Ethics and Anti-Corruption Commission v Dab Complex (K) Limited (Anti Corruption and Economics Crime Miscellaneous Application 3 of 2023) [2024] KEHC 5817 (KLR) (Anti-Corruption and Economic Crimes) (23 May 2024) (Ruling)
Neutral citation:
[2024] KEHC 5817 (KLR)
Republic of Kenya
Anti Corruption and Economics Crime Miscellaneous Application 3 of 2023
EN Maina, J
May 23, 2024
Between
Ethics and Anti-Corruption Commission
Applicant
and
Dab Complex (K) Limited
Respondent
Ruling
1.The application coming for consideration in this ruling is the Notice of Motion dated 27th March, 2024 brought under Section 56 of the Anti-Corruption and Economic Crimes Act, No. 3 of 2003, which principally seeks extension of the preservation order granted by this court on 29th September 2023 for a further period of six months.
2.The application is premised on the following grounds;
3.The application is supported by the affidavit of Evanson Mathenge, an investigator working with the Applicant, sworn on 27th March, 2024 which reiterates the grounds upon which the application is brought and further deposes that the Applicant is in the final stages of finalizing the investigations with a view of filing a suit against the Respondent and its directors to recover the monies unlawfully received by them. The Applicant is thus apprehensive that should the order not be extended the Respondent is likely to withdraw, transfer, dispose or deal with the preserved funds in order to defeat the course of justice hence rendering the recovery proceedings nurgatory.
The Respondent’s case
4.The Respondent opposed the application through a replying affidavit sworn on 3rd April 2024 by Ngojobo Daki Guyo, a Director thereat. She deposes that the orders sought cannot be granted for reason of material non-disclosure of facts by the Applicant; that no criminal proceedings have been preferred against the Respondent or its directors in relation to Commission of any economic crimes as alleged in the Applicant’s Supporting Affidavit; that since issuance of the preservation order, the Applicant has not demonstrated existence of any ongoing investigations against the Respondents or its directors or agents; that the Respondent’s directors/employees have not been questioned or asked to record statements in regard to the investigations; that therefore the Applicant is not entitled to extension of the preservation order; that the Applicant has not adduced evidence of investigations and has been indolent, guilty of inexcusable and inordinate delay in their investigations thereby disentitling themselves to this court’s unfettered discretion under the rules of natural justice. Further that extension of the preservation order will greatly prejudice the Respondent as the funds in the subject accounts are legitimate business proceeds and working capital and the freeze on the funds would impact the Respondent’s operations yet the Applicant has not satisfied the salient features of a grant of a prohibition order.
The Applicant’s Further Affidavit
5.In the Supplementary Affidavit sworn on 16th April 2024 in response to the Replying Affidavit, Evanson Mathenge. He deposes that it is not true that the directors of the Respondent were not questioned as Gonjobo Daki Guyi recorded a statement with the Applicant on 23rd January 2024; that she and her co-director have been summoned by the Applicant to record further statements as evidenced by a copy of the recorded statement as well as the letters summoning the two directors; that the co-director is a child of Gonjobo Daki Guyo and that investigations were initially hampered by the fact that whereas the name of the person of interest reads Gonjobo Daki Guyo in the national Identity Card, the name in the employment and IPPD system is Christine Daki Dima. He deposes that it took a while to retrieve the personal file and it was only during the recording of her statement on 23rd January 2024, that the Applicant was able to make headway with the investigation. He also explains that failure by the Applicant to complete the investigations within six (6) months was majorly occasioned by failure by the County Government of Marsabit to avail information and documents on time. He has annexed notices to provide information with diverse dates in February 2024. He contends that the law prohibits employees of County Governments from trading the County Governments and that doing so amounts to conflict of interest and corrupt conduct. Further that the Applicant has recorded over ten statements from officials of Marsabit County Government confirming that the Respondent traded with the County. (He has annexed copies of letters by the Applicant summoning various officials of the Marsabit County Government for interviews and statement recording).
6.Learned Counsel for the parties agreed to canvass the application by way of written submissions.
The Applicant’s submissions
7.Mr. Munene, Learned Counsel for the Applicant, submitted that the Applicant has since collected documents and recorded statements confirming that Gonjobo Daki Guyo is an employee of the Ministry of Health seconded to the County Government of Marsabit as the Chief Nursing Officer of Moyale Sub-County Referral Hospital; that the Applicant has also established that she is the director of the Respondent; and further that she is a signatory to the Respondent’s account and that her company traded with the County Government without her declaring the conflict of interest to the County and is hence guilty of conflict of interest and the monies received by the Respondent are proceeds of crime.
8.Counsel submitted that Section 56(3) of the Anti-Corruption and Economic Crimes Act (ACECA) gives this court jurisdiction to extend the preservation orders; that the delay in the investigations was occasioned by the Respondent’s director having a different set of names in her identity card and in her employment and IPPD records hence causing considerable time to retrieve her personal information and occasioning delay in the supply of documents by the County Government of Marsabit.
9.Placing reliance on Section 42(3) of the ACECA which provides:
10.Counsel stated that the Applicant has demonstrated that it has undertaken extensive investigations against the Respondent and its directors and is on the verge of concluding investigations. Further that the Respondent has not demonstrated that she will suffer any prejudice if the order for extension is granted but to the contrary, the public stands to suffer prejudice if the funds are withdrawn as that will defeat the course of justice.
The Plaintiff/Respondent’s submissions
11.The Respondent did not file submissions for this application either in the e-filing platform or the Division email.
The Issues for determinationi.Whether the Applicant has met the threshold for grant of extension of the preservation order;
Analysis and Determination
12.The preservation orders sought to be extended by the current Application were issued under Section 56 (1) of the ACECA. The order was made exparte as is required the only feter being that the court must be satisfied that there are reasonable grounds to suspect that the property is tainted. Section 56(1) of the ACECA provides: -
13.At the time this court issued the preservation order it was satisfied on the evidence placed before it that prima facie there were reasonable grounds to suspect that the property was acquired as a result of corrupt conduct. It is instructive that a preservation order is sought at the investigation stage so as to preserve the funds as a decision is made whether or not recovery proceedings shall be instituted. At that stage investigations are still ongoing and failure to preserve would render the intended recovery proceedings nurgatory.
14.Nowhere was the necessity of a preservation order explained better than in the case of Mape Building & General Engineering vs Attorney General & 3 others [2016] eKLR where the court stated: -
15.In this case the Applicant established reasonable grounds for grant of a preservation order. It presented a schedule of payments made by County Government of Marsabit to the Respondent between 17th July 2021 and 3rd May 2023, and the Respondent’s account opening forms. It also established that the Respondent company belongs to Ngojobo Daki Guyo an employee of that County Government.
16.The Applicant seeks extension of the preservation order for a further six months so as to allow it to complete investigations and commence criminal and civil proceedings against the Respondent and its Directors and its investigator has given what in my view amounts to a plausible explanation for not completing the investigations within the six months first granted. The grounds raised by the Respondent do not, in my view, suffice to reject the application, as it has not been demonstrated that this sum is the only one available to the Respondent to run its affairs.
17.As for the Contention that there are no criminal proceedings against the Respondent or its directors, and that the facts of the Applicant’s affidavit are falsehoods; that too is not a ground not to extend the order as at this point the court is not concerned with proof of the merits of the case but rather on whether reasonable grounds have been demonstrated.
18.While the law does not provide for the threshold for an application for extension of preservation orders, it does provide for extension under Section 56 (3) of the ACECA which states: -
19.The power to grant or not to grant an application for extension is therefore discretionary. That discretion must be exercised judicially and it is my finding that in this case the Applicant has met the threshold for exercise of this court’s discretion in its favour as it has given a plausible explanation for the delay in completion of the investigations. Accordingly, the application is allowed. The preservation order be and is hereby extended for a period of six (6) months from the date of this application. There shall be no order for costs.
DATED, SIGNED AND DELIVERED VIRTUALLY ON THIS 23RD DAY OF MAY, 2024.………….…………….E. N. MAINAJUDGEIn the presence of:Mr. Munene for the Applicant/EACCMr. Kiogora Mugambi for the RespondentCourt Assistant – Karanja