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Financial and Economic Crimes in Kenya: A Summary of Findings

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Introduction

Corruption is an impediment to economic growth, prosperity and reduction of poverty. Financial Crimes like Tax fraud, Procurement Fraud, Money Laundering, Cyber Crime, Bribery and Corruption, Asset Misappropriation, Accounting and Financial Statement Fraud are common in Kenya and these crimes have untold consequences. The number of Economic Crimes reported to the police in Kenya increased to 4,786 in 2019, marking as the highest number since 2010.

However, the prevalence of economic crimes in Kenya has decreased with 58% of respondents to a survey indicating that they have experienced some economic crime in the last 24 months, down from the 75% reported in 2018. In Corruption Perception Index 2020, and Transparency International, Kenya ranked 124th out of 180 countries for corruption, tied with Pakistan, Bolivia etc.

Legal and Institutional Frameworks

Ethics and Anti Corruption Commission Act, 2011 EACCA (formerly the Anti-Corruption and Economic Crimes Act,2003 ACECA), Ethics and Anti-Corruption Commission, Kenya Anti-Corruption Commission (KACC),Anti-Corruption Police Unit, Central Bank of Kenya Act, Ministry of Justice and Constitutional Affairs, National Anti-Corruption Campaign Steering Committee, Privatisation Act, 2005, Public Audit Act, 2003- sets up the National Audit, Government Financial Management Act, 2004,Public Procurement and Disposal Act, 2005, Office of the Director of Public prosecution etc.

Although the ACECA was introduced in 2003 in Kenya, it was first applied in 2008 in a successful case against Kenya’s former head of Port Authority. Since then the ACECA/ KACC which was later disbanded and replaced with the EACC in 2011 has seen a 100% success rate in five subsequent cases with am estimated USD 6.4 million in funds recovered in total.

An Overview of Cases on Financial Crimes in Kenya So Far

In the renowned case of Stanley Mombo Amuti v KACC SC Petition No.21 of 2019 (Appeal No. 184 of 2018 at Nairobi), the constitutionality of Section 55 of the ACECA which provides for Unwanted wealth and it’s forfeiture, vis-à-vis the provision of Articles 20,25(c) and 40(3) of the Kenyan Constitution(2010) was raised. The learned judge found the provision of the section to be inconsistent with the Constitution and dismissed the Respondent’s Origination Simmons but the dismissal was later overturned at the Court of Appeal.

Unexplained assets recovery proceedings in Kenya are usually challenged in court in allegations of violation of the constitutional right to fair trial and presumption if innocence because S. 55 creates a presumption of corruption and places the burden of proof on the respondents requiring them to prove that their properties were explained lawfully. Jomo Kenyatta, discusses this dilemma in full.

In EACC v Patrick Ochieno Abachi & 6 ors Civil Suit No.15 of 2019, the EACC challenged Mr Abachi in the High Court to explain the source of his asset. This case clearly exemplifies one set of circumstances in which civil unexplained wealth legislation can be a great tool to target assets stolen through corruption. The Court ordered the confiscation of several bank accounts, properties and plots of land of the Respondent. He applied for a stay of execution pending the appeal, but the application was quashed 2021.

One major blow to Kenya’s fight against financial Corruption is the Goldenberg Scandal– A Political scandal involving the Highest level of the Kenyan government under Daniel Arap Moi was found to have subsidized exports of gold far beyond standard arrangements during the 1990s by paying the company (Goldenberg International) 35% in Kenya’s currency more than their foreign currency earning. This cost Kenya the equivalent of more than 10% of the country’s annual Gross Domestic Product. It is also possible that no or minimal amount of gold were indeed exported. The officials involved were prosecuted but a party was ruled by the constitutional Court as one that “cannot be charged”, thereby promoting injustice and rendering the law ineffective.

In Jimmy Kiamba’s (Nairobi’s County Chief Officer Finance) case, the EACC was awarded KES. 31Million by the High Court after the Respondent failed to adequately explain the source of his wealth.

On the 26th of May, 2021, The Nation (Nairobi) recorded that the EACC linked 3 governors and a sitting County Boss to Sh 11Bilion- Unexplained Wealth, nearly half of the Sh 25 Billion wealth illegally acquired by public servants for the past 5 years.

Ayodeji G.I, Olola James. O, Mochere, Shalline Nyaboke, Vinya, M. Victor, Mungai, Moses Kahiga, Eric Ngumbi etc. have written articles on the legal framework for financial and Economic Crimes, Wealth declaration, unexplained wealth, comparative studies on these issues and more in Kenya and are all worthy of note.

Conclusion

A number of cases are currently undergoing investigation or going through the Courts. Speed is hoped for with respect to the resolution of these cases as Judges and Prosecutors, the Anti-Corruption and Economic Crimes Commission get acquainted with the law. Also law investigators are becoming skilled in obtaining evidence of Civil Illicit Enrichment as the day goes by and this will further strengthen the fight against corruption in Kenya.