In a judgment delivered on Friday, a five-judge bench led by Chief Justice Martha Koome dismissed appeals by the Ethics and Anti-Corruption Commission (EACC) and the Assets Recovery Agency (ARA), upholding a Court of Appeal decision in Aboo’s favour, whose three Equity Bank accounts holding a total of Sh19,688,152.35 had been targeted for forfeiture by the State.

Aboo, who is the spouse of a former Kenya Revenue Authority (KRA) employee, had contested the attempted forfeiture of the funds, which investigators alleged were proceeds of crime.

The Supreme Court affirmed that investigators must establish a clear link between suspected criminal activity and any property targeted for forfeiture under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).

At the centre of the dispute were three Equity Bank accounts at the Donholm branch containing a combined Sh19,688,152.35.

The ARA moved to recover the funds after receiving information in March 2017 that the money was suspected to be proceeds of crime.

The agency linked the funds to Aboo’s husband, Alex Mukhwana Khisa, then a KRA officer who had been investigated over allegations that he solicited bribes from clearing and forwarding agents.

However, the EACC’s parallel investigations into Khisa were later closed, while preservation orders obtained against him were vacated in January 2018.

In response to inquiries on the source of the funds, Aboo said the money came from her businesses dealing in agricultural produce, transport, perfumes and cereals. She also provided investigators with the identities of her business associates

The Supreme Court found that the agencies failed to sufficiently investigate or challenge her explanation.

“Instead of discounting the respondent’s explanation by investigating these sources, all the 2nd appellant stated in rebuttal was that the respondent had not produced any receipts to back up her claim,” CJ Koome led bench said

The bench held that an element of crime must form the basis of any forfeiture proceedings.

“A reading of the foregoing provisions leaves no doubt that an order for forfeiture under POCAMLA can only be made against property which, in one way or another, is associated with the commission of a crime, or is a proceed of crime. The incidence of crime remains central to such forfeiture proceedings,” the court held.

“It is therefore a requirement that the ARA has to establish a nexus between the subject matter of forfeiture and a crime or its intended commission when seeking an order of forfeiture.”

The judges noted that the agencies’ suspicions were largely based on the existence of substantial amounts of money in Aboo’s accounts and allegations previously made against her husband.

They questioned the evidence linking the funds to criminal activity.

“What is there on record to show that the monies in question were obtained by Aboo as a result of an offence or criminal activity?” the judges asked.

They added: “Where is the evidence on record to support such an allegation by the very institution that closed further investigations into the accusations of bribery against the respondent’s husband? Where is the incidence of crime in the entire chain of events that triggered the forfeiture proceedings?”

The Supreme Court further held that where an agency alleges that property constitutes proceeds of crime generated by a third party, that person should be joined in the proceedings.

“We are of the considered view that the requirement for a nexus between the impugned property and the alleged criminal conduct under the forfeiture scheme in POCAMLA makes it critical that the person alleged to have generated the proceeds of crime, in this case, the respondent’s husband, ought to be joined to the proceedings,” the court stated.

The ruling is expected to shape future civil asset recovery proceedings by clarifying that although forfeiture cases are civil in nature, investigators must still demonstrate a connection between property and criminal activity before assets can be seized by the State.

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Justice Nixon Sifuna of the Anti-Corruption and Economic Crimes Division ruled that the agency failed to prove the funds were proceeds of crime.

The judge added that the agency’s investigations were “rash, selective, and riddled with gaps,” and could not sustain a civil forfeiture claim.

He concurred with Sonko, stating that indeed he defended deposits as legitimate business and land sale proceeds.

ARA had argued that the deposits, spread across Sonko’s accounts at Equity Bank, Co-operative Bank and Diamond Trust Bank, were linked to corruption at City Hall and formed part of a “complex money laundering scheme.”

“The Motion states that there are reasonable grounds to believe that those funds are proceeds of crime. Reason for which the Motion has urged this Court to declare those funds proceeds of crime; and order that they be forfeited to the Kenya Government,” the judgment states.

In its case, ARA relied on an affidavit by Corporal Sautet Jeremiah, who claimed that between 2017 and 2019, Sonko’s accounts received “huge suspicious cash deposits and transfers” which were a “clear case of splitting, smurfing and placement of funds into the banking system.”

But the court criticised the agency for producing no statements from individuals allegedly involved in the flagged transactions and for only presenting bank records from August 2017, when Sonko became Governor.

“That selective approach is either dishonest or rash, oppressive and skewed to propound the Applicant’s narrative. It amounts to cherry-picking of data, as opposed to an objective consumption of the entire available data,” the judge ruled.

Sonko, in a replying affidavit dated November 7, 2023, dismissed the claims, saying he had legitimate business dealings long before entering politics.

The former governor through, Lawyer Harrison Kinyanjui cited earnings from matatus, nightclubs, restaurants, real estate and cyber cafes, as well as proceeds from land sales in Kwale and Kajiado worth hundreds of millions of shillings.

“I had for long had various income generating businesses, and it was normal and usual for my bank Accounts to receive huge cash deposits… I never at the time thought that I will later be called upon to explain these proceeds,” Sonko stated.

The judge found that ARA had not proved its case on a balance of probabilities as required under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).

“Investigation is not a pastime activity to be undertaken lazily, leisurely, lousily and rashly. It is a solemn duty for which the investigator is being paid,” the court stressed.

Consequently, the application was dismissed and the funds, totalling about Ksh26 million, remain under Sonko’s control.

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