‘It was the complainant’s case that the money withdrawn from her account was Ksh. 8,000. It is thus not clear to the Court what the amount of Kshs. 958,700 claimed by the respondent represents. This leads the Court to concur with the claimant that the entire fiasco was a fabrication intended to either terminate the claimant or swindle the insurance company through fraudulent claims’- Judge Christine Baari, Kisumu Employment and Labour Relations Court
By The Weekly Vision Team
The previously flourishing Gusii Mwalimu Sacco is facing hard times after revelations emerged in court that the board may have been involved in attempts to deceive an insurance company. The unethical practice by the board was brought to light through a court case following the unlawful termination of an employee’s contract.
Gusii Mwalimu Sacco is led by David Ogega, the board’s chairman; Timothy Machaga, vice chairman; Evans Masira, secretary; James Omwoncha, treasurer; and CPA Jared Makori, the CEO. The situation involves one Benard Nyakundi Kimanga, a former employee who was unjustly fired by the board after the Sacco allegedly incurred a loss of Ksh. 3,118,000, an amount that was never disclosed in their financial statements, with the board choosing to keep the matter confidential.
A section of the Sacco members are aware of the loss and are now requesting the board accept responsibility and impose a charge to retrieve the lost millions. According to Mr Nyakundi, his employment was unjustly terminated when he was manipulated, coerced, menaced, threatened, intimidated, and harassed into writing a response in front of the directors, confessing to accusations with the assurance that no disciplinary measures would be taken against him. His statement was then used by the Sacco management to seek reimbursement from their insurance provider; he was fired thereafter.
The judge noted, “Further, if the respondent lost money at all, the board failed by using shortcuts, coercing, and intimidating employees instead of properly investigating the alleged thefts and fraud and procedurally and properly bringing the fraudsters to book.”-Judge Christine Baari, Kisumu Employment and Labour Relations Court
In his appeal, Mr. Nyakundi made a plea, requesting a ruling that his dismissal from the Sacco was unjust, illegal, irregular, and improper. He also sought an instruction from the court for the payment of his full terminal benefits, reinstatement to his previous position, and compensation for exemplary, compensatory, and punitive damages.
The director alleged in court that money had been lost; however, this was not disclosed in Sacco’s financial records. According to recent findings, the directors may have been involved in a scheme to deceive the insurance company by making false claims. Judge Christine Baari’s ruling on December 7, 2023, at the Kisumu Employment and Labour Relations Court brought to light unethical behavior, decay, and bribery that could potentially lead to the collapse of the Sacco if not addressed.
The revelation in court may lead to the Sacco management facing further scrutiny from the Ethics and Anti-Corruption Commission (DCI) and other investigative agencies to address the issue of corruption there since the Sacco Societies Regulatory Authority (Sasra), the regulator, seems unable to conduct effective investigations. Mr. Nyakundi’s employment records indicate that he was employed by the Sacco as a computer operator and that he rose up the ranks to the position of assistant system administrator, earning a gross monthly salary of Ksh. 160,952.98 as of July 2020, when he was wrongfully and unlawfully dismissed from employment.
According to a statement made under oath, Mr Nyakundi stated that he received a notice of suspension on October 17, 2019, after being accused of being part of a “team” that created a Sacco ATM card for member number 17551 without proper authorization.
The letter of interdiction notified him that he must provide a written response to the accusations within two weeks. He claims that he did reply to the letter, initially denying all the allegations, but eventually amended his response to align with the instructions given by the Sacco’s Board.
According to Nyakundi, he agreed to compose a statement or reply as instructed by the directors of the Sacco. They insisted that he write his response in their presence and admit to the accusations, with the assurance that the disciplinary action would be dropped and his statement would be utilized to seek reimbursement from their insurance provider. In addition, they promised to keep him employed at the Sacco.
On July 24, 2020, the directors utilized his statement to terminate his service instead. He argues that the letter of dismissal stated the grounds for his termination as his unauthorized production and use of local ATM cards on July 14, 2019. He also admitted liability and agreed to repay the stolen amount of Kshs. 3,118,000 for forgery. As per Nyakundi, the directors’ alleged theft of the funds was a ploy to unlawfully and improperly enrich themselves and remove him from his position. During the cross-examination, Nyakundi informed the court that he had agreed to pay the amount of Ksh. 958,700, as instructed by the Sacco’s board. He stated that he had signed a letter on June 29, 2020, acknowledging his commitment to pay this amount, claiming that he was forced and threatened by the Sacco’s board to do so.
In response to Mr. Nyakundi’s statement, the board requested a court order to force Nyakundi to reimburse the counter-claim amount of Ksh. 908,700, which he had agreed or promised to repay. The board also requested that Nyakundi reimburse Kshs. 1,183,000, which was acquired in an improper and/or unjust manner from the Sacco.
According to a witness (who requested to remain anonymous due to fear of retaliation), it took her three months to realize that Ksh. 8,000 had been taken out of her account, which she believes was part of the Sacco’s scheme to profit from the ATM fraud. This was disclosed in court during cross-examination as evidence of the Sacco’s potential involvement in such fraudulent activities.
According to her, she was not aware of the specific amount of the counterclaim, and her claim was limited to Ksh. 8,000. She also clarified that she had not given any instructions to the board of the Sacco to demand Ksh. 3,000,000. According to the Court, Mr Charles Omwanza, who was the Chief Executive Officer of Sacco during the time of Nyakundi’s termination, stated that Nyakundi had signed a fidelity form. This form made him responsible for his immediate dismissal.
The court was informed that the board took advantage of the ATM fraud to generate easy money from the Sacco. It was revealed that the ICT department was solely responsible for producing ATM cards and that Fridah Nyamisa, an ICT officer, was not scrutinized for her involvement in the fraud.
The Chief Executive Officer (CEO) was questioned as to why the incident was not reported to the authorities, considering it was criminal in nature. After confirming in his statement that the Sacco had lost a total of Ksh. 3,118,000, he decided to report the matter to the Sacco’s regulator, Sasra, instead of the police.
It is imperative to mention that the Sacco directors did not submit the system logs and CCTV footage during the trial. These pieces of evidence are essential in identifying the individuals who accessed the accounts in question and withdrew the funds as stated. According to the judge, it was evident that there was a lack of evidence to show that reasonable attempts were made to clarify the charges against Nyakundi, as mandated by Section 41 of the Employment Act.
The judgment by Judge Christine Baari of the Kisumu Employment and Labour Relations Court dated December 7, 2023, reads, “In the premise, I find and hold that the decision to terminate the claimant did not meet the irreducible minimum principles of a fair hearing, which renders the termination unfair on account of procedure.”. The judge further noted that “the claimant faced imminent risk of losing his job and was thus vulnerable at the time he was coerced and/or intimidated to admit liability in a bid to save his job. The respondent no doubt took undue advantage of the claimant’s vulnerability to secure an admission of liability.”
While blaming the directors, the judge noted, “Further, if the respondent lost money at all, the board failed by using shortcuts, coercing, and intimidating employees instead of properly investigating the alleged thefts and fraud and procedurally and properly bringing the fraudsters to book.”.
Further, the judge noted, “It is also not disputed that the respondent’s premises, and specifically the ATM lobby, had CCTV surveillance cameras, which should easily have shown who withdrew money from which account at a particular time. The respondent did not deem it necessary to obtain the CCTV footage or, at the very least, refer to it in the investigation to prove that the claimant was culpable for the theft. In conclusion, I find and hold that the claimant’s termination is both procedurally and substantively unfair.”
The judge noted, “It was the complainant’s case that the money withdrawn from her account was Ksh. 8,000. It is thus not clear to the Court what the amount of Kshs. 958,700 claimed by the respondent represents. This leads the Court to concur with the claimant that the entire fiasco was a fabrication intended to either terminate the claimant or swindle the insurance company through fraudulent claims.
The final judgment reads, “In whole, judgment is entered for the claimant as against the respondent as follows: A declaration that the claimant’s termination is unfair and unlawful.
An order for payment of seven (7) months’ salary as compensation for the unfair termination at Kshs. 1,126,670.86/- One-month salary in lieu of notice at Kshs. 160,952.98/- Costs of the suit and interest until payment in full. The respondent’s counterclaim is dismissed with costs.
