[2022] KEHC 9985 (KLR)

Gichane v Republic (Anti-Corruption and Economic Crimes Appeal 19 of 2019) [2022] KEHC 9985 (KLR) (Anti-Corruption and Economic Crimes) (14 July 2022) (Judgment)

Neutral citation: [2022] KEHC 9985 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-Corruption and Economic Crimes Appeal 19 of 2019

EN Maina, J

July 14, 2022

Between

Charles Kinuthia Gichane

Applicant

and

Republic

Respondent

(Being an Appeal from the original conviction and sentence of Anti-corruption Chief Magistrate’s Court at Nairobi (Hon. L. N. Mugambi) delivered on 13th May, 2019 in Milimani Anti-Corruption Case No. 2 of 2014)

Judgment

Introduction 1. By a Petition of Appeal dated May 23, 2019the appellant, Charles Kinuthia Gichane challenged the conviction and sentence of the Anti-Corruption Court meted against him by Chief Magistrate L.N. Mugambi in Anti-Corruption Case No. 2 of 2014.

Background 2. Together with his co-accused one John Faustine Kinyua, the appellant was charged with the Offence of Fraudulent Disposal of Public Property contrary to Section 45(1)(b) as read with Section 58 of the Anti-Corruption and Economic Crimes Act. The particulars of the offence were that on diverse dates between 4th July and 17th August 2003 at Kenya Reinsurance Plaza situated within Nairobi County, he fraudulently acquired land parcel LR No. 209/10611/Villa Franca Estate belonging to Kenya Reinsurance Corporation.

3. The prosecution called seventeen (17) witnesses and the defence two witnesses namely the Appellant and his co-accused. Briefly, the prosecution’s case was that the suit property, Villa Franca House No. 70 belonged to Kenya Reinsurance Corporation, a public body and that the Appellant acting in concert with his co-accused devised and executed a scheme to have the property fraudulently transferred to himself. The court heard that the house was paid for by monies that were intended to settle outstanding premiums owed to Kenya Reinsurance Corporation by Heritage Insurance Company. For that purpose, a cheque for the sum of Kshs. 3,196,896 was issued by Heritage Insurance Company which the Appellant who was an employee of Heritage Insurance Company collected and subsequently used to pay for the house purportedly on grounds that he was owed a similar amount by Kenya Re for consultancy services.

4. The Defence case was that the cheque in question was a payment for consultancy services rendered by the Appellant to Kenya Reinsurance Corporation. That at the material time the Appellant heard that Kenya Re was selling some houses and because he was owed Kshs. 3,789,937 by Kenya Re, he requested that his earnings be commuted for the purchase of the house.

5. However, after evaluating evidence and submissions from both sides the trial court found the Appellant guilty and convicted him and sentenced him as follows:-a)Punishment under Section 48(1) (a) of the Anticorruption and Economic Crimes Act, a fine of Kshs. 1,000,000 and in default one-year imprisonmentb)A mandatory fine of Kshs. 6,393,792 under Section 48(1) (b) of the Anticorruption and Economic Crimes Act since he acquired a quantifiable benefit of Kshs. 3, 196, 896 and in default, three years’ imprisonmentc)Pursuant to Section 45(b) of the Anticorruption and Economic Crimes Act, the ownership of House No. 70 LR 209/10611/106 at Villa Franca shall be reverted to Kenya Reinsurance Corporation

6. Being aggrieved by the conviction and sentence the Appellant preferred this appeal. The grounds of Appeal are:a.That the learned trial magistrate erred in law and in fact in convicting the Appellant when there was no probative evidence against the Appellant to warrant the said decisionb.That the learned trial magistrate erred in law in shifting the burden of proof to the Appellant contrary to the lawc.That the learned magistrate erred in law in convicting the accused person without considering and giving weight to the accused’s sworn defence that dislodged the prosecution cased.That the learned trial magistrate erred in law and fact by failing to appreciate that the prosecution’s deliberate failure to call the Managing Director under whose docket permission was obtained to engage the accused’s services was fatal to the prosecution Case.e.The learned trial magistrate erred in law and fact in failing to appreciate that the services rendered by the Appellant to the Respondent and his request in writing for a set off of his consultancy fees which was not produced by the prosecution rendered the entire transaction of a civil nature and not criminalf.That the learned magistrate erred in law and fact in failing to appreciate the conduct of the appellant during his transactions with the respondent were formal, documented and were for a consideration that was being paid by the respondent for services rendered to it by the appellantg.That the learned magistrate erred in law and fact in failing to appreciate the gaps left in the prosecution case with respect to the contested letters of acceptance, cheque in question that could not be connected to the applicant to warrant a safe convictionh.That the sentence was duly harsh, illegal and excessive in the circumstancesi.That the learned magistrate failed to take into account the appellant’s mitigating facts before sentencej.That the learned magistrate misdirected himself into law by taking into account other extraneous issues that were not part of the charges the appellant faced and to bring the same to convict the appellant.”

7. The Appellant prays that the conviction and sentence be set aside and that the appeal be allowed in its entirety. The appeal was canvassed by way of written submissions.

Appellant’s Submissions 8. Relying on the case of Joan Chebichii Sawe vs Republic (2003) eKLR to the effect that the prosecution must prove its case beyond reasonable doubt and that suspicion however strong does not suffice, the Appellant submitted that the trial court erred in believing the prosecution’s case despite the substantial loopholes thereat. Counsel submitted for instance, that it was undisputed that at the material time Kenya Re was chasing payments from its debtors. That in his capacity as the Finance Director, DW1 wrote several letters demanding payment which fact was corroborated by the evidence of Johnson Githaka (PW8) the Managing Director. PW8 testified that the management of Kenya Re was responsible for debt collection and the Board only gave policy directions and therefore in writing the letter dated 12th August 2003 asking for settlement of Kshs. 3,196,896 the first accused (DW1), was acting in the course of his duties.

9. The Appellant also pointed out that it was the unchallenged evidence of DW1 that Kenya Re had held a board meeting which resolved that the Corporation would outsource professionals to perform reconciliation works hence he was duly authorized to give such work to the Appellant; and that the validity of the Appellant’s resultant payment was confirmed by PW8. Counsel submitted that during his testimony, PW8 was referred to the letter dated 28th April 2000 headed “Appointment to Consultancy Services” addressed to the Appellant by Kenya Re and confirmed that it was related to data reconciliation that had taken place. Counsel stated that the witness was then referred to a second handwritten letter requesting that the commission earned from the consultancy be used as part payment for the purchase of the subject property to which he remarked that pursuant to the first letter the Appellant would have been paid if he performed the work and that each department had its own procedure for carrying out work. Counsel contended that the sale of the suit property was above board; that sale of the corporation’s houses was confirmed by Michael Jeti Mbeshi (PW3) who was in charge of Property Management and Administration at the Corporation; That the letter of offer dated 19th August 2003 prepared by Rosemary Wambui (PW4) was signed by the Appellant and he attached a banker’s cheque for Kshs. 3,196. 896 thereto and that instructions were then given for preparations of the sale agreement and transfer in favour of the Appellant and no audit query on the transaction was ever raised as confirmed by PW12 who was the then Assistant Chief Accountant at Kenya Re.

10. Counsel stated that ownership of the house in question reverted to Kenya Re sometime in 2011 during the trial which fact was not taken into account in mitigation. Counsel stated therefore that the court erred in imposing the mandatory fine of Kshs. 6,393,792 as double loss as well as the extra fine of Kshs. 1,000,000 as there was no benefit gained and neither was there a loss to the Corporation. Counsel submitted that in as much as sentencing is discretionary, it ought to be exercised judiciously eschewing irrelevant factors and wrong principles as was held in the case of Shadrack Kipchoge Kogo vs Republic(2015) eKLR. Counsel urged this court to quash the decision of the trial court and to set aside the sentences.

Submissions of the Respondent 11. Learned Counsel for the Respondent submitted that the prosecution discharged its burden of proof in proving the charges against the Appellant. That the evidence on record is in line with the offence of fraudulent acquisition of public property as provided in Section 45(1) (b) of the Anti-corruption and Economic Crimes Act. Counsel submitted that the prosecution adduced evidence to the effect that money was owed by Heritage Insurance Company to Kenya Re and a request for the same was made in P.Ex 1 but the Appellant received the cheque, P.Ex 3, for the demanded amount which he was supposed to deliver to Kenya Re as demonstrated by the dispatch register. However, he instead purported to purchase a house belonging to Kenya Re with the funds.

12. It was submitted that evidence on record proved that House No. 70 situated in Villa Franca Estate belonged to Kenya Re; that the respondent is in agreement with the trial court’s reasoning at page 41 of its judgment that whereas the Appellant spoke of money due to him from Kenya Re, there was no formal acknowledgement by Kenya Re of such a debt in any correspondence or formal documentation whatsoever. Counsel stated that the trial court rightly concluded that the house in question was paid for by monies that were intended to settle outstanding premiums owed by Heritage Insurance Company which issued a cheque for the sum of Kshs, 3,196,896 in that regard. On the sentence Counsel submitted that the same is legal and proper and in accordance with the Judiciary of Kenya Sentencing Policy Guidelines 2016. Counsel urged that the appeal should be dismissed in its entirety and the trial court’s conviction and sentence upheld.

Analysis and Determination 13. A first appeal being in the nature of a retrial my duty is to put the evidence in the trial court to a fresh evaluation so that I arrive at my own independent conclusion while keeping in mind that I did not see or hear the witnesses who testified.

14. The issues that arise for determination from the appellant’s grounds of appeal and the rival submissions of Learned Counsel for the parties are as follows:i.Whether the respondent proved its case against the appellant beyond reasonable doubtii.Whether the trial court’s sentence was manifestly excessive and illegal in light of the mitigating factors advanced

15. It is not in dispute that the Appellant acquired the suit property, House No. 70 situated in Villa Franca Estate from Kenya Reinsurance Corporation. It is also not disputed that the funds used to purchase the property were owed to Kenya Re by Heritage Insurance Company Limited. According to the prosecution the funds were misappropriated by the Appellant to acquire the property and the Corporation thereby suffered a double loss. The Appellant’s position however is that the funds are what was owed to him by Kenya-Re as a commission for consultative services rendered to it and that therefore he properly used the funds to acquire the house. The prosecution’s evidence presented by PW1, PW2, PW11 and PW14 all employees of Heritage Insurance Limited confirmed that P.Ex3, the cheque for Kshs. 3,196,896 used by the Appellant to purchase the property originated from Heritage Insurance Company and was intended to be payment of a debt owed to Kenya Reinsurance Corporation by Heritage Insurance Company. At the time, the Appellant was a manager at Heritage and he was involved in the processing of the payment which Kenya Re demanded vide a letter produced as (P.Ex1).

16. The monies were clearly therefore not intended as a payment for services rendered by the Appellant to Kenya Re but for settlement of a debt owed to Kenya Re by Heritage Insurance Company Limited. Whereas the Appellant alleges to have been owed a similar amount by Kenya Re he did not adduce evidence, other than that he had been hired to render consultancy services, that the services rendered were equal or equivalent to that sum of money. That the prosecution ought to have called the Manager in charge of the relevant department to substantiate the veracity of his entitlement to payment for consultancy services does not hold. This is because this was a fact within his special knowledge for which he had the burden to prove under Section 11 of the Evidence Act which states: -11. Burden on accused in certain cases(1)When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any exception or exemption from, or qualification to, the operation of the law creating the offence with which he is charged and the burden of proving any fact especially within the knowledge of such person is upon him:Provided that such burden shall be deemed to be discharged if the court is satisfied by evidence given by the prosecution, whether in cross-examination or otherwise, that such circumstances or facts exist:Provided further that the person accused shall be entitled to be acquitted of the offence with which he is charged if the court is satisfied that the evidence given by either the prosecution or the defense creates a reasonable doubt as to the guilt of the accused person in respect of that offence.(2)Nothing in this section shall—(a)prejudice or diminish in any respect the obligation to establish by evidence according to law any acts, omissions or intentions which are legally necessary to constitute the offence with which the person accused is charged; or(b)impose on the prosecution the burden of proving that the circumstances or facts described in subsection (1) of this section do not exist; or(c)affect the burden placed upon an accused person to prove a defence of intoxication or insanity.”

17. In light of the foregoing, it is evident that the burden of proving that the Appellant was entitled to payment of Kshs.3,196,896/- being consultancy services to Kenya Re which he then set off against the purchase price of the house in question lay upon the Appellant. He relied on a handwritten letter requesting set-off but did not tender any evidence demonstrating the scope of his assignment and the amount owed to him if any. His defence did not in any way create doubt in the prosecution’s case that he misappropriated the money by converting it to his own use for acquisition of a house belonging to Kenya Re. I agree with the trial court’s finding that as a result of his conduct Kenya Re Corporation suffered a double loss (the funds and the house) albeit that the house was reverted back to the Corporation by the court order. I am satisfied therefore that the Appellant’s conviction was safe. The same is upheld.

18. I have also considered Counsel’s submissions in regard to the sentence. With due respect to Counsel for the Appellant I am not persuaded there was any error thereat. The Corporation suffered a double loss and the Appellant conferred upon himself a double benefit. The sentence was lawful and accordingly the appeal is dismissed in its entirety. It is so ordered.

SIGNED, DATED AND DELIVERED VIRTUALLY THIS 14TH DAY OF JULY, 2022E N MAINAJUDGE