Kenya Anti-Corruption Commission v Peter Mwai Ndegwa & 9 others [2019] Eklr

Case Caption:

In the High Court of Kenya at Nairobi; the Anti-Corruption and Economic Crimes Division; ACEC No. 9 of 2016 (Formerly HCCC 300 of 2006), Kenya Anti-Corruption Commission V Peter Mwai Ndegwa T/A Bon Marchie Contracts; Spiral Powers Tools & Equipment and Emedia Promotions, David Muroki Ndegwa T/A Kambiti General Merchants, David Kabaka Gachuru, George Wahome Njoroge, Joseph Ndung’u Kiarie T/A Plover Packaging, Tom Odhiambo Mwonya, Angeline Mary Muguongo, Erastus Maina Gikunu, Charles Kinyua Kagio T/A Kinch Enterprises; and Sekil Contractors, Daniel Mwaura Kimani.

Case URL:

http://kenyalaw.org/caselaw/cases/view/179833

Summary Significance:

A case for acquisition of public property; the Court held that unless the acquisition is justified, then the subject property should revert to the state.

Applicable laws:

•The Constitution of Kenya 1963, Section 79
•The Ethics and Anti - Corruption Commission Act, Section 11(d)
•The Leadership and Integrity Act, Section 4(2)

Brief Facts:

The Plaintiff (EACC) filed a suit for recovery of Kshs. 28,655,709/= against the Defendants; the officials of Makuyu Town Council and their close business associates. The suit arose from a scheme that was orchestrated by the Town Council officials to defraud the Council of the said money through opening of a fictitious bank account (KCB account No. 257 971 350) in the name of the Local Authority Transfer Fund (LATF) which received funds from the Central Bank. The accounts were allegedly opened with the authority of the Central bank. The Plaintiff established that that the said accounts were opened using forged authority letters from the National Treasury and once funds were sent to the said bank account, the same were distributed to the Defendants rather than being used for the intended purpose. According to the Defendants, the funds received from the Central Bank were utilized for the intended purpose to wit; purchase of murram and hardcore for road repairs in Makuyu. Accordingly, the Plaintiff sought and obtained orders preserving properties suspected to be proceeds of said scheme pending hearing and determination of the suit.

Issues for Determination:

I.Whether the KCB account No. 257 971 350 Thika was the Local Unit of the Funds Transfer (LATF) account for Makuyu town council.
II.Whether the authorization from the National Treasury were genuine
III.Whether any money was credited into KCB Thika account No. 257 971 350, If so, how much?
IV.Was the money in KCB Thika account No. 257971350 spent on the Makuyu town council projects? If not, who are the beneficiaries?
V.Whether the beneficiaries liable for the loss of the amount of Kshs. 28,655,709/=?
VI.Who should bear the costs?

Holding:

The court held that the Plaintiff had proved beyond doubt that Makuyu Town Council had only three (3) bank accounts; Thika account no. 3739570 as the only LATF account and two other accounts which were not LATF were: - i. Barclays Bank of Kenya account No. 1096346 (current) and Co-operative Bank Thika account no. 0120073035200 savings. Therefore, KCB account no. 257971350 Thika was not an official LATF account for Makuyu town council. Further, the court held that the alleged authorization letters from the National Treasury to open the fictitious account were forgeries since they were not signed by the appropriate parties. Additionally, there was no authorization from the Treasury for release of funds that was paid to KCB account no. 257971350 Thika. The court further held that there were credits into this account from Treasury as follows: ●27/2/2004 – Kshs. 6,202,688/= ●17/4/2004 – Kshs. 11,840,551/= ●Direct payment –Kshs. 8,900,410/= for computers. ●16/9/2003 (PEXB22) – Kshs. 28,655,709/= The court held that the 1st, 2nd and 3rd Defendants unlawfully opened a LATF account with KCB Thika. This account was used to receive a total of Kshs. 28,655,709/= on behalf of LATF and which was used to pay persons for services not rendered to the Makuyu town council. Therefore, the beneficiaries were liable to the extent of the benefit received. in view of the foregoing court concluded that the plaintiff had proved its case against the Defendants and entered judgment for the Plaintiff against each one of the Defendants with costs to the plaintiff.

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