Assets seized from suspects linked to corruption and money laundering — especially goods or property that depreciate or decay fast — will be sold and the money invested in government bonds if Parliament adopts proposals meant to allocate the properties for public good.
The Treasury on Tuesday published draft guidelines on how proceeds of crimes, money laundering and corruption will be allocated for public benefit with investments in government securities the preferred destination.
Dozens of Kenyan government officials and business people have appeared in court in recent months on charges relating to alleged theft of hundreds of millions of shillings from public coffers.
The prosecutions, though yet to result in convictions, are seen as a new drive to tackle widespread graft that has netted both public and private sector players.
As a result of the cases, the State has either frozen or seized hundreds of millions of shillings in bank accounts and confiscate assets such as homes, land and luxury cars from the suspects. In the past, taxpayers have failed to benefit from such seized assets, with land and homes remaining unused while millions of hundreds of shillings was left untouched in banks, due to a lack of a legal framework. Moveable assets like cars have been lying at police stations, with their values depreciating fast, making it difficult to auction the properties.
Now, the proposed regulations provide for the formation of a Criminal Assets Recovery Fund to receive, manage and transfer all property recovered by the Assets Recovery Agency (ARA) and the Ethics and Anti-Corruption Commission (EACC).
The Fund will invest the money received from the auctioning of the properties like land, cars and homes in government securities and transfer some of the cash to the government’s main account for allocation to projects like roads, power plants and construction of dams.
Treasury Principal Secretary Julius Muia Tuesday said in an interview that the State expects the proposed fund to be operational in the current financial year, which will end in June.
“Our intentions are very clear that proceeds from crimes and assets that are recovered should be applied for use in ways which will be for public advantage,” Dr Muia said in the telephone interview.
“It’s our hope that once we get the views from the public then the legislature will not take long so that the Fund is operational within this financial year.”
The EACC and the ARA have in recent years recovered billions of shillings, largely in cash and land, from proceeds of corruption and money laundering. There is, however, no legal regime guiding the use of assets seized by the State agencies.
Official data shows that the State agencies recovered assets linked to graft worth Sh3.8 billion in the year to June 2018, up from Sh300 million a year earlier — reflecting the government’s aggression in recovering stolen public properties.
Senior officials from the Kenya Pipeline Company (KPC), Kenya Power and the National Hospital Insurance Fund (NHIF) were last year charged with abuse of office and economic crimes that led to the loss of billions of shillings from the institutions. The State has also been battling in court with dozens of business people and State officials over the loss of billions of shillings through fictitious procurement at the National Youth Service.
The ARA is said to have profiled the assets of the accused and their business associates, setting the stage for the agency to seek court orders to freeze the assets for forfeiture to the State.
Muthoni Kimani, the ARA director, in a note sent to Parliament in December said the process of recovering the looted assets is long and requires the agency to seek court orders for search and seizure.
The draft regulations propose setting up of a 10-member Recovery Fund Committee to provide overall management, design and oversight of the fund, including use of the properties and monies recovered.
Proposed members of the committee include the Attorney-General, the Director-General of the National Intelligence Service, the Central Bank of Kenya (CBK) Governor and the Director-General of the Financial Reporting Centre (FRC). The PS Treasury will also sit on the committee.
“We are looking for a more stable resource base on which to anchor the process of following up on criminal activities and that’s in tandem with our drive to make sure that we professionalise the way things are done in accordance with the law,” Dr Muia said.