Tuesday, February 28, 2006

White Collar Wonderland

Last Friday, the directors of the collapsed Euro Bank were acquitted of charges in a complex case of fraudulently accepting a deposit from the Postal Corporation of Kenya.

This extends a long trend of poor prosecutions resulting in a series of acquittals in high-profile corruption cases.

What does this portend for suspects in Anglo Leasing, Goldenberg, recently-suspended heads of parastatals, and others charged with white-collar corruption crimes in Kenya? They may not have much to worry about beyond their names being forever linked with graft cases.

Perry Mason problem
Former DPP Murgor complained for a long time that it was unfair and demoralizing for his prosecution staff to earn so much less than KACA investigators. And like the fictitious prosecutor Hamilton Burger, who lost every case to superstar-lawyer Perry Mason, government prosecutors end up facing the cream of the Kenyan legal society who all the major accused people are able to hire with their deep pockets. Along the way, they may suffer a few setbacks but the high-powered defence lawyers mostly win their cases. e.g. Ketan Somaia and his co-accused were sent to Kamiti for a few months (and spending a good chunk of time in a Nairobi hospital) but their convictions for stealing from the National Bank was eventually overturned.

Complex cases
Better lawyers aside, most cases are difficult to understand, let alone to prove. In the words of Vice President Moody Awori - “who is my accuser, on what charge?” - the principals are far removed from the crime and the crime itself is not easily defined. It is easy to prosecute a case where a policeman asks for, and receives a 5,000 shilling bribe from a motorist who later shows up and testifes in court against the policemen, armed with evidence supporting the bribe. But the Anglo Leasing and Goldeberg are complicated since the prime movers signed almost no documents. The few fingerprints to be found are those of their juniors who processed the dubious payments to non-existent companies. Murgor/Wako have had to terminate and withdraw many corruption cases that their prosecutors had presented in court because they later realized that the charges could not be sustained.

Lawyers vs. Bankers
The court process is not speedy especially where assets are involved. E.g. All Banks incur thousands of shillings monthly in legal fees often in cases where straight forward loan-default cases are tied up in courts awaiting hearing dates or where injunctions are filed, allegations of bank fraud, excessive penalties & interest are all raised by unscrupulous lawyers to muddy the case. lawyers are able to stretch cases for several years, to point where the legal cost exceed the loan costs and force banks to surrender by settling with their clients. The lesson here is the longer the court process, the better the chance of acquittal or dropping of charges

So it unlikely that people accused of corruption will ever be convicted. It may now be easier to prosecute people under the Public Officers Ethics Act, but as Mutula Kilonzo says on Crossfire, the law came into effect in 2005, and cannot be applied retroactively.


Mimmz said...

Sadly, what you say about the inability to prosecute for lack of evidence is true. The point would be to tighten the loopholes in the process of signing contracts. I'd recommend time and resources not be wasted attempting to prosecute those where there isn't sufficient evidence. Instead, burden any such people with a definite date to account for wealth acquired, in the situation where they cannot, the worst will be assumed and their property seized. There is a better chance of any sense of justice ever being achieved in this. Additionally all officials should be fired where obvious lack of budget reconciliation/thoroughness can be proven. I think there are better chances of getting anything real achieved through these methods.

Parklander! said...

Hi Bankelele,
Being our business news authority, is it true that President Kibaki removed VAT for computers and related equipment yesterday?

bankelele said...

Mimmz: It will be easy to prosecute under the public officers ethics act which explicitly seplls out, among other things, conflict-of interest, wealth declarations, receiving of gifts, awarding of contracts, giving false statement to the public, etc.

Parklander: Here's the a briefing from yesterday (http://www.communication.go.ke/media.asp?id=176) but they may have already been zero-rated in last years budget.see - (http://bankelele.blogspot.com/2005/06/budget-200506.html)


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