State intensifies war on recovery of proceeds of crime

In Summary

•The most visible use of the Act has been in the war on graft especially stolen public funds.

•It has successfully been used to recover proceeds of corruption even as the criminal cases take longer in the corridors of justice.

ARA has successfully used it to recover money in a case involving smuggling of goods.
ARA has successfully used it to recover money in a case involving smuggling of goods.
Image: FILE

Over two decades ago, a lady was sentenced to thirty years in prison for drug trafficking. Before her arrest and successful trial, she had invested her proceeds of crime in various properties from the Coast region to Eldoret. In the period that she was in jail, there was a significant property boom and when she got out recently, she came out a multi-millionaire and is now living like a queen, literally. At that time, the law only provided a custodial sentence as it still does, only that now there are more statutes to deal with cases like. Prominent among those statutes is the Proceeds of Crime and Anti-Money Laundering Act, 2009 (PROCAMLA) used together with the Anti-Corruption and Economics Crimes Act (ACECA)

PROCAMLA is “An Act of Parliament to provide for the offence of money laundering and to introduce measures for combating the offence, to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime, and for connected purposes.” Section 4 of the Act says, A person who acquires, uses or has possession of property and who, at the time of acquisition, use or possession of such property, knows or ought reasonably to have known that it is or forms part of the proceeds of a crime committed by him or by another person, commits an offence.”

If this Act had been in existence when sentenced to 30 years in prison, the State through the Asset Recovery Agency would have moved to repossess all the assets that could have been linked to her drug trafficking. She would have left prison a pauper and a pariah in society. But since it did not, she is see as “shining example” of how a few years of sacrifice in prison can bring long term wealth.

Today, PROCAMLA has nipped that in the bud. The most visible use of this Act has been in the war on graft especially stolen public funds where it has successfully been used to recover proceeds of corruption even as the criminal cases take longer in the corridors of justice. Some of these instances include the a Toyota Landcruiser and Five parcels of land in various areas being proceeds of crime in NYS II in the Ngirita case; James Thuita Nderitu and others over KES 32 Million being proceeds of crime from NYS; Lillian Mbogo and others for USD 105,293.7 and Kshs 22,445,487.74 held in various bank accounts and former Finance Manager of National Water Conservation Authority, Stanley Mombo Amuti, in possession of unexplained assets valued Ksh. 41,208,000/=.

Now, the ARA has successfully used it to recover money in a case involving smuggling of goods from Uganda without paying taxes. This was done in a judgement by Justice James Wakiaga on 8th June, 2021 when he delivered a forfeiture ruling against one Mr Josphat Kamau in Civil Application No 13 of 2020 {Asset Recovery Agency v Josphat Kamau} of approximately 45 million on the basis that they were proceeds of crimes for which the respondent had been charged in court. In the ongoing criminal matter, Mr Kamau has been charged with the offense of smuggling goods contrary to section 199(a), importing restricted goods contrary to section 200(a)(ii) as read with section 210(b) and importing goods which are concealed of the East African Community Customs Management Act, and which case is ongoing.

In summary, Mr Kamau’s trucks returning from Uganda were declaring that they were empty (and therefore no goods to be declared for taxation purposes. The two had modified compartments that were used to smuggle cigarettes from Uganda with the one caught carrying non-customed cigarettes worth 9.5 million. The ASA demonstrated to the satisfaction of the court that on 13 other occasions, they could link the departure and returns of the said vehicles to large cash withdrawals and deposits out of and into Mr Kamau’s accounts.

The Court held that “the letter, spirit and gravamen of the Proceeds of Crime and Anti-Money Laundering Act is to ensure that one doesn’t benefit from criminal conduct and that should any proceeds of criminal conduct be traced, then it ought to be forfeited, after due process, to the State, on behalf of the public which is deemed to have suffered some injury by the criminal conduct.” The Court further held that ASA having placed before it evidence showing that the respondent was engaged in smuggling for which he had been charged, the burden therefore shifted upon the respondent to show that his was a legitimate business undertaking. He did not. He should have done this through proper accounting documents including local purchase orders, receipts for purchases made, delivery notes to his clients, audited statements of account reflect profit and loss and corresponding taxes paid. Having failed to prove that the said money in his account was from legitimate businesses, coupled with the uncontroverted evidence that his tracks were found with uncustomised goods, the court issued an order of forfeiture.

To understand the basis of these forfeitures, we need to understand the definition of what is termed proceeds of crime. Section 2 of the Act defines proceeds of crime as:

“proceeds of crime” means any property or economic advantage derived or realized, directly or indirectly, as a result of or in connection with an offence irrespective of the identity of the offender and includes, on a proportional basis, property into which any property derived or realized directly from the offence was later successively converted, transformed or intermingled, as well as income, capital or other economic gains or benefits derived or realized from such property from the time the offence was committed.”

This smuggling case could have significant impact on the illicit import of goods that is costing the Kenya Revenue Authority billions in un-taxed illicit goods. It will also go a long way in protecting innocent Kenyans from poor quality and sometimes even harmful counterfeits as there would be no motivation to engage in those businesses.

PROCAMLA together with ACECA have provided the people of Kenya with a mechanism to ensure that criminals do not accrue benefits from proceeds of crimes even as their criminal cases go on. As it is progressively implemented, criminals will no longer sleep easy in prison knowing that at the end of their jail terms they would have large portfolios of wealth arising from their criminal acts.

Dr Makodingo Washington

[email protected]