When senior managers steal they typically do it knowing their employer’s systems back to front. They know which accounts can be skimmed and which assets nicked.
Seniority also provides insight into how their actions may be covered up. Managers understand what transactions trigger audits and where holes exist in record-keeping. If the company monitors email and telephones or the cameras down the back fire-escape no longer work – they are often in the loop on that.
The law reports are replete with managers misappropriating monies, stealing equipment, misusing vehicles, copying sensitive data and paying inflated invoices. Kimberly recently hosted a most intricate scheme where a trusted senior manager defeated all manner of security systems - red-areas, glove-boxes, magnetic safes and click-clack jars – to sneak out high value diamonds1. It is one of those cases where you half want to fire the employee and half want to promote him for sheer ingenuity.
Once suspicion comes to lie upon a sophisticated crook their ability to have earlier avoided finger-pointing paper-trails means evidence of misconduct may be scant. After all, only evidence counts in a disciplinary hearing or civil court. This is where, during the investigation stage, getting possible ‘accomplices’ to talk becomes important. These are sometimes the proverbial little fish, although it is not unheard of for one kingpin to turn another in.
Acts of financial misconduct should be difficult to commit alone. The design of financial, procurement and asset management systems in most large organisations typically prevents a single employee from controlling a transaction from beginning to end. Successful theft, fraud or corruption then requires that other employees turn a blind eye or share in the loot along the way.
Logic dictates that accomplices who also face dismissal will be reluctant and even hostile employer informants and witnesses. Indeed, it is better for them to withhold cooperation during an investigation, taking their chances in a disciplinary hearing and at the CCMA. An employer wishing to lead the evidence of an accomplice typically needs to offer a deal. This takes the form of an agreement that the employee plead guilty to their own role in the misconduct, accept a sanction short of dismissal on condition they truthfully testify at the subsequent hearings of their confederates.
A recent Labour Court case has delved into how fairness affects making these deals. In this case2, four employees in the Eastern Cape Department of Health who took a jaunt to watch a World Cup 2010 match at taxpayers’ expense in an aircraft meant for emergency medical evacuations. An additional charge was supplying false statements to the MEC for Health in the Eastern Cape when later questioned about this trip.
As one might imagine, the department sought the dismissal of the employees. One of them however accepted an offer to testify against the rest in exchange for indemnity from dismissal. Crucially, he had sat in the private meeting where a lie was concocted by the panicked soccer fans after the MEC asked about the trip. The initiator of the disciplinary enquiry considered his evidence crucial on this charge. Indemnity was conditional on his accepting a final written warning for the same offence and testifying frankly and honestly at the later disciplinary hearing of his colleagues.
The other passengers on the plane were duly dismissed. The fairness of the decision was confirmed at the Bargaining Council. The employees took this finding to the Labour Court on review. One of the grounds of review was that, by treating the accomplice witness differently, the employer inconsistently applied discipline to the other employees. Their misconduct was no more severe. Why were they also not given the chance to ‘plea bargain’?
The Labour Court began by distinguishing a plea bargain where the employer and employee agree on a sanction ahead of a hearing and plea agreements where the employer offers a lesser sanction to an accomplice to secure his testimony. Plea bargains rest on the idea that, if an employee shows remorse by accepting responsibility and spares everyone a drawn-out hearing, a lesser sanction may be appropriate. In a plea agreement, the employer is forced to offer a lesser sanction otherwise it has insufficient evidence to proceed against anyone. As the Court found:
“38 … The employees’ complaint that they were also owed a plea deal betrays a misunderstanding of the type of plea deal on offer. It was not a plea deal where a lesser sanction was agreed in exchange for a guilty plea so as to avoid a hearing. The purpose of the plea bargain offered to Mxesibe was to secure evidence against the rest of the employees to enable their discipline. The lesser sanction agreed with Mxesibe was not in recognition that the charge he faced was not serious enough to warrant dismissal if he pleaded guilty but was rather a necessary compromise by the employer to induce the co-operation of an accomplice in a disciplinary hearing.”
To expect that all employees be offered the same opportunity was nonsensical: “ The object of securing evidence to discipline employees who misconducted themselves would be completely defeated if every one of the employees involved in the misconduct were offered a plea bargain to testify against the others.”
The Court stated that plea agreements were an ‘important mechanism’ to secure evidence used every day in criminal law3. It accepted that these could be imported into labour law with appropriate checks and balances. The Court pertinently remarked that, in the selection of an accomplice witness, the employer possessed a great deal of latitude. An employer would select someone with adequate overall knowledge of the offence. People peripherally involved in the incident would not fit this bill. A prospective witness would likely be someone the employer thinks would best ‘withstand any pressure to recant’ and who would come off well on the witness stand.
Addressing possible unfairness in the selection of witnesses, the key issue was that the employer’s decision should not betray male fides.
Signs that the discretion to select an accomplice witness might be capriciously exercised include that:
• it was unnecessary to have offered any witness a deal to testify against the others and therefore the agreement seems a ruse to enable the employee to escape accountability;
• the witness was the ‘big fish’ used to provide evidence against the ‘little fish’; or
• the witness was selected with by an ‘improper motive’ such as favouritism or unfair discrimination against the other employees. This might apply when, for example, white employees are routinely offered pleas and never employees of other races.
Interestingly, the court rejected the argument that an accomplice witness’ guilty plea is an indication of true remorse. As a defense against inconsistency, a guilty plea is not a true distinguishing factor between him and his fellow wrongdoers.
 If accomplice plea agreements are to be imported into labour law, it is best not to be sentimental about those who accept them. Accomplice plea agreements are by-and-large induced by the avoidance of dismissal and not contrition. The evidence these accomplice witnesses provide should also be evaluated with this in mind.
This sounds a necessary warning that those evaluating the account provided by an accomplice or accessory should do so with caution, amounting almost to suspicion. After all, they have a powerful reason to colour their evidence, minimize their own role or satisfy their employer by embroidering their evidence.
It remains then for investigators, when other evidence is poor, to skillfully obtain the co-operation of the right kind of accomplice witness. If anything is an art and not a science, then interviewing ‘suspects’ is. While high levels of solidarity among rank-and-file employees sometimes enforced with intimidation obstruct obtaining ‘impimpi’ testimony, the same might not apply among managers. It is sad to say but, given South Africa’s inequality levels and wage structure, the fall in lifestyle for a manager suddenly out of a job is far more precipitous than for a blue-collar worker. This is an additional feature that might motivate a manager to more easily co-operate in an investigation, even at the risk of being unpopular with his mates.
Naturally, an investigator would do well to imply confidence in the employer’s case during an interview. If the investigator places a dud hand on the table in an interview with a prospective witness, leverage disappears.
Once there is agreement, this should be in writing. The agreement should contain nothing suggesting the witness is expected to say anything but the truth in the hearing. Indemnity must be conditional on the employee giving frank and honest testimony. The chairperson of the hearing makes this finding. A material deviation from an earlier statement to an investigator would mean no indemnity agreement was reached in the first place and entitle the employer to take further disciplinary steps.
Without importing all the criminal law formalities an agreement modelled on a section 204 of the Criminal Procedure Act is probably best practice. Employers might want to generate such a template to avoid unnecessary legal fees.
What MEC: Dept of Health – ECP shows is that, as is the case with entrapment4, certain criminal law precepts are usefully imported into labour law. They make practical sense and have fairness at their heart. As much as labour law purists would prefer a strict distinction between these fields of law, once an employer becomes concerned with issues of guilt, proof, evidence and sanction, they come to inhabit the same strategic world as any prosecutor. There is no reason not to borrow and suitably amend some of the tools used by the latter to assemble a good case against dishonest employees. If the existing evidence is not conclusive, why not try to exploit the inherent dishonour among thieves?
The Labour Court has recognised that this mechanism of proof is not inherently unfair.
Heinrich Böhmke is a director, trainer and investigator at Meridian Training.
1. Superstone Mining (Pty) Ltd v Dale Lonsdale Hohne (176/12)  ZANCHC 6
2. MEC: Department of Health, ECP v PHSDSBC and Others (2016) 37 ILJ 1429 (LC)
3. Section 204 of the Criminal Procedure Act of 1977
4. Cape Town City Council v South African Municipal Workers Union (SAMWU) and Others (C367/98)  ZALC 106