The Assets Recovery Agency (ARA) has been stripped of the function of holding forfeited cash.
High Court judge Nixon Sifuna on Friday said most of the money recovered from proceeds of crime end up being misappropriated hence the need to channel the money to Treasury.
While issuing the orders, the judge noted that before a court decrees forfeiture, it needs to caution itself of an unguided forfeiture order that does not bother to ascertain whether money forfeited to the government arrives at its destination.
Sifuna said the destination of the forfeited funds is the Consolidated Fund, which is at the National Treasury.
“I am of the view that rather than this money being transferred to the Assets Recovery Agency, it be transferred directly to the Consolidated Fund through the National Treasury so that it is available for the common benefit of all Kenyans,” he stated.
The judge noted that forfeitures do not make it to a central government fund such as the Consolidated Fund.
The judge issued the orders following a case filed by the Asset Recovery Agency against Peter Oluwafemi Olaiwon.
The agency in the suit wanted the court to issue orders declaring as proceeds of crime and liable for forfeiture to the government $28,000 (approximately Sh3.9 million) recovered from Olaiwon.
Olaiwon, a Nigerian, is serving a three-year at the Industrial Area Prison.
Court documents indicate Olaiwon had visited Kenya in October 2021. A month later, in November, while still in Kenya, a parcel was sent to him from South Carolina, in the US, by one Linda Dye, whom he (Olaiwon) said is his aunt.
The parcel, which contained six books, seven T-shirts, and one jacket, was marked to be collected by him at Kenya Post Office.
On November 5, 2021, when he presented himself at the Kenya Post Office City Square Branch counter to collect the parcel, he was arrested by the police when the jacket was opened.
The jacket was found to be containing $28,000. The agency held that the money was proceeds of crime.
Olaiwon opposed the application, saying the money was sent to him to start a business.
The Nigerian said he came to Kenya to start a hotel business in Eastleigh Estate.
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The court noted that the explanation offered by the Nigerian in his replying affidavit created more doubt than the application itself.
The judge noted that Olaiwon failed to demonstrate the genuineness, purpose and legitimacy of the funds.
The court questioned why such a huge sum of money was conveyed in a parcel, instead of being sent through banks or other money transfer institutions.
Sifuna crafted orders that he considered necessary to facilitate the transfer of the said $28,000 to the government.
“Since all such previous forfeitures are untraceable to the Consolidated Fund, they are like the proverbial low-lying fruits susceptible to larceny by those with an affinity and appetite for theft of public funds,” he stated.
He said the $28,000 be transferred from the Assets Recovery Agency Bank Account No. 1240221339 Kenya Commercial Bank Limited, KICC Branch, to the National Treasury within 30 days.
He said ARA’s CEO shall within seven days, ensure the $28,000 is transferred to the National Treasury. He ordered the CEO to file an affidavit confirming the transfer and providing documentary proof.
Upon the money being received at the National Treasury, the Principal Secretary shall within seven days from the date the funds are received, file an affidavit in this suit confirming and acknowledging receipt of the said money, and the same transmitted to the Consolidated Fund.
The judge said in the intervening period between now and the time when the Criminal Recovery Fund is operationalised, all monies that courts order to be forfeited to the government shall be paid to the National Treasury.
He said upon the operationalisation of the fund, the Assets Recovery Agency shall within 90 days, transfer to the fund all the preserved and forfeited assets, and property, and all the monies as shall be on its bank.
The Assets Recovery Agency was directed to, within 45 days from the date of the judgment, submit to the Auditor General, a report detailing the list and particulars of all the monies, assets and property it is holding under preservation orders and forfeiture orders.
The judge directed that the suit be mentioned on February 7, 2024, to confirm compliance with the orders.
At the same time, he ordered Treasury Cabinet secretary to speed up the operationalisation of the Criminal Recovery Fund regulations.
Sifuna noted that Kenya has no Proceeds of Crime and Anti-Money Laundering (POCAMLA) Regulations and the Criminal Assets Recovery Fund has not yet been operationalised.
“To date, no regulations have ever been issued by the CS to Parliament for passing, hence Kenya has no POCAMLA Regulations, and the Fund (Criminal Assets Recovery Fund) has not yet been operationalised, and neither is it in actual existence. It exists only on paper in the Act,” noted Justice Sifuna.