NG’ENO V. EAST AFRICAN BREWERIES PLC [2025] KEELRC 2188 (KLR)

(https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2188/eng@2025-07-24)

The Facts of this Case are as follows;

Bernard Ng’eno is the Claimant in this case and a former employee of the Respondent. East African Breweries PLC is the Respondent herein and the former employer of Bernard Ng’eno.

Bernard Ng’eno joined East African Breweries PLC in 2011 as a Sales Representative. By 2023, he had risen through the ranks to the position of Divisional Sales Manager-Mountain, reporting to the Commercial Director.

On 21^st September 2023, the Human Resources Director and the Commercial Director, asked to meet Bernard Ng’eno. At the meeting, Bernard Ng’eno was informed of a decision to suspend him from work, to pave way for investigations into allegations of irregular transactions. The management were concerned with “fraudulent activities” involving two major events dubbed “Isiolo Fest” and “Embu Sevens Activation”. According to East African Breweries, Bernard had approved Monitoring and Evaluation reports that exaggerated event outcomes, allegedly in collaboration with others. There was also a separate claim that he had failed to report the loss of a company-issued phone promptly, a matter they treated as another indicator of negligence or dishonesty. After investigations were concluded, East African Breweries put Bernard through a disciplinary process, eventually terminating his employment with the company on 7^th November 2023.

Bernard sued his former employer, alleging among other things that his termination from employment was unfair and procedurally flawed. He particularly claimed that the disciplinary process was one sided and that the evidence he provided, including that of reporting the loss of the phone to the company’s IT department and even to the police, was not considered.

Was Bernard Ng’eno’s termination by East African Breweries procedurally fair and based on a valid reason?

Ng’eno told the Court that event planning and reporting was a shared responsibility, and that he had relied on data already approved in the system. As for the phone, he insisted to the Court that he had reported its loss to the company’s IT department and even to the police, with documentation to prove it. He reiterated that despite his retorts, he was dismissed on November 7, 2023.

What does the Law provide?

The legal standard governing termination from employment in Kenya is found in Sections 41 and 45 of the Employment Act, 2007. Section 41 provides for procedural fairness. Before termination, an employee must be informed of the reasons and given a meaningful chance to respond, with the right to have a representative present. Section 45 states that a termination is unfair if the employer fails to prove that it was grounded in a valid reason and conducted fairly.

Analysis

The court acknowledged that the allegations were serious. Falsifying Monitoring and Evaluation reports and mismanaging company property could certainly constitute valid grounds for termination if proven. However, the court reiterated that a substantive reason alone is not enough. The process must also be fair. In assessing procedural fairness, the Court noted that Bernard Ng’eno had specifically requested key for documents before his disciplinary hearing, including the internal investigation report and statements from witnesses, which East African Breweries were relying on. The company refused to share them, citing confidentiality. The court underscored that fairness demands disclosure, especially when that evidence forms the foundation of serious accusations. Denying Ng’eno access to the very documents being used against him violated Section 41 of the Employment Act and undermined his ability to defend himself effectively. The Judge reiterated that once an employer uses certain evidence to support disciplinary action, it loses the right to withhold that evidence on grounds of confidentiality.

In trying to strengthen its case on Bernard’s misconduct, the company included as part of its documents, a letter from Kenyatta University regarding Ng’eno’s discontinued academic program. The Court stated that its inclusion, without explanation or giving Ng’eno a chance to respond, was prejudicial and malicious at worse.

In conclusion therefore, the court found that although East African Breweries had a substantive reason to initiate a disciplinary process, the procedure was flawed and it did not meet the requirements of Section 41 And 45 of the Employment Act, thereby rendering Bernards termination of employment unlawful and unfair.

Conclusion

Bernard Ng’eno was awarded 12 months’ salary as compensation for unfair termination, totalling Kes. 10,058,300, and one-month’s salary in lieu of notice, amounting to Kes. 838,199. In total he was awarded Kes. 10,896,787.

Our Role

RISKHOUSE INTERNATIONAL plays a vital role in supporting employers during workplace investigations by offering independent, professional services that are both thorough and legally sound.

In cases where allegations involve issues like financial misconduct, document irregularities or unreported asset loss, Riskhouse conducts detailed forensic investigations using digital analysis, financial audits and document examination to uncover the facts. The evidence we collect and the reports we produce are structured to meet the evidentiary burden required in disciplinary proceedings, arbitration or court, while maintaining strict data protection standards to preserve personal and sensitive information.

Our investigations are impartial, well-documented and compliant with both legal and ethical standards, helping employers make informed decisions and avoid procedural missteps that could lead to claims of unfair termination.

At RISKHOUSE INTERNATIONAL, we boast of a team of expert investigators who have continually assisted our clients with their pre-employment, employment and post-employment needs. Our team incorporates specialists in intelligence analysis, financial investigations, cyber security and legal advisory, allowing our clients to make informed hiring decisions and manage or avoid altogether, potential risks to their organisations.  With a multidisciplinary team and a commitment to confidentiality, Riskhouse ensures that every investigation stands up to scrutiny and protects the integrity of both the organisation and its people.

Kindly reach us on email at info@riskhouse.co.ke. We are capable, willing and would be happy to help you with all your pre-employment, employment and post-employment needs.

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Key aspects of land due diligence include: 

1. Title verification – confirming legal ownership and whether the title is clean, valid, and unencumbered. 

2. Land use/zoning compliance – checking if the intended use aligns with planning regulations. 

3. Historical ownership – tracing the land’s ownership chain to ensure no prior fraud or illegality. 

4. Regulatory approvals – verifying survey plans, environmental clearances, and subdivision approvals. 

5. Physical inspection – visiting the site to identify boundary disputes, encroachments, or occupation issues. 

Land due diligence protects the buyer from legal disputes, fraud, and investment risks by ensuring informed, lawful, and secure land transactions. 

CASE STUDY 

SEHMI & ANOTHER V. TARABANA COMPANY LIMITED & 5 OTHERS [2025] KESC 21 (KLR) 

Facts of the Case 

Harcharan Singh Sehmi and Jaswarana Sehmi, the 1^st and 2^nd Appellant, are brothers and the initial lessees of the suit property situated in Ngara, Nairobi. The parcel of land was initially leased to the Sehmi family for a 59-year lease beginning 1942. The Lessor was the Government of Kenya. As the lease neared its expiry in 2001, the Sehmi family applied for a renewal of the lease. As part of the lease renewal process, the brothers received letters from both the Commissioner of Lands and Director of Physical Planning, who each confirmed that there were no objections to the lease renewal. Unfortunately for Harcharan Singh Sehmi and Jaswarana Sehmi, the lease was never formally extended due to administrative delays by the Lands Office.  

In 2009, the suit property was unlawfully and unprocedurally transferred to Rospatech Limited, (the 2^nd Respondent). In 2014, Rospatech Limited transferred the suit property to Tarabana Company Limited for a consideration of Kes. 24,000,000/-. Following the transfer to Tarabana, (the 1^st Respondent), the Sehmi family were evicted from the suit property and the 1^st Respondent constructed an eight-story building on said property.  

The two brothers filed a suit at the Environment and Land Court (ELC) in Nairobi. The ELC determined that Harcharan Singh Sehmi and Jaswarana Sehmi were the rightful owners of the property. The trial court therefore, nullified the 1^st and 2^nd Respondents’ titles and reinstated the Sehmi’s titles.  

The Respondents then appealed to the Court of Appeal. The Court of Appeal reversed the trial court’s decision, and found that the 1^st respondent was an innocent purchaser for value, and that therefore, Tarabana Company Limited had a legitimate right over the suit property.  

Harcharan Singh Sehmi and Jaswarana Sehmi are now the appellants in this suit before the Supreme Court of Kenya, seeking to quash the decision of the Court of Appeal.  

Issues before the Supreme Court of Kenya 

• What is the meaning, scope and extent of applicability of the doctrine of Bona fide/Innocent Purchaser for value without Notice? 

• Does the doctrine of Bona fide/ Innocent Purchser for Value Without Notice protect a purchaser of an illegally/irregularly allocated title over Public Land? 

• To what extent, if at all, is the doctrine of Legitimate Expectation applicable to the renewal of leases over public land? 

Rule of Law 

The Supreme Court of Kenya in reaching its decision relied on the following provisions of law; 

• Section 26(1) of the Land Registration Act, 2012 

• Article 47 of the Constitution of Kenya 

• Principles of legitimate expectation 

• Doctrine of innocent purchaser for value 

Analysis  

(Paragraph 8) “Holders of impugned titles, especially those acquired before the promulgation of the 2010 Constitution always called into service the provisions of section 23 of the Registration of Titles Act (repealed) on indefeasibility of title. Pursuant to section 23, a certificate of title was held as conclusive evidence of proprietorship. Upon repeal (of the Registration of Titles Act), the effects of registration are now governed by section 26 of the Land Registration Act.” 

(Paragraph 9) “Section 26 of the Land Registration Act provided that the proprietor shall not be subject to challenge, except on the ground of fraud or misrepresentation to which the person is proved to be a party; or where the certificate of title has been acquired illegally, unprocedurally or through a corrupt scheme. Under the Registration of Titles Act (repealed), a certificate of title was to be regarded by courts as conclusive evidence that the person named therein was the absolute and indefeasible owner of the land. However, under Land Registration Act, a certificate of title was to be regarded by courts as prima facie evidence that the person named therein was the absolute and indefeasible owner of the land. It was therefore no longer possible for a title holder to erect the certificate of title as a barrier to an inquiry into its legality or otherwise.” (emphasis ours) 

The Supreme Court in reaching its conclusion found that you cannot confer a bad title. A holder of an illegal title cannot possibly confer a legal title. In other words, there is no legality that can arise from an illegality. 

The Court further explained that it is not sufficient that a person sites the doctrine of innocent purchaser for value. But such a person claiming under this doctrine must show that, one, he purchased a legal estate/estate was purchased legally, and two, that there was at the time no notice or equitable interest registered against the property.  Paragraph 11, “A purchaser would only be regarded as bona fide if he bought property in good faith without notice of any defect or claims against the title. So that if the title in question was illegal or obtained through unlawful meant, the purchaser could not claim protection even if he was not aware of the illegality.” 

Determination of the Court 

The Court determined that the 2^nd Respondent obtained the suit property illegally. Therefore, having an illegal title of land, the 2^nd Respondent was incapable of passing a valid title to the 1^st Respondent. Further, the doctrine of bona fide purchaser for value could not be invoked to protect a title to an illegally acquired public land. The Court emphasized that due diligence requires more than just reliance on a title deed or registry search—it includes investigation into how the title was acquired, especially where the land was previously under government lease or occupation. 

The Court determined; 

1. The Judgment of the Court of Appeal, dated 8^th October 2021 is overturned 

2. The Petition of Appeal dated 23^rd November 2023 is allowed 

3. The Chief Land Registrar (3^rd Respondent) is directed to effect a cancellation of the 1^st Respondent’s title from the Proprietorship Section of the Land Register 

4. The Chief Land Registrar (3^rd Respondent) is directed to make an entry in the Proprietorship Section of the Land Register to reflect the appellants as the proprietors of the suit property in accordance with the provisions of the Land Registration Act 

5. The structures and developments erected by the 1^st Respondent on the suit property be removed and demolished by the 1^st Respondent within six months from the date of this Judgment under the supervision of the 5^th respondent 

CONCLUSION 

Land due diligence is not just a procedural step; it is a critical safeguard in any real estate transaction. By thoroughly investigating legal titles, zoning regulations, environmental conditions, and other potential encumbrances, stakeholders can mitigate risks, prevent costly disputes, and make informed investment decisions. Whether you’re a developer, investor, or end-user, comprehensive due diligence ensures that your land acquisition is not only legally sound but strategically wise. In an industry where oversights can lead to long-term setbacks, due diligence is your first and most essential line of defence.  

In Sehmi & another V. Tarabana Company Limited & 5 others [2025] KESC 21 (KLR), the Supreme Court recognised the huge investment made by the 1^st Respondent on the suit property but determined that even equity cannot cure an illegality. This decision by the highest Court in the country places greater responsibility on buyers, lawyers, and developers to investigate the authenticity of titles and avoid complicity in irregular allocations. 

Due diligence is not a box-ticking exercise. Land buyers especially, must go beyond the surface; verifying not just the existence of a title but also its valid origin and compliance with legal processes. Further, a registered title acquired through illegality cannot be protected. The need to uphold rule of law, land governance principles, and constitutional protections outweighed the financial loss incurred by the developer. 

At RISKHOUSE INTERNATIONAL, we boast of a team of expert investigators who have continually assisted our clients with their due diligence needs, through a mix of analysis of publicly available information, human source inquiries and overt investigations. Our team incorporates specialists in intelligence analysis, financial investigations, cyber security and legal advisory allowing our clients to make informed decisions and manage or avoid altogether, potential risks. Kindly reach us on email at info@riskhouse.co.ke. We are capable, willing and would be happy to help you with all your background checks needs. 

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Background checks are a process used by employers to verify the accuracy of a candidate’s personal, professional, and financial history. This type of investigation involves examining a variety of records, such as criminal history, employment verification, education credentials, credit reports, and references. What most Employers aim to achieve with this process is to assess whether a candidate is trustworthy, qualified, and a good fit for the organization they are looking to join, while also helping to mitigate potential risks such as fraud, negligence, or workplace misconduct. 

JUST HOW IMPORTANT AND EFFECTIVE ARE BACKGROUND CHECKS?  

A thorough background check has become a vital component of the recruitment process. The business culture in Nairobi has always been characterised as fast-paced. A fast-paced business environment may mean higher risks and what determines the success or not of an entity is how efficiently this entity is able to mitigate such risks that threaten their profit up streaks.  

Employee Background Checks is one such strategy. Also known as pre-employment screening, employee background checks help employers verify the credentials, experience, and integrity of potential hires, confirming their educational qualifications, criminal records and lack thereof and credit history where relevant. Background checks serve as a protective measure against potential risks, ensuring that organizations make informed and responsible hiring decisions. 

CASE STUDY  

AMBASA V. EQUITY BANK (K) LIMITED & ANOTHER [2025] KEELRC 2113 (KLR) 

In a recent decision by the Employment and Labour Relations Court in Nairobi, the court found that the Petitioner, Benard Okoth Ambasa, was not unfairly and unlawfully terminated as he alleged, after the 1^st Respondent, Equity Bank, terminated Bernard’s employment due to “unsatisfactory background screening results”, after just a few weeks of him starting there.  

Facts 

Bernard Okoth Ambasa is the Petitioner herein and a former employee of the 1^st Respondent. Equity Bank is the 1^st Respondent and former employer of the Petitioner. Dr. Dorcas Kiai is the 2^nd Respondent, and was at the time, a Human Resource Practitioner at the 1^st Respondent – the Bank. 

Dr. Dorcas Kiai and Bernard Okoth Ambasa were former colleagues at Kenya Revenue Authority (KRA) before Dorcas moved to Equity Bank. On 09.12.2024, Dorcas texted Bernard on WhatsApp and shared with him that Equity was looking to hire a General Manager – Human Resource Employee Relations. She further informed him that her Group HR, David Ssegawa thought he would be interested in the role, and she was reaching out to see whether he was. 

Bernard answered Dorcas in the affirmative and in the course of the few days to come, on Dorcas’ request, he shared with her his profile and credentials. Bernard had his first interview with the Bank on 19.12.2024 and his second interview on 09.01.2025. On 22.01.2025, the Bank gave him an offer via email. Bernard counter offered and the two parties (Bernard and the Bank) negotiated the terms of the employment. Finally, on 24.01.2025, the Bank gave Bernard a further offer of a consolidated salary of Kes. 950,000/-. He accepted this offer on that same date.  

Bernard later received his appointment letter on 30.01.2025 and he was required to start his new role on 10.02.2025.  

Issue & Analysis 

According to Equity’s Human Reasource Policy and Manual, since the petitioner had been employed at the job level of General Manager, he was subject to “background screening and enhanced screening”. Further, Equity requires all employees and potential employees “during the probation period and after confirmation of employment, to declare all business interests…” “… declaring false information, including leaving out information that is relevant to what the employee owns in terms of businesses, will lead to disciplinary action.” 

The Bank contracted Spectrum Network International to conduct a background check on Bernard. The investigation revealed that the petitioner was a Director at Yarrow Spa & Barber Shop, registration number BN_X2C8XBMY, Dokam Travels (BN_P6C2G57) and Roekam Executive Barbers & Spa (BN_GVCQQYLY). The Respondents explained to the Court that “The petitioner failed to disclose the said businesses and his directorship in the declaration form he signed on 10.02.2025. He only disclosed two businesses (Resourcing and People Management Limited and Grand Dominion Ltd) in the said form and left out the high-risk businesses for money laundering that are mostly flagged by Banks.” 

The Respondents in their replying affidavit continued; “The petitioner had a fiduciary duty to disclose all information that could affect the mind of the decision-maker in whether or not to confirm him to full employment as per the contractual terms.” “…” “With the banking industry being a sensitive sector, all employees and potential employees are supposed to be above suspicion like Caesar’s wife, and any suspicion of dishonesty and integrity issues leads to automatic separation”.  

Bernard’s contract of service with the Bank was terminated on 04.04.2025.  

Determination 

The issue before court was whether Bernard’s termination was unfair.  

The court found that his termination was not unfair nor unlawful because as per the letter of appointment he signed on 30.01.2025, during the first six months (probation period), his employment was “…subject to satisfactory background screening results…” and which screening results the Bank had found unsatisfactory.  

In dismissing the suit, the Court stated, “The background checks were not a disciplinary process but was part of the recruitment, selection and appointment processes…” 

CONCLUSION 

Employee background checks are an essential component of modern hiring practices. They offer employers a reliable means of verifying a candidate’s integrity and reducing workplace risks. Equity Bank for example was able to flag “high-risk businesses for money laundering that are mostly flagged by Banks”. Conducted within the bounds of applicable labour laws, constitutional protections, and data privacy regulations, background checks are endorsed by Courts of Law such as was in this case of Ambasa V. Equity Bank (K) Limited & another [2025] KEELRC 2113 (KLR) (https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2113/eng@2025-07-17).  

At RISKHOUSE INTERNATIONAL, we boast of a team of expert investigators who have continually assisted our clients with their pre-employment needs, through a mix of analysis of publicly available information, human source inquiries and overt investigations. Our team incorporates specialists in intelligence analysis, financial investigations, cyber security and legal advisory allowing our clients to make informed hiring decisions and manage or avoid altogether, potential risks to their organisations.  

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Asset tracing is the process of identifying and locating assets that are concealed or difficult to find. This involves following a trail of financial transactions, ownership records, and other documentation to track down assets. Effective tracing and recovering assets are crucial in cases of commercial disputes and civil fraud. It plays a key role in the recovery of the proceeds and is a core component of specialised recovery services aimed at addressing financial misconduct and fulfilling legal obligations. 

Importance of Asset Tracing  

Asset tracing plays a crucial role in maintaining financial integrity and ensuring justice in various scenarios. Here are a few reasons why this process is important: 

Fraud Prevention 

Asset tracing helps to uncover civil fraud and recover stolen or misappropriated assets. By identifying hidden assets and methods used to conceal assets, it becomes possible to address and rectify financial misconduct. 

Debt Collection 

For creditors and businesses, asset recovery is crucial for collecting outstanding debts. Using recovery services to trace funds ensures that creditors can pursue repayment and secure the assets needed to satisfy financial claims. 

Divorce Settlements 

In divorce proceedings, asset tracing can help ensure that marital assets are fairly divided. Identifying hidden assets ensures an equitable settlement and protects the financial interests of both parties. 

Legal Compliance 

Asset recovery supports legal compliance by ensuring that individuals and entities meet their financial obligations. It helps uphold contractual agreements, enforce judgments, and resolve disputes. Legal advice from a specialist is often crucial in navigating these processes, ensuring that recovery efforts are aligned with legal requirements and effectively managed. 

Aset tracing is a vital process for locating assets that may be hidden or disputed. By employing a combination of investigative techniques and legal actions, individuals and businesses can address financial misconduct, recover debts, and ensure fair asset distribution. Understanding the principles and methods of asset tracing and recovery can help in effectively managing financial disputes and protecting one’s financial interests. 

At Riskhouse International, this is one of the key services we offer to law firms, financial institutions, NGOS, SMES, individuals and other reputable organizations. If you have any questions about our service or would like to discuss your matters with us in greater detail, please contact the Business Development Team on 0792603759.  

To learn more about this and catch up on our other news and alerts you may visit our blog on our website at https://riskhouse.co.ke/blog/.  

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Implementing an Effective Access Control Policy.

An Access Control Policy is essential in every organization as it provides guidelines for granting and managing access to databases and the physical assets of the company. It also sets out the limitations of access and permissions and the privileges granted to various employees based on their roles.

Some of the key items to consider when implementing an Access Control Policy include, but are not limited to the following: –

1. The purpose and scope of the policy – the policy should clearly define the purpose of the access control policy and specify its scope i.e., whether it covers digital systems and physical access as well.
2. Access Control Personnel – define the roles and responsibilities of the team involved in access control such as cybersecurity experts, system developers and administrators, data users, and end users. It should state the personnel’s obligations regarding granting access, modifying such access, and revoking access rights, where the need arises.
3. Segregation of duties – this ensures that individuals have limited access, enough to enable them to perform their job functions.
4. Access Control Mechanisms – this sets out the methods and technologies used to ensure access control. This may include passwords, two-factor authentications, authorization based on roles, and monitoring access.
5. Access Request Process – this defines the process of requesting access to a digital system or physical access. Such a process should specify the person authorized to grant and approve access requests and the criteria employed when granting or denying access. One of the best practices for Access Control Management is to have a designated team to access requests and have an Access Control Administrator in your organization.
6. Guidelines on Password and Authentication – the policy should establish guidelines for password complexity, and expiration, and promote the use of strong passwords and multi-factor authentication where possible and modification of passwords.
7. Training and Awareness – an effective plan ought to emphasize the importance of employee training and awareness regarding access control and best practices. Employees should be regularly educated about the risks attached to unauthorized access and how to ensure safety.
8. Incident Response – sets out the framework for reporting and responding to access control incidents, including unauthorized access attempts, compromised credentials, or breaches. It also sets out the incident response team, incident response procedures, and a post-incident improvement and implementation plan.

Access Control Management is important in ensuring security within an organization. Having a policy alone is not enough. One of the focal practices in ensuring security is the implementation and enforcement of the policy. This calls upon the Access Control Committee and the Access Control Administrator in every organization to be at the forefront in the implementation of the plan and monitor compliance through measures such as periodic audits, security assessments, and regular compliance reviews to ensure that access controls are effectively maintained.

How can we help?

At Riskhouse International, we assist the management and organizations to develop policies and standards that assess security control measures and embrace a healthy network environment. To learn more about our policy review and development program and to catch up on our other news and alerts, you can visit our blog through our website at https://riskhouse.co.ke/blog/.

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Occupational fraud typologies highlight different forms of fraud, one of which is corruption. Business corruption is categorized as the second most common type of occupational fraud, with the primary examples being bribery, conflict of interest, improper gratuities, and economic extortion. Bribery and corruption pose significant risks to organizations as they may be subjected to legal, regulatory, and reputational damage. Additionally, a history of corruption can constitute a reputational risk that if not mitigated, may drive away investors, partners, clients, and future employees.

Therefore, zero tolerance for bribery and corruption is essential as it ensures sustainability and business integrity in any organization. Organizations should have robust policies, procedures, and programs to mitigate bribery and corruption risks. Organizations should also train and educate stakeholders to increase their understanding and awareness. An effective Anti-Bribery and Anti-Corruption program should lay focus on the following key areas: –

• • Top management commitment – this entails tone at the top and senior management commitment to upholding ethical conduct and integrity.
  • Risk Assessment – this entails assessments and subsequent assessments of the organization’s bribery and corruption risks.
  • Proportionate Procedures – this involves developing procedures based on risk assessment and ensuring that there is an investigation procedure in place.
  • Training and Information Communication – this involves training all levels of employees on whistleblowing and mechanisms of reporting bribery and corruption.
  • Due Diligence – this involves applying appropriate due diligence procedures to third parties including name screening, integrity, and corruption checks.
  • Monitoring and Review – this involves a continuous evaluation and validation of anti-bribery and anti-corruption programs.

At Riskhouse International, we help organizations spanning multiple jurisdictions to define, assess and respond to bribery and corruption issues. Further, we help organizations identify gaps and provide recommendations for mitigating bribery and corruption risks. We also support organizations with comprehensive Anti-Bribery & Anti-corruption (ABAC) reviews, reviews of the existing relevant legislation, review of the existing policies and procedures, conducting transactions reviews and verifications of third parties.

To learn more about this and to catch up on our other news and alerts you can visit our blog on our website at https://riskhouse.co.ke/blog/.

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A network environment can be defined as a communications system that ties multiple users together. In such an environment, there is a need to establish control measures to detect advanced threats in the network. The security mechanism measures should identify the threat’s movement in, out, and laterally within the environment.

There is a need to establish a network detection response (NDR) that can identify and allow rapid and efficient response to threat incidents and analyze the network traffic matrix. This will enable the identification of zero-day exploits and unknown unidentified threats to enhance advanced security threat hunting and detection capabilities.

The organization should embrace the following practices to prevent the threats: –

1. Human expertise – security experts should have the ability to observe and act on incidents for the purpose of preventing major damages the business may encounter.
2. An automated response – there is a need for integration and automation of security appliances to be capable of taking actions to block and mitigate potential threats as they are detected. This can be done by automatically blocking traffic from active IP addresses that are identified as known threats.
3. Artificial Intelligence/ Threat Intelligence – this is the integration of network devices and other applications by use of intelligence that feeds up-to-date information on known threats and cybercrime attackers on a network.

At Riskhouse International, we assist the management and organizations to develop policies and standards that assess security control measures and embrace a healthy network environment. To learn more about this service and to catch up on our updates and alerts you can visit our website at https://riskhouse.co.ke.

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Criminals launder money mainly using the financial system to transfer funds. Financial institutions, especially banks, are most vulnerable to abuse for laundering purposes. To protect themselves, financial institutions must have adequate controls and procedures in place that enable them to know the person whom they are dealing with. Enhanced due diligence on new and existing customers is a key part of these controls.

The application of thorough Customer Due Diligence (CDD) measures by financial institutions and a high degree of transparency is crucial to fight money laundering and the financing of terrorism effectively. Customer Due Diligence should be applied upon the establishment of a business relationship. Enhanced Due Diligence should also be applied where there is a receipt of a significant cash amount above normal threshold receipts. Customer Due Diligence measures should also be applied whenever financial institutions suspect money laundering or terrorist financing activities.

The Legal Framework for Customer Due Diligence in Kenya.

In Kenya, CDD is a legal requirement under the Proceeds of Crime and Anti-money Laundering Regulations, 2013. Under the regulations, reporting institutions which include banks, insurance companies, and microfinance institutions must undertake due diligence procedures before establishing a business relationship.

Specifically, institutions are required to identify customers using independent source documents, data, or information, verify the identity of beneficial owners and conduct ongoing due diligence on the business relationship to ensure that transactions being undertaken are consistent with the financial institution’s knowledge of the customer, their business and risk profile.

Importance of Customer Due Diligence for Financial Institutions in Kenya

One of the key benefits of conducting customer due diligence is the protection of the institution against reputational risk. Another benefit is the maintenance of customer trust. Lastly, CDD ensures the avoidance of regulatory fines and penalties. In Kenya, a reporting institution that contravenes the provisions of the regulations commits an offence and is liable to a fine not exceeding five million Kenya shillings or imprisonment for a term not exceeding three years or both.

Riskhouse International Limited assists organizations to examine the effectiveness of their Anti-money laundering and Combating Financial Terrorism programs by offering AML/CFT Health Checks, KYC Diligence, Screening, and Remediation, AML/CFT Analytics, Monitoring, and Investigation, and AML/CFT Training and Awareness.

To learn more about this and to catch up on our other news and alerts you can visit our blog on our website at https://riskhouse.co.ke/blog/

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Fraud risk assessment is a component of fraud risk management strategy that helps an organization and its stakeholders protect itself against fraud. It is a technique by management to detect and understand their fraud exposure, fraud risks, and the efficiency of existing anti-fraud controls and solutions.

Fraud risk assessment involves a comprehensive examination of fraud vulnerabilities, control environment evaluation, determining the likelihood of fraud risk, identifying material gaps, remediation, regular revalidation, and control implementation approval.

The objective of the risk assessment process is to evaluate hazards and, if required, mitigate them by improving control measures. The four primary aspects of fraud risk assessment are:

• Asset Misappropriation,which evaluates the indicators of missing cash, inventories, and other assets
• Non-financial and financial reporting,which evaluates inconsistencies that can indicate fraud in financial and non-financial reporting
• Illegal actions,which evaluate any fraudulent activities within an organization’s operation
• Regulatory compliance,which evaluates compliance with industry regulations and the organization’s efforts to meet regulatory standards.

A fraud risk assessment is critical in assisting organizations to proactively identify external and internal risks that can damage their reputation and assets and expose them to criminal or civil liability.

As a result, Riskhouse International can assist your organization in implementing a rigorous fraud risk assessment methodology that includes fraud risk identification and documentation, fraud risk analysis, fraud risk evaluation, and fraud risk treatment. Fraud risk assessment quantifies risks and allows your organization to prioritize more damaging frauds. Riskhouse will adapt a fraud risk-tolerance limit to your organization’s needs based on the results of the fraud risk assessment.

To learn more about this and to catch up on our other news and alerts you can visit our blog on our website at https://riskhouse.co.ke/blog/.

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Introduction

In simple terms, asset tracing is the process of identifying assets through investigations for a particular purpose [without going into the details to answer questions as to who has a legal right to the assets so traced]. Asset tracing can be distinguished from asset recovery which involves the restraining, seizure, confiscating, and return of the assets traced to the rightful owner; it is an assertion of a right.

The nexus between tracing and recovery is that once the tracing exercise is successfully completed, it can then be asked what rights, if any, the claimant can, on his particular facts, assert against the assets traced. These rights can be personal, proprietary, legal, and other equitable rights depending on the subsisting facts.

According to Lord Millett in Foskett v. McKeown and Others, tracing assets is neither a claim nor a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property.

Tracing is also distinct from claiming in the following ways: –

1. It identifies the traceable proceeds of the claimant’s property.
2. It enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim, but it does not affect or establish his claim.

When and why Asset tracing should be used?

The process of asset tracing and recovery is crucial for the successful recovery of misappropriated assets, recovering proceeds of fraud and embezzlement. It is also through asset tracing and identification that financiers can carry out proper due diligence in respect of assets they intend to take as security and investors can access the legitimacy of assets and ventures, they intend to invest in. Additionally, asset tracing and identification is crucial in family law proceedings including succession and divorce as we shall be further discussing in our subsequent articles on this area.

Asset tracing and recovery is also an important tool for creditors as it allows those who are considering instituting claims in court to ascertain unencumbered assets and obtain preservation orders against them to aid in recovery; it also aids in the enforcement of court decrees and judgments which would otherwise be hindered by lack of knowledge of the judgment debtor’s assets.

Asset Tracing in Corporate Insolvency Litigation

In insolvency-related matters, asset tracing is also crucial in the tracing and recovery of property that may have been misappropriated by the directors of the company. Case in point:- in liquidation matters, the insolvency practitioner may need to trace misappropriated assets in the event that he intends to pursue the directors for an offence of fraudulent trading or seek orders against delinquent directors as contemplated in our insolvency laws.

Where specific misappropriated assets can be identified, the liquidator can follow the trail and obtain freezing orders or injunctions and disclosure orders on behalf of the Company in liquidation to prevent the delinquent directors from dissipating the assets as to have the effect of prejudicing the interests of the entire body of creditors.

The liquidator, the official receiver, or the creditor can also invoke the power of the Insolvency Court under Section 504 of the Insolvency Act to undertake an examination into the conduct of the person in relation to whom the application was made. Where the Court finds that the person has misappropriated the company’s assets, the Court may make orders compelling the person: –

1. to repay, restore or account for the money or property or any part of it, with interest at such rate as the Court considers appropriate; or
2. to contribute such amount to the company’s assets as compensation for the misfeasance, breach of fiduciary or other duty as the Court considers fair and reasonable.

How can we help?

At Riskhouse, we combine our skills in forensic accounting, forensic investigations, financial & intelligence analysis, understanding of the insolvency process, and digital investigations to perform complex analyses and identify and trace assets of the relevant subjects to satisfy our clients’ needs including; due diligence, recovery of debts and/or proceeds of fraud, enforcement of legal orders,  identification of assets for distribution in family law proceedings, money laundering, resolution of disputes and assessment of cost-benefit of instituting debt recovery claim. With our support, our clients can identify and also assume control of available assets subject to the subsisting contractual relationship with the relevant subject.

To learn more about this and to catch up on our other news and alerts you can visit our blog on our website at https://riskhouse.co.ke/blog/.

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