[2023] KEHC 26581 (KLR)

Onkwani & 3 others v Republic (Criminal Appeal E007, E010, E078 & E026 of 2023 (Consolidated)) [2023] KEHC 26581 (KLR) (Crim) (11 December 2023) (Judgment)

Neutral citation: [2023] KEHC 26581 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Criminal

Criminal Appeal E007, E010, E078 & E026 of 2023 (Consolidated)

K Kimondo, J

December 11, 2023

Between

Robert Moseti Onkwani

1st Appellant

Obadiah Nyambane Gwaro

2nd Appellant

Graham Rioba Sagwe

3rd Appellant

Gladys Moraa Gichana

4th Appellant

and

Republic

Respondent

(Appeal from the judgment in Milimani Chief Magistrates Criminal Case No. 1998 of 2010 by Francis Andayi (Mr.), Chief Magistrate, dated 10th December, 2021)

Judgment

[In Respect Of The 1st & 3rd Appellants Only] 1. This further judgment relates to the consolidated appeal of the 1st and 3rd appellants above named. For the avoidance of doubt, judgment for the 2nd and 4th appellants was delivered on 8th February 2023.

2. The 1st and 3rd appellants were charged in the lower court with various counts of conspiracy to defraud and theft contrary to sections 317 and 268 (1) as read together with section 275 of the Penal Code.

3. They were both convicted on Count I for conspiracy to defraud. The 3rd appellant was also convicted for theft as charged in Count II for the sum of Kshs 96,759,540 belonging to Fina Bank. The 1st appellant was acquitted on Count IV relating to theft of Kshs 10,000,000 from the said bank.

4. The particulars of Count I against the appellants were that on or about 12th November, 2010 at an unknown place within the Republic of Kenya, jointly with others not before court, with intent to defraud conspired to defraud Fina Bank Limited of Kshs 96,759,540.

5. Count II was against the 3rd appellant only. The particulars were that on 15th November, 2010 at Fina Bank, Ngong Road branch Nairobi, jointly with others not before court, stole cash Kshs 96,759,540 from the bank.

6. Count III was against the 2nd and 4th appellants and is thus not the subject of this judgment. And like stated earlier, the 1st appellant was acquitted on Count IV.

7. The 1st and 3rd appellants, being aggrieved have lodged petitions of appeal. The 1st appellant raised 6 grounds of appeal. The 3rd appellant raised 15 grounds of appeal. Some of the combined grounds are repetitive and can be condensed into eight: Firstly, that there was insufficient evidence to found Counts I and II, or, that the evidence was at variance with the charge sheet; secondly, that the ingredients of the offences were not proved; thirdly, that the learned trial magistrate misapprehended the evidence and drew wrong inferences; fourthly, that the evidence of prosecution witnesses PW3 and PW5 against the 3rd appellant was unreliable; fifthly, that none of the witnesses adversely mentioned the 1st appellant; six, that the defence tendered by both appellants was disregarded; seven, that the sentence meted out was draconian; and, lastly, the sentence was unlawful for ordering restitution in breach of the Penal Code.

8. The appeal is contested by the Republic through grounds of opposition dated 20th April 2023. In a synopsis, the State contends that all the elements of the offences were proved beyond any reasonable doubt; and, that the sentences handed down were well within the law.

9. The 1st appellant filed submissions dated 27th February 2023. The 3rd appellant’s submissions on the other hand are dated 23rd April 2023. The Republic replied through submissions dated 10th July 2022.

10. On 26th October 2023, I heard further arguments from learned counsel for the two appellants and the Republic.

11. This is a first appellate court. I have re-appraised the evidence and records and drawn my independent conclusions. There is a caveat because I neither saw nor heard the witnesses. Pandya v Republic [1957] E.A. 336, Okeno v Republic [1972] E. A. 32, Njoroge v Republic [1987] KLR 19.

12. According to Macharia Njeru (PW1) and Julia Wambui Kanai (PW4), their law-firm, Macharia-Mwangi & Njeru, was retained by Garden Real Estate Development Limited in a conveyancing transaction. Their client was purchasing L.R. No. 12867/11 from Archer Dramond Morgan Limited for Kshs. 102,000,000. As per the sale agreement, 10% of the purchase price was paid to the vendor’s advocates. The balance was to be held in an escrow account in the names of counsel for the purchaser and vendor.

13. PW1 testified that on 15th or 16th November 2010, the purchaser advised him that it had remitted the balance of Kshs 96,759,540 to their client account at Fina Bank, Kimathi Street Branch. The funds however never hit the account. Instead they were diverted on 15th November 2010 to the account of Malch Construction Limited held at Eco Bank Towers and rapidly disbursed to various accounts including that of the 1st appellant at Barclays Bank which was credited with Kshs 9,000,000.

14. The directors of Malch Construction Ltd were John Bosco Gichana (who absconded the trial), Gladys Moraa Gichana (4th appellant) and Obadiah Nyambane Gwaro (2nd appellant) who was the managing director.

15. Dipan Zaverchand Shah (PW2) was the Head of Risk at Fina Bank. Upon learning of the fraud, he spoke to the internal auditor at Eco Bank who confirmed that the funds were deposited into the account of Malch Construction Ltd. PW2 wrote to the Banking Fraud Investigations Department (BFID) of the Central Bank of Kenya for orders to freeze the accounts.

16. The evidence of Gloria Nalumu (PW3) is important. She was a customer service officer at Fina Bank, Ngong Road. The branch manager was Graham Rioba Sagwe (the 3rd appellant). On 15th November 2010, he asked her to complete two instructions for two customers. The first was a cheque in favour of Fina Bank Ltd for KShs 3,000,000 drawn on the account of J.B. Construction Ltd (Exh. 3(a)) with an attached EFT application form (Exh. 3) and a set of instructions written on a plain paper (Exh. 3(b)). The instructions had account details with account name as Macharia-Mwangi & Njeru Advocates Account No. xxxxxx, Bank name-Fina Bank, Branch name - Main branch, Branch code - 001, Swift code - FBAKKENA

17. The 1st accused person requested her to complete the EFT form with the details attached. So, she input the details on the electronic funds transfer form which was initially blank. Once she completed it, she stamped the instructions and the copy and handed over to the director of J.B. Construction Ltd, Don Bosco Gichana, who was waiting in the banking hall.

18. The second set of instructions related to a cheque dated 12th November 2010 for Kshs. 96,759,540 drawn to Fina Bank on account of Garden Real Estate Development Ltd (Exh. 2(a)). There was an EFT application form signed but the rest of the information was blank (Exh. 2). There was a note attached (Exh. 2 (b)) stating "To Malch Construction Ltd, Eco Bank Towers, account No.xxxxxx”.

19. PW3 completed the EFT form, stamped it and handed the copy to the signatories of the account of Garden Real Estate Development Ltd, Mr. Sun Chao and Jijun Bao who were in the bank seated with the 3rd appellant. They did not raise any issues that the money was going into the wrong account. She knew the two and they would normally be accompanied by an interpreter who was an authorized agent for company with the bank. On the material day, they were not accompanied by the interpreter. In cross examination, she was emphatic that the two directors were attended to by the 3rd appellant.

20. PW3 scanned the EFT form and the cheque and sent them to the Head Office RTGS and Funds Transfer Department. She then completed the manual register where she placed the original EFT form and cheque and forwarded them to the head office for processing. She did not make a follow-up after that.

21. She remained with the documents for J.B. Construction Ltd for processing since it was an internal transaction as the two accounts were held with the bank. She did the internal transfer of KShs. 3,000,000 at the branch by debiting the J.B. Construction Ltd account and crediting the account for Macharia-Mwangi & Njeru Advocates.

22. PW 3 said that she was familiar with the handwriting of the 3rd appellant. In cross-examination, she said it was not on exhibits 2, 2(a), 2 (b), 3 and 3 (a) and 3(b). She said further-The instructions in the EFT form were entered by me and nobody else. The details were provided to me by the branch manager and I completed the instructions in the form. There are occasions when a customer would come straight to me and others when the manager would ask me to help when the customer has gone to him and there was nothing abnormal with what they did that day.

23. The 3rd appellant called PW3 three days later telling her that there was a mix up in the transactions. The head of the customer service at the head office also called her with the same information. On further cross-examination she said that in her “honest view [she] did not know who was responsible for the mix up”. But in re-examination she conceded that there was an additional paper attached to the EFT forms and she was guided by the 3rd appellant on how to complete them. After she filled them, she showed them to the 3rd appellant who advised her that they were in order.

24. PW5 was Beatrice Adhiambo Awiti. On 15th November 2010 she was the Team Leader, Fina Bank at the Central Processing Unit, Central Operations. The department received RTGS instructions to remit the funds to Eco-Bank in favour of Malch Construction Limited. Her unit confirmed that the instructions complied with the mandate, that a “call back” was done and there were sufficient funds in the account of Garden Real Estate Development Ltd. The department then processed the instructions “in the core-banking system and gave the instructions for signing as per the approved limits then passed it on to the Swift department for processing”.

25. In cross-examination she said the head office had to pass payment to the receiving bank. From the reverse of the cheque by Garden Real Estate Company (Exh. 2(a)) the “call back was made by Gloria. According to the stamp she called Chao and Jijun on 15/11/2010 at 10. 00 a.m.” PW5 confirmed that she was the one who received the instructions at head office and authorized the transaction. She did not see the name of the 3rd appellant on the documents from Ngong Road.

26. According to the investigating officer, Senior Sergeant Fredrick Musyoki (PW6), three documents were swapped: Firstly, Cheque No. 000001 for KShs 96,759,540 for Garden Real Estate Development Ltd was attached to the application form for money transfer of J.B. Construction which was transferring Kshs 3,000,000 to an account at Eco-bank in the name Malch Construction. Secondly, the note that had bank details for Malch Construction Ltd was attached to the application form meant to be for Garden Real Estate Development Ltd. In this case therefore, whoever was supposed to receive KShs 96,759,540 received KShs 3 million and vice versa.

27. Once the funds reached Malch Construction, there were rapid and massive transfers to other accounts. For instance, on 16th November 2010, Kshs 33,000,000 was transferred to Gakoi Maina Advocates; and, Kshs 10,000,000 to A. S. Kuloba & Company Advocates. There were cheque withdrawals of Kshs 8,060,000 and 3,000,000 respectively. PW6 was “convinced out of long fraud investigations that this was stolen money”.

28. I should add that Gakoi Maina testified as PW7. His evidence implicated the 4th appellant, who, like I pointed out at the beginning, is not the subject of this judgment. A. S. Kuloba Advocate also refunded the Kshs 10,000,000 and was discharged from the proceedings.

29. PW6 said that the 1st appellant was one of the beneficiaries in the sum of Kshs 9,000,000. The witness obtained account opening documents dated 26th November 2009 from Barclays Bank of Kenya, Development House account No. xxxxxx in the name of the 1st appellant (Exh. 17) and a bank statement for the period 15th to 19th November 2010 (Exh. 18). From the statement, on 17th November 2010 he received Kshs 9 million from Malch Construction. The 1st appellant claimed that he sold to Malch Construction four vehicles being: KBL 693 W; KBL 435A Toyota Hilux Pick-up; KBJ 947J-Hyundai and KBB 645N-Ford Van.

30. I have then analysed the defence in the lower court by the 1st and 3rd appellants. The 1st appellant, Robert Moseti Onkwani, made an unsworn statement. He said that the Kshs 9,000,000 wired into his account at Barclays Bank was “returned it to where it had come from”. He said he never withdrew it and he did not know his co-accused.

31. The 3rd appellant, Graham Rioba Sagwe, also made an unsworn statement. He protested his innocence and denied any involvement in the botched RTGS to Malch Construction Ltd; and, claimed that it was an honest mistake. He said that on 15th November 2010 the directors of Garden Real Estate Development Ltd came to the branch in the morning at 8. 00 a.m. They enquired about an electronic funds transfer. He asked them to sit in the banking hall and wait for PW3.

32. He said another customer, Don Bosco Gichana, director of J.B. Construction company also walked in. He referred him to PW3. The 3rd appellant said he had a tooth-ache and left for a doctor's appointment. His tooth was extracted and he went home to rest. He said he only learnt of the complaint the following day when the head of customer service at head office, Michael Obiero called him; and, that he informed him that PW3 handled both transactions. He claimed he only met the 2nd, 3rd and 4th accused persons in the course of the criminal trial; that he never held an account at Eco Bank; and, that no stolen monies were recovered from him.

33. Upon re-evaluation of the evidence, I find as follows. It is a truism that the legal and evidential burden rested squarely on the Republic. Woolmington v DPP [1935] AC 462, Bhatt v Republic [1957] E.A. 332.

34. I have perused the record. It is not true as submitted by counsel for the 1st and 3rd appellants that their defences were disregarded by the lower court. Like the trial court, I find that their unsworn statements had little probative value and amounted to red herrings.

35. I will now turn to the attack on the charge sheet. It is not drawn in an elegant manner. But the statement of the charges and the penal sections are clear. The particulars provided are sufficient. As I will discuss shortly, the material evidence from the 7 witnesses was not at variance with the particulars. Furthermore, any inaccuracy in the particulars is curable under section 382 of the Criminal Procedure Code.

36. The learned trial magistrate dealt at length with the essential requirements of conspiracy. I concur with his conclusion that conspiracy is complete when the agreement is formed, even if nothing is done to implement it.

37. Black’s Law Dictionary 10th Edition 2014, Thomson Reuters, at page 375 defines conspiracy to defraud as “a secret plan by two or more people to cheat a person or organization”. See generally Rebecca Mwikali Nabutola & 2 others v Republic, Nairobi High Court Criminal appeal 232 of 2012 [2016] eKLR.

38. In the instant case I find there was implementation that gave effect to the agreement. The evidence of conspiracy to defraud Fina Bank is largely circumstantial. But the evidence is very strong in this case. R v Kipkering arap Koske & another 16 EACA 135 (1949).

39. The agreement between the 1st appellant and the directors of Malch Construction Ltd to steal from Fina bank can be discerned from the following seven pieces of evidence. Firstly, the 1st appellant knew well in advance of the intended theft and entered into counterfeit sale agreements for the motor vehicles to Malch Construction Ltd. Secondly, when the RTGS funds were diverted to Malch Construction Ltd, they were nippily disbursed to other accounts including that of the 1st appellant.

40. Thirdly, when the 1st appellant was first arrested, he told the investigating officer (PW6) that the Kshs 9,000,000 received by him was payment for the vehicles. However, in his defence, he told the trial court that he “returned it to where it had come from”. He said he never withdrew it and he did not know his co-accused. From the evidence of PW6, it is thus not true, as urged by the 1st appellant, that no witness made any adverse evidence against him.

41. A related case is that the 4th appellant approached an advocate, Ian Maina (PW7) days in advance of the theft pretending to be buying a property. It laid the false foundation for transfer of Kshs 33,000,000 to the lawyer from the stolen funds.

42. Fourthly, the 3rd appellant, as the branch manager of Fina Bank, Ngong Road Branch knew in advance that the directors of Garden Real Estate Company were about to transfer Kshs 96,759,540 to Macharia Mwangi-Njeru & Company Advocates in a different branch of the bank. I say so because the 3rd appellant in his defence conceded that on 15th November 2010 the directors of Garden Real Estate Development Ltd visited the branch in the morning at 8. 00 a.m. They discussed with him about the electronic funds transfer. He asked them to sit in the banking hall and wait for PW3. He knew them as well as Don Bosco Gichana, the master mind of the heist. It was not a coincidence that Don Bosco Gichana also walked into the bank, came to the 3rd appellant, and was equally referred to PW3.

43. Fifthly, the conspiracy emerges from the two sets of instructions that the 3rd appellant gave to PW3. It is important to keep in mind at this juncture that the two Chinese directors of Garden Real Estate Development Ltd had signed blank RTGS forms with the 3rd appellant; and, that on this occasion, they were not accompanied by an interpreter.

44. Sixthly, the 3rd appellant was a central axis in the conspiracy. He now asked PW3 to complete the instructions for Garden Real Estate Development Ltd and for Gichana’s company, J. B. Construction Ltd as detailed earlier in paragraphs 16, 17, 18, 19 and 20 of this judgment. The fraudulent plan as explained by the investigating officer (PW6) proceeded as follows-Three documents were swapped: Firstly, Cheque No. 000001 for KShs 96,759,540 for Garden Real Estate was attached to the application form for money transfer of J.B. Construction which was transferring Kshs 3,000,000 to an account at Eco-bank in the name Malch Construction. Secondly, the note that had bank details for Malch Construction Ltd was attached to the application form meant to be for Garden Real Estate. In this case therefore, whoever was supposed to receive KShs 96,759,540 received KShs 3 million and vice versa.

45. It is the 3rd appellant who requested PW3 to complete the EFT forms with the details attached. PW3 handed the copy to the signatories of the account of Garden Real Estate Development Ltd, Mr. Sun Chao and Jijun Bao who were in the bank. They did not raise any issues that the money was going into the wrong account. Like I stated, they had no interpreter that morning. Unknown to them, their funds amounting to Kshs 96,759,540 were diverted; and, Macharia Mwangi-Njeru only received Kshs 3,000,000 from J. B. Construction Ltd who was not their client.

46. The seventh piece of evidence is that although the 3rd appellant tried to cover his tracks, he did not fully succeed. True, his handwriting was not on exhibits 2, 2(a), 2 (b), 3 and 3 (a) and 3(b). But Kshs 96,759,540 is a substantial sum of money. The blank but signed RTGS forms by Garden Real Estate Development Ltd were left with him. He was the branch manager. He handed them over together with those of J. B. Construction Ltd to PW3 to complete. In re-examination PW3 conceded that there was an additional paper attached to the EFT forms and she was guided by the 3rd appellant on how to complete them. After she filled them, she showed them to the 3rd appellant who advised her that they were in order.

47. It is only after that that the 3rd appellant stepped out for a dentist’s appointment to have his tooth extracted. He claims that he only learnt of the complaint the following day when the head of customer service at head office, Michael Obiero, called him. PW1, Macharia Njeru, also testified that he had tried to desperately reach the 3rd appellant on telephone without success; and, that when he finally did, he was not helpful.

48. When I tie up all those seven pieces, I have no doubt in my mind that there was a prior agreement between the 1st and 3rd appellants and Don Bosco Gichana or Malch Construction Limited to defraud Fina Bank of the sum of Kshs 96,759,540. The RTGS forms by Don Bosco Gichana for J.B. Construction Ltd transferring Kshs 3,000,000 to an account at Eco-bank in the name of Malch Construction was a decoy.

49. It follows as a corollary that all the elements of Count I were proved beyond reasonable doubt. The appeal by the 1st and 3rd appellants on their conviction on that count is hereby dismissed.

50. For the same reasons, I find that the 3rd appellant was a central core in the theft of Kshs 96,759,540 from the bank. The funds were diverted on 15th November 2010 to the account of Malch Construction Limited held at Eco Bank Towers and hurriedly disbursed to various accounts detailed earlier.

51. True, the 3rd appellant did not have an account at Eco Bank and there was a paucity of evidence that he benefitted from the loot. The point to be made however is that he facilitated or engineered the heist. The upshot being that Count II was equally proved beyond any reasonable doubt. The appeal by the 3rd appellant on conviction for this count is equally dismissed.

52. I will now turn briefly to the sentence. The appellants submitted that the sentence was draconian; and, that the lower court erred in ordering for restitution. Section 354 (3) of Criminal Procedure Code empowers the court to alter the finding, maintain the sentence, or with or without altering the finding reduce or increase the sentence. The parameters were well set out in Macharia v Republic [2003] 2 E.A. 559.

53. The lower court considered the mitigation and the records. Under section 24 (g) of the Penal Code, payment of compensation is a lawful punishment. However, the power should be exercised with restraint and only in compliance with section 177 of the Criminal Procedure Code. In this case, a substantial amount of the stolen funds was recovered and restored to the complainant bank.

54. The lower court correctly ordered for restitution for the specific balance of Kshs 15,673,538. 01 owed to the complainant (less Kshs 4,500,000 being the bonds paid or sums forfeited to the State); in default of which the 1st and 3rd appellants were to serve 18 months in jail on Count I. The 3rd appellant was also sentenced to 18 months’ imprisonment on count II. The jail sentences were however suspended for a year under section 15 of the Criminal Procedure Code; and, subject to the restitution. I find that the sentences handed down were lawful and merited in all the circumstances of this case.

55. In the end, the entire consolidated appeal by the 1st and 3rd appellants lacks merit and is hereby dismissed.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 11TH DAY OF DECEMBER 2023. KANYI KIMONDOJUDGEFurther Judgment read virtually on Microsoft Teams in the presence of-1st & 3rd appellantsMr. Nyambuto for the 1st appellant instructed by Omboga & Company Advocates.Mr. Oyatta for the 3rd appellant instructed by Oyatta & Associates Advocates.Mr. Mutuma for the Republic instructed by the Office of the Director of Public Prosecutions.