Financial Crime World

Kenya’s Battle Against Financial Crimes: A Look at the Legal Landscape and Notable Cases

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Introduction

Kenya, an economically vibrant country in East Africa, faces the persistent issue of financial crimes. Corruption and associated offenses, such as tax fraud, procurement fraud, money laundering, cybercrime, bribery, asset misappropriation, and accounting and financial statement fraud, pose significant challenges to economic growth and development. According to Kenya Police (2020), there were 4,786 reported cases in 2019, making financial crimes the highest category since 2010. Although there has been a slight decrease in recent years (Transparency International Kenya, 2021), with 58% of survey respondents reporting economic crime experiences in the past 24 months, Kenya ranks 124th out of 180 countries in the Corruption Perception Index 2020 (Transparency International, 2021).

To tackle financial crimes, Kenya has developed a robust legal and institutional framework. Key legislations include (but are not limited to):

  1. The Ethics and Anti-Corruption Commission Act, 2011 (EACC)
  2. The Anti-Corruption Police Unit
  3. The Central Bank of Kenya Act
  4. The Ministry of Justice and Constitutional Affairs
  5. The National Anti-Corruption Campaign Steering Committee
  6. The Privatisation Act, 2005
  7. The Public Audit Act, 2003
  8. The Government Financial Management Act, 2004
  9. The Public Procurement and Disposal Act, 2005

Ethics and Anti-Corruption Commission Act (EACC)

Enacted in 2011 (previously known as the Anti-Corruption and Economic Crimes Act in 2003), the EACC Act has had considerable successes. Since its first application in 2008 against Kenya’s former head of the Port Authority, the EACC has recorded a 100% success rate in five subsequent cases, resulting in an estimated USD 6.4 million in fund recoveries (Xinhua, 2016).

Unexplained Assets and the Courts

Despite these strong institutional arrangements, unexplained assets recovery proceedings in Kenya have faced legal challenges. Critics argue that these proceedings violate the right to a fair trial and presumption of innocence under Section 55 of the ACECA. The constitutionality of this provision has been extensively debated by scholars, including Ayodeji G.I, Olola James, Mochere, Shalline Nyaboke, Vinya, M. Victor, Mungai, Moses Kahiga, and Eric Ngumbi, among others.

Notable Cases and Their Implications

Stanley Mombo Amuti v KACC SC Petition No.21 of 2019

This high-profile case highlighted the dilemma of unexplained assets recovery proceedings. Although the Court of Appeal upheld the constitutionality of Section 55, overturning the High Court’s dismissal of the Respondent’s originating summons (Xinhua, 2020), the process raised concerns about the presumption of innocence and right to a fair trial.

EACC v Patrick Ochieno Abachi & 6 ors Civil Suit No.15 of 2019

Civil unexplained wealth legislation has proven effective in targeting assets acquired through corruption. For instance, in the EACC v Patrick Ochieno Abachi & 6 ors Civil Suit No.15 of 2019, the court ordered the confiscation of several bank accounts, properties, and plots of land, following the EACC’s failure to provide adequate explanations for the respondent’s wealth (Xinhua, 2019).

Goldenberg Scandal

The Goldenberg Scandal, a political scandal involving high-level government officials under Daniel Arap Moi in the 1990s, is a significant setback in Kenya’s efforts to combat financial corruption. The subsidizing of gold exports beyond standard arrangements cost the country over 10% of its annual GDP (Sagar, 2019). Prosecution of those involved faced Constitutional Court challenges, leading to injustice and the ineffectiveness of the law (Munene, 2018).

Jimmy Kiamba’s Case

More recent cases, such as Jimmy Kiamba’s case, where the High Court awarded the EACC KES 31 million after the respondent failed to explain the source of their wealth, are still under investigation or going through the courts (Xinhua, 2017).

Conclusion

As Kenya continues to intensify its efforts against financial crimes, it is crucial to focus on the resolution of ongoing cases with urgency and transparency. Enhanced skills in obtaining evidence of civil illicit enrichment and greater public-private cooperation will further bolster the nation’s fight against corruption, ultimately leading to a more prosperous and economically resilient Kenya.