Absa Bank has successfully appealed for the reversal of a Sh1 million compensation paid to a former customer advisor it fired in July 2012 over a loan borrowed using forged documents.
Ms Teresiah Wanjiru Ndegwa was fired after it emerged that documents used by a bank customer for a Sh500,000 loan contained forged audit reports and that there was a subsequent suspicious transfer of Sh18,000 from the customer- Shani Enterprises - to a bank account jointly held by the ex-Absa employee and her husband.
Court of Appeal judges Mohammed Warsame, Gatembu Kairu, and Fred Ochieng said the bank established to the required standard that it genuinely believed that Ms Ndegwa was privy to the audit report submitted to the lender in support of the loan application by Shani Engineering.
“Based on our evaluation of the evidence, we are persuaded that given that the respondent was a joint account holder with her husband to which ‘audit fees’ were paid for audit reports that formed the basis of a loan application, the bank had a reasonable basis for believing that the respondent was complicit based on which her employment was procedurally terminated,” the judges said.
The judges said by concluding that “there is a real probability of one joint account holder not knowing about the transactions in a joint account”, the Employment and Labour Relations Court (ELRC) applied a standard of proof on the part of the bank beyond the applicable standard of the balance of probabilities and thereby acted on a wrong principle and arrived at the wrong decision.
“We accordingly allow the appeal and hereby set aside the judgment of the ELRC and substitute an order dismissing the respondent’s claim with costs to the appellant,” said the judges.
The bank submitted that a joint account holder cannot, in any event, be exonerated or excused on the basis of the probability that she had no knowledge of the payment.
While ordering the bank to compensate Ms Ndegwa the amount, which was equivalent to eight months gross wages as compensation, the Employment court held that the termination was procedurally fair.
However, the Judge said there was a weak link between Ms Ndegwa and the forged audit report.
In the appeal, Absa said the judge failed to appreciate the gravity of the uncontested fact that the Sh18,000 paid into a joint bank account related to ‘audit account fees’ and that there was evidence that the husband was not an accountant and the payment could not, therefore, have been to the husband.
