Asset Recovery Agency v Cullinan Private Jets Corp & others & 2 others

USD 24,712.61 held in Account Number 6658001882 in the name of Glo Jet International Limited held at Ecobank Bank Limited. KES 1,134,691.33 held in Account Number 6658001881 in the name of Glo Jet International Limited held at Ecobank Bank Limited. ii. That this honourable court be pleased to issue orders of forfeiture of the following funds to the applicant;USD 54,257.85 held in Account Number 01904057361250 in the name of Cullinan Private Jets Corp held at I & M Bank.KES 696,070.70 held in Account Number 01904057361250 in the name of Cullinan Private Jets Corp held at I & M Bank.USD 24,712.61 held in Account Number 668001882 in the name of Glo Jet International Limited held at Ecobank Bank Limited.KES 1,134,691.33 held in Account Number 668001882 in the name of Glo Jet International Limited held at Ecobank Bank Limited. i. That this honourable court be pleased to issue an order that the above funds be forfeited to the state and transferred to the Assets Recovery Agency. ii. That this court do make any other ancillary orders it considers appropriate to facilitate the transfer of the property forfeited to the government. iii. That costs be provided for. 2. The application is premised on the grounds that on August 25, 2023 the agency received information that I&M Bank account numbers 01904057361250 and 01904057366250 and Eco Bank Limited Bank account numbers 6658001882 and 6658001881 were holding funds suspected to be proceeds of criminal activities and money laundering. 3. In execution of its mandate under section 53, POCAMLA, in identifying, tracing, freezing and recovering proceeds of crime, the agency opened an inquiry file no 85/2023 to investigate the source of the funds in the accounts. On August 25, 2023 the agency obtained orders to conduct investigations vide Misc Application Number E150 of 2023 and the investigations revealed that the said bank accounts received suspicious huge cash deposits from various suspicious sources to create reasonable ground to believe that the funds were obtained through illegitimate means. 4. The application is supported by the affidavit sworn by Alfred Musalia, an investigator with the agency, sworn on December 18, 2023 which reiterates the grounds on the face of the application then adds that their analysis of the accounts established that the following accounts are holding funds which were obtained from illegitimate sources and are reasonably believed to be proceeds of crime; 5. i. USD 54,257.85 held in Account Number 01904057361250 in the name of Cullinan Private Jets Corp held at I & M Bank. ii. KES 696,070.70 held in Account Number 01904057361250 in the name of Cullinan Private Jets Corp held at I & M Bank. iii. USD 24,712.61 held in Account Number 668001882 in the name of Glo Jet International Limited held at Ecobank Bank Limited. iv. KES 1,134,691.33 held in Account Number 668001882 in the name of Glo Jet International Limited held at Ecobank Bank Limited. He added that on August 6, 2023, together with other investigators, he recorded the statements of the directors of the respondents’ companies who did not produce any evidence of alleged exportation of soap stones or any other goods or precious metals as had been alleged. https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 2

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Respondents Grounds of Opposition 6. The respondents oppose the originating motion on the ground that the applicant has failed to demonstrate that the business of the respondents and consequently monies held by I&M bank and Eco bank on their behalf fall within the meaning of money laundering. They further contend that the applicant is on a fishing expedition because the forfeiture application was filed on August 25, 2023 with no report which could be finalized five months later. 1st Respondent’s Response to the Application 7. The 1st respondent opposes the motion through the affidavit of Louis Iteba Pamba sworn on January 19, 2024. In that affidavit, he introduces himself as the continental executive director and the chief executive officer of the 1st respondent. He avers that the 1st respondent is a duly registered subsidiary company in the Republic of Kenya with its parent company registered in the United States of America and that it is in the business of providing exclusive executive private flight charter services to customers. He recounted that the board of directors of the parent company, on June 21, 2023, resolved that the 1st respondent opens a business account with I&M Bank and the 1st respondent opened the following accounts; a. Account Number 01904057366250 b. Account Number 01904057361250 c. Account Number 01904057361251 8. On August 1, 2023, the 1st respondent received an inquiry on their website from one Mr Rondell Fletcher based in Los Angeles, California for a passenger/cargo charter services for goods stored in a bonded warehouse at JKIA Nairobi which goods were destined for Dubai in the UAE. Mr Fletcher also wished to travel to Nairobi to meet the 1st respondent’s management team for which reason he required an invitation letter from them to be able to process his visa. 9. The 1st respondent approved the request and Mr Fletcher complied with all the requisite procedures and paid USD 387,833.72 to the 1st respondent’s company. The parent company subsequently communicated to the 1st respondent on the development and informed them that they would wire some funds to Nairobi to cater for preparation of flight and attendant costs and the flight departure date was scheduled for August 24, 2023. Subsequently, an international wire transfer of USD 333,718.35 was received by the 1st respondent’s bank. 10. He added that come August 21, 2023, the 1st respondent made a request for cash withdrawal of USD 125,720 from its bank for the payment of the chartered passenger/cargo flight personnel per diem and other attendant costs but the bank declined. On August 24, 2023, he sought an inter account transfer of USD 9,000 which was equally declined. 11. By that time the 1st respondent had issued several cheques for settlement of the company’s utility bills and on the same date they received emails responses from the bank to the effect that the cheques had been dishonored due to “frozen account”. 12. He thus asserts and contends that the instant application for forfeiture of the funds in the 1st respondent’s referenced bank accounts is made in bad faith. https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 3

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2nd Respondent’s Response to the Application 13. The application is resisted by the 2nd respondent vide the affidavit of Geoffrey Somoni Birundu sworn on January 19, 2024 in which he introduces himself as the chief executive officer of the 2nd respondent company. He explicated that the 2nd respondent is a local subsidiary of Glo Jet International Corp based in Orlando Florida, USA and is in the business of providing exclusive private air charter services to foreign and local clients. He added that the 2nd respondent opened and managed two bank accounts with Eco Bank Kenya Limited that is a USD account number 6658001882 and KES account number 6658001881. 14. He stated that on August 25, 2023, the applicant obtained ex parte orders restricting debit transactions in the respective accounts of the respondent yet the 2nd respondent was not served with the said orders. 15. It is then asserted additionally that the 2nd respondent had provided the applicant with verifiable details of relevant contact persons who could assist them with further investigations into the activities of the respondents and their parent companies but no officer has reached out. 16. Lastly, he asserts that though the investigator has alleged that the funds in the subject accounts were from suspicious sources, he contends that the investigator did not draw the court’s attention to exactly what the agency unearthed to lead to the suspicion. Applicant’s Further Afidavit 17. When served with the replying affidavits, the applicant filed a further affidavit by Mr Alfred Musalia sworn on April 23, 2024, in which it is averred that his investigations established that one Rondell Maurice Fletcher deposited a total of USD 400,000 into his Mazuma Holdings Account No 6897943574 held at Wells Fargo USA and then transferred a sum of USD 412,746.55 in that account to Cullinan Private Jet USA Account Number 9984784992 held at Wells Fargo USA out of which amount, a sum of USD 333,718.35 was transferred to Cullinan Private Jets Corp Limited Account Number 01904057361250 held at I&M Bank and the funds were subsequently utilized by the respondent for various purposes which are not the intended purpose. The applicant thus contends that the respondents and the interested party fraudulently obtained money from Mr Fletcher and used the same for purposes other than servicing the services promised and with no intention to so deliver. 18. Pursuant to the court order issued in January 31, 2024, Cullinan Private Jets Corp (USA) joined the suit as an interested party on the ground that the 1st and 2nd respondents are its local subsidiaries. The respondents and the interested party then made an application to cross- examine the applicant which application was allowed by the court. Cross examination of Alfred Musalia 19. On cross examination by Mr Ogema for the respondents, it was his sworn testimony that though the two respondents have a parent company in the USA, he did not confirm the affairs of the parent company because their investigations were not about the affairs of the parent company. He stated that he interviewed one Mr Fletcher, a victim of fraud by the respondents and he recorded his statement. He denied knowledge that the flight failed to take off due to failure on the part of the victim but confirmed that it was a term of engagement between the victim and the respondents that the respondent would not refund because the respondents were not involved in assisting the customer procure the cargo. The respondents duty was only to provide charter services. https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 4

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20. On cross examination by Mr Masake for the interested party, he stated that he did not contact the parent company as the recipient of the money and that he only took the statements of the local directors even though the foreign directors were the majority shareholders. He added that the money was deposited in USA then the foreign companies sent the money to Kenya with the purpose of the money being to facilitate transfer of goods to Dubai. It was observed that when the money landed it was diverted to different and unrelated purposes a practice he viewed to be consistent with international fraud. He added that part of the money in the sum of USD 50,000 was transferred to the 2nd respondent allegedly for the transport of goods but the suspicion is that the invoice was to MK panda who was the payee and the payer. He stated that a total of unexplained USD 333,718.35 came to Kenya which they wish to be forfeited. He explained that agency had not sought forfeiture of that which was received in the USA. He stated that he did not establish if the sister companies sent money to each other and that his investigations were narrowed down to the complaint by Mr. Fletcher. 21. On further cross examination by Mr Ogema he stated that the documents from Mr Fletcher were recorded and filed after the originating motion had been filed. 22. On reexamination by Mr Adow he stated that there was no requirement for charge or conviction before forfeiture could be sought and that they did not investigate the parent company because their target was the money sent to Kenya. He added that the money was never used for the purpose it was intended for being the movement of cargo from Kenya to Dubai. 23. Parties have filed their respective submissions to the originating motion which are as below; Applicant’s Submissions 24. In urging the originating motion, the applicant reiterates that the subject funds were preserved by an order that was duly gazetted. The contention is that when given the chance to explain the legitimate sources of the funds, the respondent failed to do so hence by application of section 112, evidence Act, the burden to prove facts specially within their knowledge rested on the two respondents. 25. It is then submitted that the funds in question, 78,970.46 and KES 1,830,762.03 owned by the respondents were fraudulently obtained from one Rondell Maurice Fletcher, are thus proceeds of crime as defined under the Act, hence the court is urged to exercise its powers under section 92 of POCAMLA and order forfeiture of the suspected assets in order to deprive criminals if ill-gotten gains. 26. The decision in Schabir Shaik & others v State Case CCT 86/06(2008) ZACC 7 is cited for the proposition of the law that money laundering is a complex syndicate by sophisticated criminals who use complex systems of camouflage to avoid the proceeds form crime being detected for confiscation. 27. On whether the application for civil forfeiture is in violation of the respondents’ right to property under article 40 of the Constitution, the applicant submits that property unlawfully acquired is not constitutionally protected and cites the case of Assets Recovery Agency v Lilian Wanja Muthoni T/A Sahara Consultants and 5 others in that regard. 28. On whether conviction is a precondition for civil proceedings under part VIII of POCAMLA, they refer the court to the decision in R v DPP & others JR Civil Application No 102 of 2016 where the court observed that the offence of money laundering is a stand-alone offence and that one need not prove any charges prior to the charges of money laundering. The applicant thus pleads that the application be allowed as prayed. https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 5

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Respondents’ Submissions 29. In resisting the originating summon, the respondents submit that their explanation of what transpired is corroborated by the investigating officer that the funds in question came from one Mr Fletcher who had reached out to the respondents’ parent company in the USA to link him to its subsidiaries in Kenya to render cargo transportation services as part of the respondents usual business. It is submitted that Mr Fletcher paid the monies to the interested party pursuant to the contract for provision of chartered cargo flight services to him and the funds were to be applied towards preparation and availing of the said flight to Mr Fletcher on the agreed dated and time. They contend that this dispels the notion that the respondents received the funds from suspicious sources. 30. The respondents express doubt in the investigations carried out by the agency and its conclusions on suspicion that the funds were illegitimately acquired, pointing out that the agency having found that not all the funds paid by Mr. Fletcher to the USA company were wired to Kenya but never saw the need to find out what became the funds that remained in the USA. They argue that instead of carrying out conclusive investigation, the agency was content to allege that the respondents utilized part of the funds paid by Mr Fletcher to make payments to fictitious entities as part of the alleged money laundering schemes. There is then 31. the question why the statement by Mr Fletcher was self-recorded in September 2023 before the instant suit was filed but signed on February 15, 2024. It was thus submitted that Mr Fletcher having not been called as a witness by the applicant and the applicant having not proved the existence of any circumstances that would place the statement in the province of the exceptions to the rule against hearsay under section 33 of the Evidence Act, the said statement remained hearsay without any probative value. 32. It is additionally submitted that the statement by Mr Fletcher having been unsworn, the veracity of its contents could not be tested by way of cross examination. The decision in Mercy Kajuju & 4 others v Republic[2009] eKLR was cited on the probative value of unsworn statement. In that decision the court cited with approval the decision of the court of Appeal in May v The Republic[1981] KLR. 129, where the court held “ That unsworn statement is not, strictly speaking evidence and the rules of evidence, cannot be applied to unsworn statement. It has no probative value, but it should be considered in relation to the whole of the evidence. Its potential is persuasive rather than evidential. For it to have value it must be supported by evidence recorded in the case.” Issues, Analysis and Determination. 33. 34. The court has had time to peruse originating motion, the responses thereto and the submissions by the parties and identifies the following issues for determination; 1. Whether the funds the subject of this suit and which are sought to be forfeited have been proved to be proceeds of crime as defined in law? 2. Whether the said funds are subject to forfeiture? Section 2 of POCAMLA widely defines what constitutes proceeds of crime to mean any property or economic advantage derived or realized, directly or indirectly, as a result of or in connection with an offence irrespective of the identity of the offender and includes, on a proportional basis, property into which any property derived or realized directly from the offence was later successively converted, https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 6

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transformed or intermingled, as well as income, capital or other economic gains or benefits derived or realized from such property from the time the offence was committed. 35. Section 81 of POCAMLA recognizes forfeiture proceedings to be civil in nature while section 92 goes further to provide that the standard of proof is on a balance of probabilities. 36. The court reads and appreciates Part VIII of the POCAMLA to demand that in order to discharge its burden of proof under section 107 of the Evidence Act, what is required of an applicant is to demonstrate that there are reasonable grounds to believe that funds or property held by a respondent are proceeds of crime. 37. To discharge that burden in this matter, the applicant states that it received information from one Mr Fletcher that the respondents had obtained a total sum of USD 412,746.55 from him under the pretense that they would assist him transport cargo from Kenya to UAE, which service was never delivered. The ensuing investigation established that out of the total sum of USD 412,746.55 paid by Mr Fletcher to the interested party, only USD 333,718.35 came to Kenya and was diverted to different and unrelated purposes. In the words of Mr Alfred Musalia, in his cross examination, the movement of money and the intricate shareholding between the respondents and interested party created the suspicion that the respondents were engaged in money laundering activities. 38. To this court, that Mr Fletcher complained of having been defrauded by the respondents and the interested party in the manner disclosed in the statement, there was a prima facie basis to suspect that a crime had been committed. When it turned out that no definite preparation were placed on line to effect the contracted service on the dates scheduled, with additional demand for cash on short notices, there was a red flag that would attract the attention of an investigator properly sensiticed in the intrigues, intricacies, novelty and underground networks associated with money laundering. The court thus determines that there was demonstrated reasonable suspicion that an offence known to the law in Kenya had been established. That was the essence of the contention by Mr Fletcher that he was never shown any jet operated by the respondents. Once that was done, the evidential burden shifted to the respondents to substantiate the funds in question were obtained and held through legitimate means in the ordinary course of business. 39. The respondent when faced with that burden had one answer; the money was paid to it in its ordinary course of business of provision of jet charter service. The explanation was that on August 1, 2023, the 1st respondent received an inquiry on their website from one Mr Rondell Fletcher based in Los Angeles, California, for a passenger/cargo charter services for goods stored in a bonded warehouse at JKIA Nairobi which goods were destined for Dubai in the UAE. Mr Fletcher also indicated the wish to travel to Nairobi to meet the 1st respondent’s management team for which he required an invitation letter from them to be able to process his visa. 40. The 1st respondent approved the request and Mr. Fletcher paid USD 412,746.55 to the 1st respondent’s parent company. The parent company subsequently communicated to the 1st respondent of the development and informed them that they would wire some funds to Nairobi to cater for preparation of flight and attendant costs. The flight departure date was scheduled for August 24, 2023. Subsequently, an international wire transfer of USD 333,718.35 was received by the 1st respondent’s bank. The 1st respondent has tendered the charter agreement and other documents how the money was moved. There was however no evidence that the respondents indeed are engaged in the business alleged. In terms of section 112 of the Evidence Act, once Mr Fletcher alleged that he had been defrauded and doubted that the respondents had any jets to charter, it was incumbent upon the respondent to show that indeed he had at least a jet to charter and that it was licensed to carry out that business. The respondents gave a wide berth in that regard. https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 7

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41. The gist of the application is that upon receipt of the funds by the respondents, they were diverted to different and unrelated purposes and the flight to UAE never materialized. In effect, the applicant asserts that when received, the money was deployed in a manner to demonstrate no desire or plan to execute the contract between the parties. 42. The mandate of this court sitting on an application for forfeiture is to determine whether the respondents have explained to the satisfaction of the court how and the circumstances in which they received USD 333,718.35. In this case it was important for the respondents to establish that the subject money was received in the ordinary course of business and not out of a fraud against Mr Fletcher. The court finds that the respondent failed in that obligation and that the money stands out as reasonably suspected of being a proceed of crime. When so established, the law and public policy in Kenya demand that illegitimately acquired asset be deprived from the acquirer and forfeited to the government on behalf of the citizen against whom impropriety impact negatively. The originating motion is thus allowed and the court issues orders as follows: 43. a. The sum of USD 54,257.85 held in Account Number 01904057361250 and KES 696,070.70 held in Account Number 01904057366250 in the name of Cullinan Private Jets Corp domiciled at I & M Bank Limited, are adjudged to be proceeds of crime and ordered forfeited to the state. b. The sum of USD 24,712.61 held in Account Number 6658001882 and KES 1,134,691.33 held in Account Number 6658001881both in the name of Glo Jet International Limited and domiciled at Ecobank Bank Limited, are adjudged to be proceeds of crime and ordered forfeited to the state. c. The two banks are directed to transmit the forfeited sums to the applicant within seven days from the date this order shall have been extracted and served upon them. d. The applicant having succeeded, the costs of the suit are awarded to it. It is so ordered DATED, SIGNED AND DELIVERED, VIRTUALLY, THIS 11TH DAY OF DECEMBER, 2024 SIGNED BY: HON. JUSTICE P. J. OTIENO THE JUDICIARY OF KENYA. MILIMANI HIGH COURT HIGH COURT ANTI CORRUPTION AND ECONOMIC CRIMES https://new.kenyalaw.org/akn/ke/judgment/kehc/2024/17283/eng@2024-12-11 8

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