Back Where it Belongs

At the end of 2018, there was much press coverage of the visit of External Relations Minister Ian Gorst to Kenya to sign an asset-sharing agreement for £3 million. The money was confiscated following criminal proceedings in the Royal Court in Jersey in which a Jersey company entered guilty pleas to four counts of money laundering by holding funds derived from criminal conduct. The conduct in question was that of Samuel Gichuru, former chief executive of the Kenya Power and Lighting Company, the Kenyan government’s electricity utility company. Between 1999 and 2001 he accepted bribes from a number of foreign engineering and energy businesses in exchange for the award of valuable contracts. The money was paid into the Jersey-registered company, Windward Trading Limited. The asset-sharing agreement will allow the £3 million in confiscated funds to be returned to the people of Kenya. This successful outcome demonstrates how criminal prosecutions can sometimes in the right case be effective in cross-border asset recovery and the repatriation of stolen funds. It is often the position that civil proceedings offer much the best prospect of achieving results in cross-border asset recovery cases. The higher standard of proof, budgetary constraints, and political and other considerations can make pursuing recovery via criminal proceedings a less promising option. However, the most careful analysis needs to be given to each case and often each branch of a case in determining whether to adopt civil, criminal proceedings or both. The Gichuru case is an excellent example of the factors which frequently militate against using the criminal process not being barriers to the ultimate goal of recovery of assets. For a country, institution or individual seeking to recover stolen funds, the criminal route is cost effective because the state agencies in the jurisdiction where the funds are located carry out the work, but the risks in pursuing this route alone are that:

• The State decides not to institute criminal proceedings;
• There is a prosecution but it results in acquittals; or
• There are convictions but a confiscation order is not made or is in a low sum.

Another downside of the criminal route is that the victim is not a party and the proceedings are controlled by the authorities. A key factor in the Gichuru case was that the current directors of Windward Trading, who were not in position at the time of the alleged wrong-doing, cooperated with the authorities and took the responsible decision to enter guilty pleas on behalf of the company. Where the financial institutions or individuals involved take a different stance, that can change the outlook considerably. Developing a strategy at the outset is vital in any asset recovery exercise. Often, achieving aims means making use of multiple legal avenues and a coordinated strategy with parallel proceedings in different jurisdictions. Sophisticated advice is needed as to the best route to take. Even where a criminal prosecution is under active consideration, it may be prudent to prepare a simultaneous set of civil recovery proceedings so as to be ready to issue these at short notice if, for any reason, the authorities do not proceed with the criminal case, or there is any hesitancy or delay in moving forward. In particular, where there is uncertainty as to the location of assets or a risk of dissipation and a need to act quickly, civil recovery action can produce swift results. The range of tools available to a civil practitioner to be deployed at short notice to seek disclosure and freezing orders worldwide (including gagging orders), can make this a worthwhile initial expenditure. Senator Gorst’s trip to Kenya was the final stage in Jersey’s involvement in recovering the proceeds of Gichuru’s corruption. As well as the asset-sharing agreement, Senator Gorst recently signed two international arrangements to promote greater cooperation between Jersey and Kenya: a Memorandum of Understanding on Financial Cooperation with the Government of Kenya; and the Framework for Return of Assets from Corruption and Crime to Kenya (FRACCK). The MoU sets out initiatives across areas of mutual interest such as asset sharing, collaborating in tackling financial crime, increasing cross-border trade and investment, and enhancing future partnerships in providing high-quality, well-regulated capital to Kenya in the form of foreign direct investment. The FRACCK is just one example of the island’s commitment to tackle cross-border financial crime. The island continues to work with responsible partner jurisdictions and this cooperation has been recognised by international bodies such as the International Monetary Fund (IMF) and Moneyval. At the same time, the Jersey Royal Court has consistently recognised its responsibility to assist in the prevention, detection and remedying of fraud and in providing injunctive relief. It is likely to be one of the most effective jurisdictions for pursuing civil fraud claims (as seen in the Brazil v. Durant case and the stance taken by the Royal Court in respect of evidential issues such as tracing and ‘reverse tracing’ and its advanced restitutionary jurisdiction). These are ongoing positive signs that Jersey is committed to take action against the perpetrators of financial crime, whether in criminal or civil proceedings, to deprive them of the fruits of their wrongdoing. The Kenya agreement is an encouraging example of such fruits being returned to their rightful owners. Baker and Partners acted on behalf of the Kenyan Ethics and Anti-Corruption Commission and devised the strategy which resulted in the repatriation of the assets. Stephen Baker Senior Partner, Baker & Partners