PROVING FRAUD REQUIRES HIGH LEVEL SKILLS
BY Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: firstname.lastname@example.org. Go to: www.labourlawadvice.co.za
Workplace fraud, by its nature, is a secretive act. It is a type of dishonesty that is normally committed in such a way that its very existence is concealed. Collins Concise Dictionary defines fraud as “deliberate deception, trickery or cheating intended to gain an advantage”. This means that those frauds for which employees have been caught are likely to be only the tip of the iceberg. As shown in the Rope constructions case reported later in this article, even apparent frauds discovered by employers may go unpunished because of lack of proof that the accused was, in fact, the fraudster.
In order to prove fraud, the employer must show that the accused employee was the one who committed the act and that he/she did so for gain. However, such gain would not have to be confined to direct financial advantage. The fraud could be committed for the advantage of a friend or family member or could be a means towards gaining the perpetrator a job. For example, claiming false qualifications for a job would be fraudulent in the sense that the job applicant would be gaining employment based on a lie.
While fraud can occur at any level it is at its most dangerous at the upper levels of the organisation. This is because of senior employees:
- often have easier access to bigger amounts of money
- can cause great damage to customer relations
- can be in a better position to cover up irregularities
- are often trusted more than are junior employees
The employer’s strategy for combating employee fraud needs to be based on two broad approaches, namely, prevention and reaction. Prevention involves the principle of trusting nobody and the implementation of comprehensive safeguards. These could include measures such as video cameras and telephone conversation recordings, authority levels and procedures, access controls and auditing procedures amongst others.
Reaction involves taking seriously all reports or hints of irregularities, swift action and, above all, building a cast iron case against the accused. Failure to do so properly can result in the dismissed employee being reinstated simply because the employer failed to prove the employee’s guilt at the CCMA or bargaining council.
In the case of CEPPWAWU obo Limba vs Consol Glass (2009, 5 BALR 431) the employee was dismissed for fraud after he completed a form wherein he claimed to have conducted a sample check. It was established that he had not, in fact, conducted that check and that he should not have completed the form. At the arbitration, the employer was unable to convince the commissioner that the employee had completed the form for reasons of fraud. The commissioner appeared to believe that the employee had made an error by completing the form. In view of this and due to the fact that the employee had not been given the opportunity to cross-examine his accusers the commissioner found the dismissal to be unfair and ordered the employer to reinstate the employee with back pay.
It is possible that, after completing a sample check, the employee could make some errors while completing the check confirmation form. However, it is most unclear how an employee could logically complete an entire check confirmation form by mistake. In the absence of a clear and credible reason for making such an alleged error, I would submit that the balance of probabilities are that the employee completed the check form intentionally and that he did so dishonestly in order to make it appear that he had completed the check. It might be argued that this was a type of ‘fraud’ in the sense that he would have gained from it by dishonestly avoiding having to do the work necessary to complete the sample check.
Employers need to understand that legally, where they wish to infer that an employee committed fraud, they must at least be able to prove that the false act could not have been carried out in error. This illustrates the urgent need for employers to make improvements to their evidence preparation skills and labour law expertise. The optimisation of these skills is crucially important because:
- At CCMA the employer has the full onus of proving that the employee was guilty of the charges and hence that the dismissal was fair;
- Many commissioners see the preservation of the jobs of employees to be of great importance and will not be likely to uphold a dismissal decision unless the employer has succeeded in convincing the commissioner that dismissal is fully justified;
- Employees have access to highly experienced and skilled trade union officials to represent them at CCMA.
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