REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT MARSABIT
CRIMINAL APPEAL DIVISION
CRIMINAL APPEAL NO. E035 OF 2024
SIMON GITAU……………………………..….……………..1 st APPELLANT
EDWARD KAMAU………………..………..……….……….2 nd APPELLANT
EZEKIEL NAMBALE……………….……………….…………3 rd APPELLANT
ABDI ISACKO MAMO………………………….…..……….4 th APPELLANT
TONY HALAKE………………………………….….………..5 th APPELLANT
VERSUS
REPUBLIC………………………………………….…………...RESPONDENT
( Being an appeal against both conviction and sentence arising from Marsabit SPMCR No E362 of 2021 delivered by Hon S.K. Arome (PM) on 14 th October 2024)
JUDGEMENT
A. INTRODUCTION
1. All the Appellants were charged with the offence of conspiracy to commit a felony contrary to Section 393 of the penal Code, Cap 63 laws of Kenya . The particulars were that; On diverse dates between 1 st January, 2018 and 10 th June 2021 at Marsabit Total petrol station in Marsabit Central sub county, jointly with others not before this court conspired together to commit a felony namely stealing by servant, stole Kshs.29,261,060/= the property of Total Marsabit Petrol station limited.
2. On count two, the 4 th Appellant, Abdi Isako Mamo was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 1 st January 2018 and 10 th January, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.8,031,431/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
3. On count three, the 3rd Appellant, Ezekiel Nambale was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 4 th December, 2019 and 5 th May, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.2,782,385/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
4. Finally, on count four, the 5th Appellant, Tony Halake was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 1 st January 2018 and 4 th June, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.907,090/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
5. The Appellants took plea and denied the charges faced. On full trial, the trial magistrate upon considering the evidence adduced by both parties and the subsequent submissions filed did find all the appellant’s guilty of the offence of they were charged with. After mitigation, the trial court proceeded to convict them and sentenced them to pay a fine of Kshs.500,000/= each and in default to serve two (2) years' imprisonment.
B. EVIDENCE AT TRIAL
6. PW1 Abdulhakim Omari Salim, confirmed that he was a director and the owner of the company that ran Total petrol station situated within Marsabit town. In early 2020 he realised that the sale returns were dwindling and that the said petrol station was struggling to refill/refuel itself. He inquired from the 1 st and 2 nd appellant who were the station manager and accountant respectively and they did inform him that the deficit had occurred due to uncollected debt. Despite his best efforts to steady the ship, the financial strain continued until the end of the said year.
7. At the beginning of 2021, he instructed his brother (PW3) to oversee recovery of the debt owed and to supervise the running of the station. He too noted that there were shortcomings between the returns given by the pump attendant manager and accountant respectively as the same were not tallying. He also noted the same from daily returns sent to the petrol stations WhatsApp group and when he visited the station, he did discover that some of the daily reconciliation reports were missing and the explanation given by the 1 st and 2 nd appellants was that they had disposed off (burnt) the same, which was against the company policy.
8. He then decided to call in his auditor (PW2) who did partial Audit of three months and discovered that Kshs.965,075/= was missing and thereafter opted to undertake a comprehensive audit for the period 1 st January 2018 to May 2021, which revealed losses amounting to Kshs.29,261,060/= . He reported the matter to the police and all the appellants, who were his workers were arrested as they had been implicated in the said fraud.
9. Under cross examination PW1 confirmed that the company did meet its operational expenses between 2017 to 2020 and that the daily sales reconciliation report were sent to him by the 1 st and 2 nd appellant through WhatsApp, but the returns excluded lubricants sales as that was handled separately by Farida Salah. He further confirmed that they did not operate a financial management system and he would analyse his business annually. He further reiterated that the pump attendants would report to the 1 st appellant, and both 1 st and 2 nd appellant would send him daily reconciliation reports of sales made through a WhatsApp group that they had jointly created for easy of communication.
10. He further confirmed that all employees would report to the 1 st appellant and when he realised that the company was suffering unexplained losses, he instructed his brother to run the show and that is when they discovered that pump readings had been altered, a collaboration effected between all the appellants. This had prompted him to call in the auditor who unearthed deeper malaise and resulted in the said employees being charged.
11. PW2 Micheal Mwangi Wachira, confirmed that he was a certified public accountant (No 2094) based at Nairobi and was requested by PW1 to undertake an in-depth audit and reconciliation of sales returns made by the petrol attendants using the stations banking’s and reconciliation reports. The initial report covered the period April 2020 to May 2021 and later also covered the period from 1 st January 2018 to May 2021.
12. Each pump was allocated to one attendant and he/she would be in charge of the said pump during the whole period of his shift. When starting and closing his/her shift the said pump attendant would note the readings on the daily reconciliation report, signed by the said attendant, which report would be handed over to the station manager to compute sales figures. This was done by multiplying the sales in litres by the selling price. The expected sales for the day would be arrived at after deducting sales sold on credit, sales paid for by credit cards, Mpesa and sales paid by Total BV cards. The balance after this would be cash sales for the day.
13. During the audit, they came across instances, where entries in the daily reconciliation report were incorrectly computed, where meter opening reading were not in agreement with the closing meter readings from the previous shift for the same pump and in one instance had been inflated by 200litres for a particular pump. The 1 st appellant would receive the daily reconciliation report from each attendant, he would then post the same on an Excel sheet and forward to PW1 through WhatsApp on daily basis, and also forward to the 2 nd appellant for daily accounting posting.
14. They had meticulously gone through the mangers reports on reconciliation for all pumps for each month of all the years under review, looked at the reports sent to the director and the different selling prices over the said period of time and established where the shortages would arise from, which was mainly due to variances contributed to by wrong recording at the daily reconciliation undertaken by customer pump attendants. Their report was contained in five volumes, which included all daily and monthly reconciliation reports for the period under review and produced it into evidence as Exhibit 3(i) to(v) and the Email and WhatsApp communication from the 1 st appellant to PW1 too was produced as Exhibit 6.
15. In summary, there were variance between the expected sales as computed using the pump meters and actual reported sales, and in the final analysis they discovered that 302,768 litres of fuel valued at Kshs.33,847,144/= could not be account for and individually the appellants, who were pump attendants were accountable as follows;
a) Abdi Isacko Abdi; discrepancy of 73,531 litres valued at Kshs.8,031,431/=
b) Ezekiel Nambale; discrepancy of 25,671 litres valued at Kshs.2,782,385/=
c) Hawo Hussein; discrepancy of 89,427 litres valued at Kshs.10,100,003/=
d) Tony Halake; discrepancy of 8,346 litres valued at Kshs.907,090 /=
16. Under cross examination, PW2 confirmed that the audit on credit sales was done, but he had not included it amongst the audit relating to losses incurred due to false reconciliation entries, which findings, they had tabulated separately. He had also not come across a prior audit or any standard document outlining organizational procedure for the said service station. According to him it was the 1 st appellant who was the station manager and he had reached that assumption based on the reporting structures noted during the said audit process.
17. PW3 Salah Omar Salim, recalled that in December 2020, his elder brother, PW1 called him and requested him to take over the overall supervision of their petrol station, where he also ran his independent business. There were two shifts at the said station and each attendant would be given his daily reconciliation form, where they would fill opening meter readings at the start of the said shift and also log in closing meter readings when the shift came to an end. The difference between the opening and closing readings gave the sales for the said shift. The attendant would also hand over the said form to the station manager who would do his own reconciliation to ensure that the entries made therein were accurate, after which he would then send the reconciliation report on daily basis to PW1.
18. On route check of the said daily reconciliation forms, he realised that some of the entries were tampered with and informed PW1, since he suspected that there was collusion between the accused persons. Later he and PW1 also went through the said reconciliation reports and decided to call in PW2, to undertake the comprehensive audit, which confirmed their worst fears and resulted in the appellants being charged with the offence before court.
19. Under cross examination PW3 clarified that he had his own business within the service station, and was not employed by PW1 to work for the said petrol station. In December 2020 at the request of PW1 he had supervised the station workers and noted the abnormality, which he reported.
20. PW4 PC Jackson Mauso testified that after PW1 had raised his complaint, he did investigate this case and noted how the daily sales were recorded by the pump attendants after every shift and reconciled by the 1 st and 2 nd appellants as the station manager and accountant respectively. It was established that several entries had been altered creating a difference in the amount of petrol sold (which he randomly picked from the audit report and highlighted) and over the period of time it was established by the audit undertaken that the station had lost a total of Kshs.29,261,060/= worth of petroleum products sold and which the appellants could not account for. After investigations were complete, he did arrest the said appellants and arraigned them before the court to face the charges levelled against them.
21. Under cross examination he confirmed that he relied on the audit undertaken to charge the appellants and had noted that PW3 was the supervisor at the said Petrol station. He reiterated that the pump meter readings had been altered thereby creating inconsistencies in the amount of petrol sold and further agreed with the appellants counsel that supporting documents in the audit report were photocopies that were not certified.
22. PW5 Guyo Jirmo confirmed that he worked as a pump attendant at PW1’s petrol station and his work was to serve customers and would fill the reconciliation form for his petrol pump at the beginning and end of his shift. He produced a sample of the said form into evidence. Under cross examination he confirmed that he did not have his employment letter in court and reiterated that they would close/sign the said reconciliation form before the 1 st appellant. He also clarified that Farida Salah was not the forecourt manager, but did exclusively deal with lubricants at the said station. He was also aware of the black book used to capture dip readings and they also had a meter reading book which captured fuel readings and available stock.
23. He reiterated that each individual pump attendant would fill the daily returns form for each pump and hand it over to PW1, who would go through the same and confirm that the details therein were accurate after which each pump attendant would sign the reconciliation forms to authenticate the same. They also did not deal with the black books, master control book or reading book.
24. The prosecution closed their case at that point and all the appellants were placed on their defence. The 1 st Appellant confirmed that he was the former manager at Marsabit Total petrol station and was in charge of human resource and corporate compliance issues. Overall, he would report to PW1 and on the ground was supervised by PW3, since it was a family business and they would organise how to purchase the stock sold and accounts. He also worked with the accountant, forecourt supervisor attendant, lubricant attendant and direct procurement officers in Nairobi. Further it was his evidence that the customer/petrol pump attendants would report to the forecourt supervisor one Farid Salah.
25. He further clarified that he never handled any cash transacted at the petrol station and that they had established a common WhatsApp group, where he would report the daily occurrence to PW1, twice a day. He recalled that in April 2021, the 2 nd appellant had a serious fall out with PW3 and tendered his resignation and later in May 2021 and audit was conducted to facilitate his clearance. To facilitate the said audit, he did provide the auditor with invoices, delivery notes, sales record (master stock control book (black book), financial documents, bank statements, cash/Mpesa records sales record, Total Kenya BV cards sales records and outstanding creditors records. He also sent him all the emails and WhatsApp communication (Exhibit 6).
26. He confirmed that the daily sales record would capture all the data from each pump for both shifts A & B and it would also give a summary of all events that occurred on daily basis at the station. By and large the station had not recorded any losses, but in the few instances when the same had occurred, the same were within acceptable margins. In one instance there was a mis recording, where they thought that they had lost 240 litres of petrol and this had led to the pump attendant being arrested, but later it was discovered that the forecourt supervisor had made an error in her recordings and the matter was dropped. After the audit was complete, PW2 did inform him that the station had lost a colossal amount of money, of about Kshs 40 million , which to him was not possible and his request to be supplied with a copy of the said audit report was rejected.
27. Further, the auditor had informed him that the staff had conferred to him that they (him and the 2 nd appellant) would retain Kshs.5,000/= on daily basis, which they would share and any staff member who would fail to deliver this sum would be threatened with dismissal. He outrightly denied this allegation and stated that it was not true. After the audit, the matter was reported to the police and they all went and recorded their statements. The 1 st appellant emphasized that PW3 was trained by Total Kenya on operational checks and balances and on how to detect variances on stock movement and they had maintained strict compliance of the same to ensure that no outside stock was sold within their business premises.
28. Under cross examination, he maintained that all the pump attendants worked under him, but reported to the forecourt manager. He was also the administrator of the station WhatsApp group where he reported the daily returns to PW1. He challenged the findings of the audit report on the basis that the said auditors had not used the black book, which contained original entries, and further noted that the entries for March and April 2021 too were missing.
29. Under further cross examination from the complaint’s counsel, he admitted that he signed the employment contract of all employee apart from that of the 2 nd appellant, and would report to both PW1 and PW3, through WhatsApp and email, which were the stand mode of communication. He insisted that the forecourt manager, Farid salah is the one who would receive daily reconciliation reports of each pump attendant surrendered at the close of each shift and confirmed that the same were captured in the audit bundle produced.
30. Further, he emphasized that the forecourt manager and pump attendant would individually take the relevant meter reading, which must collaborate and then would calculate the daily sales using the difference between the opening and closing readings. The said findings would be forwarded to him and he would in turn forward the same to PW1 and head of accounts Nairobi, Mwangi Kariuki. He confirmed that audit report Volume 6 contained the summary of WhatsApp communication shared over the said period. If there were any lapses which occurred, then PW3 would be the right person to answer the same and affirmed that he never verified the information received from the forecourt manager before forwarding the same to PW1.
31. The 4 th appellant (DW2) confirmed that he worked as a pump attendant at the said station and after the audit had been carried out, he was summoned by PW1, who demanded that he accounts for the loss established. He denied any wrong doing and was later arrested and charged with the offence before court. He confirmed that as a pump attendant he would take daily pump readings at the start and close of his shift with his supervisor and the same would be recorded in the black book by the supervisor and his daily reconciliation report, and the black book data had to tally. Under cross examination he went through the audit report and confirmed several inconsistencies/ variances noted over the audit period.
32. One Hawo Hussein, the 5 th Accused person also testified and his evidence mirrored that of the 4 th Appellant, and it is noted that he did not Appeal against the conviction and sentence passed.
33. The 3 rd Appellant (DW4) also confirmed that he worked as a pump attendant and filled in daily reconciliation forms, which they got from the station supervisor, and would individually fill the same at the beginning and end of every shift. The supervisor too, would record the same entries in the black book. After the audit, he was summoned by PW1 and interrogated over the sums lost under his watch and later were escorted to the police station to record their statements. Under cross examination he was taken through the audit report and confirmed the various inconsistent entries noted. The evidence of the 5 th Appellant (DW5) evidence was similar to that of the other pump attendants as captured above
34. The 2nd Appellant (DW6) confirmed that he was the station accountant at Marsabit Total petrol station and used quick books system to run the station accounts until 31.04.2021 when he resigned. His role was to keep customer statements recorded in the system and also post all the sales to the system indicating the different payment modes of payment, which included payments made through, BV card, Visa Mpesa, credit sales or cash. In instances where discrepancies arose, he would investigate the same and either resolve it amicably, correct wrong posting and in some instances deduct payment from the pump attendant salary. His other duty was to undertake stock control movement, which involved reading opening meter readings on all nozzles at the start of the month and closing meter readings at the end of the month and send his report to Total headquarters-Nairobi every month.
35. He would also audit lubricants sold, but sales received from the same were handled by PW3 and never forwarded to the station account. After considering the sales, outstanding debts, customer aging analysis and other customers consuming fuel through credit and outstanding balances he noted that the company debt stood at Kshs.28,059,936.31/= at 31.03.2020 and the same had grown to Kshs.40,000,000/= by the time he left employment. He had also reported to PW1 that Total headquarters had unlawfully deducted a total of Kshs.12,000,000/= on account of fuel sold via Total BV card and that too had to be taken into consideration when looking at the alleged losses made by the station.
36. Under cross examination he confirmed that the situational report which he had referred to the period of 2018 going backward and did not relate the period going forward, though the customer aging report referred to the period from 2018 up to 31.03.2020. He confirmed that PW3 run his own business known as Baslum Auto spares within the said petrol station and his report had noted that some customers had alleged that they had paid some money owed to the petrol station to him, but which in turn, he had not forwarded to the petrol station. He also clarified that debt were assets/not losses and the same was not related to the case at hand.
37. The 2 nd accused further confirmed that he interacted with daily reconciliation report, worked as a team with the 1 st appellant and reported directly to PW1. In particular his role was to enter daily sales record based on the daily reconciliation report and where there were variances, he would note the same and report to PW1. He also confirmed that though debtor owed to the company was Kshs 40 million , the same was not related to the case at hand. He insisted that there were no alterations at the pump and he would have pick up the same during his monthly reconciliation assessment of fuel sold.
38. DW7 Khadija Yusuf confirmed that she worked at the petrol station as a pump attendant and corroborated the evidence of 3 rd and 4 th Appellant herein.
39. At the close of trial, the learned trial magistrate did consider all the evidence adduced and found that there was direct and reliable evidence to convict all the Appellant’s of the offence they were charged with and proceeded to convict them under Section 215 of the criminal procedure code . After mitigation, the trial court did sentenced them to pay a fine of Kshs.500,000/= each and in default to serve a sentence of two (2) years imprisonment.
C. THE APPEAL
40. Dissatisfied by the conviction and sentence passed, the Appellant’s filed their joint petition of appeal and raised the following grounds of appeal that;
(a) . The learned trial magistrate erred in law and fact by disregarding the legal requirements for the admissibility of electronic evidence in accordance with Section 106B of the Evidence Act. The court admitted electronic evidence, including WhatsApp messages and accounting software records, without the mandatory certificate required under Section 106B(4) of the Evidence Act. This failure rendered the electronic evidence inadmissible and unreliable.
(b) The learned trial magistrate erred in law and fact by failing to authenticate the electronic records relied upon by the prosecution. The court overlooked the legal requirement that the prosecution must prove the reliability of the systems used to generate the electronic records, as per Sections 78A and 106B of the Evidence Act. The prosecution failed to demonstrate that the computers used were functioning correctly or that the records were produced in the ordinary course of business.
(c) The learned trial magistrate erred in law and fact by failing to properly evaluate the inconsistencies in the testimonies of the prosecution witnesses. The witnesses, including PW1, PW3, and PW4, gave contradictory accounts of key facts, such as who reported the alleged fraudulent activities to the police. These inconsistencies were not adequately addressed, casting doubt on the credibility of the prosecution's case.
(d) The learned trial magistrate erred in law and fact by relying on circumstantial evidence that did not meet the required legal standards. The prosecution's circumstantial evidence, particularly the reconciliation reports, was unreliable, as the reports lacked serial numbers, dates, and signatures. Some reports were also missing, and the chain of circumstances was incomplete. The court failed to ensure that the circumstantial evidence excluded any reasonable hypothesis of innocence, as required by law.
(e) The learned trial magistrate erred in law and fact by failing to consider the defense's alternative hypotheses regarding the alleged fraud. The defense presented plausible explanations, including operational errors and potential malice by the complainant, which were not adequately considered by the court. The court instead improperly focused solely on the prosecution's evidence, despite these alternative explanations.
(f) The learned trial magistrate erred in law and fact by failing to address the non-disclosure of the "black book", a critical piece of evidence in the case. The prosecution failed to produce this book, which was allegedly used to record transactions at the petrol station. The court did not compel its disclosure, thereby allowing the prosecution to suppress material evidence that could have exonerated the accused.
(g) The learned trial magistrate erred in law and fact by failing to recognize the bias and malice in the investigation, as evidenced by the complainant's coercive actions towards witnesses. The defense witnesses testified that they were pressured by the complainant to implicate the 1st and 2nd accused persons, and upon their refusal, they were added as accused persons. This clear bias and malice by the complainant undermined the integrity of the investigation and should have been given more weight by the court.
(h) The learned trial magistrate erred in law and fact by failing to find that the prosecution did not prove the alleged financial losses beyond reasonable doubt. The prosecution did not produce key financial records, such as invoices or records of fuel purchased and sold, that would have established whether any losses actually occurred. The failure to provide this critical evidence seriously undermines the prosecution's case.
(i) The learned trial magistrate erred in law and fact by failing to recognize the flaws in the charges against the accused. The charges, particularly those regarding tampering with pump meter readings, were vague and lacked specific details about the alleged actions of the appellants. The charges failed to outline how the appellants allegedly altered the meter readings or the specific quantities of fuel involved. This lack of specificity prejudiced the accused and resulted in an unfair trial.
41. The Appellant’s prayed that their conviction and sentence be quashed and that they be set free.
D. SUBMISSIONS
(i) The Appellants Submissions
42. The appellants relied on their submissions dated 5 th December 2024 and stated that they had a right to be presumed innocent as guaranteed under Article 50(2), (a) of the Constitution and that the state had to prove their case beyond reasonable doubt. Reliance was placed in the case of Woolmington Versus DPP 1935 AC 462, Bakare Vs State 1985 2NL WR & Miller Vrs Minister of Pensions 1942 AC for emphasis. They rehashed the daily activities carried out in the forecourt and pointed out that all items sold, including fuel products (petrol diesel and kerosene). LPG, Lubricants and car care products were all recorded in a book known as “ Master control stock book – black book ”, kept under the custody of the forecourt manager and it was a key document as it was in the said book, that all stock movement was recorded at the end of every shift. They also acknowledged that each attendant recorded their numbers in the daily sales reconciliation form at the end of each shift and the sale had to correspond with details of the black book.
43. The sales would be transacted under different modes including credit cards, invoices (for credit customers), Mpesa, Total Kenya Bon Voyage card (BV) as well as cash transactions and at the end of the day sales reconciliation would be undertaken. They faulted the prosecution for failing to avail the “black book” to their detriment, considering that it was under the custody of the complainant and was a vital book in collating all sales data generated for financial reporting by the 2 nd Appellant.
44. The trial Magistrate had failed to appreciate that PW1, PW2 and PW3 had all denied the existence of this black book and/or its use to record daily sales, which book was also the fulcrum without which, no proper audit could have be undertaken. Further their conviction was made without proper consideration of the evidence, especially the audit report, which lacked evidence to show that they had altered the pump meter readings, nor were the said reconciliation reports serialized to follow shift sequence, some had no dates or signatures and therefore could not be used as forensic
[...truncated]
IN THE HIGH COURT OF KENYA AT MARSABIT
CRIMINAL APPEAL DIVISION
CRIMINAL APPEAL NO. E035 OF 2024
SIMON GITAU……………………………..….……………..1 st APPELLANT
EDWARD KAMAU………………..………..……….……….2 nd APPELLANT
EZEKIEL NAMBALE……………….……………….…………3 rd APPELLANT
ABDI ISACKO MAMO………………………….…..……….4 th APPELLANT
TONY HALAKE………………………………….….………..5 th APPELLANT
VERSUS
REPUBLIC………………………………………….…………...RESPONDENT
( Being an appeal against both conviction and sentence arising from Marsabit SPMCR No E362 of 2021 delivered by Hon S.K. Arome (PM) on 14 th October 2024)
JUDGEMENT
A. INTRODUCTION
1. All the Appellants were charged with the offence of conspiracy to commit a felony contrary to Section 393 of the penal Code, Cap 63 laws of Kenya . The particulars were that; On diverse dates between 1 st January, 2018 and 10 th June 2021 at Marsabit Total petrol station in Marsabit Central sub county, jointly with others not before this court conspired together to commit a felony namely stealing by servant, stole Kshs.29,261,060/= the property of Total Marsabit Petrol station limited.
2. On count two, the 4 th Appellant, Abdi Isako Mamo was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 1 st January 2018 and 10 th January, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.8,031,431/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
3. On count three, the 3rd Appellant, Ezekiel Nambale was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 4 th December, 2019 and 5 th May, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.2,782,385/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
4. Finally, on count four, the 5th Appellant, Tony Halake was charged with the offence of stealing by servant contrary to section 281 of the Penal code . The particulars were that on diverse dated between 1 st January 2018 and 4 th June, 2021 at Marsabit town Total Petrol station in Marsabit central sub county within Marsabit town, being an employee of Total Marsabit service station stole cash Kshs.907,090/= the property of Total Marsabit service station which came into his possession by virtue of his employment.
5. The Appellants took plea and denied the charges faced. On full trial, the trial magistrate upon considering the evidence adduced by both parties and the subsequent submissions filed did find all the appellant’s guilty of the offence of they were charged with. After mitigation, the trial court proceeded to convict them and sentenced them to pay a fine of Kshs.500,000/= each and in default to serve two (2) years' imprisonment.
B. EVIDENCE AT TRIAL
6. PW1 Abdulhakim Omari Salim, confirmed that he was a director and the owner of the company that ran Total petrol station situated within Marsabit town. In early 2020 he realised that the sale returns were dwindling and that the said petrol station was struggling to refill/refuel itself. He inquired from the 1 st and 2 nd appellant who were the station manager and accountant respectively and they did inform him that the deficit had occurred due to uncollected debt. Despite his best efforts to steady the ship, the financial strain continued until the end of the said year.
7. At the beginning of 2021, he instructed his brother (PW3) to oversee recovery of the debt owed and to supervise the running of the station. He too noted that there were shortcomings between the returns given by the pump attendant manager and accountant respectively as the same were not tallying. He also noted the same from daily returns sent to the petrol stations WhatsApp group and when he visited the station, he did discover that some of the daily reconciliation reports were missing and the explanation given by the 1 st and 2 nd appellants was that they had disposed off (burnt) the same, which was against the company policy.
8. He then decided to call in his auditor (PW2) who did partial Audit of three months and discovered that Kshs.965,075/= was missing and thereafter opted to undertake a comprehensive audit for the period 1 st January 2018 to May 2021, which revealed losses amounting to Kshs.29,261,060/= . He reported the matter to the police and all the appellants, who were his workers were arrested as they had been implicated in the said fraud.
9. Under cross examination PW1 confirmed that the company did meet its operational expenses between 2017 to 2020 and that the daily sales reconciliation report were sent to him by the 1 st and 2 nd appellant through WhatsApp, but the returns excluded lubricants sales as that was handled separately by Farida Salah. He further confirmed that they did not operate a financial management system and he would analyse his business annually. He further reiterated that the pump attendants would report to the 1 st appellant, and both 1 st and 2 nd appellant would send him daily reconciliation reports of sales made through a WhatsApp group that they had jointly created for easy of communication.
10. He further confirmed that all employees would report to the 1 st appellant and when he realised that the company was suffering unexplained losses, he instructed his brother to run the show and that is when they discovered that pump readings had been altered, a collaboration effected between all the appellants. This had prompted him to call in the auditor who unearthed deeper malaise and resulted in the said employees being charged.
11. PW2 Micheal Mwangi Wachira, confirmed that he was a certified public accountant (No 2094) based at Nairobi and was requested by PW1 to undertake an in-depth audit and reconciliation of sales returns made by the petrol attendants using the stations banking’s and reconciliation reports. The initial report covered the period April 2020 to May 2021 and later also covered the period from 1 st January 2018 to May 2021.
12. Each pump was allocated to one attendant and he/she would be in charge of the said pump during the whole period of his shift. When starting and closing his/her shift the said pump attendant would note the readings on the daily reconciliation report, signed by the said attendant, which report would be handed over to the station manager to compute sales figures. This was done by multiplying the sales in litres by the selling price. The expected sales for the day would be arrived at after deducting sales sold on credit, sales paid for by credit cards, Mpesa and sales paid by Total BV cards. The balance after this would be cash sales for the day.
13. During the audit, they came across instances, where entries in the daily reconciliation report were incorrectly computed, where meter opening reading were not in agreement with the closing meter readings from the previous shift for the same pump and in one instance had been inflated by 200litres for a particular pump. The 1 st appellant would receive the daily reconciliation report from each attendant, he would then post the same on an Excel sheet and forward to PW1 through WhatsApp on daily basis, and also forward to the 2 nd appellant for daily accounting posting.
14. They had meticulously gone through the mangers reports on reconciliation for all pumps for each month of all the years under review, looked at the reports sent to the director and the different selling prices over the said period of time and established where the shortages would arise from, which was mainly due to variances contributed to by wrong recording at the daily reconciliation undertaken by customer pump attendants. Their report was contained in five volumes, which included all daily and monthly reconciliation reports for the period under review and produced it into evidence as Exhibit 3(i) to(v) and the Email and WhatsApp communication from the 1 st appellant to PW1 too was produced as Exhibit 6.
15. In summary, there were variance between the expected sales as computed using the pump meters and actual reported sales, and in the final analysis they discovered that 302,768 litres of fuel valued at Kshs.33,847,144/= could not be account for and individually the appellants, who were pump attendants were accountable as follows;
a) Abdi Isacko Abdi; discrepancy of 73,531 litres valued at Kshs.8,031,431/=
b) Ezekiel Nambale; discrepancy of 25,671 litres valued at Kshs.2,782,385/=
c) Hawo Hussein; discrepancy of 89,427 litres valued at Kshs.10,100,003/=
d) Tony Halake; discrepancy of 8,346 litres valued at Kshs.907,090 /=
16. Under cross examination, PW2 confirmed that the audit on credit sales was done, but he had not included it amongst the audit relating to losses incurred due to false reconciliation entries, which findings, they had tabulated separately. He had also not come across a prior audit or any standard document outlining organizational procedure for the said service station. According to him it was the 1 st appellant who was the station manager and he had reached that assumption based on the reporting structures noted during the said audit process.
17. PW3 Salah Omar Salim, recalled that in December 2020, his elder brother, PW1 called him and requested him to take over the overall supervision of their petrol station, where he also ran his independent business. There were two shifts at the said station and each attendant would be given his daily reconciliation form, where they would fill opening meter readings at the start of the said shift and also log in closing meter readings when the shift came to an end. The difference between the opening and closing readings gave the sales for the said shift. The attendant would also hand over the said form to the station manager who would do his own reconciliation to ensure that the entries made therein were accurate, after which he would then send the reconciliation report on daily basis to PW1.
18. On route check of the said daily reconciliation forms, he realised that some of the entries were tampered with and informed PW1, since he suspected that there was collusion between the accused persons. Later he and PW1 also went through the said reconciliation reports and decided to call in PW2, to undertake the comprehensive audit, which confirmed their worst fears and resulted in the appellants being charged with the offence before court.
19. Under cross examination PW3 clarified that he had his own business within the service station, and was not employed by PW1 to work for the said petrol station. In December 2020 at the request of PW1 he had supervised the station workers and noted the abnormality, which he reported.
20. PW4 PC Jackson Mauso testified that after PW1 had raised his complaint, he did investigate this case and noted how the daily sales were recorded by the pump attendants after every shift and reconciled by the 1 st and 2 nd appellants as the station manager and accountant respectively. It was established that several entries had been altered creating a difference in the amount of petrol sold (which he randomly picked from the audit report and highlighted) and over the period of time it was established by the audit undertaken that the station had lost a total of Kshs.29,261,060/= worth of petroleum products sold and which the appellants could not account for. After investigations were complete, he did arrest the said appellants and arraigned them before the court to face the charges levelled against them.
21. Under cross examination he confirmed that he relied on the audit undertaken to charge the appellants and had noted that PW3 was the supervisor at the said Petrol station. He reiterated that the pump meter readings had been altered thereby creating inconsistencies in the amount of petrol sold and further agreed with the appellants counsel that supporting documents in the audit report were photocopies that were not certified.
22. PW5 Guyo Jirmo confirmed that he worked as a pump attendant at PW1’s petrol station and his work was to serve customers and would fill the reconciliation form for his petrol pump at the beginning and end of his shift. He produced a sample of the said form into evidence. Under cross examination he confirmed that he did not have his employment letter in court and reiterated that they would close/sign the said reconciliation form before the 1 st appellant. He also clarified that Farida Salah was not the forecourt manager, but did exclusively deal with lubricants at the said station. He was also aware of the black book used to capture dip readings and they also had a meter reading book which captured fuel readings and available stock.
23. He reiterated that each individual pump attendant would fill the daily returns form for each pump and hand it over to PW1, who would go through the same and confirm that the details therein were accurate after which each pump attendant would sign the reconciliation forms to authenticate the same. They also did not deal with the black books, master control book or reading book.
24. The prosecution closed their case at that point and all the appellants were placed on their defence. The 1 st Appellant confirmed that he was the former manager at Marsabit Total petrol station and was in charge of human resource and corporate compliance issues. Overall, he would report to PW1 and on the ground was supervised by PW3, since it was a family business and they would organise how to purchase the stock sold and accounts. He also worked with the accountant, forecourt supervisor attendant, lubricant attendant and direct procurement officers in Nairobi. Further it was his evidence that the customer/petrol pump attendants would report to the forecourt supervisor one Farid Salah.
25. He further clarified that he never handled any cash transacted at the petrol station and that they had established a common WhatsApp group, where he would report the daily occurrence to PW1, twice a day. He recalled that in April 2021, the 2 nd appellant had a serious fall out with PW3 and tendered his resignation and later in May 2021 and audit was conducted to facilitate his clearance. To facilitate the said audit, he did provide the auditor with invoices, delivery notes, sales record (master stock control book (black book), financial documents, bank statements, cash/Mpesa records sales record, Total Kenya BV cards sales records and outstanding creditors records. He also sent him all the emails and WhatsApp communication (Exhibit 6).
26. He confirmed that the daily sales record would capture all the data from each pump for both shifts A & B and it would also give a summary of all events that occurred on daily basis at the station. By and large the station had not recorded any losses, but in the few instances when the same had occurred, the same were within acceptable margins. In one instance there was a mis recording, where they thought that they had lost 240 litres of petrol and this had led to the pump attendant being arrested, but later it was discovered that the forecourt supervisor had made an error in her recordings and the matter was dropped. After the audit was complete, PW2 did inform him that the station had lost a colossal amount of money, of about Kshs 40 million , which to him was not possible and his request to be supplied with a copy of the said audit report was rejected.
27. Further, the auditor had informed him that the staff had conferred to him that they (him and the 2 nd appellant) would retain Kshs.5,000/= on daily basis, which they would share and any staff member who would fail to deliver this sum would be threatened with dismissal. He outrightly denied this allegation and stated that it was not true. After the audit, the matter was reported to the police and they all went and recorded their statements. The 1 st appellant emphasized that PW3 was trained by Total Kenya on operational checks and balances and on how to detect variances on stock movement and they had maintained strict compliance of the same to ensure that no outside stock was sold within their business premises.
28. Under cross examination, he maintained that all the pump attendants worked under him, but reported to the forecourt manager. He was also the administrator of the station WhatsApp group where he reported the daily returns to PW1. He challenged the findings of the audit report on the basis that the said auditors had not used the black book, which contained original entries, and further noted that the entries for March and April 2021 too were missing.
29. Under further cross examination from the complaint’s counsel, he admitted that he signed the employment contract of all employee apart from that of the 2 nd appellant, and would report to both PW1 and PW3, through WhatsApp and email, which were the stand mode of communication. He insisted that the forecourt manager, Farid salah is the one who would receive daily reconciliation reports of each pump attendant surrendered at the close of each shift and confirmed that the same were captured in the audit bundle produced.
30. Further, he emphasized that the forecourt manager and pump attendant would individually take the relevant meter reading, which must collaborate and then would calculate the daily sales using the difference between the opening and closing readings. The said findings would be forwarded to him and he would in turn forward the same to PW1 and head of accounts Nairobi, Mwangi Kariuki. He confirmed that audit report Volume 6 contained the summary of WhatsApp communication shared over the said period. If there were any lapses which occurred, then PW3 would be the right person to answer the same and affirmed that he never verified the information received from the forecourt manager before forwarding the same to PW1.
31. The 4 th appellant (DW2) confirmed that he worked as a pump attendant at the said station and after the audit had been carried out, he was summoned by PW1, who demanded that he accounts for the loss established. He denied any wrong doing and was later arrested and charged with the offence before court. He confirmed that as a pump attendant he would take daily pump readings at the start and close of his shift with his supervisor and the same would be recorded in the black book by the supervisor and his daily reconciliation report, and the black book data had to tally. Under cross examination he went through the audit report and confirmed several inconsistencies/ variances noted over the audit period.
32. One Hawo Hussein, the 5 th Accused person also testified and his evidence mirrored that of the 4 th Appellant, and it is noted that he did not Appeal against the conviction and sentence passed.
33. The 3 rd Appellant (DW4) also confirmed that he worked as a pump attendant and filled in daily reconciliation forms, which they got from the station supervisor, and would individually fill the same at the beginning and end of every shift. The supervisor too, would record the same entries in the black book. After the audit, he was summoned by PW1 and interrogated over the sums lost under his watch and later were escorted to the police station to record their statements. Under cross examination he was taken through the audit report and confirmed the various inconsistent entries noted. The evidence of the 5 th Appellant (DW5) evidence was similar to that of the other pump attendants as captured above
34. The 2nd Appellant (DW6) confirmed that he was the station accountant at Marsabit Total petrol station and used quick books system to run the station accounts until 31.04.2021 when he resigned. His role was to keep customer statements recorded in the system and also post all the sales to the system indicating the different payment modes of payment, which included payments made through, BV card, Visa Mpesa, credit sales or cash. In instances where discrepancies arose, he would investigate the same and either resolve it amicably, correct wrong posting and in some instances deduct payment from the pump attendant salary. His other duty was to undertake stock control movement, which involved reading opening meter readings on all nozzles at the start of the month and closing meter readings at the end of the month and send his report to Total headquarters-Nairobi every month.
35. He would also audit lubricants sold, but sales received from the same were handled by PW3 and never forwarded to the station account. After considering the sales, outstanding debts, customer aging analysis and other customers consuming fuel through credit and outstanding balances he noted that the company debt stood at Kshs.28,059,936.31/= at 31.03.2020 and the same had grown to Kshs.40,000,000/= by the time he left employment. He had also reported to PW1 that Total headquarters had unlawfully deducted a total of Kshs.12,000,000/= on account of fuel sold via Total BV card and that too had to be taken into consideration when looking at the alleged losses made by the station.
36. Under cross examination he confirmed that the situational report which he had referred to the period of 2018 going backward and did not relate the period going forward, though the customer aging report referred to the period from 2018 up to 31.03.2020. He confirmed that PW3 run his own business known as Baslum Auto spares within the said petrol station and his report had noted that some customers had alleged that they had paid some money owed to the petrol station to him, but which in turn, he had not forwarded to the petrol station. He also clarified that debt were assets/not losses and the same was not related to the case at hand.
37. The 2 nd accused further confirmed that he interacted with daily reconciliation report, worked as a team with the 1 st appellant and reported directly to PW1. In particular his role was to enter daily sales record based on the daily reconciliation report and where there were variances, he would note the same and report to PW1. He also confirmed that though debtor owed to the company was Kshs 40 million , the same was not related to the case at hand. He insisted that there were no alterations at the pump and he would have pick up the same during his monthly reconciliation assessment of fuel sold.
38. DW7 Khadija Yusuf confirmed that she worked at the petrol station as a pump attendant and corroborated the evidence of 3 rd and 4 th Appellant herein.
39. At the close of trial, the learned trial magistrate did consider all the evidence adduced and found that there was direct and reliable evidence to convict all the Appellant’s of the offence they were charged with and proceeded to convict them under Section 215 of the criminal procedure code . After mitigation, the trial court did sentenced them to pay a fine of Kshs.500,000/= each and in default to serve a sentence of two (2) years imprisonment.
C. THE APPEAL
40. Dissatisfied by the conviction and sentence passed, the Appellant’s filed their joint petition of appeal and raised the following grounds of appeal that;
(a) . The learned trial magistrate erred in law and fact by disregarding the legal requirements for the admissibility of electronic evidence in accordance with Section 106B of the Evidence Act. The court admitted electronic evidence, including WhatsApp messages and accounting software records, without the mandatory certificate required under Section 106B(4) of the Evidence Act. This failure rendered the electronic evidence inadmissible and unreliable.
(b) The learned trial magistrate erred in law and fact by failing to authenticate the electronic records relied upon by the prosecution. The court overlooked the legal requirement that the prosecution must prove the reliability of the systems used to generate the electronic records, as per Sections 78A and 106B of the Evidence Act. The prosecution failed to demonstrate that the computers used were functioning correctly or that the records were produced in the ordinary course of business.
(c) The learned trial magistrate erred in law and fact by failing to properly evaluate the inconsistencies in the testimonies of the prosecution witnesses. The witnesses, including PW1, PW3, and PW4, gave contradictory accounts of key facts, such as who reported the alleged fraudulent activities to the police. These inconsistencies were not adequately addressed, casting doubt on the credibility of the prosecution's case.
(d) The learned trial magistrate erred in law and fact by relying on circumstantial evidence that did not meet the required legal standards. The prosecution's circumstantial evidence, particularly the reconciliation reports, was unreliable, as the reports lacked serial numbers, dates, and signatures. Some reports were also missing, and the chain of circumstances was incomplete. The court failed to ensure that the circumstantial evidence excluded any reasonable hypothesis of innocence, as required by law.
(e) The learned trial magistrate erred in law and fact by failing to consider the defense's alternative hypotheses regarding the alleged fraud. The defense presented plausible explanations, including operational errors and potential malice by the complainant, which were not adequately considered by the court. The court instead improperly focused solely on the prosecution's evidence, despite these alternative explanations.
(f) The learned trial magistrate erred in law and fact by failing to address the non-disclosure of the "black book", a critical piece of evidence in the case. The prosecution failed to produce this book, which was allegedly used to record transactions at the petrol station. The court did not compel its disclosure, thereby allowing the prosecution to suppress material evidence that could have exonerated the accused.
(g) The learned trial magistrate erred in law and fact by failing to recognize the bias and malice in the investigation, as evidenced by the complainant's coercive actions towards witnesses. The defense witnesses testified that they were pressured by the complainant to implicate the 1st and 2nd accused persons, and upon their refusal, they were added as accused persons. This clear bias and malice by the complainant undermined the integrity of the investigation and should have been given more weight by the court.
(h) The learned trial magistrate erred in law and fact by failing to find that the prosecution did not prove the alleged financial losses beyond reasonable doubt. The prosecution did not produce key financial records, such as invoices or records of fuel purchased and sold, that would have established whether any losses actually occurred. The failure to provide this critical evidence seriously undermines the prosecution's case.
(i) The learned trial magistrate erred in law and fact by failing to recognize the flaws in the charges against the accused. The charges, particularly those regarding tampering with pump meter readings, were vague and lacked specific details about the alleged actions of the appellants. The charges failed to outline how the appellants allegedly altered the meter readings or the specific quantities of fuel involved. This lack of specificity prejudiced the accused and resulted in an unfair trial.
41. The Appellant’s prayed that their conviction and sentence be quashed and that they be set free.
D. SUBMISSIONS
(i) The Appellants Submissions
42. The appellants relied on their submissions dated 5 th December 2024 and stated that they had a right to be presumed innocent as guaranteed under Article 50(2), (a) of the Constitution and that the state had to prove their case beyond reasonable doubt. Reliance was placed in the case of Woolmington Versus DPP 1935 AC 462, Bakare Vs State 1985 2NL WR & Miller Vrs Minister of Pensions 1942 AC for emphasis. They rehashed the daily activities carried out in the forecourt and pointed out that all items sold, including fuel products (petrol diesel and kerosene). LPG, Lubricants and car care products were all recorded in a book known as “ Master control stock book – black book ”, kept under the custody of the forecourt manager and it was a key document as it was in the said book, that all stock movement was recorded at the end of every shift. They also acknowledged that each attendant recorded their numbers in the daily sales reconciliation form at the end of each shift and the sale had to correspond with details of the black book.
43. The sales would be transacted under different modes including credit cards, invoices (for credit customers), Mpesa, Total Kenya Bon Voyage card (BV) as well as cash transactions and at the end of the day sales reconciliation would be undertaken. They faulted the prosecution for failing to avail the “black book” to their detriment, considering that it was under the custody of the complainant and was a vital book in collating all sales data generated for financial reporting by the 2 nd Appellant.
44. The trial Magistrate had failed to appreciate that PW1, PW2 and PW3 had all denied the existence of this black book and/or its use to record daily sales, which book was also the fulcrum without which, no proper audit could have be undertaken. Further their conviction was made without proper consideration of the evidence, especially the audit report, which lacked evidence to show that they had altered the pump meter readings, nor were the said reconciliation reports serialized to follow shift sequence, some had no dates or signatures and therefore could not be used as forensic
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