The Employment and Labour Relations Court has upheld the dismissal of a former Co-operative Bank of Kenya relationship manager accused of helping fraudsters reactivate dormant customer accounts, including one belonging to a deceased client.
The court also ordered the former manager, Amos Koech, to repay the bank a Sh2.9 million staff loan following dismissal over suspicious viewing of customer accounts and alleged involvement in fraud.
Dismissing Mr Koech's claim, the court found that Co-op Bank had valid grounds to fire him over suspected fraud and breach of customer confidentiality rules. He was a relationship manager in the bank’s Diaspora Banking Unit.
Mr Koech had sued the bank in December 2023 seeking compensation for unfair dismissal, gratuity, 12 months’ salary compensation amounting to Sh2 million and an order compelling the bank to lift the suspension of his banking licence.
He argued that the bank unlawfully and maliciously terminated his employment in November 2020 despite his explanations to allegations linking him to fraudulent activities involving customer accounts.
Court documents show Mr Koech joined Co-op Bank in May 2013 as a graduate clerk at the Lang’ata branch before rising through the ranks to become a relationship manager in July 2020.
Bank’s defence
However, the bank told the court that investigations established that the employee improperly facilitated activation of dormant accounts targeted by fraudsters impersonating genuine customers.
One of the accounts belonged to a deceased customer. The bank said that fraudsters attempted to reactivate an account using forged documents, including a purported prison discharge certificate, to falsely explain why the dormant account had remained inactive.
According to the bank, Mr Koech contacted officials at the Kimathi branch and facilitated activation of an account under suspicious circumstances despite knowing the purported account holder was an impostor.
The bank also accused him of helping fraudsters activate another dormant account belonging to a customer at the bank’s Kariobangi branch.
It was said that this account was later targeted by impostors who allegedly conducted unauthorised transactions that caused financial loss.
Co-op Bank said audit trails and system logs showed the employee accessed sensitive customer accounts unrelated to his duties and breached the lender’s confidentiality and ethics policies.
Court’s findings
“The court is satisfied that suspicion of fraud in a banking environment, supported by audit logs and internal investigation findings, constitutes a valid and fair reason for dismissal,” said the judge in Nairobi.
The court held that banking employees hold positions requiring high levels of integrity and accountability because of the sensitive nature of financial institutions.
The former manager denied sharing confidential customer information with outsiders and maintained that he had not participated in any fraudulent scheme.
However, during cross-examination, Mr Koech admitted that he viewed accounts outside his mandate and acknowledged that such access breached the bank’s code of conduct.
He also confirmed attending a disciplinary hearing and signing minutes of the proceedings.
The court found that the bank complied with procedural fairness requirements under employment law by issuing a show-cause letter, conducting a disciplinary hearing and allowing the employee to appeal the dismissal.
“The evidence before the court shows that the claimant was suspended, issued with a notice to show cause which he responded to in writing, invited to a disciplinary hearing and finally informed of the outcome,” the court said.
The verdict
It rejected the former employee’s argument that he was unfairly dismissed and declined all claims for compensation and gratuity.
The court found that the employee was not entitled to service pay because the bank had been remitting provident fund and National Social Security Fund deductions during his employment.
Also dismissed was his request for reinstatement of his banking licence, saying the court lacked jurisdiction and noting that the employment relationship ended in 2020.
The court also allowed the bank’s counterclaim seeking recovery of an outstanding staff loan of Sh2.9 million issued to Mr Koech in June 2019, plus contractual interest.
Co-op Bank argued that its staff manual allowed recall of employee loans once employment ended and said the former employee had defaulted after dismissal.
The court noted that Mr Koech did not dispute the outstanding balance or challenge the counterclaim during the proceedings.
