Court orders Treasury staff to surrender Sh75m mixed with dirty cash

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A National Treasury employee has been ordered to forfeit Sh75 million, which includes her salary, farming and small business earnings, which she mixed with illicit money.

In a win for the Ethics and Anti-Corruption Commission (EACC), Justice Benjamin Musyoki said a person who mixes clean money with dirty funds puts everything legitimately earned at risk of being seized by the government.

“The defendant has argued that the money in the accounts was from her salaries, farming, small business and sale of her motor vehicle and should not be forfeited.

"The irregular allowances were not paid in cash. They went through the same bank accounts, and the fact that the money was withdrawn over time does not mean that the accounts became free of dirty money. The defendant admitted that she would transfer money from one account to another. A person who mixes their clean money with tainted funds puts the otherwise legitimately earned money in the line of forfeiture,” said Justice Musyoki.

The judge said the employee was earning more money in allowances, contrary to the Salaries and Remuneration Commission (SRC) 's advice.

“In the premises, I have no difficulty in holding that the money paid to the defendant as taskforce allowances was not approved by the SRC and therefore, it was unlawful and irregular,” he ruled.

The judge, however, declined to allow EACC to sell off properties claimed to be hers after ruling that it did not prove that she owned them. He said that the prayers sought amounted to forfeiting the properties through a shortcut.

“Whereas there could have been payments to that effect, the plaintiff did not produce evidence that the defendant owns that particular flat and forfeiting the same runs the risk of depriving a third party who has not been heard,” he ruled.

On one hand, EACC argued that the money held in the Kenya Commercial Bank and Equity Bank was tainted. It also claimed that the employee, code-named in the judgment as FJK, had also bought land in Mombasa, Kilifi, and an apartment through illegally paid extraneous and facilitation allowances.

EACC Investigator Juliet Kamala told the court that SRC had capped the allowances at Sh 30,000 and ought to reflect in the employee’s payslip.

However, according to her, Sh15.4 million was not paid through payslips and was beyond what FJK was entitled to. 

According to her, FJK was earning Sh93,073 as net salary.

The investigator said that the civil servant was in multiple committees at the same time, and some of the allowances paid did not exist in the public service guidelines and policies.

The witness, however, admitted that there was no complaint from the National Treasury. She also admitted that she did not investigate FJK’s other sources of income.

EACC claimed FJK was the biggest beneficiary of the conspiracy to defraud public funds, having received Sh79.5 million between December 2020 and March 2022 from the Sh177 million lost by the Treasury.

The commission said FJK withdrew some of the funds to buy property and that by the time they began investigations, her two accounts at KCB and Equity Bank had a balance of Sh8.7 million, which was among those frozen by the court.

In her response, FJK told the court that she is a finance officer working with Treasury, a farmer and a small-scale businesswoman.

 FJK explained that her duties involved budget preparations, expenditure monitoring and control and reporting on budget performance and expenditures.

She added that she had several assignments from other departments which were allocated to her and which were outside her job description.

During the period in question, the courtier was appointed to several committees by the Principal Secretary, which appointments she was obligated to perform. She added that the appointments contained specific terms of reference and period.

FJK stated that the money frozen in her Equity Bank account had no relation to the payments from the Treasury.

The court heard that the money came from rental income, farming and earnings from a mall business.  She explained that the rental income was from her property in Akila Estate house number C4-02, which she had acquired through mortgage with Kenya Commercial Bank in 2018.

To prove this, she produced a lease agreement dated November 25, 2019. S

He added that her income from farming and small business went to her KCB account as well as Sh 1.8 million from the sale of her motor vehicle on March 29, 2022.

FJK also claimed she received money from a pension scheme in the same account from June 2016 up to the end of June 2022.

She also stated that money from her small business would go to the Equity Bank account, which she would transfer to the KCB account.

The civil servant complained that among the five officers involved, only two were investigated. She also stated that she was the only member of the task force who was investigated. At the same time, she argued that the PS was never charged.