Court raises red flag over asset recovery billions

A judge has directed the Treasury to fast-track regulations to operationalise the Criminal Recovery Fund. PHOTO | SHUTTERSTOCK

A judge has directed the Treasury to fast-track regulations to operationalise the Criminal Recovery Fund following fears that monies forfeited to the government might fall into the wrong hands while being held at a bank account operated by the Assets Recovery Agency (ARA).

High Court judge Nixon Sifuna noted that the millions of shillings that are preserved and later forfeited to the government every year end up in a KCB bank account and not the Consolidated Fund.

According to Justice Sifuna, depositing the money with the State agency is a grave omission and an anomaly.

“Since all such previous forfeitures are untraceable to the Consolidated Fund, they are like proverbial low-lying fruits susceptible to larceny by those with an affinity and appetite to the theft of public funds,” the judge said.

Read: Kenya tracks Nigeria dirty cash, seizes Sh15 billion

The judge directed Cabinet Secretary Treasury Njuguna Ndung’u to fast-track the regulations and forward them to Parliament for approval so that the Criminal Recovery Fund can be operationalised.

He said a progress report should be filed in court within six months.

Justice Sifuna made the directive when he ordered the forfeiture of $28,000 (about Sh3.9 million) recovered from Nigerian Peter Oluwafemi Olaiwon in November 2021.

The Nigerian is currently serving a three-year jail term at Industrial Area Prison after he was found guilty of two counts related to money laundering.

Justice Sifuna directed the chief executive officer of the ARA to ensure that the money, which had been preserved at the KCB bank account since 2021, is transferred to the Treasury within seven days from the date of the judgment and file an affidavit confirming the transfer.

“In the intervening period between now and the time when the said Fund is operationalised, all monies that courts order to be forfeited to the government shall be paid into the National Treasury,” Prof Sifuna added.

The agency had preserved more than Sh15 billion in the last two years suspected to be proceeds of crime.

Part of the billions have been released after the agency withdrew the forfeiture applications and in some instances, successfully petitioned for the money to be forfeited to the government.

A source who asked not to be named said the account at KCB is only a holding account, for preservation purposes.

The agency can only transfer the money that has been forfeited to the State after the owner has exhausted the appeals, the source added.

Justice Sifuna, however, said there is a need to put in place safeguards to ensure such holes are plugged and the funds, assets and properties forfeited to the government are insulated and kept out of reach of further corruption, misappropriation or further money laundering.

The judge further directed the agency to submit to the Auditor-General a report detailing a list and particulars of all monies, assets and property it is holding under preservation and forfeiture orders.

“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 Treasury so that it is available for the common benefit of all Kenyans,” he said.

Section 109 of the Proceeds of Crime and Anti-Money Laundering Act (Pocamla) establishes the Criminal Assets Recovery Fund.

Section 110 of the Act defines the monies and property to be sent to the said Fund as including all property and monies derived from the confiscation and fulfilment of forfeiture orders.

Further, section 113 mandates the Treasury CS to issue regulations to operationalise the Fund. But to date, no regulations have been issued by the CS to Parliament for passing, the judge said.

“This court as the anti-corruption court cannot ignore its duty to protect public resources and public funds, such as the monies, assets and property whose forfeiture to the government it frequently orders,” he said.

The judge wondered what happens to the interest earned pending forfeiture, and whether the funds are audited by the Auditor-General or Parliament oversight reports.

The money in the Oluwafemi case was shipped to the country from South Carolina, USA and concealed in a jacket.

According to the ARA, the money is suspected to be proceeds of crime as the Nigerian came to Kenya in October 2021.

He was arrested when he went to the City Square post office to pick up the suitcase, which had been disguised as clothes and books, to conceal the money.

Evidence tabled in court showed that he visited Kenya in October 2021, a month later in November, he was sent a parcel from South Carolina by Linda Dye, who was said to be a sister to his mother. The parcel contained six books, 7 T-shirts and one jacket.

The agency told the court that the Nigerian was an accomplice of Linda Dye and there was reasonable suspicion that he was involved in a money laundering scheme.

Mr Oluwafemi, however, said the money was sent to him in good faith by MS Dye to help him invest and earn a living given his youthful age.

He said Ms Dye had no criminal record in the US and the money was sent to him in a parcel because he did not have a bank account in Kenya. He had stayed in the country for about 35 days, he added.

Read: Judge fumes at ‘notorious’ ARA case withdrawals

As to why the money was sent to Kenya and not Nigeria, the convict said he wanted to start a hotel business in Eastleigh, Nairobi.

The judge said Mr Oluwafemi’s response left more questions than answers and was unhelpful.

“The evidence he has offered for his claims is highly doubtable and unconvincing, hence he has failed to persuade this court to believe him,” the judge said.

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