EACC Suffers Setback as Supreme Court Raises Threshold for Asset Forfeitures

The Supreme Court has raised the bar for state asset seizures, ruling that agencies mandated to combat graft must establish a link between property targeted for forfeiture and proceeds of crime.

A five-judge bench led by Chief Justice Martha Koome unanimously dismissed appeals by the Ethics and Anti-Corruption Commission and the Assets Recovery Agency seeking to forfeit KSh 19.7 million held in three Equity Bank accounts belonging to businesswoman Pamela Aboo.

The ruling followed the Court of Appeal’s decision to set aside forfeiture orders that had been issued in 2018.

“ARA is required to make a nexus between the subject matter of forfeiture and a crime committed or a crime intended to be committed when they apply to the Court for a forfeiture order,” judges of the High Court said.

Legal Standard for Asset Forfeiture: Proving the Nexus to Crime

They added that property can only be forfeited pursuant to the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) if such property was used in the commission of a crime, intended to be used in the commission of a crime, or proceeds of crime.

The judgment highlights a distinction in law between “dirty money” (derived from crime or linked to the commission of a crime or its intended commission), and “unexplained wealth,” two phrases that the State often employs in interchangeably in cases involving asset recovery.

“ARA is required to prove the nexus of crime and the subject matter of forfeiture on a balance of probabilities,” the Court ruled, stating that only to allude to a connection to crime is not enough.

It is required of the investigative agency to show the real linkage between the property that it is seeking to have forfeited and any alleged or intended crime committed.

“ARA must place before the Court credible evidence that satisfies the essential ingredients of the law,” judges of the high court explained. “The nexus between the property which is the subject of forfeiture proceedings and the incidence of crime cannot be dispensed with.”

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The Court’s Decision Regarding Insufficient Evidence of Crime Proceeds

On that basis, the court found no evidence to suggest that the Ksh 19.7 million received and spent by Ms. Aboo were used in a crime or that it was part of crime proceeds.

The case arose in 2017 following information received by the ARA that the accounts in question had been used to receive and remit suspected proceeds of crime.

Ms. Aboo had told investigators the funds were from business enterprises in transport, cereals, sugarcane, bananas, and perfumes in Mombasa and Busia, and even gave the names of individuals associated with these companies.

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In its judgment, the Court found that the investigators made no efforts to either disprove Ms. Aboo’s explanations or investigate them before moving to court to have the funds forfeited.

The court observed that Aboo’s husband, an official with Kenya Revenue Authority named Alex Mukhwana Khisa, has never been charged, adding that EACC, after filing the case, had dropped efforts to investigate allegations of bribery.

The ruling that Mr. Khisa should have been part of the case explained that the case presented by these agencies was largely dependent on the allegations of whether he generated the proceeds.

The judgment is expected to set precedence on upcoming asset recovery cases as it outlines what investigators need to demonstrate to justify the forfeiture of assets under the POCAMLA.

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A photo showing EACC integrity house. Photo/ EACC/ X