The Court of Appeal in Nyeri has endorsed a decision by Consolidated Bank to sack one of its employees for lending her own money to a family friend and earning interest on it, in what was seen as business competition against the financial lender.
The employee, Lydia Kaguri, was dismissed on allegations of lending Sh300,000 to a family friend, who was also a customer of the bank’s Maua branch in Meru County in 2015.
It was said that by lending the money and earning interest, she acted in conflict with the bank’s business, which was against its code of conduct.
Ms Kaguri, who was a customer service officer, was dismissed in October 2017 for breaching the bank’s code of conduct while also engaging in money lending.
The bank’s disciplinary committee found her guilty of engaging in a business that was in direct competition with her employer and withdrawing Sh20,000 from the said customer’s account without due process.
Determining an appeal filed by the bank against a High Court’s decision to award Ms Kaguri compensation of Sh2 million for loss suffered and unpaid salaries, the Court of Appeal said there were sufficient grounds to terminate her employment.
It added that the bank had not flouted any provision of the law in the way it handled the disciplinary issues facing the staff.
Judges Sankale Ole Kantai, Jessie Lesiit, and Abida Aroni overturned the High Court judgment and issued an order for dismissal of the claims filed by Ms Kaguri against the bank.
The court also found that the staff had disregarded the bank’s standard operating procedures when she abdicated her role and duty as the second custodian of the vault, leading to a loss of Sh641,500.
“This misconduct led to loss of money. It was also established that the staff had engaged in the business of lending money where she earned interest contrary to the terms and conditions of her employment. It was also established that she had withdrawn money from a customer’s account without authority,” said the judges.
The court agreed with the bank’s lawyer, Charles Mwongela, that the employee was heard as required by law and that her explanations were found to be unsatisfactory, leading to her dismissal.
Mr Mwongela told the court that the trial judge erred in law in finding that Ms Kaguri’s employment was unfairly terminated. He added that the dismissal was not unfair or contrary to the labour laws.
Ms Kaguri joined the bank as a clerk and one of the conditions of her employment was that she had to live on her salary and if it became known that she was borrowing from unauthorised sources or lending money, she would be liable for dismissal from the bank’s service.
In her defence before the disciplinary committee, she denied engaging in the business of lending money and explained that the debit from the customer’s account had been made by the customer himself, not by her.
She stated that she did not have the teller rights and therefore could not withdraw any money from the account.
She accused the said customer, who she said was an old family friend who had approached her for money to repair a motor vehicle, of being a malicious person out to defraud her.
In court, she said the termination of employment was malicious and that as a result, she had suffered loss and damage.
She was seeking payment of salary for years lost up to retirement of Sh36.8 million, compensation for 12 months’ salary of Sh1.8 million and unpaid half salary during the period of suspension of Sh230,000.
She was also seeking a declaration that she had been unfairly dismissed and an order for her reinstatement to her former position and general damages.
