The applicant, is a statutory body established under Section 53 of the Proceeds of Crimes and Anti-Money Laundering Act (hereinafter referred to as POCAMLA). The applicant’s statutory mandate is to identify, trace, freeze, preserve and recover proceeds of crimes and pursuant to that mandate, it has brought this matter against the respondent by way of originating motion dated 31 st October 2024 praying for the following orders;
THAT this Honourable Court be and is hereby pleased to issue an order in the nature of declaration to the effect that motor vehicle registration number KDL 886J Chassis Number KDH201-0197247 is a proceed of crime and thus liable to forfeiture to the Government of the Republic of Kenya in terms of sections 90(1) and 92(1) of the Proceeds of Crime and Anti-Money Laundering Act, 2009.
THAT the Honourable Court be and is hereby pleased to issue an order forfeiting motor vehicle KDL 886J Toyota Hiace Chassis Number KDH201-0197247 to the Government of the Republic of Kenya.
THAT this Honourable Court be and is hereby pleased to issue an order directing that the proprietary interest in motor vehicle registration No. KDL 886J Chassis Number KDH201-0197247 shall vest in the Assets Recovery Agency on behalf of the Government of the Republic of Kenya.
THAT this Honourable Court be and is hereby pleased to issue an order directing the Director National Transport and Safety Authority (NTSA) to transfer to and register the proprietary interests in motor vehicle registration No. KDL 886J Chassis Number KDH201-0197247 in the name of the Assets Recovery Agency and issue a registration certificate thereto.
THAT this Honourable Court be pleased to issue any ancillary orders it may deem fit and just to issue.
THA T costs be provided for.
The originating motion is supported by affidavit of Martin Samburumo an investigator with the applicant dated 31-10-2024. The applicant has listed 12 grounds of the application which in summary state that the motor vehicle the applicant seeks to forfeit was purchased using funds associated with loss of fuel when the respondent was in charge of the truck which was transporting it.
The investigator has deponed that sometime in September 2023, the respondent received intelligence information about a suspected case of stealing of goods in transit and money laundering that had been perpetrated by the respondent and opened an inquiry file for the purpose of investigations. Upon investigations, the applicant established that the respondent was employed by Lake Trans Logistics Africa Limited (hereinafter referred to as ‘the respondent’s employer’) in January 2021 as a truck driver with a gross salary of Kshs 35,000.00. He depones that on 14-02-2023, the respondent’s employer assigned him duties to drive and manage motor vehicle registration number KCH 732/ZF433B loaded with diesel automotive gas oil (hereinafter referred to as ‘the diesel’) to transport to Jinja in Uganda but the same did not reach the intended destination. Instead, the respondent drove the truck from Kenya Pipeline Company Kisumu depot to Busia-Uganda border for customs clearance and during the journey a customs seal tracker fixed on the truck raised alerts at 16.42.04 and 20.47.01 hours.
The truck was cleared on 15-02-2023 at the Busia border and was driven to Uganda and the customs seal tracker was disconnected or logged off at 09.46.06 hours and reconnected on 17-02-2023 at 11.26.35 hours. The truck was last found parked and unattended along the road in Tororo in Uganda with the diesel siphoned off as well as its fuel. Further, the respondent’s telephone line was switched off. The incident was reported on 17-02-2023 to the Uganda authorities and investigations on the same were still going on.
The applicant alleges further that on 25 th February 2023, the respondent purchased motor vehicle registration number KDL 886J (hereinafter referred to as the vehicle) from Moiz Motors Limited for Kshs 3,500,000.00. The said company had been authorised to sell the vehicle by Darson Trading Limited, the interested party herein. According to the applicant, the respondent paid a deposit of Kshs 1,500,000.00 and the balance of Kshs 2,000,000.00 was to be paid by installments of Kshs 66,666.00 for a period of 30 months. The deposit was paid in cash of Kshs 900,000.00 and a bank deposit of Kshs 600,000.00 to Ayan Automobile Limited. After payment of the deposit, the respondent paid Kshs 240,000.00 between April and August 2023 leaving a balance of Kshs 1,630,000.00.
The respondent was charged in court at Milimani Chief Magistrate’s Court in January 2024 vide criminal case number E1192 of 2024 with the offences of stealing goods in transit contrary to Section 279(c) of the Penal Code, money laundering contrary to Section 3(b)(1) as read together with Section 16(1)(a) of the POCAMLA, use of proceeds of crime contrary to Section 4(b) as read together with section 16(1)(a) of the POCAMLA and removing or defacing customs seal contrary to section 195 of the East African Community Customs Management Act, 2004 which case is still ongoing.
The applicant states further that the respondent’s income could not support the purchase of the motor vehicle as he was earning Kshs 35,000.00 per month with a net salary of Kshs 24,253.00 in October 2022 and Kshs 24,879.00 as at January 2023. Further to this, the respondent held two bank accounts and three telephones lines, one merchant account and was also using an account held under the name of one Ms. Esther Karanja.
Investigations on the above accounts revealed that account number 0706xxxxx00 at the Bank of Africa was opened in December 2016 for purposes of receiving salaries but had only four transactions amounting to Kshs 30,489.00 and went dormant in April 2017. Account number 0320xxxxxxx113 at Equity Bank had numerous deposits between January 2020 and December 2020 from Plains and Ridges Co Limited as salaries totaling to Kshs 314,675.00.
The respondent’s telephone line number 072xxxx504 received a maximum of ten deposits per month between 1-01-2020 and September 2020 with Kshs 32,000.00 deposited in September being the highest. The same line made maximum of 13 deposits per month between 1-01-2021 and December 2021 the highest amount being Kshs 34,000.00 having been deposited on 24 th March 2021. Between 1-01-2022 and 31-12-2022, the same line received a maximum of 9 deposits per month between 1-01-2022 and December 2022 with the highest being Kshs 140,000.00. Other deposits in the line were Kshs 20,000.00 on 13-01-2023 and Kshs 12,000,00 on 4-02-2023.
The deponent states further that there were loan disbursements reflecting in the account at Equity bank. The applicant avers that the month of February 2023 reflected the highest sum of monies paid to repay the outstanding loan with repayment of Kshs 145,933.14 out of which Kshs 99,000.00 was repaid between 15 th and 25 th of the said month. It is also averred further that line number 072492xxx24 started receiving deposits in March 2021 and by 16-02-2023, it had received a total of Kshs 142,730.00. The applicant adds that between 15-02-2023 and 4-08-2023 the bank account received suspicious funds totaling to Kshs 539,000.00 and paid out Kssh 514,876.85 and after 5-08-2023 the account did not receive any further deposits save for two loan disbursements totaling to Kshs 17,100.00 and the account has not been used since 12-09-2023.
As for the mpesa line number 0722xxxx04 which was in operation since 1-01-2020, it transacted only 8 times during the time it was switched off between 18-02-2023 and 28-09-2023 unlike the previous time when it would transact frequently. It was also alleged that on 14-02-2023 and 25-02-2023 the respondent paid out Kshs 120,152.00 and Kshs 122,588.53 respectively.
The applicant also analysed line number 0111940655 which was registered to Esther Karanja which it claimed was used by her and the respondent to pay Kshs 80,000.00 for the motor vehicle and Kshs 2,500.00 to the County Government of Murang’a being monthly charges for a PSV license and received Kshs 100.00 from the respondent on 7-10-2023. The applicant claims further that the respondent had not paid KRA Tax returns and actually had tax liability of Kshs 7,101.00.
The applicant believes that the above basis raises reasonable suspicion that the funds used to purchase the motor vehicle were proceeds from the sale of the diesel and fuel siphoned from the truck the respondent was in charge of.
The respondent and the interested party filed replying affidavits in opposition to the originating summons. On the part of the respondent, it is deponed that he has been carrying out various kinds of businesses and owned several vehicles from time to time. He states that on a date he did not specify but which was apparently before the incident in question, he bought motor vehicle registration number KBB 291Z from one Wilson Muriuki for a sum of Kshs 510,000.00.
He adds that he took his first loan of Kshs 300,000.00 from Equity Bank on 6 th April 2021 which was payable in twelve months and with which he bought motor vehicle registration number KAN 566D. On 11-11-2021 he got another 18 months term loan of Kshs 1,000,000.00 from the same bank to facilitate opening of a cereal shop and a beauty shop. The latter loan was secured by motor vehicle registration number KBB 291Z. He added that he purchased motor vehicle registration number KBB 809M from one Peter Kioi which he registered with Eldonas Supreme Sacco for public transport business. He stated that he used the income from this vehicle and his salary from his employment to repay the loan.
The respondent also explained that one James Mbogo Kibe had on 18-09-2022 taken a friendly loan of Kshs 600,000.00 from him which he repaid by paying part of the deposit of Kshs 600,000.00 for the purchase price of the motor vehicle sought to be forfeited in this matter. The respondent added that the difference of Kshs 900,000.00 for the deposit was part of his loan facilities, income from motor vehicle registration number KBB 809M and his other businesses.
He denies stealing the diesel and fuel as claimed and states that on that day, he was intercepted and robbed by people unknown to him while on transit. He however did not report the theft because he was in fear having been threatened by the robbers. The motor vehicle was purchased under hire purchase which was to run for thirty months which period is still running. He added that he sold KBB 291Z on 4-08-2023 to Samuel Mwangi for Kshs 310,000.00 which went to pay part of the loan.
The respondent has claimed that his business was affected after the vehicle was impounded by officers from DCI in July 2023. He confirms that he was arrested and charged and adds that his telephone handset was part of what was stolen from him when he was hijacked and that is why it was switched off. He therefore explains that the motor vehicle was purchased through the aforesaid loan facilities. He has explained that Esther Karanja was his wife and they use her line to pay their utilities bills and liabilities.
The interested party affirms through an affidavit sworn by Nicholus Ngoli Inyangala that the motor vehicle was sold to the applicant by its sister company Moiz Motors Limited. He adds that the interested party is a company engaged in business of buying and selling of motor vehicles and has no capacity to know the buyers’ source of funds. He confirmed that the respondent paid a deposit of Kshs 1,500,000.00 and agreed to liquidate the balance of Kshs 2,000,000.00 by thirty monthly installments of Kshs 66,660.00. He added that the hire purchase agreement is still going on as the respondent has not completed paying the purchase price and in the circumstances, the property in the motor vehicle remains with the interested party.
The parties filed written submissions which I have read. I have also read the supporting and supplementary affidavits of the applicant, the replying affidavits of the respondent and the interested party as well as the annexures produced therein.
This is a civil recovery under Sections 81, 90 and 92 of the POCAMLA. Being so and by virtue of Section 92(4) of the Act, the outcome of the criminal case filed against the respondent will not have a bearing on the validity of the order of the court in this matter. The two are different and independent proceedings. In this matter, the applicant has a duty to discharge the legal burden of proof while the respondent and the interested party have the evidentiary burden of proof. In Assets Recovery Agency v Ali Abdi Ibrahim (2022) KEHC 1906 (KLR), it was held that;
‘ Likewise, in this case the burden of proof lies upon the Applicant to prove that the funds in the Respondent’s accounts are proceeds of crime as alleged but should that burden be discharged the evidential burden shifts to the Respondent to explain the source of the funds given that such evidence is within his special knowledge.’
The applicant must establish a reasonable and prima fascie case that the funds used to purchase the motor vehicle were proceeds from the sale of the diesel and fuel siphoned off the truck he was driving. The applicant has told the court that the basis of its belief that the funds were proceeds of crime is that the diesel and fuel were lost in the hands of the respondent.
All the bank and telephone line accounts which were analysed by the applicant were opened before the diesel and fuel were lost. The applicant has not laid a basis to demonstrate that the respondent was involved in criminal or suspicious activities prior to February 2023 when the alleged incident occurred. The applicant has also not demonstrated that the respondent’s accounts had suspicious deposits prior to February 2023. Actually, the applicant has used analysis of pre-February 2023 period to show that the respondent could not have had any other sources of income except his salaries from his employers meaning that the applicant had no issues with the respondent’s activities during that period.
The basis of the applicant’s suspicion is the payment of Kshs 145,933.14 in February 2023 towards liquidation of the loan which was close to the date the diesel was lost. The applicant points out that Kshs 99,000.00 of this came between 15-02-2023 and 25-02-2023 which obviously is meant to fit the amount within the period of interest. The applicant conveniently I would say, fails to point out that on 24-02-2023 Kshs 100,000.00 came in the account from James Mbogo Kibe who should be the same person who the respondent said had taken a loan from him in September 2022. Even before February 2023, the applicant would deposit amounts of similar value. For instance, on 30-08-2022, he deposited Kshs 140,000.00 and Kshs 30,000.00 through his phone which was not part of his salary. In June 2022, the account received Kshs 95,000.00 which was not part of the respondent’s regular salary.
I have gone through the bank statement and I find that the entries therein confirm respondent’s narration of how he grew from one loan to another. The statement shows that the loan for Kshs 300,000.00 was disbursed on 6-04-2021 and that there was disbursement of the loan of Kshs 1,000,000.00 on 17-11-2021. It also shows that the respondent transferred to Peter Kihoi Kshs 460,000.00 on 21-11-2021 which confirms the respondent’s averment that he bought his motor vehicle KBB 809M from Peter Kioi. These entries are also supported by loans and motor vehicles sale agreements exhibited by the respondent. The bank statements show that the respondent would deposit some money in his bank account other than the regular salaries which is a testament that he had other sources of income which gives credence to his averments that he was engaged in other businesses. It is notable that some of these deposits were coming from his telephone line.
The motor vehicle in question was bought through hire purchase on 25-02-2023. The diesel was lost in about a week before the date of the purchase. At this time the respondent’s bank account had Kshs 100,000.00. If we were to look at the bank statement as the only source of information on source of funds, the applicant would be justified to link the sale of the diesel to the funds used to purchase the motor vehicle but I am convinced that the respondent used to earn or transact in amounts higher than his regular salary.
The respondent has explained that the deposit of the motor vehicle was financed by Kshs 600,000.00 from James Kibe and Kshs 900,000.00 from the loans advanced by the bank and other businesses. The respondent replied to this by stating that it tried to get the said Kibe in vain as his known telephone lines were switched off and their efforts to trace him were unsuccessful and that the funds from the loan were depleted as at the time the motor vehicle was purchased. However, the applicant has not told the court the efforts it made to trace the said James Kibe. The respondent has exhibited an agreement with Mr. Kibe dated 18-09-2022 and this being a civil case where the standard of proof is on a balance of probabilities and noting that the bank statement shows that the respondent had some transactions with the said James Kibe, I hold that the respondent has satisfactorily explained the source of the Kshs 600,000.00.
Having said the above, we are left with explanation of Kshs 900,000.00 paid in cash. The respondent explains that the said money was raised from the loan he got from Equity and savings from his businesses. He has exhibited two sale agreements which shows that he had owned two motor vehicles before the incident of loss of the diesel. He avers that one of his previous vehicles was sold after the respondent found himself in arrears due to the disruption of his business by impounding of the vehicle in question in this matter.
The applicant has countered the above by stating that the funds from the loan had been depleted at the time of the purchase. That may be so but I note that the respondent has also stated that he had other businesses. I have stated elsewhere above that the respondent’s statement of account showed considerable deposits and credits even before the loss of the diesel. The respondent has deponed that he had a cereal and beauty shop which were established with financing from the loan of Kshs 1,000,000.00 although he has not produced evidence of existence of the shops. The credits to the account which were not salaries related are proof that the respondent was running some income generating ventures and savings of Kshs 900,000.00 is not unachievable. It is not a must that every savings, income and earnings pass through one’s bank account and noting that the applicant has not questioned the income the respondent was getting before the loss of the diesel, I find that the respondent has on a balance of probabilities explained the source of the Kshs 900,000.00.
The applicant’s mandate is to trace proceeds of crime and not to audit lifestyles of persons. For the audit to be justified if it must, there should be a reason which is connected to a specific offence or crime. The fact that the respondent was charged in court and that the diesel was lost does not mean that the respondent should be subjected to lifestyle audit.
Even if I were wrong in finding that the respondent had satisfactorily explained the source of the Kshs 900,000.00, I would still have had difficulties in forfeiting the motor vehicle. The motor vehicle is still registered to the interested party and there is no evidence to show that the interested party was aware or had reasons to believe that the source of the purchase price was not lawful. The applicant has argued that the interested party has not utilised Section 93 of the POCAMLA to established that it acquired its interest in the motor vehicle without knowing the circumstances under which the money was obtained. The interested party did not acquire interest in the motor vehicle on the date of the purchase. It had the interest before then and the person who acquired interest in the vehicle on the date of the transaction was the respondent. In that case Section 93 of the POCAMLA does not apply to the interested party.
The applicant has argued that the interested party has not shown that it demanded the balance of the purchase price after August 2024. In my view, this does not divest the interested party of its rights over the motor vehicle. The position of the law is that a chattel under hire purchase remains the property of the owner until the payment of the purchase price is made in full. In Eunice Kanugu Kingori v NIC Bank Limited (2018) KEHC 10147 (KLR), it was held that;
‘Hire purchase Agreements are Agreements whereby, an owner of goods allows a person, known as the hirer, to hire goods from him or her for a period of time by paying installments. The hirer has an option to buy the goods at the end of the Agreement if all installments are being paid. However, it is not a contract of sale but contract of bailment as the hirer merely has an option to buy the goods and although the hirer has the right of using the goods, he is not the legal owner during the term of the agreement, the ownership of the goods remain with the owner.’
In that case the motor vehicle is legally owned by the interested party and there being no evidence that the interested party was an accomplice in the disappearance of the diesel or in assisting the applicant to launder proceeds of crime, the court holds that the orders for forfeiture are not appropriate in this matter.
Consequently, the originating motion is hereby dismissed with costs to the respondent and the interested party.
Dated, signed and delivered at Nairobi this 31 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Mr. Wambua for the applicant and Miss Kamau for the respondent.
THAT this Honourable Court be and is hereby pleased to issue an order in the nature of declaration to the effect that motor vehicle registration number KDL 886J Chassis Number KDH201-0197247 is a proceed of crime and thus liable to forfeiture to the Government of the Republic of Kenya in terms of sections 90(1) and 92(1) of the Proceeds of Crime and Anti-Money Laundering Act, 2009.
THAT the Honourable Court be and is hereby pleased to issue an order forfeiting motor vehicle KDL 886J Toyota Hiace Chassis Number KDH201-0197247 to the Government of the Republic of Kenya.
THAT this Honourable Court be and is hereby pleased to issue an order directing that the proprietary interest in motor vehicle registration No. KDL 886J Chassis Number KDH201-0197247 shall vest in the Assets Recovery Agency on behalf of the Government of the Republic of Kenya.
THAT this Honourable Court be and is hereby pleased to issue an order directing the Director National Transport and Safety Authority (NTSA) to transfer to and register the proprietary interests in motor vehicle registration No. KDL 886J Chassis Number KDH201-0197247 in the name of the Assets Recovery Agency and issue a registration certificate thereto.
THAT this Honourable Court be pleased to issue any ancillary orders it may deem fit and just to issue.
THA T costs be provided for.
The originating motion is supported by affidavit of Martin Samburumo an investigator with the applicant dated 31-10-2024. The applicant has listed 12 grounds of the application which in summary state that the motor vehicle the applicant seeks to forfeit was purchased using funds associated with loss of fuel when the respondent was in charge of the truck which was transporting it.
The investigator has deponed that sometime in September 2023, the respondent received intelligence information about a suspected case of stealing of goods in transit and money laundering that had been perpetrated by the respondent and opened an inquiry file for the purpose of investigations. Upon investigations, the applicant established that the respondent was employed by Lake Trans Logistics Africa Limited (hereinafter referred to as ‘the respondent’s employer’) in January 2021 as a truck driver with a gross salary of Kshs 35,000.00. He depones that on 14-02-2023, the respondent’s employer assigned him duties to drive and manage motor vehicle registration number KCH 732/ZF433B loaded with diesel automotive gas oil (hereinafter referred to as ‘the diesel’) to transport to Jinja in Uganda but the same did not reach the intended destination. Instead, the respondent drove the truck from Kenya Pipeline Company Kisumu depot to Busia-Uganda border for customs clearance and during the journey a customs seal tracker fixed on the truck raised alerts at 16.42.04 and 20.47.01 hours.
The truck was cleared on 15-02-2023 at the Busia border and was driven to Uganda and the customs seal tracker was disconnected or logged off at 09.46.06 hours and reconnected on 17-02-2023 at 11.26.35 hours. The truck was last found parked and unattended along the road in Tororo in Uganda with the diesel siphoned off as well as its fuel. Further, the respondent’s telephone line was switched off. The incident was reported on 17-02-2023 to the Uganda authorities and investigations on the same were still going on.
The applicant alleges further that on 25 th February 2023, the respondent purchased motor vehicle registration number KDL 886J (hereinafter referred to as the vehicle) from Moiz Motors Limited for Kshs 3,500,000.00. The said company had been authorised to sell the vehicle by Darson Trading Limited, the interested party herein. According to the applicant, the respondent paid a deposit of Kshs 1,500,000.00 and the balance of Kshs 2,000,000.00 was to be paid by installments of Kshs 66,666.00 for a period of 30 months. The deposit was paid in cash of Kshs 900,000.00 and a bank deposit of Kshs 600,000.00 to Ayan Automobile Limited. After payment of the deposit, the respondent paid Kshs 240,000.00 between April and August 2023 leaving a balance of Kshs 1,630,000.00.
The respondent was charged in court at Milimani Chief Magistrate’s Court in January 2024 vide criminal case number E1192 of 2024 with the offences of stealing goods in transit contrary to Section 279(c) of the Penal Code, money laundering contrary to Section 3(b)(1) as read together with Section 16(1)(a) of the POCAMLA, use of proceeds of crime contrary to Section 4(b) as read together with section 16(1)(a) of the POCAMLA and removing or defacing customs seal contrary to section 195 of the East African Community Customs Management Act, 2004 which case is still ongoing.
The applicant states further that the respondent’s income could not support the purchase of the motor vehicle as he was earning Kshs 35,000.00 per month with a net salary of Kshs 24,253.00 in October 2022 and Kshs 24,879.00 as at January 2023. Further to this, the respondent held two bank accounts and three telephones lines, one merchant account and was also using an account held under the name of one Ms. Esther Karanja.
Investigations on the above accounts revealed that account number 0706xxxxx00 at the Bank of Africa was opened in December 2016 for purposes of receiving salaries but had only four transactions amounting to Kshs 30,489.00 and went dormant in April 2017. Account number 0320xxxxxxx113 at Equity Bank had numerous deposits between January 2020 and December 2020 from Plains and Ridges Co Limited as salaries totaling to Kshs 314,675.00.
The respondent’s telephone line number 072xxxx504 received a maximum of ten deposits per month between 1-01-2020 and September 2020 with Kshs 32,000.00 deposited in September being the highest. The same line made maximum of 13 deposits per month between 1-01-2021 and December 2021 the highest amount being Kshs 34,000.00 having been deposited on 24 th March 2021. Between 1-01-2022 and 31-12-2022, the same line received a maximum of 9 deposits per month between 1-01-2022 and December 2022 with the highest being Kshs 140,000.00. Other deposits in the line were Kshs 20,000.00 on 13-01-2023 and Kshs 12,000,00 on 4-02-2023.
The deponent states further that there were loan disbursements reflecting in the account at Equity bank. The applicant avers that the month of February 2023 reflected the highest sum of monies paid to repay the outstanding loan with repayment of Kshs 145,933.14 out of which Kshs 99,000.00 was repaid between 15 th and 25 th of the said month. It is also averred further that line number 072492xxx24 started receiving deposits in March 2021 and by 16-02-2023, it had received a total of Kshs 142,730.00. The applicant adds that between 15-02-2023 and 4-08-2023 the bank account received suspicious funds totaling to Kshs 539,000.00 and paid out Kssh 514,876.85 and after 5-08-2023 the account did not receive any further deposits save for two loan disbursements totaling to Kshs 17,100.00 and the account has not been used since 12-09-2023.
As for the mpesa line number 0722xxxx04 which was in operation since 1-01-2020, it transacted only 8 times during the time it was switched off between 18-02-2023 and 28-09-2023 unlike the previous time when it would transact frequently. It was also alleged that on 14-02-2023 and 25-02-2023 the respondent paid out Kshs 120,152.00 and Kshs 122,588.53 respectively.
The applicant also analysed line number 0111940655 which was registered to Esther Karanja which it claimed was used by her and the respondent to pay Kshs 80,000.00 for the motor vehicle and Kshs 2,500.00 to the County Government of Murang’a being monthly charges for a PSV license and received Kshs 100.00 from the respondent on 7-10-2023. The applicant claims further that the respondent had not paid KRA Tax returns and actually had tax liability of Kshs 7,101.00.
The applicant believes that the above basis raises reasonable suspicion that the funds used to purchase the motor vehicle were proceeds from the sale of the diesel and fuel siphoned from the truck the respondent was in charge of.
The respondent and the interested party filed replying affidavits in opposition to the originating summons. On the part of the respondent, it is deponed that he has been carrying out various kinds of businesses and owned several vehicles from time to time. He states that on a date he did not specify but which was apparently before the incident in question, he bought motor vehicle registration number KBB 291Z from one Wilson Muriuki for a sum of Kshs 510,000.00.
He adds that he took his first loan of Kshs 300,000.00 from Equity Bank on 6 th April 2021 which was payable in twelve months and with which he bought motor vehicle registration number KAN 566D. On 11-11-2021 he got another 18 months term loan of Kshs 1,000,000.00 from the same bank to facilitate opening of a cereal shop and a beauty shop. The latter loan was secured by motor vehicle registration number KBB 291Z. He added that he purchased motor vehicle registration number KBB 809M from one Peter Kioi which he registered with Eldonas Supreme Sacco for public transport business. He stated that he used the income from this vehicle and his salary from his employment to repay the loan.
The respondent also explained that one James Mbogo Kibe had on 18-09-2022 taken a friendly loan of Kshs 600,000.00 from him which he repaid by paying part of the deposit of Kshs 600,000.00 for the purchase price of the motor vehicle sought to be forfeited in this matter. The respondent added that the difference of Kshs 900,000.00 for the deposit was part of his loan facilities, income from motor vehicle registration number KBB 809M and his other businesses.
He denies stealing the diesel and fuel as claimed and states that on that day, he was intercepted and robbed by people unknown to him while on transit. He however did not report the theft because he was in fear having been threatened by the robbers. The motor vehicle was purchased under hire purchase which was to run for thirty months which period is still running. He added that he sold KBB 291Z on 4-08-2023 to Samuel Mwangi for Kshs 310,000.00 which went to pay part of the loan.
The respondent has claimed that his business was affected after the vehicle was impounded by officers from DCI in July 2023. He confirms that he was arrested and charged and adds that his telephone handset was part of what was stolen from him when he was hijacked and that is why it was switched off. He therefore explains that the motor vehicle was purchased through the aforesaid loan facilities. He has explained that Esther Karanja was his wife and they use her line to pay their utilities bills and liabilities.
The interested party affirms through an affidavit sworn by Nicholus Ngoli Inyangala that the motor vehicle was sold to the applicant by its sister company Moiz Motors Limited. He adds that the interested party is a company engaged in business of buying and selling of motor vehicles and has no capacity to know the buyers’ source of funds. He confirmed that the respondent paid a deposit of Kshs 1,500,000.00 and agreed to liquidate the balance of Kshs 2,000,000.00 by thirty monthly installments of Kshs 66,660.00. He added that the hire purchase agreement is still going on as the respondent has not completed paying the purchase price and in the circumstances, the property in the motor vehicle remains with the interested party.
The parties filed written submissions which I have read. I have also read the supporting and supplementary affidavits of the applicant, the replying affidavits of the respondent and the interested party as well as the annexures produced therein.
This is a civil recovery under Sections 81, 90 and 92 of the POCAMLA. Being so and by virtue of Section 92(4) of the Act, the outcome of the criminal case filed against the respondent will not have a bearing on the validity of the order of the court in this matter. The two are different and independent proceedings. In this matter, the applicant has a duty to discharge the legal burden of proof while the respondent and the interested party have the evidentiary burden of proof. In Assets Recovery Agency v Ali Abdi Ibrahim (2022) KEHC 1906 (KLR), it was held that;
‘ Likewise, in this case the burden of proof lies upon the Applicant to prove that the funds in the Respondent’s accounts are proceeds of crime as alleged but should that burden be discharged the evidential burden shifts to the Respondent to explain the source of the funds given that such evidence is within his special knowledge.’
The applicant must establish a reasonable and prima fascie case that the funds used to purchase the motor vehicle were proceeds from the sale of the diesel and fuel siphoned off the truck he was driving. The applicant has told the court that the basis of its belief that the funds were proceeds of crime is that the diesel and fuel were lost in the hands of the respondent.
All the bank and telephone line accounts which were analysed by the applicant were opened before the diesel and fuel were lost. The applicant has not laid a basis to demonstrate that the respondent was involved in criminal or suspicious activities prior to February 2023 when the alleged incident occurred. The applicant has also not demonstrated that the respondent’s accounts had suspicious deposits prior to February 2023. Actually, the applicant has used analysis of pre-February 2023 period to show that the respondent could not have had any other sources of income except his salaries from his employers meaning that the applicant had no issues with the respondent’s activities during that period.
The basis of the applicant’s suspicion is the payment of Kshs 145,933.14 in February 2023 towards liquidation of the loan which was close to the date the diesel was lost. The applicant points out that Kshs 99,000.00 of this came between 15-02-2023 and 25-02-2023 which obviously is meant to fit the amount within the period of interest. The applicant conveniently I would say, fails to point out that on 24-02-2023 Kshs 100,000.00 came in the account from James Mbogo Kibe who should be the same person who the respondent said had taken a loan from him in September 2022. Even before February 2023, the applicant would deposit amounts of similar value. For instance, on 30-08-2022, he deposited Kshs 140,000.00 and Kshs 30,000.00 through his phone which was not part of his salary. In June 2022, the account received Kshs 95,000.00 which was not part of the respondent’s regular salary.
I have gone through the bank statement and I find that the entries therein confirm respondent’s narration of how he grew from one loan to another. The statement shows that the loan for Kshs 300,000.00 was disbursed on 6-04-2021 and that there was disbursement of the loan of Kshs 1,000,000.00 on 17-11-2021. It also shows that the respondent transferred to Peter Kihoi Kshs 460,000.00 on 21-11-2021 which confirms the respondent’s averment that he bought his motor vehicle KBB 809M from Peter Kioi. These entries are also supported by loans and motor vehicles sale agreements exhibited by the respondent. The bank statements show that the respondent would deposit some money in his bank account other than the regular salaries which is a testament that he had other sources of income which gives credence to his averments that he was engaged in other businesses. It is notable that some of these deposits were coming from his telephone line.
The motor vehicle in question was bought through hire purchase on 25-02-2023. The diesel was lost in about a week before the date of the purchase. At this time the respondent’s bank account had Kshs 100,000.00. If we were to look at the bank statement as the only source of information on source of funds, the applicant would be justified to link the sale of the diesel to the funds used to purchase the motor vehicle but I am convinced that the respondent used to earn or transact in amounts higher than his regular salary.
The respondent has explained that the deposit of the motor vehicle was financed by Kshs 600,000.00 from James Kibe and Kshs 900,000.00 from the loans advanced by the bank and other businesses. The respondent replied to this by stating that it tried to get the said Kibe in vain as his known telephone lines were switched off and their efforts to trace him were unsuccessful and that the funds from the loan were depleted as at the time the motor vehicle was purchased. However, the applicant has not told the court the efforts it made to trace the said James Kibe. The respondent has exhibited an agreement with Mr. Kibe dated 18-09-2022 and this being a civil case where the standard of proof is on a balance of probabilities and noting that the bank statement shows that the respondent had some transactions with the said James Kibe, I hold that the respondent has satisfactorily explained the source of the Kshs 600,000.00.
Having said the above, we are left with explanation of Kshs 900,000.00 paid in cash. The respondent explains that the said money was raised from the loan he got from Equity and savings from his businesses. He has exhibited two sale agreements which shows that he had owned two motor vehicles before the incident of loss of the diesel. He avers that one of his previous vehicles was sold after the respondent found himself in arrears due to the disruption of his business by impounding of the vehicle in question in this matter.
The applicant has countered the above by stating that the funds from the loan had been depleted at the time of the purchase. That may be so but I note that the respondent has also stated that he had other businesses. I have stated elsewhere above that the respondent’s statement of account showed considerable deposits and credits even before the loss of the diesel. The respondent has deponed that he had a cereal and beauty shop which were established with financing from the loan of Kshs 1,000,000.00 although he has not produced evidence of existence of the shops. The credits to the account which were not salaries related are proof that the respondent was running some income generating ventures and savings of Kshs 900,000.00 is not unachievable. It is not a must that every savings, income and earnings pass through one’s bank account and noting that the applicant has not questioned the income the respondent was getting before the loss of the diesel, I find that the respondent has on a balance of probabilities explained the source of the Kshs 900,000.00.
The applicant’s mandate is to trace proceeds of crime and not to audit lifestyles of persons. For the audit to be justified if it must, there should be a reason which is connected to a specific offence or crime. The fact that the respondent was charged in court and that the diesel was lost does not mean that the respondent should be subjected to lifestyle audit.
Even if I were wrong in finding that the respondent had satisfactorily explained the source of the Kshs 900,000.00, I would still have had difficulties in forfeiting the motor vehicle. The motor vehicle is still registered to the interested party and there is no evidence to show that the interested party was aware or had reasons to believe that the source of the purchase price was not lawful. The applicant has argued that the interested party has not utilised Section 93 of the POCAMLA to established that it acquired its interest in the motor vehicle without knowing the circumstances under which the money was obtained. The interested party did not acquire interest in the motor vehicle on the date of the purchase. It had the interest before then and the person who acquired interest in the vehicle on the date of the transaction was the respondent. In that case Section 93 of the POCAMLA does not apply to the interested party.
The applicant has argued that the interested party has not shown that it demanded the balance of the purchase price after August 2024. In my view, this does not divest the interested party of its rights over the motor vehicle. The position of the law is that a chattel under hire purchase remains the property of the owner until the payment of the purchase price is made in full. In Eunice Kanugu Kingori v NIC Bank Limited (2018) KEHC 10147 (KLR), it was held that;
‘Hire purchase Agreements are Agreements whereby, an owner of goods allows a person, known as the hirer, to hire goods from him or her for a period of time by paying installments. The hirer has an option to buy the goods at the end of the Agreement if all installments are being paid. However, it is not a contract of sale but contract of bailment as the hirer merely has an option to buy the goods and although the hirer has the right of using the goods, he is not the legal owner during the term of the agreement, the ownership of the goods remain with the owner.’
In that case the motor vehicle is legally owned by the interested party and there being no evidence that the interested party was an accomplice in the disappearance of the diesel or in assisting the applicant to launder proceeds of crime, the court holds that the orders for forfeiture are not appropriate in this matter.
Consequently, the originating motion is hereby dismissed with costs to the respondent and the interested party.
Dated, signed and delivered at Nairobi this 31 th day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Mr. Wambua for the applicant and Miss Kamau for the respondent.