Kiambaa & 3 others v Ethics and Anti-Corruption Commission; Equity Bank Limited (Interested Party) (Civil Appeal 464 of 2019) [2024] KECA 74 (KLR)
The bottom line
#Kenya's Court of Appeal ordered a former Nairobi treasurer and his family to pay or forfeit over KShs.113 million in cash plus seven properties their wealth could not explain.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.whether there was failure on the part of the court to observe the principle of stare decisis, leading to violation of the appellants' fundamental rights
- 2.whether the appellants had any 'unexplained assets' and, if the answer is in the affirmative, whether they gave sufficient explanation as to how they were acquired
- 3.whether the court erred in ordering forfeiture of the 'unexplained assets'
- 4.whether the court misdirected itself by finding that the appellants had given sufficient explanation on some of the 'unexplained assets'
- 5.whether the court erred by shifting the burden of proof to the appellants
- 6.whether the trial court was biased or inconsistent, thereby arriving at an erroneous judgement
- 7.who pays the costs of the appeal
Key legal issues
#Whether failure to issue notices before obtaining warrants violated the appellants' rights and the principle of stare decisis
The ground fails. Section 26 of ACECA is permissive and, per the Supreme Court in EACC v Prof. Tom Ojienda, notices need not precede warrants; no violation occurred and the notice issue was raised too late in the trial court.
The Court applied the binding Supreme Court decision that the Secretary's power to issue notices under Section 26 is discretionary, dependent on satisfaction that it will assist or expedite an ongoing investigation. Counsel only attempted to raise the issue at the tail end of trial proceedings, the application of 12th July 2019 was not even on the record before the appellate court, and the notice was issued during an ongoing investigation. Accordingly neither the rights-based nor the stare decisis argument could stand.
Whether the burden of proof was wrongly shifted to the appellants under Section 55 of ACECA
No. The Commission first discharged its legal burden of proving unexplained assets on a balance of probabilities; the evidentiary burden then properly shifted to the appellants, who failed to give a satisfactory explanation.
The Court traced the two-stage scheme of Sections 55(5) and (6) of ACECA and its own precedents in the Stanley Mombo Amuti litigation: the Commission must prove assets disproportionate to known income on a balance of probability; the court may then require the person to satisfy it that the assets were acquired otherwise than by corrupt conduct. This is a dynamic evidentiary burden consistent with Section 112 of the Evidence Act, not a reversal of the legal burden. The appellants' explanations for businesses and rental income lacked supporting documents.
Whether the appellants gave sufficient explanation for the impugned assets
No. Claims of farming, hotel, water, transport and quarry businesses and huge rental income were unsupported by receipts, invoices, tax returns or other documentary evidence, and the audited financial report was worthless.
The Court found that neither the 1st appellant's claimed businesses nor the 2nd appellant's beauty parlour and interior design business produced any evidence of sales, permits or tax returns. The 1st appellant's declared assets rose from about Kshs.1 million to Kshs.423 million within six years with no explanation, and substantial deposits were made by his own juniors at the County, including his bodyguard. The financial report relied on was neither supported by evidence nor produced by its maker, and was dismissed as a worthless piece of paper.
Whether the trial court erred in finding certain assets sufficiently explained (cross-appeal)
Yes. The trial judge erred in treating five listed properties as legitimately acquired; the cross-appeal succeeded and those properties were added to the list of unexplained assets liable to forfeiture.
The Court agreed with the respondent that the trial judge failed to interrogate the dramatic escalation of rental income from Kshs.600,000 to Kshs.95 million between 2009 and 2013, and that no evidence supported the businesses said to have funded the purchases. It therefore varied the High Court judgment to include the five contested properties plus L.R. No. 7785/818 in the unexplained assets, directing payment of their current market value or forfeiture.
Whether the trial court's computation of the unexplained cash was correct
Partly. The trial judge erred in fixing unexplained cash at Kshs.282,648,604; the correct figure, after deducting undisputed cash and the Kshs.11 million withdrawal, was Kshs.113,893,743.
The Court accepted the undisputed bank balances of Kshs.121,316,469 for the 1st appellant, Kshs.3,540,000 for the 2nd appellant and Kshs.37,274 for the 3rd appellant, totalling Kshs.124,893,743, and deducted the unchallenged Kshs.11 million withdrawal. It substituted that figure for the trial court's sum and directed joint and several payment or forfeiture. The appeal therefore succeeded only to that extent, while the cross-appeal succeeded on the properties.
Legal principles established
#- Notices under Section 26 of ACECA are permissive, not mandatory, and no court order or warrant is required before their issuance; the EACC Secretary may issue them where satisfied they will assist or expedite an investigation.
- In unexplained-assets forfeiture under ACECA, the Commission bears the legal burden of proving on a balance of probabilities that a person has unexplained assets; only then does the evidentiary burden shift to the person to give a satisfactory explanation, failing which forfeiture follows.
- Income and assets claimed to be legitimate must be supported by concrete documentary evidence; an unproven and uncorroborated financial report cannot displace a finding of unexplained assets.
Court orders
#- 1.Set aside the trial court's order requiring the 1st appellant to pay to the Government the sum of KShs. 282,648,604
- 2.Ordered and directed that the appellants do jointly and severally pay or forfeit to the Government of Kenya the sum of Kshs. 113,893,743, being the unexplained cash in their bank accounts
- 3.Allowed the respondent's cross-appeal and varied the judgment of the High Court to include seven listed properties (Maisonette No. 15 on L.R. No. 209/12742; Skyrock Apartments Block B Unit 11 L.R. No. 330/317; Apartment No. B1 Block B on L.R. No. 2/699; Apartment No. B5 Block B on L.R. No. 330/1310; Apartment No. B8 Block A on L.R. No. 330/1310; L.R. No. 7785/605; L.R. No. 7785/818) in the list of 'unexplained assets' liable to forfeiture
- 4.Ordered and directed payment by the appellants of the current market value of the listed assets or forfeiture in lieu of payment to the Government of Kenya of the current value of the said assets forthwith
- 5.Ordered that the costs of the appeal be borne by the appellants jointly and severally
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Anti-Corruption and Economic Crimes Case No. 1 of 2016
- Jurisdiction invoked
- First appeal to the Court of Appeal against the judgment of the High Court in an anti-corruption and economic crimes forfeiture suit under the Anti-Corruption and Economic Crimes Act (ACECA)
Relief refused
#Appellants' argument that notices under Section 26 of ACECA had to precede the obtaining of warrants, rendering the recovery process null and void
The Supreme Court in EACC v Prof. Tom Ojienda held the notice provision is permissive, not mandatory; no order or warrant was needed before issuance of notices
Appellants' reliance on the Tax Tribunal figure of Kshs.172,890,052 in place of the trial court's computation
The EACC's mandate to recover unexplained assets differs from the Kenya Revenue Authority's mandate to recover taxes; the two agencies may not arrive at similar outcomes
Appellants' claim that their audited financial report established their legitimate income
The report was unsupported by evidence and its maker was not called to testify
Appellants' allegation that the trial judge shifted the burden of proof
The respondent first proved unexplained assets on a balance of probabilities; only then did the evidentiary burden shift to the appellants, who failed to give a satisfactory explanation
Respondent's cross-appeal on tax-evaded quantum (inferred from the trial court's treatment), to the extent only the listed properties and unexplained cash were added
Cross-appeal allowed only in part, varying the judgment to add specified assets
Costs
The costs of the appeal be borne by the appellants jointly and severally.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
we hereby order and direct that the appellants do jointly and severally pay or forfeit to the Government of Kenya the sum of Kshs. 113,893,743, being the unexplained cash in their bank accounts.
We further order and direct the payment by the appellants of the current market value of the assets listed in Paragraph b above or forfeiture in lieu of payment to the Government of Kenya of the current value of the said assets forthwith.
The costs of the appeal be borne by the appellants jointly and severally.
The respondent had the obligation to prove beyond a balance of probabilities that the appellants were in possession of 'unexplained assets' and, if the court was so satisfied, only then would the evidentiary burden shift to the appellants to explain how those assets were acquired.
we view the said report as a worthless piece of paper unworthy of consideration by a court of law.
it is clear there was no need to obtain any order or warrants from the court before issuance of the notices and that the notices secretary to the respondent had the power to issue notices where he deemed necessary without recourse to court
Issues in the judgment
#The names of the individual appellants are never stated in the judgment; they are identified only as the 1st, 2nd, 3rd and 4th appellants, and the 3rd appellant only as Jimbise Limited.
The figure for the reduced 'unexplained assets' is inconsistently given as Kshs.575,121,611 in one passage and Kshs.575,121,811 in another.
The respondent is referred to variously as 'the respondent' and 'the 1st respondent', and the 2nd and 3rd appellants are once described as '2nd respondent' and '3rd respondent', suggesting drafting errors.
The appellants' counsel is recorded as relying on a stare decisis finding by 'this court' on ex parte warrants, yet the names and details of the cases condensed into the seven appeal issues are partially garbled in the text.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kiambaa & 3 others v Ethics and Anti-Corruption Commission; Equity Bank Limited (Interested Party) (Civil Appeal 464 of 2019) [2024] KECA 74 (KLR)", Case Analysis (2024). Not stated in the judgment text. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/74/eng@2024-02-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.