“We Reported It” Is Not a Defence: What Compliance and Investigations Teams Should Take From a Recent Malicious Prosecution Ruling

Compliance and investigations teams are often the first line of defence when something goes wrong internally (a discrepancy, a suspected fraud, a missing asset). The instinct to escalate quickly, involve law enforcement, and let the courts determine guilt is understandable. But a recent Milimani Commercial Court decision is a useful case study in how an under-investigated complaint can turn into significant legal exposure for the organisation that made it, regardless of good intentions.

The case in brief

A public commission lodged a criminal complaint against one of its own officers over missing acknowledgment slips from materials in his custody. The officer had, in fact, been the one to flag the discrepancy in the first place. The prosecution ran for roughly six years, despite the commission itself later concluding ( in a formal written request to withdraw) that the officer was trustworthy and the case against him was weak. The request was not acted upon for years. He was ultimately acquitted and successfully sued for malicious prosecution.

The legal principle at stake

To succeed in a malicious prosecution claim, a plaintiff must show that the defendant instituted or was instrumental in the proceedings, that there was no reasonable or probable cause for doing so, that the proceedings were actuated by malice, and that they terminated in the plaintiff’s favour. Malice doesn’t require proof of personal animus: it can be inferred from the surrounding circumstances, including a demonstrably inadequate investigation.

In this case, the court found several such circumstances: no internal inquiry preceded the complaint; other individuals with equal access to the materials were never investigated; the complainant’s own subsequent assessment of the officer’s credibility was never reconciled with its earlier complaint; and no explanation was offered for why the prosecution continued despite a formal withdrawal request. Taken together, the court held these facts demonstrated an absence of reasonable and probable cause, which, on Kenyan authority, is enough to found liability even without direct evidence of ill motive.

Implications for investigations and compliance functions

A complaint is not a substitute for an investigation. Lodging a report with law enforcement based on access or opportunity alone, without first narrowing the field through interviews and evidence review, leaves the organisation exposed if the complaint turns out to be wrong.

Document the “why” as much as the “what.” Courts look for evidence of a genuine, good-faith basis for a complaint, not just that a loss occurred and someone had access to it.

A change of position must be followed through. If your organisation’s own investigation later undermines the basis for a complaint already filed, a documented and persistent effort to have the matter withdrawn is essential, both ethically and as a legal safeguard.

Liability isn’t limited to the investigating body. In this case, both the complainant institution and the prosecuting authority were held jointly and severally liable, a reminder that referring a matter onward doesn’t end an organisation’s exposure.

Prolonged, unexplained delay compounds risk. A six-year prosecution with no clear justification for its continuation is, in itself, evidence courts are willing to treat as indicative of malice.

For compliance and investigations professionals, the lesson isn’t to avoid reporting genuine wrongdoing, it’s to ensure that by the time a complaint reaches a prosecuting authority, it reflects a properly tested, evidence-based conclusion rather than a first instinct.

CB Mwongela & Co. Advocates acted as counsel in this matter and has since worked closely with the underlying legal and evidentiary questions it raised (from how courts scrutinise the adequacy of an internal inquiry, to how liability can attach jointly to both a complainant institution and a prosecuting authority). If your organisation’s compliance or investigations function wants a second opinion before escalating a matter externally or needs its complaint-handling procedures reviewed against the standard courts actually apply, our team advises institutions and corporates on exactly this kind of risk.