Waluke, Wakhungu walk free after court overturns Sh2b fine over maize scandal

After a decade of navigating the corridors of justice, Sirisia MP John Waluke and his former business partner Grace Wakhungu are now free.

The Court of Appeal on Friday quashed their harsh convictions linked to the Sh300 million maize scandal.

A three-judge bench, consisting of Justices Asike Makhandia and Patrick Kiage, set aside the lengthy prison terms of 67 years for Waluke and 69 years for Wakhungu, along with their requirement to pay a total fine of Sh1 billion each.

They had been convicted for irregularly obtaining over Sh300 million from the National Cereals and Produce Board (NCPB) in 2004 for maize supplies that were never delivered.

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However, Judge Abida Ali-Aroni declined to append her signature to the 38-page judgment.

The two judges concluded that the previous sentences imposed on the duo were unjustified, leading to their release.

“Ultimately, we are satisfied that the appellants have made a case to warrant us to allow the appeal. The appeal is accordingly allowed, and the convictions and sentences imposed on the appellants are set aside. The appellants shall forthwith be set at liberty unless otherwise lawfully held,” the judges ruled.

The genesis of the dispute is the sum of Sh297 million received by the Erad Supplies company from NCPB for supply of 40,000 metric tonnes of maize in 2004.

At the time, there was a significant scarcity of maize in the country, prompting the government to instruct NCPB, through the Strategic Grain Reserve, to import maize.

Won tender

In response, the NCPB issued a tender for the urgent supply of 180,000 metric tonnes of white maize to help avert a looming hunger crisis.

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, Waluke and 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 fraud.

Waluke and Wakungu were then charged for the money which was paid to them from NCPB bank accounts according to an alleged false claim and a fraudulent invoice.

In 2020, a trial court found Wakhungu, Waluke, and their company, Erad Supplies & General Contractors, guilty of defrauding the NCPB of Sh297 million.

Chief Magistrate Elizabeth Juma had granted alternative fines of Sh727,725,562 for Waluke, Sh707,725,562 for Wakhungu, and Sh727,725,562 for the company, totalling over Sh2 billion.

The two were accused of submitting fake claims for over Sh300 million in an alleged botched deal to supply 40,000 metric tonnes of maize to the government in 2004.

Waluke and Wakhungu were the remaining directors of the company after the third director, Jacob Juma, was murdered in 2016.

After months behind bars, the pair appealed their convictions, arguing that the evidence presented during the trial was insufficient to support such severe penalties.

On October 1, 2022, the High Court upheld their sentences, dismissing their application to challenge the decision. Justice Esther Maina ruled that they were properly convicted and sentenced them for the graft allegations in the maize scandal.

Politically instigated

Following this ruling, the duo was returned to prison until they appealed the High Court’s decision at the Court of Appeal.

After spending four months behind bars, the appellate court granted them Sh10 million cash bail each pending the appeal.

In his petition at the Court of Appeal, the Sirisia MP called on the court to quash his conviction, claiming that he acquired the Sh300 million lawfully.

Waluke’s lawyers, Otiende Amolo and Elisha Ongoya while defending the MP at the Court of Appeal, argued that the MP’s woes were politically instigated and termed the 67-year imprisonment a harsh penalty for such a case.

“Our client remains innocent and we pray that this honourable court will review this matter and set the record straight,” Waluke’s lawyers told the court.

On her side, Waluke’s co-accused through lawyer Paul Muite argued that the High Court disregarded findings by three other judges Alfred Mabeya, George Odunga, and Leonard Njagi, that the alleged fraudulent payments made by NCPB to Wakhungu company, Erad General Suppliers Ltd, were legal.

Muite stated that the payments were made based on court orders following an arbitration award in favor of Erad.

He further noted that the funds deemed fraudulently acquired were part of a larger sum awarded by an arbitrator in October 2004 for loss of profits (USD 1,960,000) and storage charges (USD 3,106,000).

Regarding the High Court’s finding that the invoice used by Wakhungu to claim payments was a forgery, Muite argued that the conclusion was flawed, as there was no forensic evidence to demonstrate that the invoice was fake.

Final and binding

In their decision, the appellant court judges ruled that the graft charges lacked sufficient basis for sentencing, as the payments in question had been sanctioned by the High Court through civil proceedings.

They criticized trial magistrate Juma for ignoring the appellants’ defense, which argued that they had not committed any offenses since the payments were approved by the High Court.

The Court of Appeal emphasized that Magistrate Juma was bound by the High Court’s decisions regarding the transaction, particularly since the issue of an allegedly forged invoice had been thoroughly addressed in civil proceedings.

The judges condemned the NCPB for attempting to punish Waluke and Wakhungu for what they viewed as malicious motives.

They noted that after failing to challenge the civil award, the NCPB turned to the Ethics and Anti-Corruption Commission (EACC) to pursue criminal charges against the appellants, which the judges deemed an abuse of the criminal process.

The judges pointed out that the trial court erred in its findings regarding the alleged forgery of invoices, as this issue had already been resolved by the High Court. They reiterated that the magistrate lacked the authority to contradict the decisions of a superior court.

Furthermore, the judges criticized Justice Maina for not adequately evaluating the evidence, asserting that even if the offense of uttering false documents was proven, it did not automatically imply the commission of other offenses, as concluded by the judge.

“It is apparent that the offense of uttering false documents, even if proven, did not automatically mean that the remaining offenses had been committed,” the bench stated.

The judges emphasized that determinations made by courts of concurrent jurisdiction should not be revisited by lower courts, warning that doing so would undermine the principle of stare decisis.

“We wish to restate that if the Judiciary is to perform its duties effectively and remain true to the spirit with which it is entrusted, it must uphold the dictate that when higher courts make decisions, those decisions bind lower courts,” they stated.

The judges also warned that allowing a party to challenge the orders of higher courts by moving to another court would jeopardize the foundation of the judicial system.

The judges reaffirmed that judgments from higher courts remain final and binding, regardless of any misgivings other judges may have.