Debarment set aside on interesting grounds

The number of successful appeals for reconsideration of debarments makes one wonder how many travesties of justice took place before the Financial Sector Tribunal saw the light. Previously, there was no recourse but the legal route, which was often too expensive for most mere mortals wishing to take on big institutions with deep pockets.

In the latest case, the applicant was employed by a bank for some 25 years. When she became eligible for voluntarily retirement, she did so. Her employment terminated on 31 July 2020 but, at the same time, she joined a competitor of the bank.

Her employer held the view that, if she intended to join a competitor she had to resign, which would have meant that the restraint of trade clause in her employment contract would have come into effect. It was of the view that her retirement was a ruse to evade her contractual obligations and that she was  dishonest in pretending to retire while she had, in fact, resigned.

The charge against her was that she had misrepresented her employment termination reasons in that she applied for early retirement and subsequently joined another employer. This led to her debarment on the ground that she was no longer a fit and proper person because she lacked the necessary “personal character qualities of honesty and integrity”.

The Tribunal saw it differently.

“The charge was misconceived. It is based on the underlying false assumption that if one retires under the terms of your employment contract and pension fund rules you will or may no longer work whether for a competitor or otherwise. If the applicant was entitled to retire and take up another employment, her motive in picking the retirement option is irrelevant and does not reflect on her personal qualities of honesty and integrity as an FSR. This was not only a contractual dispute but one without merit.”

Three charges against her, in the debarment hearing, concerned restraint of trade issues, and was dismissed by the Tribunal, in the light of the above.

The other charge concerned the fact that she, on 13 May, sent client email addresses to her personal email address without approval from her Regional Manager.

Interestingly, the Tribunal held that Section 14 requires that the reasons for a debarment must have occurred and become known to the financial services provider while the person was a representative of the provider. This begs the question whether the employer knew of the breach on or before 31 July.

There was nothing on record to suggest that the bank knew of the breach at the appropriate time. Its letter dated 29 July to the employee made no reference to what is potentially a serious matter, namely the misappropriation of the bank’s confidential information.

“Since the jurisdictional requirements for a debarment of the applicant by the respondent are lacking, the debarment must be set aside, and it will not make sense to refer the matter back for reconsideration.”

“ORDER: The application is upheld, and the debarment set aside.”

Comment

Although it is not very clear from the Tribunal determination, one must assume that the bank knew of the information she sent to herself but did nothing about it until they learnt that she had joined a competitor. If, for instance, the person had misappropriated money, and this was only discovered after the event, the findings would certainly be different.