Ethics & Anti-Corruption Commission vs Vulcan Lab Equipment Ltd & Another [2020]eKLR
Case Caption:
In the Court of Appeal; Civil Appeal No 197 of 2018 (Consolidated with Civil Appeal No 354 of 2018; Ethics and Anti-Corruption Commission vs Vulcan Lab Equipment & School Equipment Production Unit.
This Court will not aid those who would seek to use the judicial process to enforce contracts that bear the blight and blemish of corruption or illegality, and are against the public interest
Applicable laws:
Section 13 of the Ethics and Anti-Corruption Commission Act.
Brief Facts:
This was an appeal from the judgment and decree of the High Court Anti -corruption and Economic Crimes Case No 27 of 2016 formerly High Court civil suit No 110 of 2010. The 1st Respondent Vulcan Lab Equipment Limited (Vulcan) filed suit against the 2nd Respondent, School Equipment Production Unit (SEPU) and the Kenya Anti-Corruption Unit which was the predecessor to the appellant, Ethics and Anti-Corruption Commission (the Commission), which were the 1st and 2nd Defendant respectively.
In July 2009 SEPU approached Vulcan for a quotation or pro forma invoice for the supply of various science equipment and laboratory chemicals, which the former was to supply to various secondary schools in the country. Vulcan complied and forwarded the requested pro-forma invoice which amounted to Kshs. 226,772,450 inclusive of VAT. The duo then signed a supply contract on 16th July 2009 which provided that SEPU was to pay 33% of that sum as down payment and a similar percentage upon delivery of half of the goods, and the balance at full delivery. The contract was valid for 2 1/2 months’ renewable by consent of both parties. On the same day indicated in the contract, SEPU issued a cheque for Kshs. 75,086,880 to Vulcan.
A few days later the Commission moved to the Chief Magistrate’s Court at Kibera vide Misc. Criminal Application No. 233 of 2009 and obtained orders that froze two of Vulcan’s accounts held at the Westlands branch of the Southern Credit Commercial Bank. The Commission took that action to preserve the down payment which it considered to have been a misappropriation of public funds. The Commission had also through the Attorney General commenced criminal proceedings against Vulcan and its directors charging it with conspiracy to commit an offence of corruption, and fraudulent acquisition of public property under the ACECA.
Vulcan contended that the said action was “illegal, high handed, unwarranted and amounted to harassment and, a blatant abuse of power by the Commission” which caused Vulcan to “loose (sic!) the interest and the opportunity to utilize and/or invest the funds by way of bonds, shares or other business” of its choice. And it claimed damages. Vulcan complained that the criminal action was illegal, unconstitutional, unfounded and in bad faith.
Issues for Determination:
Whether the 1st to 4th Appellants applied the procedure laid down by the law when procuring the science equipment.
Holding:
It was evident to the court that the reason for the urgency that the 1st to 4th Appellants advanced was not supported by evidence. The court was of the view that the “urgency” was created by the 1st to 4th Appellants to avoid bounds of the provisions of the PPDA.
The court held that the prosecution did prove to the required standard that the 1st to 4th Appellants fraudulently paid to the 6th Appellant the said sum of Kshs. 75,086,880/- for goods not supplied. It did not constitute a valid defence that the said goods were supplied later. Their appeal in that regard could not succeed. The court could not allow the 5th to 6th Appellants to benefit from an obvious illegality and blatant breach of the law. The court could not grant their plea that they be paid the cost of the goods which they ordered at the instance of SEPU but were frustrated from supplying the same. The 5th and 6th Appellants’ remedy lay elsewhere. Appeals lodged by the 1st to the 4th Appellants lacked merit and was dismissed. In respect of the 5th and 6th Appellants, their respective appeals were allowed.
