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The Applicant’s application dated 17/3/2015 was filed wherein the Applicants prayed for ORDERS THAT: -
(1) The Court orders of stay of proceedings and enforcement of orders issued on 5/3/2025 in Milimani Miscellaneous Application No. E766 of 2025 Republic–vs- Ollin Sacco pending hearing and determination of the Application.
1. The Court calls for the records in Milimani Miscellaneous Application NO. E766 of 2025 Republic –vs- Ollin Sacco for purpose of satisfying itself and determination of legality, propriety and correctness of the orders issued on 5/3/2025.
2. That the Court be pleased to restrain the Respondent from arresting charging prosecuting or questioning or in any way intimidating the Applicants Board of Directors on or over any matter the subject of the orders issued on 5/3/2025.
3. That the Court be pleased to issue an order referring the subject matter in E766/2025 Republic vs Ollin Sacco to Sacco Societies Fraud Investigation Unit (SSFIU) for investigation and determination.
GROUNDS OF THE APPLICATION
3. The application is brought under the provisions of Article 165 (6) and (7) of the Constitution (Sections 362) Criminal Procedure Code and 364 Section 48 (2) 49 (3) 50 Sacco Societies Act and on the following grounds; that the Applicant is a deposit institution with over 38,000 members who have deposited 8 Billion Kenya Shillings and a share capital of 800,000,000/= . The Applicant is a vital institution in the financial sector.
4. The Applicant received Court order dated 5/3/3035 issued in Miscellaneous Criminal Application No. E766 of 2025 and which was served with the 1st Respondent’s application dated 3/3/3035.
5. That the Respondent sought warrant to investigate the entire record of the Applicant’s undertaking which order was issued on 5/3/2025 allowing C.I Antony Kamau to “ …access , inspect , investigate , to obtain information and to lift and carry as exhibits certified copies of the Applicant’s documents listed under paragraph 4 (I)-(XVIII) on the grounds of the application and the impugned orders of the trial Court .”
6. That the orders did not give a mention date for compliance.
7. That the orders granted to the 1 st Applicant on 5/3/2025 is a preserve and mandate vested by law on SASRA; inspection of documents is within the mandate of Sacco Societies Regulatory Authority (SASRA) as per the provisions of Sections 48 (2) and 49 (1) of the Sacco Societies Act granting it power to inspect Sacco records.
8. Further that Sacco Societies Fraud Investigative Unit is a specialized unit established through SASRA with mandate of detecting, preventing and addressing any fraudulent act or activities within any Sacco whether reported (as herein) or even in its own volition as per page 6675 of Gazette Notice No. 3/12/2021.
9. That the proceedings leading to the impugned orders failed to comply with Sections 67 and 76 of the Sacco Societies Act which also provide for dispute resolution mechanisms in such matters.
10. That these orders will not only have serious financial implications and time constraints on Applicant’s share holders but will also have far reaching implications by totally disrupting the operations and financial stability of the Applicant and potentially erode public and the depositors’ confidence in the organization.
11 That the Applicant’s confidentiality and protection of members personal and financial data under the Data Protection Act risks violation. The orders would lead to unauthorized dissemination of sensitive information.
12.That the power granted to SASRA to investigate is the ideal way to protect the depositors’ interests considering the sensitive nature of the Applicant business.
13. That similar policy applies to mainstream banks that are investigated by Anti-Banking Fraud Unit that operates under Central Bank of Kenya.
14. The Applicant sought interim orders through Court’s intervention of the urgent Application as Applicant and its members will indeed suffer irreparable loss and damage to its reputation and there were serious chances of potential breach of Applicant’s confidentiality to its depositors, members and shareholders that cannot be mitigated by damages.
THE APPLICANT’S SUPPORTING & FURTHER AFFIDAVITS.
15. The Application is further supported by the affidavit of Cyrus Kabute Mungai the Chairman of the Board of Directors of Ollin Sacco Ltd and the Further Affidavit sworn by John Mwangi Gathige who is the Applicant ‘s Chief Executive Officer and Secretary.
13. That Cyrus Kabute in his affidavit reiterates the grounds on the face of the application.
14. He further explains that the Respondent’s application was filed on account of a complaint by an unknown member of the Sacco and a letter was sent to the Board of Directors by unknown person on 24/1/2025 to be addressed during the Applicant’s AGM Meeting that was to be held on 25/1/2025 and was actually held and the said letter was attached and produced at Pg 126-132 of the annexed bundle to the application
15. The member failed to raise the issue at the Annual General Meeting and thus it was never discussed but the letter was circulated amongst members and dropped in some institution by unknown person. That the 1st interested party’s CEO informed him that the letter had been dropped in their offices with other copies made to the Directorate of Criminal Investigations and Ethics and Anti-corruption Commission.
16. That the Applicant was served with Court orders and having seen the complaint the Applicant Board tasked its Audit Committee to look into the allegation and report back immediately. That the Audit Committee found that the claims were untrue and not justified and a report to this effect was presented to the Board. The report was adopted unanimously on 13/3/2025.
17. The AApplicant’s document falls within the mandate of SASRA which is to inspect Sacco records as per the case of Kenya National Police Service DT Sacco –Vs- Directorate of Criminal Investigations where the Court referred a complaint to SSFIU.
18. The Applicant has a well-established and updated human resource policy and structures and reviews that continually guide it as per the provisions of the Finance Act to manage its resources. The Applicant urges that it is fully compliant as will be established by SSFIU report.
19. The orders have far reaching implications and will inevitably expose the Applicant to potential operational disruption financial instability erosion of public confidence and should be set aside.
20. That there is no justification in granting the orders. The Respondent is in the haste to harass the Sacco management and overlooked the legal role of SASRA and SSFIU in investigating the claims against the management of Saccos.
21.The Sacco Societies Fraud Investigations Unit (SSFIU) established by SASRA in 2020 is mandated to detect prevent and address any fraudulent act/claim, activities within SACCOs, as per the Kenya Gazette Notice of 3/12/2021, Pg 6675.
22. That the Respondent enjoined SSFIU in the matter as a party after realizing its folly in assuming powers outside its jurisdiction to investigate Saccos.
23. The depositions in the Further Affidavit are that the CEO and Finance officer were exonerated and that internal reports authored by the Applicant’s Board, Audit Committee and SASRA.
24. That the complaint letter was from an anonymous person who was not a member. That members attended trainings and meetings and the issues were not raised. That the letter of complaint does raise any offence and the Respondent had a duty to look into the complaints.
REPLYING AFFIDAVIT BY 1 st & 2 nd RESPONDENTS
25. The 1st and 2nd Respondent filed the affidavit of C.I Antony Kamau an officer attached to the Economic Commercial Crimes Unit at DCI headquarters in contest of the application.
26. The 1st Respondent is established under Section 28 of the National Police Service Act to undertake investigations into serious economic crimes, to detect and prevent crimes and to apprehend offenders.
27. That the 1 st Respondent works under the command and control of the National Police Service which has constitutional authority under Article 244 (b) of Constitution to prevent corruption and to promote transparency and accountability.
28. That the Respondent receives and handles public complaints with bearing to criminal offences and undertakes criminal investigations with cooperation and assistance of the 2nd Respondent. The Applicant is one of the fast-growing financial institution in Kenya with a wide membership and strong deposit base of savings from its members making it one of the fast growing Kenya Financial Institution.
29. That the 1 St Respondent’s statutory functions do not exclude or have preference over institutions such as the Applicant but is mandated to undertake its functions over all subjects within the Republic of Kenya as individuals or institutions except where expressly provided.
30. The Respondent received a complaint from the Applicant’s members regarding mismanagement, embezzlement and misuse of funds by CEO and Finance Officer raising pertinent issues of serious economic crime. The complaint also questions transparency and accountability in management of financial affairs of the Sacco. (Copy of Complaint attached)
31. That the members have the right to seek financial accountability through the 1st Respondent where glaring indications of commission of serious economic crime by CEO and Financial Officers are involved.
32.The 1 st Respondent has lawful duty to investigate complaints where the complaints merit investigations and the complaints received from the members of the Applicant raise substantive questions of criminal concerns thus worth investigations.
33. That fallout between the Applicant and its members should not disqualify criminal investigations where questions of fraud are raised. The Respondent sought the impugned orders to be supplied with relevant documents to commence investigations on bribery, fraudulent false accounting, stealing of members money, money laundering among others which squarely fall under the realm of criminal law.
34. That the Court in Criminal Misc Application E 766 of 2025 granted access to the documents listed on the affidavits and face of the impugned orders issued on 5/3/2025. (Copy of the Application & Court Order attached AK-2)
35. The Respondent sought the documents to trace evidence of the allegations in lawful procedural exercise of investigative function.
36. The application manifests the Applicant’s dishonesty and efforts to cover up criminal activities involving the CEO and Financial Officer and is an attempt to defeat lawful course of its investigations.
37. That the Respondent acted within its constitutional and statutory obligation and setting aside the orders would be curtailing its lawful duty. Further those criminal investigations do not amount to harassment but are fundamental step in the criminal justice process, the application has been filed to evade investigations and probable prosecution and hence is abuse of process.
38. That the suspects will be afforded an opportunity to defend themselves in a Court of law if found culpable and justice will be served on all parties equally.
39. That the deponent is used to shield the CEO and Finance Officer, the complaint raised was from concerned members who wished the Sacco well. Further , the Respondents are well trained on conducting investigations and the Applicants will not be exposed to any public ,financial or operational implications .
40. That SSFIU was established as an MOU between SASRA and Directorate of Criminal Investigations vide Gazette Notice No. 13392 reiterated the role of SSFIU to improve governance of Saccos, deter, fraud and increase protection of member deposits. That no law or legal notice established the SSFIU and gives it sole investigative powers with regard to fraudulent activities in Saccos.
41. Further that sub-units and directorates of the DCI are not in creatures of statute but they share mandate from initial statutory mandate given to the Directorate of Criminal Investigations.
42. That units deployed outside the DCI headquarters to Government Agencies and Institutions are enabled by a working understanding between National Police Service and the Directorate of Criminal Investigations. That officers deployed remain under command and control of National Police Service.
43. That the Applicant has not demonstrated any threat of objects of the Constitution Professionalism , Human Rights and Fundamental Freedom
44. That SASRA is established under Section 5 of the Act with objectives listed to have regulatory of the Sacco , supervisory and otherwise inspect books of accounts and records .That under Section 49 (2) (t) of Sacco Societies Act places the mandate of assisting investigative unit matters suspected fraud or malpractice in Sacco .
45. The SSFIU is the establishment of the 1 st Respondent and not SASRA and comprises of agents nominated by the 1st Respondent who are deployed to undertake investigations in the best interest of Saccos. That SSFIU applies where Saccos are the complainant, contrary to the case at hand. The complaint is against the Chief Executive Officer and Finance officer.
46. Lastly, referring the case to the SSFIU is a duplication of duties and a deliberate unjust scheme to defeat justice.
47. The Respondent has attached copy of the complaint received on misuse of Sacco funds and several allegations, complaint was to be raised during Annual General Meeting on 26/1/2025 letter to BOD by members.
48. The Gazette Notice No. 6673: That SASRA & Directorate of Criminal Investigations establish SSFIU to improve governance through deterrence of fraud and increase protection member deposit .That the DCI and SASRA operationalized SSFIU through good governance integrity transparency accountability.
49. The application was canvassed through written submissions.
WRITTEN SUBMISSIONS.
THE APPLICANT’S SUBMISSIONS
50. The Applicant submits that the order issued on 5/3/2024 does not envisage search warrants envisaged under Section 118 of the Criminal Procedure Code. The warrants breached further statutory provisions of Section 120 of the Proceeds of Crime & Money Laundering Act on which they were sought.
51. That the documents listed did not require search warrants but were held in Applicant’s ordinary course of business and/or are not documents suspected to be in the Applicant’s possession.
52. Further that documents can be obtained by genuine members upon request and proper channels upon due diligence.
53. That the orders were made without justification and there was no proof demonstrating that the documents were necessary for investigation of unknown offences by the CEO and Finance Officer. That the relevant law that was breached is not pleaded and the offences remain unknown.
54. Further that the application is not backed documents in support of the allegations and the complaints were not recorded and/or statements attached to the application. That the details of names or society numbers of the complainant members are also not on the application.
55. The Respondent did not present the letter before the subordinate Court. The letter was attached in the affidavit of Cyrus Mungai filed in this Court .That the letter does not mention any commission of an offence and there was also no basis in issuing the orders.
56. Further that there is no proof that the complaint came from the Applicant’s members. The Respondent did not interview or record any statement or deponed that the members declined to be interrogated.
57. The Respondent claimed that investigations were prompted by complaints raised at the Annual General Meeting. The Applicant attached minutes of the AGM of 26/1/2025 where no complaint over embezzlement and mismanagement of funds was raised.
58. The Respondent did not intend to take the documents to Court or deal with them as provided in law under Section 118 of the Criminal Procedure Code .Similarly, the Court did not order a return date making the warrants irregular and non-complaint with Section 120 of Criminal Procedure Code which require documents to be produced before Court .
59. That Section 102 of Criminal Procedure Code was not complied with since the offence to be charged and the description of the persons was not indicated. The warrant was not issued against the CEO and Finance Officer but was issued and served on the Applicant.
60. That the warrant seeks documents which include list of past and present members of the Applicant and Account details. However, the warrants were not issued against them and the name of banks and account names were not indicated. The Applicant contends that the listed documents are not relevant to the investigations of crime and that there is no proof under oath that the details of members and bank accounts are required in investigations against the CEO and the Finance officer.
61. There is no proof on reasonable ground that there is need to investigate the accounts on suspicion of an offence .The warrants seek to investigate accounts of persons who are not under investigations.
62. The provisions of Section 107 of Proceeds of Crime & Money Laundering Act were cited in the impugned application. That Section 107 as read with Section 103 of POCAMLA are not relevant since charges have not been brought. That grant of warrants under the said provisions was illegal, in statutory error and excess of jurisdiction .The Applicants legal and constitutional rights were violated in the process.
63. That the orders obtained disrupt and demean Sacco operations if implemented. The Applicant annexed Audit report and Board Committee report. The Sacco’s Committee Report and report by SASRA on the Applicant’s operations and which have not been contested.
64. The Applicant is not challenging the Respondent’s constitutional right to investigate crime. Instead, it is the process used in the process before the subordinate Court.
65. That the power was applied unlawfully and in violation of the Applicant’s right and orders issued are subject to recall and quashing by this Court. The Applicant refers to the cases of Ochillah -Vs- DPP 2022 KEHC 15455 KLR where search warrants were revoked by the High Court, the case of DPP -Vs- Ibrahim M Chengo (2019) eklr where trial Court orders on denovo proceedings were quashed. Ngetich vs Republic [2023] KEHC 20155 KLR & Walingo vs Republic [2023] KEHC 315 (KLR
RESPONDENT’S SUBMISSIONS.
66. The Respondent frames issues for determination as :
a) Whether Sacco Societies Regulatory Authority SASRA has powers to investigate criminal matters ,
b) Whether SSFIU is an independent investigative body ,whether the Cooperative Tribunal has jurisdiction whether the Directorate of Criminal investigations has power to investigate suspected fraud cases in Saccos,
c) Whether the orders contravene the Data Protection Act
d) Whether orders were correct legal and proper.
67. That SASRA was established under Section 5 and Section 48 of the Sacco Societies Act with the mandate to undertake inspection or require Sacco to submit reports and financial affairs or deposit taking to enable the authority evaluate societies’ financial affairs.
68. That section 49 (a) of the Act the Authority has mandate of assisting investigative authority on matters of suspected fraud of malpractice in Sacco by identifying such matters for referral or upon request. The Respondent refers to the case of EG & 7 Others --Vs- Attorney General, DKM & 9 others Katiba Institute amicus Petition 150 234 of 2016
69. Further that inspection is different from investigations and the two words cannot be used interchangeably. Section 48 recognizes investigative authorities. That inspection is the direct physical examination review of something to determine its condition and compliance with regulation. On the other hand investigations is the comprehensive inquiry into a specific event allegation or issue and gathering evidence. The Authority has mandate to assist investigation of suspected fraud.
70. The SSFIU is an administrative unit of the Directorate of Criminal investigations and an understanding between SASRA and the Directorate of Criminal Investigations to deter fraud and protect member deposits.
71. The Memorandum of Understanding is not binding, further, SSFIU is not backed by statutory instruments establishing it with exclusive investigatory powers. The gazette notice merely published and did not establish it. The officers deployed to the SSFIU are not independent and work under authority of the Directorate of Criminal Investigations.
72. The Respondent also contends that the Cooperative Tribunal established under Section 65 of the Sacco Societies Act does not have jurisdiction over suspected fraud by board members which is the precinct of law enforcement agencies.
73. That the Directorate of Criminal Investigations has power to investigate suspected fraud under Section 35 of the National Police Service Act and Article 243 of the Constitution . The Respondent also relies on the case of Dande & 3 others- Vs- Office of the Inspector General and further urges that the Director of Criminal investigations acted within their constitutional mandate.
74. That the revision proceedings filed are directed to the Court to usurp the Respondent constitutional mandate and to direct it how and who to investigate the matter.
75. The Respondent’s actions are legitimate since the complaint is related to illegality and economic crimes.
76. On whether the impugned orders contravened the Data Protection Act, it is submitted that the documents sought are meant to aid in investigations. That processing of personal data is exempted from the provisions of the Data Protection Act under Section 35 of the Act on grounds of public interest. Further that Section 56 of the Act provides that collection of and disclosure of personal data by the controller or data processor is allowed in suspected and unlawful activity.
77. That the impugned orders do not violate the Data Protection Act and no prejudice will be occasioned by investigations. The Applicant had not shown how the depositors will be at risk .In this case the depositors are the complainants and have lodged request for the investigations in the complaint letter dated 26/1/2025.
78. The Respondent urged that the orders are not vague or overboard .That the correct and proper orders were issued under the appropriate sections of the law. The case of Prosecutor –Vs Stephen Lesinko (2018) eklr set principles which guides under Section 362 of the Criminal Procedure Code and that orders should be grossly erroneous no compliance with the law.
79. The case of Francis Njau Njoroge & Another t/a Francom General Merchants-Vs- Insurance Regulatory Authority & 5 Others (2018) eklr on search warrants .
ANALYSIS & DETERMINATION
80. The Court considered pleadings and submissions by parties pursuant to the Application filed on 18/3/2025 under Certificate of Urgency and the Court on 20/3/2025 granted the temporary /interim orders of stay of execution of Court orders granted in CMCCE076 of 2025 pending hearing and determination.
81.The issues that emerge for determination are the following;
Constitutional and/or legal mandate of the various Investigative institutions; DCI, SASRA, SSIFU
The Complaint/Anonymous Letter received by DCI EACC KRA & Applicant Sacco is the subject of investigations; who how when and where should investigations be conducted?
Are the Trial Court orders pursuant to Section 118 & 120 of CPC be upheld or set aside?
Should the temporary /interim orders of stay of the Trial Court orders be upheld or set aside?
82. The Legal mandate of Kenya Police Service is stipulated in Article 244(b) & 245 4 (a) of the Constitution of Kenya .
83.The National Police Service Act outlines functions of ALL OFFICERS in the Kenya Police Service in Section 24 of the Act and specifically functions of DCI in Section 35 of the Act as follows;
35. Functions of the Directorate
The Directorate shall—
(a)collect and provide criminal intelligence;
(b)undertake investigations on serious crimes including homicide, narcotic crimes, human trafficking, money laundering, terrorism, economic crimes, piracy, organized crime, and cyber crime among others;
(c)maintain law and order;
(d)detect and prevent crime;
(e)apprehend offenders;
(f)maintain criminal records;
(g)conduct forensic analysis;
(h)execute the directions given to the Inspector-General by the Director of Public Prosecutions pursuant to Article 157(4) of the Constitution;
(i)coordinate country Interpol Affairs;
(j)investigate any matter that may be referred to it by the Independent Police Oversight Authority; and
(k)perform any other function conferred on it by any other written law.
84.Therefore, it is the responsibility of Police Officers under Section 24 of the Act to conduct investigations and more specifically the Directorate of Investigations to investigate serious crimes as prescribed under Section 35 of the Act . That is not in contention and the process of obtaining the Court order was lawful.
85.The issue in contention as raised by Applicant is that the Applicant is a Sacco and there is SASRA that regulates Saccos and specifically Police Unit SSIFU that is legally mandated to conduct inspection and investigations.
86.Section 48 -52 of the Sacco Society Act refers to the Authority’s power to inspect and evaluate financial situation. Section 48(b) particular provides That the Authority shall :
“…. undertake inspections or require a Sacco society to submit information and reports on its financial affairs of the deposit-taking business to enable the Authority to evaluate the society''s financial condition.”
87. Section 49 of the Act provides for the power to inspect – THAT
Powers of the Authority to inspect
1. The Authority may, at any time and from time to time, and shall, if so directed by the Cabinet Secretary, cause an inspection to be made by any person authorized by the Authority in writing of any Sacco society and of its books, accounts and records.
2. The Authority shall assist any investigative authority regarding matters of suspected fraud or malpractice in Sacco societies either by identification of such matters for referral or at the request of such authority.
3. Where an inspection is made under subsection (1), the society concerned and every officer or employee thereof shall produce and make available to the person making the inspection, all books, accounts, records and other documents of the Sacco society and such correspondence, statements and information relating to the society as the person making the inspection may require, and within such period as he may direct in writing.
4. A person who fails to produce any books, accounts, records, documents, correspondence, statements or the information required under subsection (2), within the period specified in the relevant direction, commits an offence.
5. The person making the inspection shall prepare and submit a report to the Authority, and the report shall state—
a) any breach or contravention of any of provisions of this Act or any regulations made under this Act;
b) any irregularity in the manner of conduct of the inspected society; (c) any mismanagement of a Sacco society; and
c) any other matter relating to a Sacco society not consistent with sound and prudent business practice
88. Section 50 provides that the Authority shall have power to advice and direct action to be taken where a Sacco has breached the Act and/or member deposits are at stake.
51. Supervisory enforcement actions
Where the Authority determines that a Sacco society conducts its business in a manner contrary to the provisions of this Act or of any regulations made thereunder or any other Act or in any manner detrimental to or not in the best interests of its members or members of the public, or a Sacco society is undercapitalized, the Authority shall—
(a)restrict, suspend or prohibit the payment of dividends by the society;
(b)prohibit the conversion of any profits of the society into capital;
(c) direct the suspension or removal of any officer involved in such conduct from the service of society;
(d) require the society to reconstitute its board of directors;
(e)withhold branch or other corporate approval with respect to such society;
(f)undertake regular inspections of that society;
(g)order the society to submit to the Authority within forty five days a capital restoration plan to restore the society to capital adequacy as prescribed in section 29 or in the case of issues unrelated to capital such as violations of law, a plan to resolve all deficiencies to the satisfaction of the Authority;
(h)prohibit the society from awarding any bonuses, or increments in salary, emoluments and other benefits of all directors and officers of the society;
(i)appoint a person suitably qualified and competent in the opinion of the Authority to advise and assist the society in designing and implementing the capital restoration plan or other corrective action plan and the person appointed shall regularly report to the Authority on the progress of the plan;
(j)impose restrictions on growth of assets or liabilities of the society as it deems fit;
(k)restrict the rate of interest on deposits payable by the society to such rates as the Authority shall determine; and
(l)order the society to do any or take such other action that the Authority may deem necessary to rectify a capital deficiency or other weakness.
(m)impose financial penalties on the society or any officer, director, committee member, employee or agent of the Society in such amounts as may be prescribed through regulations;
(n)issue an order placing the societ
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The Applicant’s application dated 17/3/2015 was filed wherein the Applicants prayed for ORDERS THAT: -
(1) The Court orders of stay of proceedings and enforcement of orders issued on 5/3/2025 in Milimani Miscellaneous Application No. E766 of 2025 Republic–vs- Ollin Sacco pending hearing and determination of the Application.
1. The Court calls for the records in Milimani Miscellaneous Application NO. E766 of 2025 Republic –vs- Ollin Sacco for purpose of satisfying itself and determination of legality, propriety and correctness of the orders issued on 5/3/2025.
2. That the Court be pleased to restrain the Respondent from arresting charging prosecuting or questioning or in any way intimidating the Applicants Board of Directors on or over any matter the subject of the orders issued on 5/3/2025.
3. That the Court be pleased to issue an order referring the subject matter in E766/2025 Republic vs Ollin Sacco to Sacco Societies Fraud Investigation Unit (SSFIU) for investigation and determination.
GROUNDS OF THE APPLICATION
3. The application is brought under the provisions of Article 165 (6) and (7) of the Constitution (Sections 362) Criminal Procedure Code and 364 Section 48 (2) 49 (3) 50 Sacco Societies Act and on the following grounds; that the Applicant is a deposit institution with over 38,000 members who have deposited 8 Billion Kenya Shillings and a share capital of 800,000,000/= . The Applicant is a vital institution in the financial sector.
4. The Applicant received Court order dated 5/3/3035 issued in Miscellaneous Criminal Application No. E766 of 2025 and which was served with the 1st Respondent’s application dated 3/3/3035.
5. That the Respondent sought warrant to investigate the entire record of the Applicant’s undertaking which order was issued on 5/3/2025 allowing C.I Antony Kamau to “ …access , inspect , investigate , to obtain information and to lift and carry as exhibits certified copies of the Applicant’s documents listed under paragraph 4 (I)-(XVIII) on the grounds of the application and the impugned orders of the trial Court .”
6. That the orders did not give a mention date for compliance.
7. That the orders granted to the 1 st Applicant on 5/3/2025 is a preserve and mandate vested by law on SASRA; inspection of documents is within the mandate of Sacco Societies Regulatory Authority (SASRA) as per the provisions of Sections 48 (2) and 49 (1) of the Sacco Societies Act granting it power to inspect Sacco records.
8. Further that Sacco Societies Fraud Investigative Unit is a specialized unit established through SASRA with mandate of detecting, preventing and addressing any fraudulent act or activities within any Sacco whether reported (as herein) or even in its own volition as per page 6675 of Gazette Notice No. 3/12/2021.
9. That the proceedings leading to the impugned orders failed to comply with Sections 67 and 76 of the Sacco Societies Act which also provide for dispute resolution mechanisms in such matters.
10. That these orders will not only have serious financial implications and time constraints on Applicant’s share holders but will also have far reaching implications by totally disrupting the operations and financial stability of the Applicant and potentially erode public and the depositors’ confidence in the organization.
11 That the Applicant’s confidentiality and protection of members personal and financial data under the Data Protection Act risks violation. The orders would lead to unauthorized dissemination of sensitive information.
12.That the power granted to SASRA to investigate is the ideal way to protect the depositors’ interests considering the sensitive nature of the Applicant business.
13. That similar policy applies to mainstream banks that are investigated by Anti-Banking Fraud Unit that operates under Central Bank of Kenya.
14. The Applicant sought interim orders through Court’s intervention of the urgent Application as Applicant and its members will indeed suffer irreparable loss and damage to its reputation and there were serious chances of potential breach of Applicant’s confidentiality to its depositors, members and shareholders that cannot be mitigated by damages.
THE APPLICANT’S SUPPORTING & FURTHER AFFIDAVITS.
15. The Application is further supported by the affidavit of Cyrus Kabute Mungai the Chairman of the Board of Directors of Ollin Sacco Ltd and the Further Affidavit sworn by John Mwangi Gathige who is the Applicant ‘s Chief Executive Officer and Secretary.
13. That Cyrus Kabute in his affidavit reiterates the grounds on the face of the application.
14. He further explains that the Respondent’s application was filed on account of a complaint by an unknown member of the Sacco and a letter was sent to the Board of Directors by unknown person on 24/1/2025 to be addressed during the Applicant’s AGM Meeting that was to be held on 25/1/2025 and was actually held and the said letter was attached and produced at Pg 126-132 of the annexed bundle to the application
15. The member failed to raise the issue at the Annual General Meeting and thus it was never discussed but the letter was circulated amongst members and dropped in some institution by unknown person. That the 1st interested party’s CEO informed him that the letter had been dropped in their offices with other copies made to the Directorate of Criminal Investigations and Ethics and Anti-corruption Commission.
16. That the Applicant was served with Court orders and having seen the complaint the Applicant Board tasked its Audit Committee to look into the allegation and report back immediately. That the Audit Committee found that the claims were untrue and not justified and a report to this effect was presented to the Board. The report was adopted unanimously on 13/3/2025.
17. The AApplicant’s document falls within the mandate of SASRA which is to inspect Sacco records as per the case of Kenya National Police Service DT Sacco –Vs- Directorate of Criminal Investigations where the Court referred a complaint to SSFIU.
18. The Applicant has a well-established and updated human resource policy and structures and reviews that continually guide it as per the provisions of the Finance Act to manage its resources. The Applicant urges that it is fully compliant as will be established by SSFIU report.
19. The orders have far reaching implications and will inevitably expose the Applicant to potential operational disruption financial instability erosion of public confidence and should be set aside.
20. That there is no justification in granting the orders. The Respondent is in the haste to harass the Sacco management and overlooked the legal role of SASRA and SSFIU in investigating the claims against the management of Saccos.
21.The Sacco Societies Fraud Investigations Unit (SSFIU) established by SASRA in 2020 is mandated to detect prevent and address any fraudulent act/claim, activities within SACCOs, as per the Kenya Gazette Notice of 3/12/2021, Pg 6675.
22. That the Respondent enjoined SSFIU in the matter as a party after realizing its folly in assuming powers outside its jurisdiction to investigate Saccos.
23. The depositions in the Further Affidavit are that the CEO and Finance officer were exonerated and that internal reports authored by the Applicant’s Board, Audit Committee and SASRA.
24. That the complaint letter was from an anonymous person who was not a member. That members attended trainings and meetings and the issues were not raised. That the letter of complaint does raise any offence and the Respondent had a duty to look into the complaints.
REPLYING AFFIDAVIT BY 1 st & 2 nd RESPONDENTS
25. The 1st and 2nd Respondent filed the affidavit of C.I Antony Kamau an officer attached to the Economic Commercial Crimes Unit at DCI headquarters in contest of the application.
26. The 1st Respondent is established under Section 28 of the National Police Service Act to undertake investigations into serious economic crimes, to detect and prevent crimes and to apprehend offenders.
27. That the 1 st Respondent works under the command and control of the National Police Service which has constitutional authority under Article 244 (b) of Constitution to prevent corruption and to promote transparency and accountability.
28. That the Respondent receives and handles public complaints with bearing to criminal offences and undertakes criminal investigations with cooperation and assistance of the 2nd Respondent. The Applicant is one of the fast-growing financial institution in Kenya with a wide membership and strong deposit base of savings from its members making it one of the fast growing Kenya Financial Institution.
29. That the 1 St Respondent’s statutory functions do not exclude or have preference over institutions such as the Applicant but is mandated to undertake its functions over all subjects within the Republic of Kenya as individuals or institutions except where expressly provided.
30. The Respondent received a complaint from the Applicant’s members regarding mismanagement, embezzlement and misuse of funds by CEO and Finance Officer raising pertinent issues of serious economic crime. The complaint also questions transparency and accountability in management of financial affairs of the Sacco. (Copy of Complaint attached)
31. That the members have the right to seek financial accountability through the 1st Respondent where glaring indications of commission of serious economic crime by CEO and Financial Officers are involved.
32.The 1 st Respondent has lawful duty to investigate complaints where the complaints merit investigations and the complaints received from the members of the Applicant raise substantive questions of criminal concerns thus worth investigations.
33. That fallout between the Applicant and its members should not disqualify criminal investigations where questions of fraud are raised. The Respondent sought the impugned orders to be supplied with relevant documents to commence investigations on bribery, fraudulent false accounting, stealing of members money, money laundering among others which squarely fall under the realm of criminal law.
34. That the Court in Criminal Misc Application E 766 of 2025 granted access to the documents listed on the affidavits and face of the impugned orders issued on 5/3/2025. (Copy of the Application & Court Order attached AK-2)
35. The Respondent sought the documents to trace evidence of the allegations in lawful procedural exercise of investigative function.
36. The application manifests the Applicant’s dishonesty and efforts to cover up criminal activities involving the CEO and Financial Officer and is an attempt to defeat lawful course of its investigations.
37. That the Respondent acted within its constitutional and statutory obligation and setting aside the orders would be curtailing its lawful duty. Further those criminal investigations do not amount to harassment but are fundamental step in the criminal justice process, the application has been filed to evade investigations and probable prosecution and hence is abuse of process.
38. That the suspects will be afforded an opportunity to defend themselves in a Court of law if found culpable and justice will be served on all parties equally.
39. That the deponent is used to shield the CEO and Finance Officer, the complaint raised was from concerned members who wished the Sacco well. Further , the Respondents are well trained on conducting investigations and the Applicants will not be exposed to any public ,financial or operational implications .
40. That SSFIU was established as an MOU between SASRA and Directorate of Criminal Investigations vide Gazette Notice No. 13392 reiterated the role of SSFIU to improve governance of Saccos, deter, fraud and increase protection of member deposits. That no law or legal notice established the SSFIU and gives it sole investigative powers with regard to fraudulent activities in Saccos.
41. Further that sub-units and directorates of the DCI are not in creatures of statute but they share mandate from initial statutory mandate given to the Directorate of Criminal Investigations.
42. That units deployed outside the DCI headquarters to Government Agencies and Institutions are enabled by a working understanding between National Police Service and the Directorate of Criminal Investigations. That officers deployed remain under command and control of National Police Service.
43. That the Applicant has not demonstrated any threat of objects of the Constitution Professionalism , Human Rights and Fundamental Freedom
44. That SASRA is established under Section 5 of the Act with objectives listed to have regulatory of the Sacco , supervisory and otherwise inspect books of accounts and records .That under Section 49 (2) (t) of Sacco Societies Act places the mandate of assisting investigative unit matters suspected fraud or malpractice in Sacco .
45. The SSFIU is the establishment of the 1 st Respondent and not SASRA and comprises of agents nominated by the 1st Respondent who are deployed to undertake investigations in the best interest of Saccos. That SSFIU applies where Saccos are the complainant, contrary to the case at hand. The complaint is against the Chief Executive Officer and Finance officer.
46. Lastly, referring the case to the SSFIU is a duplication of duties and a deliberate unjust scheme to defeat justice.
47. The Respondent has attached copy of the complaint received on misuse of Sacco funds and several allegations, complaint was to be raised during Annual General Meeting on 26/1/2025 letter to BOD by members.
48. The Gazette Notice No. 6673: That SASRA & Directorate of Criminal Investigations establish SSFIU to improve governance through deterrence of fraud and increase protection member deposit .That the DCI and SASRA operationalized SSFIU through good governance integrity transparency accountability.
49. The application was canvassed through written submissions.
WRITTEN SUBMISSIONS.
THE APPLICANT’S SUBMISSIONS
50. The Applicant submits that the order issued on 5/3/2024 does not envisage search warrants envisaged under Section 118 of the Criminal Procedure Code. The warrants breached further statutory provisions of Section 120 of the Proceeds of Crime & Money Laundering Act on which they were sought.
51. That the documents listed did not require search warrants but were held in Applicant’s ordinary course of business and/or are not documents suspected to be in the Applicant’s possession.
52. Further that documents can be obtained by genuine members upon request and proper channels upon due diligence.
53. That the orders were made without justification and there was no proof demonstrating that the documents were necessary for investigation of unknown offences by the CEO and Finance Officer. That the relevant law that was breached is not pleaded and the offences remain unknown.
54. Further that the application is not backed documents in support of the allegations and the complaints were not recorded and/or statements attached to the application. That the details of names or society numbers of the complainant members are also not on the application.
55. The Respondent did not present the letter before the subordinate Court. The letter was attached in the affidavit of Cyrus Mungai filed in this Court .That the letter does not mention any commission of an offence and there was also no basis in issuing the orders.
56. Further that there is no proof that the complaint came from the Applicant’s members. The Respondent did not interview or record any statement or deponed that the members declined to be interrogated.
57. The Respondent claimed that investigations were prompted by complaints raised at the Annual General Meeting. The Applicant attached minutes of the AGM of 26/1/2025 where no complaint over embezzlement and mismanagement of funds was raised.
58. The Respondent did not intend to take the documents to Court or deal with them as provided in law under Section 118 of the Criminal Procedure Code .Similarly, the Court did not order a return date making the warrants irregular and non-complaint with Section 120 of Criminal Procedure Code which require documents to be produced before Court .
59. That Section 102 of Criminal Procedure Code was not complied with since the offence to be charged and the description of the persons was not indicated. The warrant was not issued against the CEO and Finance Officer but was issued and served on the Applicant.
60. That the warrant seeks documents which include list of past and present members of the Applicant and Account details. However, the warrants were not issued against them and the name of banks and account names were not indicated. The Applicant contends that the listed documents are not relevant to the investigations of crime and that there is no proof under oath that the details of members and bank accounts are required in investigations against the CEO and the Finance officer.
61. There is no proof on reasonable ground that there is need to investigate the accounts on suspicion of an offence .The warrants seek to investigate accounts of persons who are not under investigations.
62. The provisions of Section 107 of Proceeds of Crime & Money Laundering Act were cited in the impugned application. That Section 107 as read with Section 103 of POCAMLA are not relevant since charges have not been brought. That grant of warrants under the said provisions was illegal, in statutory error and excess of jurisdiction .The Applicants legal and constitutional rights were violated in the process.
63. That the orders obtained disrupt and demean Sacco operations if implemented. The Applicant annexed Audit report and Board Committee report. The Sacco’s Committee Report and report by SASRA on the Applicant’s operations and which have not been contested.
64. The Applicant is not challenging the Respondent’s constitutional right to investigate crime. Instead, it is the process used in the process before the subordinate Court.
65. That the power was applied unlawfully and in violation of the Applicant’s right and orders issued are subject to recall and quashing by this Court. The Applicant refers to the cases of Ochillah -Vs- DPP 2022 KEHC 15455 KLR where search warrants were revoked by the High Court, the case of DPP -Vs- Ibrahim M Chengo (2019) eklr where trial Court orders on denovo proceedings were quashed. Ngetich vs Republic [2023] KEHC 20155 KLR & Walingo vs Republic [2023] KEHC 315 (KLR
RESPONDENT’S SUBMISSIONS.
66. The Respondent frames issues for determination as :
a) Whether Sacco Societies Regulatory Authority SASRA has powers to investigate criminal matters ,
b) Whether SSFIU is an independent investigative body ,whether the Cooperative Tribunal has jurisdiction whether the Directorate of Criminal investigations has power to investigate suspected fraud cases in Saccos,
c) Whether the orders contravene the Data Protection Act
d) Whether orders were correct legal and proper.
67. That SASRA was established under Section 5 and Section 48 of the Sacco Societies Act with the mandate to undertake inspection or require Sacco to submit reports and financial affairs or deposit taking to enable the authority evaluate societies’ financial affairs.
68. That section 49 (a) of the Act the Authority has mandate of assisting investigative authority on matters of suspected fraud of malpractice in Sacco by identifying such matters for referral or upon request. The Respondent refers to the case of EG & 7 Others --Vs- Attorney General, DKM & 9 others Katiba Institute amicus Petition 150 234 of 2016
69. Further that inspection is different from investigations and the two words cannot be used interchangeably. Section 48 recognizes investigative authorities. That inspection is the direct physical examination review of something to determine its condition and compliance with regulation. On the other hand investigations is the comprehensive inquiry into a specific event allegation or issue and gathering evidence. The Authority has mandate to assist investigation of suspected fraud.
70. The SSFIU is an administrative unit of the Directorate of Criminal investigations and an understanding between SASRA and the Directorate of Criminal Investigations to deter fraud and protect member deposits.
71. The Memorandum of Understanding is not binding, further, SSFIU is not backed by statutory instruments establishing it with exclusive investigatory powers. The gazette notice merely published and did not establish it. The officers deployed to the SSFIU are not independent and work under authority of the Directorate of Criminal Investigations.
72. The Respondent also contends that the Cooperative Tribunal established under Section 65 of the Sacco Societies Act does not have jurisdiction over suspected fraud by board members which is the precinct of law enforcement agencies.
73. That the Directorate of Criminal Investigations has power to investigate suspected fraud under Section 35 of the National Police Service Act and Article 243 of the Constitution . The Respondent also relies on the case of Dande & 3 others- Vs- Office of the Inspector General and further urges that the Director of Criminal investigations acted within their constitutional mandate.
74. That the revision proceedings filed are directed to the Court to usurp the Respondent constitutional mandate and to direct it how and who to investigate the matter.
75. The Respondent’s actions are legitimate since the complaint is related to illegality and economic crimes.
76. On whether the impugned orders contravened the Data Protection Act, it is submitted that the documents sought are meant to aid in investigations. That processing of personal data is exempted from the provisions of the Data Protection Act under Section 35 of the Act on grounds of public interest. Further that Section 56 of the Act provides that collection of and disclosure of personal data by the controller or data processor is allowed in suspected and unlawful activity.
77. That the impugned orders do not violate the Data Protection Act and no prejudice will be occasioned by investigations. The Applicant had not shown how the depositors will be at risk .In this case the depositors are the complainants and have lodged request for the investigations in the complaint letter dated 26/1/2025.
78. The Respondent urged that the orders are not vague or overboard .That the correct and proper orders were issued under the appropriate sections of the law. The case of Prosecutor –Vs Stephen Lesinko (2018) eklr set principles which guides under Section 362 of the Criminal Procedure Code and that orders should be grossly erroneous no compliance with the law.
79. The case of Francis Njau Njoroge & Another t/a Francom General Merchants-Vs- Insurance Regulatory Authority & 5 Others (2018) eklr on search warrants .
ANALYSIS & DETERMINATION
80. The Court considered pleadings and submissions by parties pursuant to the Application filed on 18/3/2025 under Certificate of Urgency and the Court on 20/3/2025 granted the temporary /interim orders of stay of execution of Court orders granted in CMCCE076 of 2025 pending hearing and determination.
81.The issues that emerge for determination are the following;
Constitutional and/or legal mandate of the various Investigative institutions; DCI, SASRA, SSIFU
The Complaint/Anonymous Letter received by DCI EACC KRA & Applicant Sacco is the subject of investigations; who how when and where should investigations be conducted?
Are the Trial Court orders pursuant to Section 118 & 120 of CPC be upheld or set aside?
Should the temporary /interim orders of stay of the Trial Court orders be upheld or set aside?
82. The Legal mandate of Kenya Police Service is stipulated in Article 244(b) & 245 4 (a) of the Constitution of Kenya .
83.The National Police Service Act outlines functions of ALL OFFICERS in the Kenya Police Service in Section 24 of the Act and specifically functions of DCI in Section 35 of the Act as follows;
35. Functions of the Directorate
The Directorate shall—
(a)collect and provide criminal intelligence;
(b)undertake investigations on serious crimes including homicide, narcotic crimes, human trafficking, money laundering, terrorism, economic crimes, piracy, organized crime, and cyber crime among others;
(c)maintain law and order;
(d)detect and prevent crime;
(e)apprehend offenders;
(f)maintain criminal records;
(g)conduct forensic analysis;
(h)execute the directions given to the Inspector-General by the Director of Public Prosecutions pursuant to Article 157(4) of the Constitution;
(i)coordinate country Interpol Affairs;
(j)investigate any matter that may be referred to it by the Independent Police Oversight Authority; and
(k)perform any other function conferred on it by any other written law.
84.Therefore, it is the responsibility of Police Officers under Section 24 of the Act to conduct investigations and more specifically the Directorate of Investigations to investigate serious crimes as prescribed under Section 35 of the Act . That is not in contention and the process of obtaining the Court order was lawful.
85.The issue in contention as raised by Applicant is that the Applicant is a Sacco and there is SASRA that regulates Saccos and specifically Police Unit SSIFU that is legally mandated to conduct inspection and investigations.
86.Section 48 -52 of the Sacco Society Act refers to the Authority’s power to inspect and evaluate financial situation. Section 48(b) particular provides That the Authority shall :
“…. undertake inspections or require a Sacco society to submit information and reports on its financial affairs of the deposit-taking business to enable the Authority to evaluate the society''s financial condition.”
87. Section 49 of the Act provides for the power to inspect – THAT
Powers of the Authority to inspect
1. The Authority may, at any time and from time to time, and shall, if so directed by the Cabinet Secretary, cause an inspection to be made by any person authorized by the Authority in writing of any Sacco society and of its books, accounts and records.
2. The Authority shall assist any investigative authority regarding matters of suspected fraud or malpractice in Sacco societies either by identification of such matters for referral or at the request of such authority.
3. Where an inspection is made under subsection (1), the society concerned and every officer or employee thereof shall produce and make available to the person making the inspection, all books, accounts, records and other documents of the Sacco society and such correspondence, statements and information relating to the society as the person making the inspection may require, and within such period as he may direct in writing.
4. A person who fails to produce any books, accounts, records, documents, correspondence, statements or the information required under subsection (2), within the period specified in the relevant direction, commits an offence.
5. The person making the inspection shall prepare and submit a report to the Authority, and the report shall state—
a) any breach or contravention of any of provisions of this Act or any regulations made under this Act;
b) any irregularity in the manner of conduct of the inspected society; (c) any mismanagement of a Sacco society; and
c) any other matter relating to a Sacco society not consistent with sound and prudent business practice
88. Section 50 provides that the Authority shall have power to advice and direct action to be taken where a Sacco has breached the Act and/or member deposits are at stake.
51. Supervisory enforcement actions
Where the Authority determines that a Sacco society conducts its business in a manner contrary to the provisions of this Act or of any regulations made thereunder or any other Act or in any manner detrimental to or not in the best interests of its members or members of the public, or a Sacco society is undercapitalized, the Authority shall—
(a)restrict, suspend or prohibit the payment of dividends by the society;
(b)prohibit the conversion of any profits of the society into capital;
(c) direct the suspension or removal of any officer involved in such conduct from the service of society;
(d) require the society to reconstitute its board of directors;
(e)withhold branch or other corporate approval with respect to such society;
(f)undertake regular inspections of that society;
(g)order the society to submit to the Authority within forty five days a capital restoration plan to restore the society to capital adequacy as prescribed in section 29 or in the case of issues unrelated to capital such as violations of law, a plan to resolve all deficiencies to the satisfaction of the Authority;
(h)prohibit the society from awarding any bonuses, or increments in salary, emoluments and other benefits of all directors and officers of the society;
(i)appoint a person suitably qualified and competent in the opinion of the Authority to advise and assist the society in designing and implementing the capital restoration plan or other corrective action plan and the person appointed shall regularly report to the Authority on the progress of the plan;
(j)impose restrictions on growth of assets or liabilities of the society as it deems fit;
(k)restrict the rate of interest on deposits payable by the society to such rates as the Authority shall determine; and
(l)order the society to do any or take such other action that the Authority may deem necessary to rectify a capital deficiency or other weakness.
(m)impose financial penalties on the society or any officer, director, committee member, employee or agent of the Society in such amounts as may be prescribed through regulations;
(n)issue an order placing the societ
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