Financial Crime World

Economic Crimes on the Decline in Kenya: An Overview of Key Cases and Legal Frameworks

Financial crimes, including tax fraud, procurement fraud, money laundering, and bribery, continue to pose a significant challenge to Kenya’s economic growth. However, progress has been made in combating these crimes.

Economic Crimes on the Decline

According to a report by Xpress Money, economic crimes reported to the police reached a record high of 4,786 cases in 2019. However, a survey showed that only 58% of respondents had experienced economic crime within the past two years compared to 75% in 2018 (Xpress Money, 2020).

Kenya’s Corruption Issue

Despite this progress, corruption remains a major issue in Kenya. In Transparency International’s Corruption Perception Index 2020, Kenya ranked 124th out of 180 countries, sharing the spot with Pakistan and Bolivia (Transparency International, 2020)

Three key acts provide the legal framework for countering economic crimes in Kenya:

  1. The Ethics and Anti-Corruption Commission Act (EACCA)
  2. The Central Bank of Kenya Act
  3. The Ministry of Justice and Constitutional Affairs Act
  4. The Public Audit Act

The Ethics and Anti-Corruption Commission Act (EACCA), which replaced the Anti-Corruption and Economic Crimes Act (ACECA) in 2011, has seen significant success. The following cases reflect the act’s potential in recovering unexplained wealth and fighting asset theft through corruption:

Section 55 of the EACCA: Constitutional Challenge

The constitutionality of Section 55 of the EACCA, dealing with unexplained wealth forfeiture, was called into question in Stanley Mombo Amuti v KACC (SC Petition No. 21 of 2019; Appeal No. 184 of 2018, Nairobi). Initially, the judge deemed the provision inconsistent with the Kenyan Constitution, but the decision was later overturned at the Court of Appeal. Critics argue that this legislation infringes the constitutional right to a fair trial and presumption of innocence by placing the burden of proof on the respondents.

Civil Suit No. 15 of 2019: Successful Application

In EACC vs Patrick Ochieno Abachi & 6 Ors (Civil Suit No.15 of 2019), the Ethics and Anti-Corruption Commission successfully seized several bank accounts, properties, and plots of land following the Respondent’s failure to explain the source of his wealth. This case highlights the potential utility of civil unexplained wealth legislation in combating asset theft through corruption.

Infamous Financial Scandals

Among the most notable economic crimes in Kenya’s history is the Goldenberg Scandal, a political scandal implicating high-level officials under Daniel Arap Moi. The government paid Goldenberg International over 35% more of Kenya’s currency than their actual foreign currency earnings for gold exports during the 1990s. The financial repercussions were devastating, with the country losing more than 10% of its Gross Domestic Product (BBC, 1999). Despite the prosecutions of those involved, the lack of accountability and effectiveness of the legal system continues to plague the nation.

Conclusion

  • The fight against economic crimes in Kenya is ongoing, with several high-profile cases currently being investigated or going through the courts.
  • The successful implementation and continuous refinement of legal frameworks like the EACCA are essential for ensuring transparency and accountability.
  • Enhancing the capacity of law enforcement agencies, prosecution services, and the judiciary is crucial in delivering swifter resolution of cases and ensuring adequate deterrence to potential offenders.