Why court ruled ARA can't go after assets without clear evidence

On the eve of Christmas last year, the Court of Appeal handed a judgment in a case pitting Asset Recovery Agency (ARA) against a wife to Kenya Revenue Authority (KRA) official.

Perhaps owing to the festive mood, the judgment dated December 15, 2023, went unnoticed despite its importance to how the agency should handle money laundering cases.

ARA had successfully secured an order requiring Mapela Aboo to forfeit Sh19.6 million to the State before the High Court.

It linked Aboo's money to her husband and some businessmen as the sole reason it suspected she was laundering money.

Justice Hedwig Ong'udi found that she ought to explain the source of the huge deposits, which the judge considered suspicious.

However, in a two-majority judgment, Court of Appeal Judges Mohamed Warsame and Hannah Okwengu ruled that ARA should have provided evidence that Aboo had gotten the money from criminal conduct or intended to use it for a crime.

The court ordered that the money should be returned to the owner.

The judges observed that it would be dangerous for the government to seize its citizens' properties and money without following the right procedure and providing cogent evidence.

"The coercive powers of the State must not be allowed to override the rights and interests of innocent citizens. It is the duty of State agencies to demonstrate that the trophy is a benefit of undue, unjustly or unlawfully obtained by the appellant," ruled Justice Warsame.

Justice Okwengu found that High Court Judge Hedwig Ong'udi had erred in finding that Aboo had unexplained assets.

According to the judge, under the Anti-Corruption and Economic Crimes Act (ACECA), the concern is about explaining the disproportion between one's assets and money , and the known legitimate source of income (unexplained assets).

She observed the Proceeds of Crime and Anti-money Laundering Act (POCAMLA) should only be applied where the assets or money were proceeds of crime or were intended for the commission of an offense.

The judge stated that ARA cannot use POCAMLA to go after persons with unexplained assets.

Justice John Mativo dissentingly found that ARA needed only to place its claim against the accused and leave her to provide evidence that the money was unexplained wealth.

According to Mativo, Aboo let the golden opportunity slip through her fingers. He stated that courts are there to sieve the two stories and decide whether money or assets should be forfeited, depending on either side's weight of persuasion. "The only qualification to the issuance of the order is that the court shall give any person with an interest in the property the opportunity to be heard as to why the order should not be made if there is a serious risk of injustice to any person," he said.

According to Justice Mativo, although the constitution provides for a property right, no one should be allowed to benefit from wrong-doing.

In the case, ARA claimed that the money was deposited in cash and was on behalf of Aboo's husband, Alex Mukhwana.

Aboo said it was unfair for the court to shift the burden of proving that she had clean money instead of requiring ARA to prove otherwise.