[2022] KEHC 10116 (KLR)

Assets Recovery Agency v Akinyi (Anti-Corruption and Economic Crimes Civil Suit E001 of 2021) [2022] KEHC 10116 (KLR) (Anti-Corruption and Economic Crimes) (10 May 2022) (Judgment)

Neutral citation: [2022] KEHC 10116 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-Corruption and Economic Crimes Civil Suit E001 of 2021

EN Maina, J

May 10, 2022

Between

Assets Recovery Agency

Applicant

and

Joyce Teresa Akinyi

Respondent

Judgment

Introduction 1. The Assets Recovery Agency moved this court through an Originating Motion dated 8th January 2021 for orders that the following motor vehicles owned and registered in the name of the respondent be declared proceeds of crime liable for forfeiture to the State and that they be forfeited accordingly and transferred to the Assets Recovery Agency:i.KCR xxxx Toyota Crownii.KCG xxxx – Toyota DBA – KGC10

2. The application is supported by the supporting affidavit of the Investigating Officer attached to the agency, CPL Fredrick Muriuki, sworn on 8th January 2021 who described the respondent as a female adult residing at Deep West Resort, Nairobi West Area, Nairobi County and the registered owner of the aforestated vehicles. He stated that investigations against the Respondent who is suspected of narcotics trafficking, distribution and sale of narcotic drugs, commission of organized crimes and money laundering commenced way back in the year 2000. He deposed that the respondent was actively involved in a complex drug trafficking network which was led by one Anthony Chinedu, a Nigerian National deported by the Government of Kenya in 2013 who was initially her associate before he became her husband and who allegedly sourced and distributed heroin and cocaine from Tanzania, Pakistan Uganda to various destinations in West Africa, Europe and Asia.

3. It is pleaded that in 2010 the respondent together with Anthony Chinedu registered a company known as Deep West Resort, now known as New Port Inn, as a conduit to hide, conceal and disguise their drug trade proceeds; That on 31st March 2015, the respondent was arrested at Dam II Estate House No.2 Langata, Nairobi County while in possession of 31. 8 grams of Heroin with a market value of Kshs.94,800 and charged with the offence of drug trafficking in the Chief Magistrates Court at Kibera in Criminal Case No. CR 1314 of 2015. Further that on 13th July 2019 the Respondent was arrested and subsequently charged with the offence of trafficking drugs contrary to Section 4(a) of the Narcotic Drugs and Psychotropic Substances (control) Act No. 4 of 1994 in the Chief Magistrate’s Court at Jomo Kenyatta International Airport vide Criminal Case No. CR 121 of 2019. The deponent states that during the respondent’s second arrest a search was conducted at her Deep West Resort residence and a total of 1050 grams of heroin, a tanita digital scale, five passports and total cash in coins of 20,000 Uganda shillings were recovered. The deponent states that it was established that the respondent hired as mules and associates within and outside Kenya persons named as Musankishay Kalala Paulin – a Cameroonian; Yemisi Oremi – a Pakistani; Osita Noemy Stanley – Nigerian and five Kenyans, Peres Anyango Omondi alia Raha Everline Kambere, Scholar Namunyu Imbiti, Elizabeth Akinyi Mboga, Peter Okoth Odongo and Rose Musanda Monyani. The deponent states that Musankishay Kalala Paulin and Peres Anyango were arrested on 13th July 2019 with 1. 05 grams of heroin with a market value of Kshs. 3,090,000 and 832. 8 grams of heroin at Kshs. 2,498,580. Rose Mosanda on the other hand was apprehended at her residence in Kinoo on 14th June 2019 with inter alia 796. 66 grams of heroin and that the agency successfully sought and obtained forfeiture orders against her assets in ACEC No. 2 of 2020; Assets Recovery Agency vs Rose Monyani Musanda.

4. It is the agency’s case that proceeds of the drugs trade were delivered to the respondent by way of cash, M-pesa deposits and deposits into her bank accounts by her agents and associates which she laundered by investing in various assets and properties. That on 8th August 2019 the agency established that the respondent used her personal bank account No.s xxxx; xxxx held at Stanbic Bank; xxxx held at National Bank and her Mpesa account No.xxxx as conduits for laundering proceeds of crime contrary to Sections 3, 4, 7 and 16 of the Proceeds of Crime and Anti-Money Laundering Act. Further that on 9th August 2019, the Agency obtained orders to search and investigate the National Bank account and Stanbic Bank Account No. xxxx and the investigations revealed that both bank accounts opened and operated by the respondent received huge cash and cheque deposits mainly made in tranches below Kshs. 1,000,000 to evade the Central Bank of Kenya Prudential Guidelines reporting threshold. It was deposed that documented transactions on an almost daily basis January 2015 to October 2018 span from Kshs. 60,000 to Kshs. 20,000,000.

5. The deponent states that the respondent invested in real estate and acquired a property LR No. 3734/223 (Original No. 3734/5/110), upon which she constructed 8 villas which she subsequently either sold or leased to various purchasers and tenants. It is contended that one of the units, Villa No. 5 was sold for Kshs. 43,000,000 out of which Kshs.20,000,000 was ploughed back into the drug trade through the illicit import of a consignment of heroin from Pakistan in collaboration with one Yemisi Oremi, a Nigerian national. The balance was then transferred to her Stanbic Bank accounts and partially used for the purchase of the vehicles sought to be forfeited and which are the subject of a preservation order which was gazetted on 9th October 2020 vide Gazette Notice No. 8046. It is also alleged that the respondent was found in possession of a Congolese Passport No. xxxx in the name of Mape Marline used to disguise, conceal and hide her identity so as to avoid recognition by law enforcement agencies to facilitate her acquisition, sale, conveyance and distribution of illegitimate drugs from various sources, locations and destinations and that in addition to the drug charges she was charged with being in possession of a forged Democratic Republic of Congo passport contrary to Section 54(1)(c) of the Kenya Citizen and Immigration Act No. 12 of 2011.

6. The Respondent opposed the application through her Replying Affidavit sworn on 19th November 2021 wherein she reiterates the applicant’s assertions that the proceeds from the sale of a property known as Villa Number 5 were used to purchase the motor vehicles in issue. She however averred that there is nothing illegitimate about the sale of a property that she legally and rightfully owned and asserted that the respondent’s application does not meet the threshold set by Section 92 of the Proceeds of Crime and Anti-Money Laundering Act. She urged that the forfeiture application be dismissed with costs.

Applicant’s Submissions 7. The application was canvased by way of written submissions. In her submissions dated 4th February 2022, Counsel for the applicant framed the issues for determination as follows:a.Whether motor vehicle registration number KCR Toyota Crown and KCG Toyota DBA-KGC 10 owned by the respondent are proceeds of crimeb.If issue (a) is in the affirmative, whether motor vehicle registration numbers KCR xxxx Z Toyota Crown and KCG xxxx Toyota DBA-KGC10 owned by the respondents should be forfeited to the government.

8. After rehashing the facts of the case as described in the applicant’s affidavits, counsel for the applicant submitted that the respondent declined an invitation to the agency’s offices to provide an explanation on the source of funds used to procure the vehicles in issue hence affirming that there are reasonable grounds to believe that the vehicles are proceeds of crime. Counsel submitted that the onus shifted to the Respondent in accordance with Section 112 of the Evidence Act which provides that “In any civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving the fact is upon him.” Counsel also relied on the case of Assets Recovery Agency vs Joseph Wanjohi & Others (2020)eKLR where the court stated:-“133. I have carefully perused the affidavit in reply sworn by the 1st respondent, whose contents I have set out at some length earlier in this judgment. I note that aside from a general denial that they do not use their families as mules in the illegal trade in narcotics and game trophies, the 1st and 2ndrespondents do not respond at all to the specific averments by the applicant with regard to their alleged use of their relatives as drug mules and the arrest and, in one case, the conviction of one of them for drug trafficking. Their response in this regard is confined to the averment that they were not convicted in the case against them for drug trafficking in 2009. ”and the case of Assets Recovery Agency vs Pamela Aboo; Ethics & Anti-Corruption Commission (Interested Party) (2018) eKLR where the court stated:-““57. I have done an analysis of the deposits above and shown how much was being deposited in a day or so for the Respondent. Even with all this, the Respondent has not attempted to explain the source of this money either through the replying or supplementary affidavit. It could be true that she does business with Samson Waweru, Jonathan Kimindu and her own business but where is the evidence?58. There is nothing that stopped Samson Waweru and other business partners from swearing affidavits to support her claims. If indeed Samson Waweru and Jonathan Kimindu were among the cash depositors based in Mombasa, could they not have come out to specifically state on oath when and how much they deposited? The Respondent did not support the claim that she gave Kshs 1 million to Samson Waweru. That sum of money must have come from somewhere if the allegation is anything to go by.59. Mr. Odoyo in his submissions has asked what law prohibits one from depositing money and if there is any offence in not withdrawing the same. My quick answer to that is that there is no law that prohibits one from depositing money and there is also no offence committed if one fails to withdraw their money. How was she running her business without making any withdrawals? Even as one fails to withdraw it must be shown how they are surviving. One is at liberty to deposit even a billion shillings but the person must be ready to share the source of such huge deposits with the relevant authorities. When no satisfactory explanation is forthcoming the court will take it that the same was not lawfully acquired.”Counsel also cited the case ofKACC vs James Mwathethe Mulewa & Anor[2017] eKLR where it was held:-““59. On the issue of cash deposits, the Plaintiff alleged that the 1st Defendant was receiving various deposits including a sum of Kshs 100,000/- during the period under investigations. The explanation offered by the 1st defendant was that the income was generated from the sale of nearly 300 cattle. As the 1st defendant did not respond to the second statutory notice received by him on 1st February 2011, court has no option but to believe the evidence tendered by the Plaintiff in of numerous bank statements attached to the affidavit of Josphat Kariuki Ndwigah sworn on 8th April 2011”

9. Counsel submitted that the motor vehicles in issue are proceeds of crime as defined in Section 2 of the Proceeds of Crime and Anti-Money Laundering Act. In so stating Counsel relied on the case ofEthics and Anti-Corruption Commission (The legal successor of Kenya Anti-Corruption Commission) vs Stanley Mombo Amuti (2015) eKLR where the court stated:-“78. I also note that the Defendant did not produced any document in support of the grants of Letters of Administration made to him regarding the alleged estate of his late father and brother. None of his family members were called to testify to this end, nor was it demonstrated to the court when and how much of the proceeds of the sale of this said estate had been injected into his funds.79. With regard to professional fees, the Defendant testified that some of the deposits into his bank accounts came from payments made to him for professional accounting services he had rendered. In particular, he stated that he earned Kshs. 15. 5 million from a Sudanese National. There was however not a shred of evidence to back such an averment. In my view, for the defendant to attract professional fees of the magnitude of Kshs.15. 5 million, he would have to have served a very large corporate body for a considerable amount of time or work to earn such an amount.80. The Defendant did not provide the name or company of the so called “Sudanese national” that he served, the period for which services were provided, the nature of the actual services provided and the fee notes raised. It is not clear why he chose to bank the said fees in tranches of Kshs.100,000/= via ATM over a period of days. It is doubtful that the “Sudanese National” would have paid such a large amount of fees in cash and in such small bits over a number of days, instead of making one bank transfer or a few large transfers.”

10. On the second issue counsel submitted that Section 90 of the Proceeds of Crime and Anti-Money Laundering Act empowers the applicant to apply to this court for forfeiture orders pertaining to assets that are proceeds of crime and which are subject to preservation under the Act. That Section 92(1) thereof empowers the court to issue forfeiture orders where the applicant establishes on a balance of probabilities reasonable grounds that the funds and assets in issue are proceeds of crime. Counsel stated that that in money laundering schemes, ownership of proceeds of crime may be direct or indirect. That in this case the thread of transactions showing the deposit of funds, changing alleged business activities several times, colluding and registering some assets acquired through illegitimate trade in narcotic drugs under the names of the respondent and using mules in the trade forms a pattern of transactions depicting a classic scheme of money laundering.

11. Counsel contended that conviction for a criminal offence is not a pre-requisite for civil forfeiture; That, the current proceedings are instituted in rem against the property and are not the same as criminal prosecution where the court is tasked to determine the criminal culpability of an individual. Counsel submitted that what is required in forfeiture proceedings is the identification of a lack of reasonable explanation disclosing the legitimate sources of the funds used to acquire the assets. In addition Counsel argued that since money laundering is a stand – alone offence there is no requirement for proof of a predicate offence. According to counsel, the averment that the respondent was engaged in legitimate business and that the vehicles in issue were obtained from legitimate business is incorrect, deceitful and a ploy to conceal and hide the sources of the money hence money laundering.

The Respondent’s Submissions 12. The Respondent’s submissions were filed on 23rd March 2022. Counsel for the Respondent framed the issues for determination as being whether the subject vehicles are proceeds of crime and whether they ought to be forfeited to the state. On the first issue Counsel submitted that the Respondent was acquitted in Criminal Case CR 1314 of 2015 vide a judgment delivered on 24th November 2021 hence the case cannot be a basis for forfeiting the subject vehicles. Counsel disputed that the Respondent had any association or relationship with Anthony Chinedu and contended that they were separated in 2007 and subsequently divorced way before he was deported in 2013. Counsel submitted that the applicant’s narration of the Respondent’s alleged illegal drug trafficking activities amounts to advancing evidence through a back door which is highly prejudicial to herself and averred that the Respondent has a right to be presumed innocent. Counsel stated that no evidence was adduced by the applicant to prove that the sale of Villa 5 was illegal or illegitimate. Further, that the assertion that the vehicles were purchased from proceeds of illegal drug trafficking contradicted the applicant’s former assertion that they were bought from proceeds of the sale of the Villa. Counsel reiterated that the Respondent sold Villa No. 5 erected on LR 3734/223 in 2015 for Kshs. 43,000,000. Counsel asserted that the Respondent was never invited by the applicant to give an explanation nor has evidence of the invitation been annexed as proof. She submitted that the claims against the Respondent are defamatory, alarmist and a violation of her rights to fair hearing.

13. On the issue of forfeiture, the respondent cited Article 40 of the Constitution on the right to acquire property and dispose of the same. Counsel cited Section 92(1) of the Proceeds of Crime and Anti-Money Laundering Act to support her submission that the applicant failed to demonstrate on a balance of probabilities that the subject motor vehicles are proceeds of crime hence liable to forfeiture by the state.

Analysis 14. From a consideration of the parties’ pleadings, written submissions, authorities cited and the applicable law, the issues arising for determination are as follows:a.What constitutes proceeds of crime?b.Who bears the burden of proof?c.Whether the vehicles in issue are proceeds of crime and hence liable too forfeiture?d.Whether the Applicant is entitled to the reliefs sought.

Issue (a): What constitutes proceeds of crime? 15. Section 2 of the Proceeds of Crime and Anti-Money Laundering Act defines ‘proceeds of crime’ as follows:““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”

16. As can be seen from the section the definition of what constitutes proceeds of crime is very wide. In the case of Schabir Shaik & others v State case CCT 86/06 (2008) ZACC 7 the court stated of the above definition:-“One of the reasons for the wide ambit of the definition of “proceeds of crime” is, as the Supreme Court of Appeal noted, that sophisticated criminals will seek to avoid proceeds being confiscated by creating complex systems of camouflage”. The Supreme Court of Appeal held that a person who has benefitted through the enrichment of a company as a result of a crime in which that person has an interest will have indirectly benefitted from that crime.”

Issue (b): Who bears the burden of proof? 17. As in all civil cases the burden of proof lies with the plaintiff, in this case the Assets Recovery Agency. Section 92 of the Proceeds of Crime and Anti-Money Laundering Act enjoins the High Court to make a forfeiture order only when the Agency has proved on a balance of probabilities that either the property: -“92. (a) has been used or is intended for use in the commission of an offence;or(b)is proceeds of crime.”The burden of proof borne by the Applicant herein is therefore on a balance of probabilities.

18. This was elaborated in the case of Assets Recovery Agency vs Pamela Aboo: EACC Interested party (supra) cited by both parties where the court stated:-“63. Forfeiture proceedings are Civil in nature and that is why the standard of proof is on a balance of probabilities. See Section 92(1) of Proceeds of Crime and Anti-Money Laundering Act. ……”

19. In the case of ARA & Others vs Audrene Samantha Rowe & Others Civil Division claim No 2012 HCV 02120 the Court of Appeal reiterated:-“....that in deciding whether the matters alleged constituted unlawful conduct when a civil recovery order is being made is to be decided on a balance of probability. Civil recovery proceedings are directed at the seizure of property and not the convicting of any individual and thus there was no reason to apply the criminal standard of proof...”

20. The Applicant therefore bears the legal burden to prove its case against the respondent on a balance of probabilities. Once the legal burden is discharged the evidential burden shifts to the respondent to prove that the assets were acquired legally or lawfully as this would be a fact(s) within their special knowledge. It is instructive that the evidential burden does not shift to the respondent unless and until the applicant has discharged the legal burden. My holding finds support in the case of Assets Recovery Agency v Fisher Rohan and Miller Delores, Supreme Court of Jamaica, Claim No. 2007 HCV 003259 where it was held:“……Even though these proceedings are quasi-criminal in nature there is an evidential burden of proof on the Defendant. It is incumbent on them to demonstrate evidentially how they lawfully came into possession of the assets seized.”

21. In the case of Stanley Mombo Amuti v Kenya Anti-Corruption Commission [2019] eKLR the Court of Appeal held as follows in regard to the Anti-Corruption & Economic Crimes Act whose asset recovery provisions are largely similar to those under the Proceeds of Crime and Anti-Money Laundering Act:-“Under Section 55(2) of ACECA, the theme in evidentiary burden in relation to unexplained assets is prove it or lose it. In other words, an individual has the evidentiary burden to offer satisfactory explanation for legitimate acquisition of the asset or forfeit such asset. The cornerstone for forfeiture proceedings of unexplained assets is having assets disproportionate to known legitimate course of income. Tied to this is the inability of an individual to satisfactorily explain the disproportionate assets. A forfeiture order under ACECA is brought against unexplained assets which is tainted property; if legitimate acquisition of such property is not satisfactorily explained, such tainted property risk categorization as property that has been unlawfully acquired. The requirement to explain assets is not a requirement for one to explain his innocence. The presumption of innocence is a fundamental right that cannot be displaced through a Notice to explain how assets have been acquired”

22. It is my finding that the above finding applies in proceedings for forfeiture under the Proceeds of Crime and Anti-Money Laundering Act. Once Assets Recovery Agency has proved its allegations on a balance of probabilities then the Respondent has a duty to persuade the court that the property(s) are not proceeds of crime.

23. Counsel for the Respondent submitted that the Respondent’s vehicles ought not to be forfeited given that the prosecution of the Respondent for the alleged trade in drugs ended in an acquittal. Section 92 (4) of the Proceeds of Crime and Anti-Money Laundering Act however categorically negates this. The Subsection states:-“92(4) The validity of an order under subsection (1) is not affected by the outcome of criminal proceedings, or of an investigation with a view to institute such proceedings, in respect of an offence with which the property concerned is in some way associated.”

24. It is therefore trite that a conviction is not mandatory in order for the court to make orders of forfeiture under Sections 90 & 91 of the Proceeds of Crime and Anti-Money Laundering Act. The applicant need not also establish the specific crime committed in relation to the property in issue. Contrary to the respondent’s assertion, the Agency does not have to prove that a crime was committed and that a conviction ensued from any criminal prosecution preferred thereto. All the Applicant is required to prove is that there was unlawful conduct. Once the Applicant proves the same, on a balance of probabilities as provided in Section 92(1)(b) of the Proceeds of Crime and Anti-Money Laundering Act a duty is cast on the respondent to prove that she obtained the property lawfully. The respondent is required to give a satisfactory explanation that she legitimately acquired the assets in question failing which the said assets shall be declared to be proceeds of crime.

25. As to the submission that the Respondent has a right of presumption of innocence as guaranteed in Article 50(2) (a) of the Constitution and a right to fair trial as provided in Article 50(2) of the Constitution my finding is that this is not a criminal trial against the Respondent but proceedings in rem in regard to assets reasonably believed to be proceeds of crime and hence the presumption of innocence does not apply. On this I am in agreement with Ong’undi J’s finding in the case of the Assets Recovery v Quorandum Limited & 2 others [2018] eKLR where citing with approval the cases of Serious Organized Crime Agency v Gale quoted in Assets Recovery Agency and 4 others v Audrene Samantha Rowe & 4 others Civil Division Claim No. 2012 HC C 02120 she held:-“106. Simply put civil forfeiture proceedings are not subject to presumption of innocence which is a criminal law phenomenon…….”

Issue No. (c): Whether the vehicles in issue are proceeds of crime hence liable to forfeiture? 26. The Applicant has in my considered opinion demonstrated that the respondent was involved in narcotic drug trafficking together with one Chinedu to whom she was married although they were later divorced. The Applicant has proved on a balance of probabilities that she used mules to traffick drugs and that the properties of one of those mules, Rose Munyando, were forfeited. The Respondent was apprehended severally with narcotic drugs and the applicant has demonstrated that she was charged in two criminal cases. As provided in Section 92(4) of the Proceeds of Crime and Anti-Money Laundering Act the fact that she was not found guilty and convicted is immaterial. The Applicant also proved on a balance of probabilities that the Respondent acquired Villa No. 5 during the period when she was suspected of and was being investigated for dealing with narcotic drugs which is an offence in Kenya. She conceded that she acquired the vehicles in issue partly from the proceeds of the sale of the villa. As can be seen from the definition Proceeds of Crime includes property acquired indirectly from an offence. It is my finding therefore that the applicant has proved on a balance of probabilities that the assets herein are proceeds of crime.

27. In her response and submissions, the respondent has been quite economical with information which should ideally be within her special knowledge. She has not tendered any evidence that would convince this court that the villa which she sold in order to purchase the cars was acquired otherwise than through the proceeds of illicit drugs. She has not therefore discharged the evidential burden of proof. That being the case and she having expressly admitted that the two vehicles were acquired from the proceeds of the sale of the villa I find that the vehicles are proceeds of crime the same having been acquired from tainted money. Proprietary rights safeguarded by Article 40 of the Constitution do not extend to unlawfully acquired property as stated in Sub-Article 6 so she cannot claim that her right to own property will be violated by this order.

Issue (d): Whether the two vehicles are liable to forfeiture 28. Having come to a finding that the two vehicles are proceeds of crime I must also inevitably come to the conclusion that the same are liable for forfeiture to the state and I do so order. The National Transport and Safety Authority (NTSA) through the applicant must accordingly take steps to have the same transferred to the State.

Conclusion 29. In the upshot the Application dated 8th January 2021 is allowed as prayed and the Respondent is condemned to pay the costs. It is so ordered.

SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 10TH DAY OF MAY, 2022. E.N. MAINAJUDGEIn the Presence of:-Ms Ngelechei for the ApplicantMiss Kalaine for the RespondentPotishoi – Court Assistant