A court has upheld the dismissal of a bank staff for diverting a Sh300,000 loan given by his employer to furnish his house.
The Employment and Labour Relations court ruled that Edwin Wamalwa, a clerk at Cooperative Bank, violated the bank’s staff manual and the business code of conduct and ethics by diverting the funds from the intended purpose to other use.
Justice Mathews Nduma said the bank had a valid reason to terminate Mr Wamalwa’s employment over misconduct and that the procedure was followed.
“The court is of the view that the loan disbursed to the claimant to be paid to Daphyl Enterprises in the sum of Sh300,000 was not paid to Daphyl account but was instead diverted to claimant’s personal account. There was no evidence that the money had been applied wholly for the intended purpose for purchase of furniture,” said the judge.
He dismissed Mr Wamalwa’s claim for compensation over alleged unlawful termination. Mr Wamalwa was sacked in 2018 over accusations of gross misconduct by allegedly obtaining a loan through false pretenses.
After applying for the furniture loan, the money was disbursed to the account of the vendor, Daphyl Enterprises.
However, the money was diverted to his cash account immediately thereafter for use other than the intended purchase of furniture contrary to the provisions of the bank’s staff manual, which requires members of staff to utilise staff loans for intended purposes.
The bank told the court that the conduct of the staff exposed it to potential loss and put Mr Wamalwa’s integrity as a bank employee into question.
It said the loans advanced to staff are given at preferential interest rates and pays for fringe benefits tax to bridge the difference of the interest as required by the Kenya Revenue Authority. Hence, banks insist on full disclosure to avoid legal liability and unnecessary expenditure.
The court dismissed Mr Wamalwa’s claim that the accusations were false. Justice Nderi ruled that the bank could not have had a reason to frame Mr Wamalwa with false accusations having nurtured him and promoted him fairly quickly to supervisory rank despite receipt of several verbal warnings for various violations along the way. He was in his last years at work and in the management cadre.
“The explanation given by the claimant was not satisfactory despite the bank having given the claimant an opportunity to explain himself. The bank demonstrated to the satisfaction of the court that it had a valid reason to dismiss the claimant from employment,” said the judge.
