The scourge of money laundering, economic crimes and corruption is threatening the moral and social fabric of society. In Kenya, one of the legislative instruments designed to deal with this scourge was the ACECA. In its preamble, ACECA sought to provide for prevention, investigation and punishment of corruption, economic crimes and related offences. ACECA previously established the Kenya Anti-Corruption Commission (Respondent) as a body corporate whose Chief Executive Officer was the Secretary/Director to the Commission.
Entrenched in ACECA was the concept of unexplained assets which was a legal innovation to combat the vice of doubtful sources of wealth, money laundering and suspicious corrupt practices. Underlying the concept was the theme, you failed to satisfactorily explain the lawful source of assets, you forfeited it.
A Notice issued under section 26 of ACECA is a civil investigatory tool aimed at collecting information and data from a person suspected of corruption or economic crime. By virtue of section 55 (9) of ACECA, the provisions of section 55 ACECA were retroactive and a section 26 notice could issue regardless of when the property was acquired. The notice could issue in relation to property acquired before ACECA came into force.
Evidence recovered pursuant to section 26 of the ACECA on unexplained assets was for civil recovery only. Pursuant to section 30 of ACECA, the material received pursuant to the notice could not be used in criminal proceedings against the Respondent (except in certain limited circumstances including prosecution for perjury, or on a prosecution for another offence where the respondent had provided inconsistent evidence).
The Court’s primary role as a first Appellate Court was namely: to re-evaluate, re-assess and re-analyze the evidence on the record and then determine whether the conclusions reached by the trial court were to stand or not and give reasons either way.
The 10-month period from September 2007 to June 2008 was within the 16-year timeline of 1992 to June 2008 stated in the notice dated July 9 2008. The Notice required the Appellant to furnish details of the enumerated property and cash deposits for the 16-year period. The greater period included the lesser period and no fresh or new notice was required for the 10-months between September 2007 and June 2008. That lesser period was already within the longer 16-year time-frame. Further, the Originating Summons at paragraph 4 thereof and at paragraph 10 of its Supporting Affidavit expressly identified and informed the Appellant the period under investigation was September 2007 to June 2008.
It was not the duty of the trial Court to identify the period of investigation. Under section 26 of ACECA as read with section 55 of the ACECA, it was the duty of the Respondent to identify the period under investigation. The evidence on record identified the period of investigation to be September 2007 to June 2008. Accordingly, the ground and submission that the trial Court erred in failing to identify the period of investigation had no merit. Likewise, the contestation that the Originating Summons as filed was fatally defective for being grounded on a 10-month period had no merit.
The Appellant’s right to fair hearing under Article 50 of the Constitution as well as his right to be accorded reasonable opportunity to explain the source of the monies recovered as required by section 55 (2) of the ACECA were not violated. The Appellant was required to explain the source of cash deposits in his various bank accounts for the period under investigation. It was the Appellant who identified the assets in explanation of sources of cash flows in his bank accounts. The appellant had an opportunity to explain the source of those cash assets.
An appellate court should be very hesitant to assume jurisdiction in cases where a litigant was challenging the exercise of discretion by another court. In the instant matter, under the ACECA, the Trial Court had discretion to decide if the Respondent had tendered evidence on balance of probability establishing the appellant had unexplained assets.
The trial Court had discretion to let the Appellant satisfactorily explain the source of his assets. Interfering with an exercise of discretion on the part of the trial court would be tantamount to directing a court on how to exercise its powers, in essence restraining its liberty. An appellate court could only interfere with exercise of discretion if the Appellant could show that in exercise of its discretion:
a)the court acted on a whim or that;
b)its decision was unreasonable and
c)it was made in violation of any law or that;
d)it was plainly wrong and had caused undue prejudice to one party
In the instant appeal, the Appellant had not demonstrated that the trial Court in permitting the Appellant to testify exercised its discretion under section 55(6) of ACECA unreasonably, whimsically or injudiciously or that an injustice had occurred or violation of any law had taken place. Accordingly, there was no reason to interfere with the exercise of the discretion by the trial Court.
The threshold for determining unexplained assets was provided for in section 55 of the ACECA. A reading of that section established the threshold for existence of unexplained assets to be:
a)there had to be set time period for the investigation of a person;
b)the person had to be reasonably suspected of corruption or economic crime;
c)the person had to have assets whose value was disproportionate to his known sources of income at or around the period of investigation, and
d)there was no satisfactory explanation for the disproportionate asset.
The evidence on record revealed that another offer was made by the Appellant to sell the suit property which had already been sold to another person; it was improbable that the Appellant would knowingly sell the same property to two different persons. In contract law, when there was total failure of consideration, refund of any monies paid under the contract was due and owing. In the instant matter, if at all the sale did not go through, there was no evidence of refund by the Appellant of the cash installments paid as deposit. The two people who wanted to purchase the suit property were not called to testify and throw light on the nature of the cash transactions with the appellant. The Appellant neither addressed nor contradicted the specific reasons given by the trial Court for finding that the sale agreement was suspect and not authentic. There was no reason to interfere with the evaluation of evidence and findings of the trial Court in relation to the sale agreement with the two people who wanted to purchase the suit property.
Section 362A of the United Kingdom’s Proceeds of Crime Act 2002 (POCA) on unexplained wealth order akin to section 55 (2) of the ACECA which lays emphasis on assets being disproportionate to an individual’s known legitimate sources of income. It embodies the concept of income requirement whereby an individual’s assets should be proportionate to his/her legitimate known source of income.
The protection of the right to property had socio-political, moral, ethical, economic and legal underpinning. The right protected the sweat of the brow; it did not protect property acquired through larceny, money laundering or proceeds of crime or any illegal enterprise. There was no violation of the right to property if an individual was requested to explain the source of his assets that was disproportionate to his legitimate source of income.
In the instant matter, the provisions of sections 26 and 55(2) of the ACECA did not violate the right to property as enshrined in Article 40 of the Constitution. In any event, constitutional protection of property did not extend to property that had unlawfully been acquired. If it were to be held that the requirement to explain violated the right to property under Article 40 of the Constitution, enforcement of a notice issued under Section 26 and the requirement to explain the source of disproportionate assets would be rendered nugatory.
The concept of unexplained assets and its forfeiture under sections 26 and 55(2) of ACECA was neither founded on criminal proceedings nor conviction for a criminal offence or economic crime. Sections 26 and 55 of ACECA are non-conviction based civil forfeiture provisions. The sections were activated as an action against the property itself. The sections required the Respondent to prove on balance of probability that an individual had assets disproportionate to his/her legitimately known sources of income. Section 55 (2) of the Act makes provision for evidentiary burden which was cast upon the person under investigation to provide satisfactory explanation to establish the legitimate origin of his/her assets. The said evidentiary burden is a dynamic burden of proof requiring one who is better able to prove a fact to be the one to prove it. Section 55 (2) of ACECA is in sync with Section 112 of the Evidence Act, Cap 80 of the Laws of Kenya.
Under section 55(2) of ACECA, the theme in evidentiary burden in relation to unexplained assets was to prove it or lose it. In other words, an individual had the evidentiary burden to offer satisfactory explanation for legitimate acquisition of the asset or forfeit such asset. The cornerstone for forfeiture proceedings of unexplained assets was having assets disproportionate to known legitimate sources of income. Tied to that was the inability of an individual to satisfactorily explain the disproportionate assets.
A forfeiture order under ACECA was brought against unexplained assets which were tainted property; if legitimate acquisition of such property was not satisfactorily explained, such tainted property risked categorization as property that had been unlawfully acquired. The requirement to explain assets was not a requirement for one to explain his innocence. The presumption of innocence was a fundamental right that could not be displaced through a notice to explain how assets had been acquired.
In the instant matter, the Appellant was given a reasonable opportunity to explain his disproportionate assets. He gave evidence on oath and tabled documentary evidence, however he did not discharge his evidential burden to offer satisfactory explanation as required under Section 55 (2) of the ACECA. A person with lawful income had no trouble proving the legal origin of his or her assets. The law protected only the rights of those who acquired property by licit means. Those who acquired property unlawfully could not claim protection provided by the legal system. It was in that context that of the Constitution provided that protection of the right to property did not extend to property that had been unlawfully acquired.
Whereas the Appellant was under no obligation to call any witnesses to testify on his behalf, there were three crucial individuals that he ought to have called to testify. Those individuals were crucial to corroborate the Appellant’s testimony that the named individual lawfully gave him cash in form of friendly loan or installment towards purchase of plot/houses. In civil as in criminal proceedings, the plaintiff (prosecution) was solely responsible for deciding how to present its case and choosing which witnesses to call. In the instant case, the Respondent alone bore the responsibility of deciding whether a person would be called as a witness in its case. A court could not ordinarily direct a party to call any witness. Save in exceptional circumstance, a trial court could not call any witness. In the instant case, the Appellant’s contestation that the Respondent should have called the three individuals as witnesses had no legal foundation. In law, the Appellant could not compel the Respondent to call a witness to support or rebut the Respondent’s case; all that the Respondent was obligated to do was call credible and material witnesses to prove its case to the required standard.
The failure to call a particular witness or voluntarily to produce documents or objects in one's possession was conduct evidence. In principle, failure by a party to call a material witnesses could be interpreted as an indication of knowledge that his opponent's evidence was true, or at least that the tenor of the evidence withheld would be unfavorable to his cause. An inference would not be allowed if a party introduced evidence explaining the reasons for his conduct and reason for failure to call a witness and if the evidence was truly unavailable or shown to be immaterial.
In the instant case, Section 55 (4) of the ACECA stipulated that the person whose assets were in question had to be afforded the opportunity to cross-examine any witness called and to challenge any evidence adduced by the respondent and, had to have and could exercise the rights usually afforded to a defendant in civil proceedings. In the instant matter, the Appellant did have opportunity to cross-examine the Respondent’s witnesses.
The Appellant did not offer satisfactory explanation as to the source of admitted sum of Kshs. 15.5 million from the alleged Sudanese National; the source of Kshs. 1,000,000/= allegedly for community electricity project; the source of Kshs. 10.9 million and the source of Kshs. 9.5 million for sale of properties. The contestation that the trial Court erred in applying and interpreting sections 26 and 55 of ACECA had no merit. The trial Court did not err in holding that the admitted cash monies received were part of the Appellant’s unexplained assets that should be paid to the Kenyan Government.
