Republic v Wakhungu & 2 others (Anti-Corruption Case 31 of 2018) (Anti-Corruption and Economic Crimes) [2020] KEMC 9 (KLR)
The bottom line
#A Kenyan court convicted Erad Supplies and its directors for using a forged invoice to win a Ksh 297 million payment from the National Cereals and Produce Board.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the elements of uttering a false document have been satisfied
- 2.Whether the elements of perjury have been satisfied
- 3.Whether the accused persons fraudulently acquired public property
- 4.Whether the defence raised reasonable doubt to the prosecution's case
- 5.Whether they were two or three directors of the 3rd accused
- 6.Whether the accused are to be held liable for legal fees incurred by the advocates
- 7.Whether the 3rd accused is criminally liable
- 8.Whether PEX 43 was a genuine document
Key legal issues
#Whether the 1st accused uttered a false document (invoice PEX 43) in the arbitration
Convicted on count 1; the court found PEX 43 did not emanate from Chelsea Freight and was a fraudulent document made in support of a fictitious storage claim
PW22, a director of Chelsea Freight in charge of invoice issuance, disowned the invoice; the court found him truthful. The letters between the 3rd accused and Chelsea Freight were not put to PW22 and were found unreliable or made up. The 1st accused produced the invoice before the arbitrator with knowledge it was false. The 2nd accused was exonerated by the investigating officer's evidence that he did not testify in the arbitration, and the 3rd accused, being a juristic person, was held incapable of committing the offence of uttering.
Whether the 1st committed perjury in her arbitration testimony
Convicted on count 2 - she gave false testimony on oath before the arbitrator regarding the storage claim supported by the false invoice
The arbitration was a judicial proceeding and the 1st accused testified on oath relying on PEX 43. Having found the invoice false, the court found she knowingly lied on the false storage claim. Her evidence was internally inconsistent as to how she obtained the invoice (from Jacob Juma versus receipt via DHL), showing evasiveness on its provenance.
Whether the accused fraudulently acquired public property under ACECA (counts 3, 4 and 5)
All three accused convicted on counts 3, 4 and 5 - the payments of Ksh 297,086,505, Ksh 13,364,671.40 and USD 24,032 flowed from a claim founded on a fraudulent invoice
Undisputed evidence showed garnishee payments out of NCPB accounts to the advocates and onward to the accused (Ksh 40M to the 1st accused, Ksh 50M to the 2nd accused). Since the arbitration award for storage was based on a false invoice, the award lacked credibility and the money received was fraudulently acquired public property. The accused, as directors who benefited and controlled the company, were liable notwithstanding that payment was effected through court orders.
Whether Jacob Juma was a director at the material time
The court accepted the company registry records showing Jacob Juma resigned in 2006, leaving the 1st and 2nd accused as directors in charge
Official CR13 and form 203A records showed the resignation in 2006 and redistribution of shares. No bank evidence supported the defence claim that Jacob Juma received Ksh 113 million. The accused were found to be the co-directors responsible for utilisation of the money, and their attempt to shift blame to the deceased Juma and the advocates was rejected as a late cover-up.
Criminal liability of the 3rd accused (a corporation)
The 3rd accused is liable on counts 3, 4 and 5 but exonerated on count 1
Relying on corporate criminal liability principles, the court held a company may be convicted where an alternative punishment exists. Since the directors' decision to rely on the invoice and pursue the fraudulent claim was the company's act, the company was directly involved in the offences in counts 3-5. However, given the nature of uttering (requiring personal utterance), the 3rd accused was accorded the benefit of doubt on count 1.
Whether the failure to issue a letter of credit excused the accused
No - NCPB's breach gave rise at most to a civil remedy, but the accused crossed the civil line by adducing a false document
The court accepted that the failure to open the letter of credit infringed the contract and that the 3rd accused was probably entitled to some civil remedy. However, instead of pursuing termination under clause 8 or civil recovery, the accused fabricated a storage claim supported by a false invoice, converting a contractual dispute into fraud.
Legal principles established
#- Guilt must be the only rational inference from the evidence; if any reasonable possibility consistent with innocence exists, the accused must be acquitted
- The burden of proving a criminal charge beyond reasonable doubt lies on the prosecution and does not shift
- Directors' decisions are deemed the decisions of the company and the company is bound by its agents within the scope of their mandate
- A corporation may bear criminal responsibility where an alternate punishment is available
- Accused persons are liable for their advocates' conduct as principals for their agents' actions
Court orders
#- 1.Count 1: The 1st accused is found guilty and accordingly convicted; the 2nd accused is found not guilty and acquitted under section 215 of the CPC; the 3rd accused is found not guilty and acquitted under section 215 of the CPC
- 2.Count 2 (perjury): The 1st accused is found guilty and accordingly convicted
- 3.Counts 3, 4 and 5 (fraudulent acquisition of public property): The 1st, 2nd and 3rd accused are found guilty and accordingly convicted
- 4.Both the 1st and 2nd accused to be remanded in custody (Kileleshwa Police Station) pending mitigation and sentencing on 25th June 2020 at 2:00 pm
- 5.The defence team as well as immediate family members to be accorded access to the 1st and 2nd accused for documents/medical reasons; the accused may be accorded medical treatment under supervision
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original criminal jurisdiction of the magistrates' court under the Penal Code, ACECA 2003 and the Criminal Procedure Code
Relief refused
#Prosecution's application under Section 212 of the CPC to call rebuttal evidence (Mr Leon Alfred Maynard)
It would reopen the prosecution case and the investigation; the witness had not been interrogated nor recorded a statement, and no new matter had been introduced in the defence
Defence prayer to continue on bond pending sentencing
The presumption of innocence had been removed upon conviction; the accused are now convicts
Defence prayer for seven days to prepare mitigation
Court found mitigation should be tendered on a near date given the pendency of the judgment
Costs
No costs order - criminal case; the judgment contains no costs order.
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.
Count The 1st accused is found guilty and accordingly convicted
The 2nd accused is found not guilty and acquitted under sec 215 of the CPC.
Count The 1st, 2nd and 3rd accused found guilty and accordingly convicted
Count The 1st, 2nd and 3rd accused are found guilty and accordingly convicted.
the court is convinced that PEX 43 did not emanate from Chelsea Freights as such it was a fraudulent document made by the defence in support of a fictitious claim for storage charges.
the accused committed an ofience in availing a false invoice which was relied upon in the award hence that award lacks credibility since it arose out of a fraudulent document.
This court is satisfied that the 1st and 2nd accused were the directors in charge of the operations of the 3rd accused and they were not helpless as they wish the court to believe.
The matter is fixed for mitigation and sentence on 25th June at 2:00 pm. Both 1st and 2nd accused to be remanded at Kileleshwa Police Station until then.
Issues in the judgment
#Charge sheet framing inconsistency: count 1 is charged under section 353 as read with section 349 of the Penal Code, but the judgment in paragraph 194 refers to 'Section 53(a) read with section 59 of the Penal Code'
Inconsistent figures for the garnishee payment from KCB - the charge particulars and judgment variously state Ksh 297,086,505, Ksh 297,386,505 and Ksh 297,386,550
The court framed seven (7) issues but listed eight items
Inconsistency in the amount alleged received by Jacob Juma - the 2nd accused testified Ksh 113 Million while elsewhere the same witness states Ksh 113 million and Ksh 100 million figures attributed to Jacob Juma's self-payment
Judgment recites the interest start date inconsistently - the award is elsewhere stated as interest from 27/10/2007 and 27/10/2004 but the summary paragraph states 27/10/2009
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Republic v Wakhungu & 2 others (Anti-Corruption Case 31 of 2018) (Anti-Corruption and Economic Crimes) [2020] KEMC 9 (KLR)", Case Analysis (2020). Not stated in the judgment (Anti-Corruption Court criminal case). Source: https://new.kenyalaw.org/akn/ke/judgment/kemc/2020/9/eng@2020-06-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.