Sirisia Member of Parliament John Waluke is headed to jail to serve the 67-year prison term slapped on him after the High Court declined to set aside his conviction in one of the most dramatic corruption cases in the country’s history.
Justice Esther Maina dismissed the appeal lodged by Mr Waluke and his business associate, Ms Grace Wakhungu, against their conviction and sentencing over the Sh297 million maize scandal.
Consequently, Mr Waluke will now serve 67 years in jail while Ms Wakhungu will serve 69 years for fraud.
Justice Maina said the sentences were not excessive and were within law.
“After carefully considering evidence, this court came to the conclusion that the appeals have no merit. The criminal charges were proved beyond reasonable doubt,” said the judge on Thursday while dismissing the appeal.
She also directed the appellants to pay their fines: Sh727 million for Mr Waluke and Sh707 million for Ms Wakhungu, or serve the jail sentences.
The judge found that the sum of Sh297,386,505 paid to their trading company, Erad Supplies and General Contractors Limited, by NCPB was based on a fraud. They were paid the money in 2013.
“The invoice upon which the claim for payment was based was a forgery. Mr Waluke presented it to an arbitrator knowing very well Erad Supplies and General Contractors Limited had no dealing with the maker of the invoice (Chelsea Freight Ltd) and as a result it was paid the sums by a public body,” said Justice Maina.
The convicts faced five counts related to uttering a false invoices, perjury (by knowingly giving false evidence in an arbitration dispute between Erad and the National Cereal and Produce Board) and fraudulent acquisition of public property. They committed the offences between 2009 and 2013.
At trial, the prosecution called 27 witnesses to testify in the corruption case that started following investigations by the National Assembly’s Public Accounts Committee.
The trial court found that the graft offences committed were serious, saying evidence tabled by the prosecution demonstrated that the invoice used to claim for the funds was fake, hence there was fraud.
How fraud case began
The genesis of the dispute is the sum of Sh297 million received by the company from NCPB for supply of 40,000 metric tonnes of maize in 2004.
At the time there was scarcity of maize in the country and the government had instructed NCPB, through the Strategic Grain Reserve, to import maize. NCPB then floated a tender for the supply of 180,000 metric tonnes of white maize.
Erad had won a tender from NCPB for supply of 40,000 metric tonnes but was not issued with a letter of credit, unlike the other four firms which had also won the tender.
The other firms were Hala General Trading LLC (40,000 metric tonnes), Versatrade International CC (40,000 metric tonnes), Purma Holdings Ltd (30,000 metric tonnes) and Freba Investments (30,000 metric tonnes).
Erad did not supply the maize despite submitting its tender documents and executing the contract for the supply of the same, the prosecution said.
When the contractual period expired, the company and its directors, Mr Waluke and Ms Wakhungu, successfully filed an arbitration for an award for storage charges and loss of profit plus interest and cost of the arbitration. They claimed that storage costs were incurred by Chelsea Freight.
The prosecution filed the criminal charges on allegations that the invoice, which was the basis of the claim for storage charges, and which was an exhibit in the arbitration proceedings, was not genuine, hence the claim was based on a fraud.
The convicts were then charged for the money which was paid to them from NCPB bank accounts pursuant to an alleged false claim and a fraudulent invoice.
But in their appeal the convicts insisted the payment was legal and legitimate.
Through lawyers Paul Muite, Senior Counsel, and Elisha Ongoya, they explained that the payment stemmed from breach of contract by the NCPB to supply the maize.
While prosecuting the appeal against a magistrate court’s judgment, Mr Muite said the conviction was not only erroneous but also the trial lacked legal foundation.
“The payment of the money received by the appellant were pursuant to a High Court decree issued approving and adopting an arbitration award. Payments such as this cannot, in law and fact, form basis of a criminal charge of obtaining money fraudulently. Any system of law that would allow payments made by the High Court to be basis of criminal charges can only bring disrepute in the eyes of international justice,” said Mr Muite.
He also argued that Erad had been properly contracted by the government to supply the maize after drought hit the country, but that NCPB breached the contract by failing to give the company letters of credit upon securing maize abroad and preparing the consignment for shipment.
Erad sued the State Corporation at an arbitration tribunal for the breach of contract, and it was awarded damages. The award was on two different levels: loss of profit where it was awarded $1,960,000 and storage charges where it was awarded $1,146,000.
The lawyer said the company later proceeded to the High Court for adoption of the arbitral awards. He said the court ruled in favour of the company and attempts by the NCPB to review the rulings were rejected by three judges, paving way for execution of the judgment and the payments in dispute in year 2013.
The lawyer further said the payments formed basis of the corruption case which culminated to conviction and sentence of both Ms Wakhungu and Mr Waluke for theft of Sh297 million from the public.
He explained that the criminal trial was illegal and that the same could not have commenced before setting aside of the arbitral award and the High Court judgment that endorsed the award.
“Such orders would need to be set aside first before there can be any suggestion of any criminality. Nothing like that ever happened in this matter. Our hierarchy of court demands that once a higher court has made a finding or delivered a judgment, the same is binding to the lower court. It was not open to the lower court to open orders issued by the High Court,” he stated.
There was never doubts about the validity of the contract between NCPB and Erad Supplies Ltd as well as the invoices, he argued.
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