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 overturned his harsh convictions related to the Sh300 million maize scandal.

A three-judge bench, comprising Justices Asike Makhandia and Patrick Kiage, set aside the lengthy jail terms of 67 years for Waluke and 69 years for Wakhungu, along with an obligation to pay a total fine of Sh1 billion of sh each.

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

However, Judge Abida Ali-Aroni refused to attach her signature to the 38-page ruling.

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 out a case to warrant us accepting the appeal. Accordingly, the appeal is allowed and the convictions and sentences imposed on the appellants are set aside. The appellants will be put on liberty immediately, unless legally deemed otherwise,” the judges ruled.

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

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

He won the tender

In response, the NCPB tendered for the urgent supply of 180,000 metric tons of white maize to help avert a looming famine.

Erad had won an NCPB tender for the supply of 40,000 metric tonnes but was not issued a letter of credit, unlike the other four companies that had also won the tender.

The other companies were Hala General Trading LLC (40,000 metric tons), Versatrade International CC (40,000 metric tons), Purma Holdings Ltd (30,000 metric tons) and Freba Investments (30,000 metric tons).

Erad failed to 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 brought arbitration for an award for storage costs and loss of profits plus interest and cost of arbitration . They claimed Chelsea Freight incurred storage costs.

The prosecution filed the criminal charges for allegations that the invoice, which was the basis of the claim for storage costs, and which was the subject of evidence in the arbitration proceedings, was not genuine, therefore the claim was was based on a fraud.

Waluke and Wakungu were then charged for the money paid to them from NCPB bank accounts based on an alleged false claim and 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 awarded alternative fines of Sh727,725,562 for Waluke, Sh707,725,562 for Wakhungu and Sh727,725,562 for the company, totaling over Sh2 billion.

The two were accused of making false claims for more than Sh300 million in an alleged failed 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 killed in 2016.

After months behind bars, the couple 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 confirmed his rulings, dismissing his application to challenge the decision. Justice Esther Maina ruled that they were duly convicted and sentenced them for the allegations of graft in the maize scandal.

Politically instigated

As a result of this sentence, the couple was returned to prison until they appealed the decision of the High Court to the Court of Appeal.

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

In his petition to the Court of Appeal, the Sirisia MP asked the court to set aside his conviction, claiming that he acquired the Sh300 million legally.

Waluke’s lawyers, Otiende Amolo and Elisha Ongoya while defending the lawmaker at the Court of Appeal, argued that the lawmaker’s troubles were politically instigated and described the 67-year prison term as harsh punishment for him case

“Our client remains innocent and we pray that this honorable court will review this matter and clarify things,” Waluke’s lawyers told the court.

On his part, Waluke’s co-accused through lawyer Paul Muite argued that the High Court ignored the findings of three more judges Alfred Mabeya, George Odunga and Leonard Njagi, that the alleged fraudulent payments made by NCPB in the Wakhungu company, Erad General Suppliers Ltd, were legal.

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

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

As for the High Court’s finding that the invoice used by Wakhungu to claim payments was a forgery, Muite argued that the finding was wrong as there was no forensic evidence to show that the invoice was fake.

Final and binding

In their decision, the appellate court judges ruled that the graft charges did not have sufficient grounds for sentencing, as the payments in question had been sanctioned by the High Court through a civil proceeding.

They have criticized Magistrate Juma for ignoring the defense of the appellants, who argued that they had not committed any crime since the payments were approved by the High Court.

The Court of Appeal emphasized that Magistrate Juma was bound by the decisions of the High Court on the operation, particularly as the issue of an allegedly forged invoice had been thoroughly dealt with in civil proceedings.

The judges condemned the NCPB for trying to punish Waluke and Wakhungu for what they considered malicious motives.

They noted that after failing to challenge the civil judgment, the NCPB turned to the Ethics and Anti-Corruption Commission (EACC) to bring 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 falsification of invoices, as this issue had already been resolved by the High Court. They reiterated that the magistrate had no authority to contradict the decisions of a higher court.

The judges further criticized Justice Maina’s failure to properly assess the evidence, arguing that even if the offense of issuing false documents was proven, it did not automatically imply the commission of other crimes, as the judge concluded .

“It is clear that the crime of issuing false documents, even if proven, did not automatically mean that the other crimes had been committed,” the court said.

The justices stressed that determinations made by courts of concurrent jurisdiction should not be reviewed by lower courts, warning that doing so undermines the principle of stare decisis.

“We wish to reiterate that if the Judiciary is to fulfill its functions effectively and remain faithful to the spirit with which it has been entrusted, it must respect the dictum that when the superior courts make decisions, those decisions bind the courts lower,” they said.

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

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