The Employment and Labour Relations Court has endorsed a decision by the NCBA Bank PLC to fire two of its managers for lending own money to each other and borrowing from a bank customer.
Chilumo Kaingu (a branch manager) and Stephen Wainaina (relationship manager) were found to have breached the bank's rules and human resource policy, which prohibit staff from receiving money from a customer and engaging in any business that creates conflict of interest with the bank.
Mr Wainaina was accused of borrowing money from a bank customer named Mbature Traders Limited, a company owned by his colleague, Mr Kaingu. He told the disciplinary panel that the friendly loan was to renovate his house.
For his part, Mr Kaingu was accused of engaging in borrowing and lending of funds with staff of NCBA and using his position to trade with the bank's customers, Mbature Traders Ltd and Harmony Properties Ltd.
They had sued alleging unfair termination and wanted the court to award them compensation amounting to Sh31 million each in form of salary and loss of income until retirement age.
They also sought damages for alleged discrimination, oppressive treatment, psychological anguish and reputational injury.
But Justice Linnet Ndolo dismissed their claims and held that the restriction on borrowing imposed on bank employees was reasonable as it served as a shield to the employer’s business reputation.
"I have no hesitation in reaching a finding that the bank has established a valid reason for terminating the claimants' employment, as required under Section 43 of the Employment Act. There is nothing to support the claimants' proposition that these restrictions are unconstitutional," said Justice Ndolo on Friday.
She stated that the termination of employment was substantively and procedurally fair since the two managers were also duly involved in the investigations.
They were fired in December 2022 following investigations into their involvement in outside business interests and causing a conflict of interest in their work.
From the evidence in court, Mr Kaingu initiated a Sh7 million loan application in favour of the bank's customer by the name Zhamo Agencies. His own company, Mbature Traders Limited, provided the required cash cover of Sh3.5 million and Zhamo Agencies channelled the loan funds to Mbature Traders Limited.
In the course of investigations and at the disciplinary hearing, he admitted having lend money to his colleague, Mr Wainaina, on what he referred to as friendship basis.
He added that he himself had borrowed money from yet another colleague, by the name Janet, which he was to repay with a return.
He was accused of using his company to engage in borrowing and lending of funds with staff of NCBA.
It was also alleged that he held undeclared business interests by being a director of Mbature Traders Ltd conducted business without the knowledge of his line manager and Human Resources.
For Mr Wainaina, he was accused of borrowing money from a bank customer, Mbature Traders Limited. He was also accused of colluding with Mr Kaingu to facilitate a stock loan application for yet another customer, Zhamo Agencies Ltd, where the final beneficiary of the loan was Mbature Traders Ltd. Mr Kaingu was a director and shareholder of Mbature.
The termination letter stated that the Group Human Resources policy required all employees to carry out their duties and responsibilities while maintaining high standards of honesty and integrity.
During cross-examination by the bank's lawyer in court they conceded that under the terms of their employment with the Bank, they were prohibited from lending to or borrowing from fellow employees or customers.
In challenging the termination they claimed that they were deprived of a fair hearing and that they were not availed an opportunity for legal representation.
They claimed that they were not given an investigation report and evidence, even when the disciplinary proceedings were based purely on an investigation.
They added that the charges were ambiguous and were not informed who conducted the investigation and when it was done.
The bank's lawyer Christine Wahome denied the allegations and stated that the claimants were involved in the investigation process and even recorded statements.
She told court that there was nothing in the bank's Human Resource Policy which curtailed an employee’s economic empowerment, as long as the employee did not engage in competing business or one that would give rise to a conflict of interest.
