In October 2020, Kenyan citizens and civil society organisations started a petition for the Kenyan Parliament to investigate Illicit Financial Flows (IFFs) and expedite asset recovery and repatriation efforts.
It is estimated that annually Kenya has been losing an average of Ksh 40 billion (£280 million) through illicit financial flows. Endemic grand corruption the campaigners feel has devastated sectors of the Kenyan economy. Transparency International’s Corruptions Perceptions Index ranked Kenya at 137 out of 180 countries in 2019, 180 being the most corrupt. Much of this can be attributed to local businesses and multinational corporations engaging in schemes to avoid and sometimes illegally evade Kenyan taxation, thereby adversely affecting revenue collection and impeding economic growth and development.
Some efforts are being made to repatriate stolen funds and unexplained assets using the Framework for Return of Assets from Corruption and Crime alongside Switzerland, Jersey, and the United Kingdom, and through Mutual Legal Assistance law. The Mutual Legal Assistance law is a method of cooperation between states, for prosecutors to obtain assistance in the investigation or prosecution of criminal offences. However, a lack of transparency continues to be a hindrance to repatriation efforts. Greater publication of details such as the ownership of secret offshore accounts would help a great deal with efforts to repatriate illicit funds to Kenya. Without this information repatriation efforts will continue to be frustrated as state investigators will be limited in their ability to identify the individuals responsible for laundering the proceeds of crime in tax havens, and how these assets came to be kept in offshore accounts.
Indeed, the European Commission has called for international cooperation in this area in order to mandate further transparency in tax governance. There has been progress in other jurisdictions for example, the British Virgin Islands has recently introduced a public register of owners of companies created on the island. If these steps can be implemented in all global tax haven jurisdictions, we will be closer to achieving a higher degree of enforcement and repatriation of Illicit Financial Flows, bringing justice to citizens of these countries.
The recovery of illicit financial funds held offshore could go a long way in not only boosting Kenya’s economy, which has been impacted by the Covid-19 pandemic, but also aid its recovery from the large debt burden it carries including a Ksh1 trillion (£71 billion) current budget deficit. Over the last 18 months, the International Lawyers Project has been supporting the Kenyan government and civil society by sourcing expert lawyers to review:
A fund for the proceeds of crime and anti-money laundering (The Criminal Assets Recovery Fund).
Kenya's double tax treaty policy on behalf of the Kenyan Revenue Authority.
The Implementation of The Bribery Act, alongside TI Kenya.
The draft Integrity and Anti-Corruption Bill, on behalf of the East African Legislative Assembly.
The Sovereign Wealth Fund Bill in Kenya in comparison to the legislation in Norway and Ghana, on behalf of the National Taxpayers Association of Kenya (NTA).
Kenyan Legislators salaries on behalf of the NTA, in order to assist their campaign to reduce the Kenya Wage Bill.
ILP will continue working with our partners in Kenya to establish accountability and mechanisms to ensure that repatriated assets are not misappropriated.
By Christopher Watkins, ILP Legal Fellow