STATE INVITES LEGAL ANARCHY WHEN IT BUNGLES CASES AGAINST POLITICALLY CORRECT INDIVIDUALS.

Traditionally, the scales of justice are depicted as in anticipation of the weight of evidence. Indeed this is the idyllic to which we all aspire. Unfortunately, in Kenya, the path to justice is riddled with mishaps. We have increasingly witnessed cases against powerful individuals bungled.

In what appears to be more of a public relations exercise than the quest for justice, the state through the Attorney General (AG) and the Director of Public Prosecutions (DPP) in cahoots with the defense teams, deliberately or otherwise, employs subterfuge to tip the scales in favour of the “politically correct individuals.”

Recently, in totally inexplicable circumstances, the AG and the Directorate of Public Prosecutions (DPP) failed to produce in court a key state witness to demonstrate the culpability of a defendant accused of defrauding the public. Consequently, the court declared that the defendant had no case to answer. It is unlikely that the state will appeal against this decision. Even more chilling is the fact that the said party may soon laugh all the way back to cabinet.

From the foregoing, one cannot fail to notice that the administration of the law is subject to outside influences; especially the power of money and its concomitant political influence. At the very least, justice is akin to a match fixing scandal where players from both teams are allowed to commit unsportsmanlike acts in order to gift the moneyed team a win. In legal parlance, it is referred to as “professional courtesy.”

The joke of it all is that even though hundreds of millions of the taxpayers` money was paid out to certain companies, the AG and the DPP want the public to believe that these companies were not legal entities since ghosts (and not human beings) provided these companies with the mind and soul (corpus and animus). In other words, they are telling the public that no personal liability can be imposed by the courts of law when a wily shareholder operates a company as an “alter ego” for wrongful purposes.

Clearly, our justice system seems to be sending the message to the public that it cannot “pierce the corporate veil.” This is a legal decision that treats the rights or duties of a company as the rights or liabilities of its shareholders or directors. Usually a company is treated as a separate legal person, solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations courts of law may "pierce" or "lift" the corporate veil.

This doctrine is used by the courts to ignore the corporate status of a group of stockholders, officers, and directors of a corporation in reference to their limited liability so that they may be held personally liable for their actions when they have acted fraudulently or unjustly. In other words, a court of law looks beyond the legal fiction to the reality of the situation.

Several courts have determined that the alter ego doctrine can be applied to Limited Liability Companies. In the US for instance, in Kaycee Land & Livestock versus Flahive, (2002), the Wyoming Supreme Court held that the equitable doctrine of piercing the veil was an available remedy under the Wyoming Limited Liability Company Act. In the UK, the corporate veil was lifted in the case between Gencor versus Dalby, because the company was the "alter ego" of the defendant.

In Kenya, section 320 of the Company Act imposes liability for fraudulent conduct of a company business. Under this section if in the course of winding up of a company it appears that any business of the company has been carried on with the intent to defraud the company or any other persons or for any fraudulent purpose those who were knowingly party to such conduct or business may in the discretion of the court be made personally liable for all or any debts of the company. A number of milestones cases exemplify this. Among them are: National Social Security Fund Board of Trustee Versus Ankhan Holding Limited & 2 Others (2006) as well as Standard Chartered Bank Kenya Ltd Versus Intercom Services Ltd & 4 Others (2004).

“Piercing the corporate veil” is therefore the only means of breaking down a wily individual`s protection. This is mostly done when such a company is the wily shareholder`s “alter ego” and is a sham or façade used to evade creditors or to defraud the public.

Given the soaring corruption cases in Kenya revolving around limited liability companies, it is the public`s expectation that the legal system would not shy from “lifting the corporate veil” to expose the real fraudsters. It would make a lot of social and economic sense if a company is barred from being the alter ego of the principal corporate.

Suffice to say that a legal system that is operated by and for criminals has no greater enemy than the law abiding citizen. In the words of Eustace Mullins “let it not be asked whether the lunatics have taken over the asylum.”