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How MP John Waluke forged his way to jail in maize scandal

 Sirisia MP John Waluke and his co-accused Grace Wakhungu at the anti-corruption court in Milimani on February 15, 2022. [Collins Kweyu, Standard]

In 2004, the country faced one of its most severe maize shortages which forced the government to order for urgent importation of maize to prevent an impending hunger crisis.

In a bid to cushion Kenyans from the biting hunger pangs, the government, through the National Cereals and Produce Board (NCPB), floated tenders for the urgent importation of 180,000 metric tonnes of maize.

Sirisia MP John Waluke and his business partner Grace Wakhungu, through their company Erad Suppliers Limited, found a great business opportunity and were among several companies that placed bids to import maize into Kenya.

However, what started as a benevolent business venture turned to be a corruption avenue leading to the loss of Sh313 million in public funds.

And now, Waluke and Wakhungu are going back to serve a combined 67 years' jail term should they fail to pay a fine of over Sh1.8 billion after High Court Judge Esther Maina dismissed their appeal against a magistrate's decision to convict them for fraudulent acquisition of public funds.

"The court has considered their appeals and finds that they have no merit and dismiss them. It was because of their forgeries that huge public money was lost from a public body. They will have to pay the fine or go back to jail to serve their full sentences," ruled Lady Justice Maina.

Justice Maina affirmed the decision by anti-corruption court chief magistrate Elizabeth Juma that there was overwhelming evidence to prove that the MP and his partner Wakhungu fraudulently acquired public funds without breaking any sweat.

She added that the sentences passed by the magistrate against the two who have been out on bail were not excessive, but were within the law to make them bear the consequences of their corrupt practices.

The magistrate had in June 2020 ruled that the prosecution proved its case beyond reasonable doubt and sentenced Waluke to 30 years in jail or a fine of Sh627 million, while Wakhungu was sentenced to 32 years or a Sh628 million fine. Their company was also fined Sh626 million.

"Having reviewed the evidence, the court finds that the case was proved beyond reasonable doubt. The invoice upon which they relied to claim the money from NCPB was a forgery. They presented the invoice to the arbitrator to claim the money while knowing it was forgery," ruled Maina.

Waluke and Wakungu will pay the price for pocketing Sh313 million through fraud which resulted from the tender where NCPB awarded contracts to five companies to supply 180,000 tonnes of maize in 2004.

Waluke and Wakhungu through their company Erad Suppliers and General Traders Limited were to supply 40,000 tonnes of maize from South Africa.

Whereas NCPB issued letters of credit to the other companies, it failed to do so to Erad Suppliers Ltd which led to a dispute and as per the contract, the dispute was referred to arbitration, where the company claimed that they lost millions of shillings for loss of business and storage charges.

The company claimed Sh297 million as the cost of importing the 40,000 metric tonnes of maize and an additional Sh114 million as cost for storage for their agent, Chelsea Freights Limited.

Waluke and Wakhungu presented an invoice to show they had incurred the costs and after listening to both parties, the sole arbitrator Evans Thiga ruled in favour of their company and awarded it compensation for losses and storage fees.

The arbitrator found that NCPB was in breach of the contract and ordered that Erad Suppliers Ltd be paid Sh313 million plus 12 per cent interest for five years for loss of profit and storage charges.

NCPB challenged the arbitration award but their cases were dismissed by two High Court judges. This gave the company leeway to attach money in the state agency's accounts and after paying debts and lawyers, Waluke received Sh40 million while Wakunghu got Sh40 million.

As a result of the payments, the Ethics and Anti-Corruption Commission (EACC) launched investigations into allegations that the money was fraudulently obtained through use of forged invoices.

Upon perusing the file, the Director of Public Prosecutions (DPP) in 2018 acknowledged the charges against the company directors.

Waluke, Wakhungu and their company faced a total of five charges ranging from uttering false documents and fraudulent acquisition of public property.

On June 25, 2020, the anti-corruption court ruled that the prosecution had proved all the counts, ruling that Waluke and Wakhungu took advantage of a dire situation when millions of Kenyans were facing starvation to illegally enrich themselves.

In counts one and two of perjury and uttering false document which Ms Wakhungu faced alone, the magistrate sentenced her to two years in jail or a Sh200,000 fine.

Both Wakhungu and Waluke faced count three of fraudulent acquisition of public property where they were sentenced to three years or a fine of Sh500,000 each.

The magistrate however stated that since NCPB lost Sh297 million in the process, she ordered the two to pay a fine of Sh594 million each, being twice the amount lost, or serve an additional seven years in jail.

In count four, they were again found guilty of fraudulent acquisition of public property and fined Sh500,000 each or three years imprisonment each.

In count five of fraud, the court considered that NCPB lost Sh13.3 million and ordered the convicts to pay a fine of Sh26.7 million each or serve seven years in jail each.

They were to pay an additional Sh500,000 fine each or serve three years each for conspiracy to defraud. The court further found that since NCPB lost another USD24,032 for the storage charges, the magistrate ordered that the convicts pay twice the amount of USD48,064 (Sh5.8 million) as fine or serve another seven years in jail.

In total, Waluke was sentenced to serve 30 years in jail or pay a fine of Sh627 million, while Wakhungu is to serve a total of 32 years in jail or pay a fine of Sh628 million. Their company, Erad Suppliers Ltd, was also fined a total of Sh626 million.

However, they appealed against this decision, arguing that the magistrate was put under undue pressure and that the conviction and sentence were unlawful on the basis that there was no evidence to justify the findings of guilt.

Their lawyers Paul Muite, Elisha Ongoya and Duncan Okubasu argued that the money paid to Erad Suppliers Ltd was pursuant to an arbitration award which was affirmed by the High Court and has never been challenged by NCPB.

According to the lawyers, the magistrate erred by ignoring a pertinent, admitted and common ground that the payments were premised on arbitration award and that the convicts did nothing wrong for demanding what was due to them.

Although the basis of convicting the two was on the forged payment voucher, the lawyers argued that a crucial witness who would have shed light on the invoice did not testify after the prosecution's last attempt to call him was declined.

They added that the magistrate erred by imposing an illegal long sentence based on a defective charge sheet and shifted the burden of proof to the accused instead of the prosecution.

But Justice Maina ruled that the invoice presented by Wakhungu was proved to be a forgery and that the sentences were lawful.

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