Recovery agency loses steam in graft and money laundering fight

Deputy President Rigathi. [Mose Sammy, Standard]

According to ARA, the DP's personal accounts conducted a series of huge and suspicious debit transactions amounting to Sh7.3 billion and a total credit of Sh12.5 billion between 2013 and 2020 which they suspected to be proceeds of crime.

Having argued and proved their claim, High Court judge Esther Maina, in July last year, ordered Gachagua and his business associate Anne Kimemia, trading as Jenne Enterprises Ltd, to forfeit the Sh202 million to the state for being proceeds of crime, acquired through corruption.

Change of heart

According to the judge, ARA had proved beyond any reasonable doubt that the DP and his associate engaged in corrupt practices and acquired millions which they could not explain.

However, in a swift change of heart, ARA disowned its own evidence that had convinced the High Court to declare the funds as proceeds of crime. The agency later told the Court of Appeal to give the money back to Gachagua and his associate.

The agency claimed it had been misled by the Director of Criminal Investigations to believe the DP's funds were proceeds of crime, a revelation that put the High Court in a fix as questions were raised on the kind of evidence the judge relied on to make the forfeiture order.

When the matter came before the Court of Appeal, judges Daniel Musinga, Imaana Laibuta and Grace Ngenye had no option but to drop the case after adopting the deal between the DP and ARA to withdraw the case.

"The court adopts the consent in terms of the agreement reached by the parties and signed on January 19 which will be marked as an order of the court. The matter is marked as settled," ruled the judges.

The parties agreed to have the decision of the High Court declaring the funds as proceeds of corruption set aside and the forfeiture orders overturned, allowing Gachagua and his trading partner to access their forfeited cash. Flutterwave Payment Technology Limited, alongside Boxtrip Travels and Tours Limited, Bagtrip Travels Limited, Elivalat Fintech Limited, Adguru Technology Limited, Hupesi Solutions and Cruz Ride Auto Limited, were the next beneficiaries of ARA's change of heart.

62 accounts frozen

The High Court froze the Nigerian companies' 62 bank accounts at Guaranty Trust Bank, Equity Bank, EcoBank, Kenya Commercial Bank and Co-operative Bank, with Sh6.5 billion, following an application by ARA claiming they are involved in card fraud and international money laundering.

ARA argued the Nigerian companies received billions in different denominations of Kenya shillings, US dollars, Euros and Sterling pounds, in a suspected scheme of money laundering where the money was deposited in different bank accounts to conceal the nature and source.

ARA disowned its own evidence that had convinced the High Court to declare the funds as proceeds of crime. [iStockphoto]

The state agency claimed the companies failed to explain and provide supporting documents to prove the source of the funds. This made ARA conclude the firms are a vehicle used by money launders to move illicit funds.

But in the new twist, ARA told the court they are not willing to proceed with the forfeiture application and sought withdrawal of the case after negotiations to settle the matter out of court.

"We have filed a notice of withdrawal since we do not intend to proceed with the matter. We are asking that the companies' accounts, which were frozen, be unfrozen so that they can access their money," ARA told the court.

The High Court ruled that since ARA was not interested in pursuing the case, it ordered that the matter be withdrawn and the companies allowed to get back their frozen Sh6.2 billion.

The second batch of Nigerian start-up companies of Avalon Offshore Logistics Limited, OIT Africa Limited and RemX Capital Limited also got back their Sh5.7 billion which had been frozen after ARA filed a notice to withdraw the case.

According to ARA, the three companies were suspected to have siphoned more than Sh25 billion from foreign jurisdictions between October and November last year and they only got wind of the illegal transactions when the accounts were having a balance of Sh5.7 billion.

ARA claimed OIT Africa had Sh4.9 billion in its three accounts at Equity Bank and United Bank for Africa (UBA) bank, RemX Capital Limited had 787 million in its dollar account at UBA Bank while Avalon Offshore Logistics Limited had Sh43.5 million in its two accounts at Equity Bank.

Proceeds of crime

"The money was mainly from a foreign jurisdiction and when we summoned the directors, they could not explain their sources which made us believe they are proceeds of crime liable for forfeiture to the state," said ARA.

However, before the High Court could start hearing the application, to have the funds forfeited to the state, ARA changed the course and filed a notice to withdraw it.

The agency told the court it had signed consent with the companies to settle the matter out of court. They, however, did not tell the court whether the companies had explained the sources of their funds to justify the withdrawal.

Whereas the agency filed volumes of documents showing money trails to prove that the proceeds were acquired through money laundering, they did not file subsequent outcomes of negotiations to explain whether the amounts were clean money.