Court Declines Request To Suspend Orders Freezing Funds Linked To US Linked Jet Leasing Firms

Proprietors of two exclusive private jet companies have suffered a major blow after failing to convince a judge to suspend orders freezing its bank accounts, which were restricted over claims of money laundering.

High Court Judge Esther Maina dismissed the application by the owners of the two firms linked to US based companies for lack of merit.

Cullinan Private Jet Corp, an alleged subsidiary of a company registered in Miami and Glo-Jet International limited, a subsidiary of a company registered in the state of Florida, wanted the order freezing its bank accounts in Kenya lifted.

“The Notice of Motion dated 28th September 2023 is hereby dismissed for lack of merits,” ruled justice Maina of the anti-corruption Division of the High Court.

In her ruling, the judge found that the two executive private jet companies failed to prove that the preservation orders was making it difficult to meet its expenses.

The Judge dismissed arguments by the two private jet companies that a preservation order may not be varied or rescinded if there is a forfeiture application which is yet to be determined.

The judge added that a preservation order is valid for 90 days from the date of its gazettement unless a forfeiture application is filed in which case the preservation persists until the forfeiture application is heard and determined.

“In my considered view an intended but yet to be filed forfeiture application cannot be a bar to an application for variation or setting aside of a preservation order and this issue must therefore be answered in the negative,” ruled the judge.

In her 31 page ruling , Judge Maina observed that the two companies annexed copies of cheques drawn to third parties which they claimed were dishonoured as a result of the freeze and demand letters from third parties threatening to sue for not meeting their financial obligations.

The firms had also alleged that some of their staff have handed in their resignation letters due to non-payment of their salaries and the companies were undergoing financial hardship which was threatening to cripple their operations.

“The question would then be whether inability to pay salaries and debts due to financial hardship falls within the definition of “reasonable living expenses” as envisaged in Section 89 (1) (a) (i) of the POCAMLA,” the judge said.

“It is therefore clear to me that the living expenses envisaged in Section 89 (1) are the personal living expenses of the applicant a natural person, but not of a company. The deponents of the affidavits of the companies do not allude to any hardship suffered by themselves, or by the other directors of the two companies, personally,” noted the judge.

The judge added that the only claim is that the preservation order has exposed the companies’ operations to grave danger to the extent that the parent company has threatened to relocate to other countries.

“Even then no evidence was tendered that the cheques annexed to the affidavit were presented to the banks and were in fact dishonoured. There is also no evidence from any of the company’s creditors that indeed they are owed money by the two companies,” observed the judge.

The judge further stated that a dishonoured cheque would definitely have remarks to that effect from the bank to which it is presented and in this case there are no remarks to that effect.

Cheques, the judge noted, are generated internally and the mere fact of their having been drawn is not evidence that they were not honoured.

The judge further added that the preservation orders are in respect to four bank accounts and the two companies have not disclosed whether their companies run other accounts and there is no proof that their business operations have come to a halt since the preservation orders which affect only the four accounts needless to say were issued.

Justice Maina added that the companies have also not demonstrated that their suppliers and employees were being paid from the four accounts that are affected by the preservation order.

Moreover, the two private jet companies claim to be subsidiaries of global multi-billion dollar companies with operations in 47 countries in different parts of the world and which have financial muscle to support the Kenyan entities, added the judge.

“This in itself contradicts the allegation that the Respondents are likely to meet their financial obligations because of the preservation order. Indeed, they assert that should their assets in the preserved accounts be forfeited their parent company is capable of sustaining them,” said the judge.

The two companies sotught to lift the order obtained by Asset Recovery Agency freezing its accounts pending forfeiture proceedings.

The bank accounts included four dollar and Kenya shilling accounts belonging to Cullinan Private jets Corp limited and Glo-jet International ltd.

The judge prohibited the operators or their agents or representatives from transacting, withdrawing, transferring, using and any other dealing with the money in the bank accounts.

The Bank accounts includes USD 54, 257.85 , Sh 696,070.70 held in Account Number 01904057366250 registered in the name of Cullinan Private Jets Corp Limited held at I & M Bank and USD 24,712.61 held in Account Number 6658001882 in the name of Glo Jet International Limited and Sh.1,134,691.33 held in Account number 6658001881 in the of Glo Jet International Limited held at Ecobank Limited.

ARA told the court on 25th August 2023 the Agency received information that the above accounts are holding funds suspected to be proceeds of criminal activities and money laundering

Subsequently the Agency opened an Inquiry file to investigate the legitimacy, source and destination of the funds for the purpose of ascertaining whether the same was acquired from or is a profits or benefits of proceeds of crime or intended for the commission of crime.

According to ARA court documents, financial investigations conducted by the Agency revealed complex fraud and money laundering schemes conducted by the Cullinan Private Jets Corp Ltd and Glo-jet International ltd their directors and associates rendering the above funds proceeds of crime liable for preservation and forfeiture.

The said bank accounts received suspicious huge cash deposits from various suspicious sources and investigations established that there are reasonable grounds to believe that the funds in issue are obtained through illegitimate means.

“The investigations have revealed that the cash deposits were unlawfully acquired hence proceeds of crime pursuant to the Provisions of Proceeds of Crime and Anti-Money Laundering Act and investigations further established that the funds were obtained from various suspicious sources and spent/dispersed through suspicious activities and transactions in a classical money laundering schemes,” Agency told the court.

ARA further adds that the transactions in the present application arose from the same facts and money laundering schemes in which the Respondents, their agents and associates are the planner and beneficiary.