A betting company has suffered a major blow in a bid to reclaim Sh.256 million, which the court had found to be proceeds of crime.
Mozzartbet Kenya limited lost an appeal seeking tomwin back the funds, which were declared to be proceeds of crime a few years ago.
The Court of Appeal dismissed the appeal stating that the betting firm failed to satisfactorily explain the connections with an entity that was conducting its affairs in a questionable manner.
The betting firm had claimed that the money was paid to Kimaco ltd, a software developer for delivery of a betting software.
But appellate judges Francis Toiyott, Fred Ochieng and Aggrey Muchelule dismissed the appeal saying it lacked merit.
“We hold that there was sufficient evidence, on the statutory threshold of balance of probabilities set by section 92 of the Act, to implicate Mozzartbet as well and it cannot benefit from protection of a third party,” ruled judges in their decision.
The judges further ruled that the totality of the evidence put persons holding directorships or connected with Mozzartbet as beneficiaries of funds from Kimaco.
They pointed out that the alleged developer received substantial payment from Mozzartbet.
In a 37 page decision, the appellate judges noted that although a proposition was made that civil recovery cannot be sustained solely upon the basis that a respondent has no identifiable lawful income to warrant its lifestyle, the evidence led against Kimaco was not simply a gap between identifiable lawful income and lifestyle.
“The evidence revealed that Kimaco received payment under suspicious circumstances, made out payments in similar circumstances and concealed its business from the Tax authority. Is it not said that “if it walks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck”? Posed the judges.
While turning their attention to Mozzartbet. They said that this is the entity which paid a substantial sum.Sh.256,851,910 to Kimaco for monies on account of two contracts.
“Is Mozzartbet without blemish in the matter? To start with account opening documents for its accounts in UBA Kenya Bank, names the following to be its directors: Loncar Koviljke (Serbian national), Emmanuel Charumbira (Zimbabwean national) and Musa Cherutich Sirma (Kenyan) national),” the judges said.
They added that there was evidence of payment made by Kimaco or Pescom or Makua himself to two of those Directors under suspicious circumstances that have not been adequately explained.
The court noted that Branimir Melentijevic is a shareholder of Mozzartbet Africa which is the majority shareholder of the Kenyan registered betting firm.
“There was evidence that some funds initially paid by Kimaco to Pescom Kenya made its way to Melentijevic,” said the judges.
They added that the payment were made in two invoices, for USD 69,964.30 and USD 34,599.00 allegedly for the software business.
The judges further said Kimaco did not contradict the allegation by Senior Sergeant Fredrick Musyoki that the payments bespeak of the alleged software agreement between Open Skies and Kimaco which was to service Kimaco’s contract with Mozzarbet.
High court found that Kimaco was a shell company lacking in financial capacity to undertake the alleged contract.
Asset Recovery Agency had proved, on a balance of probabilities that the funds in the bank accounts were proceeds of crime; the appellants did not provide a convincing explanation as to why they received such colossal amounts of money; some of the money ended up in the pockets of directors of Mozzartbet.
The fact that Kimaco filed a nil return with Kenya Revenue Authority(KRA) during the period in issue was sufficient proof that it was not engaged in any business and payment to KRA upon demand did not legitimize money whose source was illicit.
During the hearing in the High Court, ARA told the court Mozzartbet was involved in money laundering and that all funds held in the impugned account were proceeds of crime.
ARA through State counsel Githinji told the court Mozzartbet were not an innocent third party for the reason that the directors associated with Mozzartbet received funds from Kimaco’s and Pescom’s bank account.
He submitted that Kimaco was a shell company that was incorporated as an SPV for purposes of laundering funds under the guise that it was engaged in the business for the supply of software systems and solutions and ICT products and lacked the human resource, the speciality of technical capacity to deliver on the purported contract for the supply of software solutions and ICT products. In addition, that despite being paid an advance sum of Sh.256,051,910.00 Mozzartbet confirmed that Kimaco had not delivered as per the purported contract milestones.
State counsel submitted that there was an M-pesa transaction that showed that Kimaco received funds from Mozzartbet which was linked to Kimaco’s bank account at DTB and a bank account held at Co-operative Bank.
He contended that once the sums were received, Pescom, who was a signatory of Kimaco’s bank accounts, authorized and transferred part of the funds from Kimaco’s bank account at DTB and Co-operative Bank to Pescom’s bank account, wherein Makau was the sole signatory, held at NCBA bank.
“The funds were further transferred from Pescom’s bank account to individuals associated to Mozzartbet as directors namely, Emmanuel Charumbira, Musa Cherutich Sirma and Melentijevic Branimir,” court heard.
Githinji further contended that Pescom was not or did not have a contract with either Mozzartbet or Kimaco and therefore submitted that Kimaco was involved in money laundering and at the very least, they committed the offence of obtaining by false pretences contrary to sections 312 as read together with section 313 of the Penal Code and thus constituted proceeds of crime.
Kimaci Connection Limited through lawyer Patrick Lutta, backed Mozzartbet’s argument that the source of funds in issue was from Mozzartbet’s betting business and that the investigations by the DCI established that Mozzartbet made Sh. 17,057,136,032 from sale of bets and gave a clean bill of health regarding any alleged criminal implication.
Lawyer Lutta argued that while Mozzartbet was the best person to respond to questions on the legality or otherwise of the source of the funds, ARA failed to enjoin Mozzartbet as a party to the proceedings and the only plausible reasons for this failure was that it was convinced that the sums were from a legitimate source and not proceeds of crime.
They contend that Kimaco furnished evidence of a contract dated 20th February, 2020 with Mozzartbet for the supply of software system solutions but which was disregarded by the trial court whose finding also disregarded the fact that the software was not supplied by reason of frustration of contract by the preservation orders obtained by ARA against Kimaco.
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