Personal Liability Imposed on Officers Instigating POCAMLA Action without Due Diligence
10th November 2023
In a Ruling delivered on 9th November 2023 in Milimani High Court Anti-Corruption Civil Case No. E044 of 2022 – Assets Recovery Agency v Flutterwave Payment Technology Limited, Hupesi Solutions & Adguru Technology Limited, the Kenyan High Court held that officers of the Assets Recovery Agency (ARA) would be solely and personally liable for all future civil or tortious liabilities that would ensue from the terminated proceedings.
In the Ruling, Hon. Mr. Justice Prof. (Dr) Nixon Sifuna allowed ARA’s notice to withdraw the suit against the FinTech firms following ARA’s compliance with court orders to file an affidavit substantiating the reasons for withdrawal of the case.
The forfeiture proceedings against the three entities commenced in 2022 following allegations of money laundering and fraudulent activities leading to the preservation of the subject funds by ARA for the past year pending determination of the case.
ARA had filed two affidavits by its Director and the Investigator detailing that the agency’s final investigations had revealed that the funds held by Flutterwave Payment Technology Limited, Hupesi Solutions and Adguru Technology Limited in various bank and MPESA Paybill accounts were not proceeds of crime as initially suspected. This followed scrutiny of various supporting documents justifying the legitimacy of the funds, their sources, destination, mode of acquisition, payment forms, clientele details and other business information.
The court also reprimanded ARA for what the Judge termed to be “negligent, reckless, careless and rash manner in which the case was investigated, and the proceedings were instituted and driven”. The Judge equally faulted ARA for instituting the proceedings based on unconcluded investigations.
The Role of ARA in Enforcing POCAMLA
The Proceeds of Crime and Anti-Money Laundering Act, 2009 (POCAMLA) provides for the offence of money laundering and introduces measures to combat the offence, as well as provides for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime, and for related purposes.
Section 53 of POCAMLA establishes the Assets Recovery Agency as a body corporate with the mandate of identifying, tracing, freezing and recovering assets that are acquired from or are the profits or benefits of proceeds of crime.
Section 2 of POCAMLA defines ‘proceeds of crime’ as any property or economic advantage derived or realised, directly or indirectly, as a result of or in connection with an offence irrespective of the identity of the offender and includes, on a proportional basis, property into which any property derived or realised directly from the offence was later successively converted, transformed or intermingled, as well as income, capital or other economic gains or benefits derived or realised from such property from the time the offence was committed.
Section 19 of POCAMLA provides immunity to any reporting institution or Government entity, or any officer, partner, employee or other persons acting with due diligence and in good faith in enforcing the provisions of POCAMLA.
Conclusion
This decision accentuates the condition precedent to the grant of immunity under Section 19 of POCAMLA and affirms that the immunity from liability granted therein to investigative agencies is not absolute and may not apply where the agency or its officers are found to have acted without due diligence or in bad faith.
It will be interesting to see what ARA makes of the decision in the coming days. For now, Justice Prof. Sifuna’s Ruling brings down the curtains to the forfeiture case against the Fintech firms.
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