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Ivan Israelstam
Workplace fraud, by its very 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.
The Collins Concise Dictionary defines fraud as "deliberate deception, trickery or cheating intended to gain an advantage".This means that the fraud for which an employee has been caught is likely to be only the tip of the iceberg.
As shown in the Rope Constructions case - reported later in this article - even apparent fraud 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 or 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 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; and
- are often trusted more than 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, among others.
Reaction involves taking all reports or hints of irregularities seriously, 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 Numsa obo Thosane S v Rope Constructions Co (Pty) Ltd (17 Oct 2005 MEGA 8343, LIS), Thosane was dismissed for clock-card fraud. It was established that he had been absent from work for most of the day in question and that he had not been present at clocking out time. It was also established that, despite his absence, his time card had been clocked out. He was therefore dismissed for absence without leave and for clock-card fraud.
At the subsequent arbitration hearing, Thosane neither denied that he had been absent nor that someone else had clocked his card. However, he denied that he had been involved in the clocking of his card. This denial, together with the fact that the employer had no direct proof that Thosane had arranged the clocking of his card, worked in the employee's favour. While the employer may have been defrauded by whoever clocked Thosane's card, the arbitrator found that there was insufficient evidence that Thosane himself had intended to commit fraud.
The arbitrator therefore ordered the employer to reinstate the employee. In labour law, verdicts are to be decided on the balance of probabilities. It appears improbable that a colleague of Thosane would have clocked his card without being asked to do so by Thosane.
However, if the employer had wished to incriminate Thosane as a means of getting rid of him, one of the managers, on having noticed Thosane's absence at clock-out time, could have clocked his card to make it look as if he had committed fraud.
Had the employer, via a witness or video camera, caught a colleague of Thosane clocking his card, the employer may have been able to obtain a statement from that colleague to the effect that Thosane had asked him to clock his card.
Alternatively, had the rules required employees to keep their clock cards in a locker, it would have been easier to show that the person who did the clocking obtained the card from Thosane.Employers need to understand that according to the law, where they wish to infer that an employee committed fraud, they must at least be able to show that nobody else could have committed the fraud, without the accused being involved in any way.
This illustrates the urgent need for employers to make improvements to their security arrangements, disciplinary procedures and labour-law expertise.
- Ivan Israelstam is chief executive of Labour Law Management Consulting. He can be contacted on 011-888-7944, 082-852-2973 or
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- Our appreciation to Ivan an The Star newspaper for permission to publish this article.
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