The Employment and Labour Relations Court has faulted Consolidated Bank of Kenya for the unfair dismissal of one of its business development officers over allegations of improper loan approvals totalling Sh102 million.
Justice Monica Mbaru stated that it was improper for the bank to hold Emmanuel Wambua responsible for a non-verified asset used to secure the debt, noting further inconsistencies in the lender’s actions.
The judge noted that senior officers involved in the same credit approval process only received warnings while Mr Wambua was terminated.
“The practice undermined the entire disciplinary process,” said Justice Mbaru, adding that terminal payments could not “sanitise the procedural and substantive lapses”.
The judge dismissed assertions by the bank that Mr Wambua should have visited a property situated in Shanzu, Mombasa, offered as loan security, noting he lacked valuation expertise.
“To require the claimant to visit the site to appreciate the security that was to be financed through the loan was to expect too much from him. He was neither a valuer nor a legal technical expert capable of discerning that the title was good through a mere visit,” said Justice Mbaru.
Mr Wambua, employed since July 2018 until his termination in October 2024, faced allegations including approving a Sh75 million loan without due diligence, recommending Sh26 million equity release instead of asset finance, and approving a Sh1.5 million term loan despite customer arrears.
In defence, the bank, through various witnesses, including its credit administration manager Jacquiline Thagichu, said investigations had established that the claimant recommended a loan facility without an on-site inspection report on the security for the loan.
Ms Thagichu said Mr Wambua bypassed inspection reports, while HR head Rose Mukoba said he gave unsatisfactory disciplinary hearing responses.
However, the court said the termination was unfair. The court consequently barred the bank from increasing the interest rate of a staff mortgage loan that had been granted to Mr Wambua.
The court said there was no evidence that the mortgage facility had insurance to protect the employee in the event of job loss due to circumstances beyond their control.
“For the unfair termination of employment, the claimant should be permitted to process and repay the mortgage at the staff rate of six percent until full payment is made, unless he opts to pay it upfront,” said Justice Mbaru, while ruling a case filed by Mr Wambua challenging the dismissal.
The court found that due process was not followed because Mr Wambua was suspended from work, and this prevented him from accessing key records and documents needed to prepare his representations during the disciplinary hearing.
“To suspend the employee and then invite him to a disciplinary hearing, despite his request to access key records, is to deny the employee a benefit and right that is mandatory under Section 41 of the Employment Act,” said Justice Mbrau.
Regarding the allegations that the claimant failed to conduct a site visit, the court said that, as the business development officer, it was not clarified, through a job description or under the credit policy, whether this crucial role fell under the claimant or the credit department.
“In any event, the respondent had a department dedicated to credit. A simple site visit by an untrained layperson unfamiliar with legal technicalities and property valuations might not have been beneficial. To address this, the respondent’s credit department enlisted the services of valuers. There was a legal team, a credit department headed by Ms Thagichu,” said the judge.
She stated that the fact that there were ongoing court cases relating to the nine title deeds presented by the client, who applied for the loan facility, could not be discerned from a site visit.
The court further dismissed diversion allegations as unsubstantiated, stating fraud claims should have involved investigative agencies. Justice Mbaru concluded: "Termination was substantively flawed... contrary to sections 41 and 45 of the Employment Act."
