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How to deal with employees in a criminal syndicate

For any criminal syndicate looking to target a business, there are few things more valuable than having access to a company insider. Whether they are able to plant someone inside the organisation by filling a vacant position or are able to draw an existing employee into their criminal enterprise, having that insider power makes their lives a lot easier. 

You only have to look at the outcomes of the Zondo state capture commission or the recent reporting of fraudulent purchases at Tembisa Hospital in Gauteng to see how costly a corrupt employee, or one with ties to a criminal syndicate, can be. The more signing power and access to financial functions, the more damage they can do.

Knowing that, what legal options do organisations have available to them when they discover that an employee — or group of employees— has created, or colluded with, a criminal syndicate, beyond simply laying criminal charges?

Derivative misconduct and common purpose

Once a crime syndicate has been discovered within an organisation, it is likely that there will be several role players who, in addition to attracting criminal charges, will need to be dismissed, fairly. There are two legal principles that could possibly be applied when seeking to dismiss these employees, one of which applies to employees who were active participants in the criminal activity and the other to those who knew that the misconduct was happening but chose not to report it to the employer and rather look the other way.

The first legal principle is that of common purpose. The Constitutional Court recently had cause to consider this doctrine being applied in employment law in the matter of Numsa obo Aubrey Dhludhlu and 147 Others vs Marley Pipe Systems (SA).

While the principle is often applied to murder and assault, it could be argued to also apply where employees act collectively with the intention of defrauding their employer. An example of this is where one employee creates a false purchase order, another then creates an invoice relating to the purchase order, and yet another employee processes the invoice for payment.

The Constitutional Court has reconfirmed that to prove “common purpose” in a disciplinary enquiry the employer must be able to demonstrate, in respect of each employee who is alleged to have acted with common purpose, that the employee:

  • was present when the unlawful action took place or actively took part;
  • was aware of the unlawful action;
  • acted with common purpose with those perpetrating the misconduct by performing some act of association; and
  • possessed the requisite intention in his/her actions (they intended to steal from the employer).

The second legal principle is that of derivative misconduct. Derivative misconduct seeks to assist the employer in dismissing employees who know that other employees are committing misconduct but do not alert their employer to it.

For an employer to seek to dismiss employees for derivative misconduct it must, at a minimum, be able to prove that on the evidence available the most probable inference in relation to each employee charged, the employee:

  • was present when the misconduct was committed;
  • would have been able to identify those who committed the misconduct;
  • would have known that the employer needed the information;
  • failed to disclose the information to the employer; and
  • did not disclose the information because they knew they were guilty and not for an innocent reason.
Addressing intimidation

Of course, in both instances, employees might seek to excuse their behaviour by saying they were threatened and had no choice but to participate in the misconduct or to turn a blind eye to it. While there are real instances where employees are intimidated and/or threatened, it may be that this justification will only assist an employee in mitigation of a sanction to be imposed during the disciplinary hearing.

An employee seeking to rely on this mitigating factor would need to provide evidence supporting their contention that they were intimidated and/or that there was a real and credible threat to their lives or livelihoods. If an employee can show, on a balance of probabilities, that the threat was real, the employee may receive a lesser sanction than dismissal.

Creating the right environment

Criminal syndicates can only thrive for as long as an environment allows for it. Therefore it is crucial that employers do regular health checks on their systems and processes, and ensure there are sufficient and efficient checks and balances in place in high risk departments.

An employer’s ethics and culture are also fundamental to lessening the risk of criminal syndicates but also in encouraging employees to speak out and report misconduct when they see it. To borrow the British Transport Police slogan — “See It. Say It. Sorted”.

It is important that organisations create the right environment for employees, with appropriate protections in place, that allows them to come forward without fear of repercussions or reprisal.

It is also important that this is something organisations should striveto get right from day one. Once employees see that an employer has not provided adequate support to an employee who has come forward, other employees are not likely to trust the process into the future.

Move quickly and correctly

Finally, notwithstanding the monetary loss organisations could also face significant reputational damage from having a criminal syndicate operating within their business if reports of such behaviour are not dealt with swiftly and efficiently.

Employers should ensure that they equip themselves to identify, rectify and avoid possible opportunities for a criminal syndicate to begin within its operations and ensure its ethics and culture drive the standards expected of employees.

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How to deal with employees in a criminal syndicate
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Authors

Portrait ofLucinda Hinxman
Lucinda Hinxman
Director
Johannesburg