- They moved to court in 2015 seeking to be compensated for losing their money to the pyramid schemes.
- The judge noted that the petitioners did not sue the pyramid schemes that allegedly defrauded them.
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It was a sad day for 39,000 Kenyans who were scammed out of Sh8 billion by pyramid schemes years ago after the court dismissed their case.
They moved to court in 2015 seeking compensation from the government for allowing the companies to operate in the country.
Justice James Makau on Thursday dismissed their petition, ruling that it was an abuse of the court process and an attempt to pressure the government to burden the taxpayers and pay them money lost to the pyramid schemes.
The judge noted that the petitioners did not sue the pyramid schemes that allegedly defrauded them.
“The petitioners herein entered into contract between themselves and various institutions which they did not sue or join in this petition,” the court ruled.
Judge Makau ruled that the state entities that were sued in the case were not party to the contracts.
They had sued the Attorney General, PS Ministry of Cooperatives Development and Marketing, the governor of Central Bank, PS Ministry of Finance and PS Ministry of Interior.
The judge ruled that the petition was filed in the wrong court as it should have been taken before the civil or commercial division, not the constitutional court.
He also dismissed allegations by the petitioners that the state was liable for breach of contract between them and the pyramid schemes.
“The court notes that the agreements and contracts relied upon by the petitioners reveal a common thread of voluntary creation of rights and obligations including payments made,” the court ruled.
The judge further ruled that from the case it was clear they assumed the risk of their investment with the entities they entered into contract with.
The court said it had noted that the state had gone an extra mile to warn the public in several press releases on the illegality of the pyramid schemes.
“CBK advised the general public to conduct due diligence so as to verify the legitimacy and the sources of the handsome returns and warned them to beware of investment opportunities that promise high returns,” the court said.
The petitioners had told the court that they were misled by the pyramid schemes to deposit various sums of money in a number of accounts opened in banks and other financial institutions.
It was their argument that the heads of ministries sued in the case were grossly negligent as public servants and were in breach of their duty of care and trust owed to the public.
They also faulted the state for registering the pyramid scheme companies which had no legitimate business to do, enabling them to make false representations to Kenyans.
“The state in total disregard of their public duty to protect the property interest of petitioners brought about the situation which prevailed eight years ago where the petitioners were defrauded of over Sh8 billion in a nationwide finance scam which was clearly foreseeable,” they argued.
But the state opposed the petition, telling court that it’s the petitioners who willingly entered into agreement with the pyramid schemes.
The defence also said it was the founders of the enterprises who had full knowledge of the business they wanted to carry on and they did not do anything to enable them to make false representation to Kenyans.
The government said it formed a task force to investigate the operations of pyramid schemes and establish the extent of their impact in the country.
“It is therefore not true that the government failed to form an organic data to collect information nationally on losses suffered by people who had deposited their money in the pyramid schemes as alleged by the petitioners” the state said.
Edited by Henry Makori