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September 18, 2018

Lifestyle audits and the Constitution

A lifestyle audit is simply  “a study of a person’s living standards to see if it is consistent with his or her reported income”.

Its purpose is to identify pointers to improper activity that has enabled the person to live beyond their means.

Lifestyle may be judged from things that are pretty public, such as a house, a car, a taste for extravagant food and drinks, holidays or expensive women (or men) which cannot be explained on the basis of what is known of the person’s resources. Other material may be less obvious such as the size of the person’s bank account. Some people can live apparent modest lives, preferring to hoard rather than spend their wealth.

Evidence of this sort is not conclusive, of course. A person might inherit a fortune, marry a wealthy spouse, or have a lucrative but unknown hobby. What it is useful for is to indicate, whose affairs might be worth investigating further.

Superficial appearances of the sort mentioned will be of limited help if a person has squirreled away their money in tax havens, or owns expensive buildings in far-off places, or perhaps buys very expensive jewellery that is worn only on very private occasions.

This could obviously be rather a time-consuming exercise and would require some expertise to conduct well. In fact countries commonly carry out such exercises only for fairly senior staff. The President’s plan, if it is a plan, to do this for all government officials, is not very practical.

 

THE LAW

Elgeyo Marakwet Senator Kipchumba Murkomen recently said: “Lifestyle audit is not investigations and it’s not compulsory. It’s a voluntary moral process. To make it legal we have to establish the legal framework for it and even then, what’s established cannot be used for prosecution.” It certainly does not have to be a voluntary process. Nor would it be necessary to have law to take note of the obvious lifestyle issues.

But, to get details of other things, legal processes would, or ought to, be necessary — bank accounts and M-Pesa transactions, for example.

In fact, we do have some legal framework already. In 2008, the Ethics and Anti-Corruption Commission took to court a financial controller with a parastatal who was earning Sh306,000 a month. But the EACC said he owned seven houses or plots, four vehicles, six bank accounts (one in London) and had Sh4 million in cash in his house. The EACC had carried out a search of his house, with a search warrant. You might think of this as a sort of lifestyle audit. Or perhaps his lifestyle had been evidently beyond his apparent means, and led to the search.

What the EACC wanted was for the court to agree he had “unexplained assets” and that these should be seized by the state, if he could not explain where they came from. It was not trying to use this evidence to convict the controller of a crime.

The Commission was using the Anti-Corruption and Economic Crimes Act, which allows it to go to court over “unexplained assets”. Unexplained assets are those “whose value is disproportionate to his known sources of income and for which there is no satisfactory explanation”.

If the Commission convinces the court that a person has such assets, the court may require the person to produce evidence to satisfy the court “that the assets were acquired otherwise than as the result of corrupt conduct”. The law does have a weakness: That the acquisition of the assets must have happened around a time when there were already suspicions of the person being involved in corruption. In other words, a lifestyle audit alone is not enough.

The case went before Justice Kalpana Rawal (not long before she was elevated to the Supreme Court). She rejected the EACC’s case, on a variety of grounds, based on the Constitution. One of the reasons she seems to have thought up after the case was argued, so the lawyers, for both sides, had no chance to make any arguments on the point. Her particular problem was the fact that the person with the unexplained assets would be asked to explain where they came from.

However, the Court of Appeal took a different view. They sent the case back to the High Court, and last year Justice Lydia Achode held that the financial controller had not shown how he had acquired some of the assets, and ordered that he pays Sh41 million to the government.

An important point is that the person with the assets is not being tried for a criminal offence. They will not be sent to prison as a result of the case. They stand to lose property that they own, and which they ought to be in the best position to explain. This sort of law is becoming a common provision in the arsenal of countries that are combating corruption.

Ethiopian law creates a crime of having unexplained assets if you are a public officer. To convict someone of a crime under Kenyan law, the prosecution would have to prove, beyond reasonable doubt, that the person used criminal means.

 

DECLARING ONE’S WEALTH

There is another legal tool that tries to provide the data for ensuring integrity: All public officers are supposed to declare their wealth, when they take office and every year. This has been part of the law since 2003. No doubt people will not declare things that they have illegally acquired. But a lifestyle audit along with these declarations might be very useful in uncovering corruption.

Unfortunately, the law does not require these declarations to be made public.

The first draft Constitution (the CKRC’s in 2002) said all public officers must make written declarations of their assets, and those of their spouse and of unmarried children under 18 years. And the declaration should be available for public inspection. The Bomas draft kept these provisions, though it allowed Parliament to make rules about when the declarations should be open for inspection. It is not hard to imagine how MPs would have used that power to whittle away the principle of public declarations.

The Committee of Experts kept the requirement for declarations, though they did not require all assets of spouses and children to be declared, only those owned jointly with the officer declaring.

It will come as no surprise to readers to learn that all these requirements disappeared in Naivasha (along with the parliamentary system and various other good provisions). That Parliamentary Select Committee that considered the CoE draft was responsible for a good deal of weakening of the constitution.

So it is not because of the Constitution that public officers are supposed to make declarations, but because of the law passed during the early stages of the constitution making process. But the reality seems to be that these declarations are not made use of. 

 

CULTURE OF OPENNESS

There are plenty of countries in which the assets of public officers are a matter of public record. You can, for example, read online about the assets of British MPs, including payments they receive for television appearances, or writing newspaper articles, and donations for their work, as well as houses they own.

Naturally, people don’t like it. The European Court of Human Rights gave a robust response to a Polish local government official who objected that this was a violation of his privacy. Privacy is protected by the European Convention on Human Rights as it is by our Constitution. The Court said, “The general public has a legitimate interest in ascertaining that local politics are transparent and Internet access to the declarations makes access to such information effective and easy. Without such access, the obligation would have no practical importance or genuine [impact] on the degree to which the public is informed about the political process.”

As so often, we have a lot of law, but it is not really enforced. We need more than “lifestyle audits” and other gimmicks to make a difference.

 

 

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