Financial Crime World

Financial Crimes and Ethics: Kenya’s Battle Against Corruption and Unlawful Wealth

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Kenya’s Corruption and Financial Crimes Problem

The East African country of Kenya, known for its vibrant economy and rapid development, faces a significant issue in the form of financial crimes and corruption. Some common offenses include:

  • Tax fraud
  • Procurement fraud
  • Money laundering
  • Cyber crime
  • Bribery and corruption
  • Asset misappropriation
  • Accounting and financial statement fraud

According to the latest reports, 4,786 economic crimes were reported to the police in Kenya in 2019. However, only 58% of respondents had experienced some form of economic crime in the last 24 months. Kenya was ranked 124th in Transparency International’s Corruption Perception Index 2020.

To tackle these economic menaces, Kenya has put in place the following legal and institutional frameworks:

  • Ethics and Anti-Corruption Commission Act, 2011 (EACCA)
  • Ethics and Anti-Corruption Commission
  • Kenya Anti-Corruption Commission (KACC)
  • Anti-Corruption Police Unit
  • Central Bank of Kenya Act
  • Ministry of Justice and Constitutional Affairs
  • National Anti-Corruption Campaign Steering Committee
  • Privatisation Act, 2005
  • Public Audit Act, 2003
  • Government Financial Management Act, 2004
  • Public Procurement and Disposal Act, 2005
  • Office of the Director of Public prosecution

Successes and Challenges in Enforcing the Law

The Ethics and Anti-Corruption Commission (EACC), although introduced in 2003, had a successful case against Kenya’s former head of the Port Authority in 2008. The EACC has recorded a 100% success rate in five cases, recovery of an estimated USD 6.4 million.

While these frameworks have had successes, they have also faced challenges. The constitutionality of Section 55 of the ACECA, which deals with unwanted wealth and its forfeiture, was questioned in Stanley Mombo Amuti v KACC due to potential violations of the provisions in Articles 20, 25(c), and 40(3) of the Kenyan Constitution (2010).

Unexplained assets recovery proceedings have been contentious, with allegations of violations of the constitutional right to a fair trial and the presumption of innocence.

Effective Tools in Targeting Corruptly-Gained Assets

Despite the challenges, civil unexplained wealth legislation can be an effective tool to target assets gained through corrupt means. In EACC v Patrick Ochieno Abachi, the Court ordered the confiscation of several bank accounts, properties, and plots of land belonging to the Respondent.

The Goldenberg Scandal: A Stumbling Block in Kenya’s Fight Against Financial Corruption

A major issue hindering Kenya’s fight against financial corruption is the Goldenberg Scandal, a political scandal involving high-level Kenyan government officials during the 1990s. The authorities subsidized gold exports, leading to the loss of over 10% of the country’s annual Gross Domestic Product. Although those involved were prosecuted, the Constitutional Court’s ruling concerning one defendant created a loophole, perpetuating injustice and hindering the effectiveness of the law.

Recent Developments and Future Prospects

In the most recent development, the Ethics and Anti-Corruption Commission (EACC) linked three governors and a sitting County Boss to unexplained wealth totaling Sh 11 Billion, nearly half of the Sh 25 Billion unlawfully acquired by public servants over the past 5 years.

As cases continue to be investigated and make their way through the courts, there is hope for resolution with judges and prosecutors becoming more familiar with the relevant laws. The skill of law investigators is growing, making the fight against corruption in Kenya stronger each day.