Section 30 of the Constitution of Kenya creates Parliament. And provides that Parliament shall consist of the President and the National Assembly.

The Constitution gives Parliament the legislative power of the Republic of Kenya. And goes further to provide that the legislative power of Parliament shall be exercisable by Bills passed by the National Assembly. The procedure for passing of bills by the National Assembly is well set out and elaborate.

When a Bill is passed by the National Assembly, it is presented to the President for his assent. And after Presidential assent, a law made by Parliament only comes into operation when it has been published in the Kenya Gazette.

Parliament has the power to postpone the coming into operation of a law, and may make laws with retrospective effect. Section 46 (7) of the Constitution provides that a law made by Parliament shall be styled an Act of Parliament, and the words of enactment shall be “enacted by the Parliament of Kenya.”

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It is the above legislative power of Parliament that was the focus of the Bosire Report on the Goldenberg Inquiry, and the Ruling of the High Court following Professor George Saitoti’s Challenge to the Bosire Report.

Under the Constitution, the power of Parliament to make laws is made subject to:

• Section 3A of the Constitution of Kenya, which provides that any law or any part thereof, which is inconsistent with the Constitution, is void.

• The Supervisory powers of the High Court of Kenya which has unlimited original jurisdiction in civil and criminal matters and such other jurisdiction and powers as may be conferred on it by the Constitution or the law.

The Bosire Report reached the finding that the 15% ex gratia export compensation payments made to Goldenberg International Limited were illegal and were not made under any law enacted by Parliament or even under the Local Manufactures (Export Compensation) Act. The Ruling cites verbatim a passage on page 219 of the Bosire Report stating

“Besides Parliamentary approval of the expenditure as a customs refund does not cure the illegality of the payment of the 15% ex gratia. The argument that because the payment was designated ex gratia, then there was no breach of the Local Manufactures (Export Compensation) Act is a red herring. The designation of the payments as ex gratia was a ploy to circumvent the above Act. The approval given to GIL’s proposal was not that it would be paid ex gratia but additional export compensation. Whether it was subsequently called ex gratia or customs refund, those were moves to conceal the illegality and in our view Parliament does not have power under the law to pardon illegality it still stands. The only way Parliament could possibly have gone round this was to amend the relevant law retrospectively to cover all past illegal payments.”

The Bosire Commission concluded that Parliament’s powers were legislative only. It could only approve of the Executive Policies by the passing of laws; and its approval of any such policies could not remove the stain of illegality from any government policy.

The High Court does not agree. It rubbished the above interpretation of Parliament’s powers as horrendous in law and reached a different conclusion on its perceptions of Parliament’s powers. It stated that:

• Even though the Local Manufacturers (Export Compensation) Act was silent on the payment of the additional 15% ex gratia, the Government had formulated a policy in respect of the extra 15%, which Parliament had approved.

• The decision of Parliament (to approve the extra 15%) could not form the basis of a cause of action. That, it cannot be challenged before any court of law.

• It is not every policy decision of Parliament that ends up as an Act of Parliament and Parliament must under the doctrine of separation of powers have the latitude to act as a watchdog body to the Executive without necessarily legislating as such.

• A Court of Law cannot question the decisions of Parliament as Sections 4 and 12 of the National Assembly (Powers and Privileges) Act prohibit such challenges, and neither could the Bosire Commission, an inferior body to the High Court.

The High Court purported to rewrite the Constitution, put Parliament above the reach of the High Court, and the law, and entrenched Sections 4 and 12 of the National Assembly (Powers and Privileges) Act into the Constitution. According to their ruling:

• Parliament has the power to make laws;

• And the power to make decisions, by the approval of policies.

• Parliament’s power to make decisions cannot be questioned by any court of law, as any such challenge will offend the National Assembly (Powers and Privileges) Act.

The question in your minds must be what is this National Assembly (Powers and Privileges) Act?

Section 56 of the Constitution provides that

“Subject to the Constitution, the National Assembly may (a) make standing orders regulating the procedure of the Assembly (including in particular orders for the orderly conduct of proceedings)

(b) subject to Standing Orders made under paragraph (a) establish committees in such manner and for such general or special purposes as it thinks fit and regulate the procedure of any committee so established.”

Section 57 of the Constitution provides that

“Without Prejudice to the Powers conferred by Section 56, Parliament may, for the purpose of the orderly and effective discharge of the business of the National Assembly provide for the powers, privileges and immunities of the Assembly and its committees and members” (emphasis mine)

There is nothing in the above two sections that gives Parliament any power other than to make laws, and similarly, there is nothing that gives Parliament power to make decisions by the approval of government policies. However, the High Court does not agree. It went much further to state that Section 4 and Section 12 of the National Assembly (Powers and Privileges) Act had constitutional backing, and as such, any finding that purports to encroach on a decision of Parliament is unconstitutional.

VALLEY Section 4 of the National Assembly (Powers and Privileges) Act provides

“No civil or criminal proceedings shall be instituted against any member for words spoken before or written in a report to the Assembly or a Committee or by reason of any matter or thing brought by him therein by petition, bill resolution motion or otherwise.

Section 12 of the National Assembly (Powers and Privileges) Act provides “No proceedings or decision of the Assembly or the committee of Privileges acting in accordance with this Act shall be questioned in any court.”

The National Assembly (Powers and Privileges) Act creates Parliamentary privileges. It regulates and protects the proceedings, records, and members of the National Assembly. However, it does not and cannot confer on the National Assembly, or Parliament, any power other than that of making laws. It is a procedural and protective law, and no more.

Under our Constitution, our lawmakers envisaged and provided for Parliament’s role to be legislative. And endowed the High Court with the constitutional power and duty to ensure that the legislative power of Parliament was not abused or misused. The High Court, by ruling as it did, has placed Parliament above the law, finally!

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The Court of Appeal in the case of Intercom Services Ltd & James Kanyitta Nderitu and Others vs Standard Chartered Bank (K) Ltd (2003) considered itself under a duty to be more cautious, more protective, and far more curious when dealing with funds whose ultimate beneficiary was the Public. It held supreme public interest over private gain.

The following were some of its key findings:

• Though the drawer of the cheque in question was the Customs and Excise Department, the personnel of the Department who signed it did so on behalf of the government.

• The signatories to the cheque were mere employees of the Customs and Excise Department. The person who stood to lose was the Government of Kenya or the public not the signatories.

• The duty to make inquiry in full was more pronounced as there would be nothing to stop the signatories to the cheque from conspiring with the customer to defraud taxpayers of public funds.

• Where a bank is faced with a cheque from a body corporate or a government, the bank’s duty to inquire into the validity of the cheque goes beyond the mere signatories of the cheque and beyond the paying bank and the customer.

• There is a distinction that should always be there between the standard to be applied in case of a cheque drawn on a personal account where the loss to the owner of the cheque is confined to the same individual and a cheque drawn on behalf of a government where there is need to protect the interest of the public to avoid losses due to possible conspiracy between the signatories of the cheque and the customer.

The Nderitu Ruling by the Court of Appeal (incidentally dealing with export compensation under the Local Manufactures (Export Compensation) Act) raised the bar for banks dealing with public funds. Unfortunately, the reverse is true for the High Court Saitoti Ruling, which lowered the bar for Parliament when dealing with public funds.

And, if at all, you have any remaining doubt that the High Court manifestly erred in removing the illegality stain on the 15% ex gratia export compensation payments to Goldernberg International Ltd only, and no other exporter, do consider the provisions of Section 100 of the Constitution of Kenya on the authorization of public expenditure by appropriation, set out verbatim below:

It provides –

Section 100

(1) The Minister for the time being responsible for finance shall cause to be prepared and laid before the National Assembly in each financial year estimates of the revenues and expenditure of the Government of Kenya for the next following financial year.

(2) When the Estimates of expenditure other than expenditure charged upon the Consolidated Fund by this constitution or by any Act of Parliament) have been approved by the National Assembly, a Bill, to be known as an Appropriation Bill, shall be introduced into the Assembly, providing for the issue from the Consolidated Fund of the sums necessary to meet that expenditure and the appropriation of those sums, under separate votes for he several services required, to the purposes specified therein.

(3) If in respect of any financial year it is found –

a) That the amount appropriated by the Appropriation Act to any purpose is insufficient or that a need has a risen for expenditure for a purpose to which no amount has been appropriated by that Act; or

b) That any moneys have been expended for a purpose in excess of the amount appropriated to that purpose by the Appropriation Act or for a purpose to which no amount has been appropriated by that Act,

a supplementary estimate or, as the case may be, a statement of excess showing the sums required or spent shall be laid before the National Assembly and, when the supplementary estimate or statement of excess has been approved by the Assembly, a supplementary Appropriation Bill shall be introduced into the Assembly, providing for the issue of those sums form the Consolidated Fund and appropriating them to the purposes specified therein.

Enough said. The onus now lies on our ever-jovial Attorney General.

KETHI D. KILONZO (Advocate of the High Court of Kenya)

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