Financial Crime World

Kenya’s Corporate Financial Crimes: A Look at Major Cases and Legal Frameworks

Kenya, known for its economic potential and bustling business landscape, faces a persistent challenge: corporate financial crimes. Despite some progress in recent years, fraudulent practices such as tax fraud, procurement fraud, money laundering, cyber crime, bribery and corruption, asset misappropriation, and accounting and financial statement fraud continue to pose a significant threat.

Economic Crimes on the Rise

According to the latest police reports, the number of recorded economic crimes in 2019 was 4,786—the highest since 2010 [1]. However, the prevalence of economic crimes seems to have decreased based on a survey, where only 58% of respondents reported experiencing some form of economic crime in the last 24 months, down from 75% in 2018.

Transparency International’s Corruption Perception Index 2020 found Kenya ranked 124th out of 180 countries, sharing this position with countries like Pakistan and Bolivia [2].

Amidst these concerns, the Kenyan government has established a robust legal and institutional framework to combat financial crimes. Notable acts include:

  • Ethics and Anti-Corruption Commission Act, 2011 (EACCA)
  • Anti-Corruption and Economic Crimes Act, 2003 (ACECA)
  • Privatisation Act, 2005
  • And various other acts and bodies

The EACCA, which replaced the ACECA, sets up entities such as the Ethics and Anti-Corruption Commission, Kenya Anti-Corruption Commission, Anti-Corruption Police Unit, Central Bank of Kenya, Ministry of Justice and Constitutional Affairs, National Anti-Corruption Campaign Steering Committee, and the Privatisation Act, 2005, among others.

Notable Cases

ACECA’s Successes and Controversies

The ACECA, first used in 2008 to prosecute Kenya’s former head of Port Authority, has seen a 100% success rate in five subsequent cases, with a total estimated USD 6.4 million in funds recovered [3]. However, the constitutionality of Section 55 of the ACECA, which provides for the forfeiture of unwanted wealth, has been challenged in court due to its perceived conflict with the Constitution and the presumption of innocence [4].

Patrick Ochieno Abachi

One of the most prominent cases involving unexplained assets recovery proceedings in Kenya is EACC v Patrick Ochieno Abachi [5]. In this case, the EACC challenged the respondent to explain the source of his assets, which led to court orders to confiscate several bank accounts, properties, and plots of land. However, the application for a stay of execution was quashed in 2021 [6].

Goldenberg Scandal

The Goldenberg Scandal, a political scandal involving high-level Kenyan government officials under Daniel Arap Moi in the 1990s [7], resulted in officials subsidizing gold exports by paying the company, Goldenberg International, 35% more than their foreign currency earning. These actions cost the country over 10% of its annual Gross Domestic Product. Although some officials were prosecuted, the lack of justice delivered by the constitutional court made the law ineffective.

Jimmy Kiamba

In the case of Jimmy Kiamba, the Nairobi County Chief Officer Finance, the EACC was awarded KES. 31Million by the High Court after he failed to provide an explanation for the source of his wealth [8].

More recently, the EACC linked three governors and a sitting County Boss to unexplained wealth totaling Sh 11 Billion [9].

Scholarly Contributions

As the legal framework for financial and economic crimes continues to evolve, scholars like Ayodeji G.I, Olola James, O, Mochere, Shalline Nyaboke, Vinya, M. Victor, Mungai, Moses Kahiga, and Eric Ngumbi, among others, have contributed greatly to the discourse through their articles on the legal framework, wealth declaration, unexplained wealth, and comparative studies on these matters in Kenya [10][11][12][13][14][15][16][17].

With ongoing investigations and court cases, the resolution of these cases is eagerly anticipated as the Judges, Prosecutors, and the Anti-Corruption and Economic Crimes Commission continue to familiarize themselves with the law. The acquisition of skills in obtaining evidence of civil illicit enrichment is also expected to strengthen Kenya’s fight against corruption.

[1]: https://thefifth estate.co.ke/economic-crime-cases-and-challenges-kenya/ [2]: https://www.transparency.org/en/cpi/2020 [3]: https://jurist.pitt.edu/news/2013/10/kenyas-antigraft-agency-claims-usd-12m-in-corruption-cases/ [4]: https://www.cghp.co.ke/article/recent-cases-and-issues-in-kenyan-anti-corruption-law-section-five-of-the-anticorruption-2003/ [5]: https://www.kenyalaw.org/caselaw/cases/view.php?id=36413 [6]: https://www.kenyalaw.org/caselaw/cases/view.php?id=40615 [7]: https://www.africafiles.org/article/goldenberg-scandal-case-overview [8]: https://nation.co.ke/news/politics/jimmy-kiambas-14m-in-bank-accounts-frozen/1066-7697244-13fbej.html [9]: https://citizentv.co.ke/news/local/governors-and-boss-linked-to-ksh11bn-stashed-in-foreign-banks-1539956 [10]: https://www.jstor.org/stable/252145592 [11]: https://web.stanford.edu/group/scce/papers/2010_Ngumbi_Olukana-Africa_Corporate_Governance.pdf [12]: https://www.researchgate.net/publication/334319222_Corruption_and_good_governance_in_Kenya [13]: https://www.researchgate.net/publication/333451163_Unexplained_Wealth_in_Kenya [14]: https://www.researchgate.net/publication/317867198_Comparative_Perspective_on_Combating_Financial_and_Economic_Crime_In_Africa [15]: https://www.researchgate.net/publication/312788099_The_Role_of_Corporate_Reputation_in_Financial_Reporting_Challenges_in_the_Contemporary_Business_Environment_The_case_of_Kenya [16]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2921044 [17]: https://www.researchgate.net/publication/354594461_Unmasking_Corporate_Financial_Crimes_An_Empirical_Analysis_of_Wealth_Statement_Filings_in_Kenya_1997-2007 [18]: https://kenya.go.ke/content/corruption-prevalence-survey-2019-summary-report