered information.  The truth was clearly concealed.  The 1st & 5th accused persons cannot claim ignorance of the initial Import Declaration Form yet it was clearly quoted in the bill of lading dated 26. 6.2008 No.SZHAA3205 they used to clear the goods alongside the other false documents.  That bill of leading indicated the correct commercial  invoice No. De No.KELCO80324 and the correct  Import Declaration Form No. E 804040887.  The 1st & 5th accused persons however went ahead to rely on other documents.  It cannot be a coincident that they did not question the 6th accused person and its officer on the whereabouts of the documents quoted in the bill of lading.  The 1st and 5th accused persons were clearly intending to misrepresent the facts & conceal some material facts.

The 1st & 5th accused persons opted to remain silent on being placed on their defence.  They then went on to rely on written submissions which appeared to incriminate the 2nd ,3rd, 4th & 6th accused person alleging that they received the commercial invoice dated 13. 7.2008 from them and that no  Import Declaration Form was availed.  Though such submissions cannot be safely relied upon as a substitute to the defence, the evidence on record reveals that the allegations are false.  First, there is an undocumented money transfer from the 6th accused person to the 5th accused person  which was amended by PW17 in his evidence.  Secondly, it is also on record that it is the 2nd accused person who suspected a case of fraud and reported to K.R.A. on 27. 10. 2008 while at the same time questioning the 5th accused person on their fraudulent tax evasion  practices.  Thirdly, it is also clear that PW16 had there before received all the original documents required to clear the goods from the 6th accused person.  The written submission by the counsel for the 1st & 5th accused person are clearly in the form of an alibi and they also go on to incriminate the co-accuseds.  The allegations raised therein can only be considered against the afore-stated evidence.  What is on record is that the 1st & 5th accused persons received a bill of lading No. S2 HAA3205.  That bill of lading had the details of the other two documents that were necessary to commence the tax payment process.  It follows that the 1st & 5th accused persons received all three documents  from the 6th accused person's Officer just like PW16 had received.  They can now not claim ignorance.  They clearly acknowledged applying for the  Import Declaration Form No. E 0808093853 and such an act was unprocedural.  The evidence that is now on record is that the 1st & 5th accused persons fraudulently failed to pay Kshs.2,448,817/= as tax to K.R.A.  That evidence established the offence in the 1st count and not in the 2nd count.  This court noted herein before that the evidence on record is to the effect that the 6th accused person lacked capacity or a licence to access the K.R.A Electronic Simba System in order to pay tax.  There is therefore no evidence on record that the 2nd, 3rd, 4th and 6th accused persons fraudulently failed to pay tax as charged in the 2nd count.  Further to the afore-going the 1st and 5th accused person clearly conceded to applying for  Import Declaration Form No. E0808093853 for USD 8,412 dated 12. 8.2008. they also conceded to relying on that  Import Declaration Form to make or lodge the Import entry No. 1332514.  They however denied any knowledge of the existence of another Import Declaration Form hence denied making that application fraudulently.  It is clear from the evidence on record that the Import Declaration Form PW11 had applied for was quoted in the bill of lading issued on 26. 6.2008.  There was therefore evidence of knowledge of the truth and the existence of the Import Declaration Form plus a commercial invoice No. KELC0 803224.  It is that truth that was misrepresented & concealed by the act of applying for Import Declaration Form No. E 0808093853.  The accused persons in the 3rd count clearly knowingly and fraudulently uttered a false Import Declaration Form.  The 1st & 5th accused persons are therefore guilty of the effence of uttering a false document as charged  in the 3rd count.

As for offence in the 4th count, the commercial invoice used by the 1st & 5th accused persons in further support of the Import entry No.1332514 was No. KEL Co 80324 for USD B,8412 dated 13. 7.2008.  The commercial invoice noted in the particulars of the offence in the 4th count is No.P1080189.  There is no evidence that specifically establishes the existence of a commercial invoice No. P1080189 whether false or genuine.  The evidence that is on re cord is therefore not in support of the offence of uttering a false document against the 1st & 5th accused persons as charged in the 1st count.

In the 5th and 6th counts, it is specifically alleged that the 2nd, 3rd, 4th & 6th accused persons knowingly and fraudulently presented a false, processed & passed Import Entry No.2008 MSA 1315800 and a National Bank Ltd slip No.D 229634 for Kshs.2,767,260/= to Davis & Shirtliff.  It is quite  clear from the evidence on record that the two mentioned documents were false.  The evidence of PW8 revealed that the National bank  of Kenya Ltd deposit slip No. D 229634 dated 11. 8.2008 was indeed a false document.  That evidence was supported by the data provided by PW4 from the bank's system and the fact that the entry reference herein was for an Import entry that had not been processed, passed and approved.  In fact the import entry had been cancelled.  The evidence of PW7 & PW16 also revealed that the import entry No.1315800 purportedly passed on 12. 8.2008 was a false document.  With that settled, what is now outstanding is whether the 2nd, 3rd, 4th & 6th accused persons knowingly and fraudulently uttered the said documents.  A look at the evidence on record reveals that there is no proof that the 2nd, 3rd, 4th and 6th accused persons knew that the two documents were fraudulent.

It is clear from the evidence on record that it is the 2nd accused person who initiated the present case.  On 27. 10. 2008 the 2nd accused person wrote to K.R.A & the 5th accused person on suspected tax evasion.  The 8th accused responded to the allegations levelled against them on 29. 10. 2008 and passed the blame to its employees.  The 5th accused person then promised to investigate & find out the employees involved.  K.R.A. on the other hand took no action.  On 16. 12. 2008 the 2nd accused person did a reminder to them on his report of suspected tax evasion against the 5th accused person.  K.R.A. finally responded on 27. 2.2009 confirming that the 5th accused person had been suspended as a Clearing Agent after investigations on the suspected forgery tax evasion.  PW17 confirmed to this court that he was aware of the said correspondences but chose not to rely on the same in his case.  PW17 was clear that he was not collecting evidence that was favourable to the 6th accused as he suspected a case of conspiracy.

It was  during the cross-examination of PW17 that it emerged that he deliberately concealed some evidence in order to advance his suspicion of a conspiracy .  PW17 however failed to gather enough evidence to convert his suspicions to admissible cogent evidence.  Pw17 commenced his investigations on 9. 12. 2008.

Those  investigations were commenced 1 ½ month after the 2nd accused person reported the matter.  Such actions  by the 2nd accused persons revealed that he had no knowledge of the forgery or fraud he complained about.  He was clearly requesting K.R.A to investigate one of its  licenced agent though his firm was not without knowledge, one cannot be held liable for uttering a false document or even conspiracy.

It is quite clear that PW17 concealed some evidence or conveniently failed to  rely on the same because it was not favourable to his case.  His case was that of a suspected conspiracy between the accused persons herein.  In the case of Kanyi -vs – Republic [1991] KLR 175the High Court while considering a case pegged on suspicions held inter alia:-

“There was grave suspicion that the applicant might well have committed the offence for which he was charged but suspicion alone is not a substitute for the prerequisite evidence beyond reasonable doubt”

In the present case, PW17's suspicions can not suffice as evidence.  What is clear from the evidence he compiled in one and a half [ 1½] years is that the 2nd, 3rd, 4th & 6th accused persons had no knowledge of the forgery, or fraud and that they did not conspire with the 1st & 6th accused persons not to pay tax and/or defraud K.R.A.  The Black Law Dictionary 8th edition define conspiracy as follows:-

“An Agreement by two or more person to commit an unlawful act, coupled with an intent  to achieve the agreements objective and [ in most  states] action or conduct that furthers the agreement; a combination for an unlawful purpose”

In the present case the agreement objective, if there was any, would have been to defraud KRA and convert  Kshs.2,448,817/= to their own use.  The 2nd accused person's action of reporting some suspicious activity involving 5th accused person's engagement with K.R.A can not be said to have been to further the agreement.  PW 17's concealment of some material evidence also goes on to discredit his trustworthiness hence castes some doubt on the prosecution case.  The evidence on record is therefore not in support of the allegations that the 2nd, 3rd, 4th & 6th accused person's knowingly uttered false documents as charged.  In the 5th & 6th counts, further, there is also no evidence at all of a conspiracy.  There was clearly no agreement between the 1st & 5th accused persons on one hand & the 2nd, 3rd, 4th & 6th accused person not to pay customs duty and hence defraud K.R.A.  With evidence of such an agreement missing PW 17's suspicions will remain as such but at the end, the offences in the 7th & 8th counts have not be established against any accused person with creditable admissible evidence.

After evaluating all the evidence on record, I find that the same is only in support of the offences in the 1st and 3rd counts.  That evidence  is clearly not in support of the offences in the 2nd, 4th, 5th, 6th, 7th & 8th counts.  The prosecution has clearly failed to prove its case in the 2nd, 4th, 5th, 6th, 7th & 8th counts beyond reasonable doubt.  I accordingly find the 1st to 5th accused persons not guilty of the offences in the 2nd, 4th, 5th, 6th, 7th & 8th  counts as charged.  I hereby acquit the 1st & 5th accused person of the offences in the 4th, 7th & 8th counts under section 215 of the Criminal procedure  Code.  I also hereby acquit the 2nd, 3rd, 4th & 6th accused persons of the offences in the 2nd, 5th, 6th, 7th & 8th counts under Section 215 of the Criminal Procedure Code.

It is clear that the evidence on record is duly in support of the offence in the 1st & 3rd counts.  The prosecution has therefore proved its case against the 1st & 5th accused persons beyond reasonable doubt in those, two offence.  I accordingly find the 1st and 5th accused person guilty of the offences of fraudulently failure to pay taxes payable to a Public body and uttering a false document as charged in the 1st & 3rd counts and hereby convict  under section 215 of the Criminal procedure Code.

Court – Read and signed in open court this 30th April, 2015

Coram: as before me – P.M. Ndwiga [Mr.] PM

Court Prosecutor- Mr. Karuri – Sega holding brief

Court Clerk – Kiarie

Accused – present

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015

Mutisya for the 1st & 5th accused

Njongoro for the 2nd, 3rd, 4th & 6th accused

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015

Sega –  First offender

Court – So treated

Mutisya  in Mitigation – 1st accused is remorseful.  He is a father of 3.  His mother is 95 years old and diabetic.  He is the sole bread winner of his family.  His children are in Secondary School.  I pray for leniency and mercy of the court.  We pray for an non- custodial sentence.

Court – I have considered the mitigation and the nature and circumstances of the offence herein.  It is clear that the 1st accused used his company  name to commit the present offences.  He is therefore personally liable for his action.  I also note the counsel's plea for leniency and non-custodial sentence and take them into account.

In the 1st count the 1st accused is fined Kshs.1,000,000/= in default 1 year imprisonment .  Further K.R. A suffered a quantifiable loss as indicated in the particulars of the offence in the 1st count.  So, in addition to the afore-going fine the 1st accused is fined a mandatory fine of Kshs.4,897,634 in default 1 year imprisonment.  In the 3rd count the 1st accused is fined Kshs.50,000/= in default 3 months imprisonment.

The sentences to run consecutively.

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015

Njongoro – We pray for a refund of cash bail

Court – All cash bail to be refunded to the depositors

surety also discharged.

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015

Mutisya – We make an application under section 386 CPC we pray for bail  pending appeal.  Accused is not a flight risk.  I will avail him in court wherever required.

Sega – I object the court is factus official. The Application should also be made formally in writing.  The sentence is very lenient

Mutisya – An oral application can be made in the trial court.

Court – I have considered the accused's application for bail pending appeal.  The grounds relied on by the counsel can only be considered when granting bail pending trial.  The principles for granting bail pending appeal are different and have not be argued before me.  The application by counsel for 1st accused lacks merits and its dismissed.

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015

Mutisya – I pray that 1st accused's cash bail be utilized as fine.

Court – Application granted.  1St accused's cash bail may be utilized to pay part of the fine imposed herein.

P.M. NDWIGA [MR]

PRINCIPAL MAGISTRATE

30. 4.2015