Finance Director Dismissed For Poor Financial Records

Case Study: Onyango v Bridge International Academies (Employment and Labour Relations Cause 1458 of 2018) [2025] KEELRC 2288 (KLR) (31 July 2025) (Judgment)

Background Facts

• Onyango was employed as Finance Director on 1st July 2016.
• In 2018, BIA suffered a significant financial loss (Ksh. 63.7 million) due to a fraud perpetrated through its M-Pesa payroll system.
• An investigation by KPMG found the fraud was facilitated by a lack of oversight, monitoring, and reconciliation of accounts—responsibilities falling under the Finance Director.
• On 14th August 2018, BIA issued Onyango a notice to show cause, accusing him of gross misconduct for failing to detect and prevent the fraud. He was simultaneously placed on compulsory leave.
• A disciplinary hearing was scheduled. Onyango failed to attend on multiple occasions, citing a pre-planned break and arguing the process was unfair. He also requested a full, unredacted copy of the KPMG report and access to data on his work laptop, which BIA did not provide.
• On 23rd August 2018, BIA terminated Onyango’s employment based on his written response, having proceeded with the hearing in his absence.

Onyango’s Arguments:

• BIA relied on a KPMG report to terminate his services. Yet, he averred that the report did not implicate him in the alleged fraud.
• BIA fixed the disciplinary hearing on dates when it knew that he was away on his scheduled leave. He contended that despite his efforts to reschedule the hearing to a convenient date, BIA declined to do so thus rendering its decision to terminate his employment on 23rd August 2018.
• BIA terminated his services on frivolous grounds. BIA merely used him as a scapegoat since there was no evidence to demonstrate that he was either involved in or personally benefited from the alleged fraud.
• the responsibility to monitor, reconcile and update the payroll lay with the People and not Finance Department where he was attached. His role as Finance Director was limited to overall review of the payroll and effectuation of statutory deductions but did not extend to picking deviations in salaries for individual employees since he was not privy to their contracts of service and benefits.
• The People Director had the responsibility of reviewing and approving payroll inputs, paysheets and M-Pesa upload files. Thus, if any payments were made from the M-Pesa platform which were outside the payroll cycle, the responsibility for this anomaly lay with the People and not Finance Director.
• when he joined BIA, he detected loopholes in its systems and controls which presented major financial implications for BIA. BIA did not have a basic reconciliation system in place. It is his case that he took up the matter and advised the People Department and Payroll Accountant to streamline the process so that financial reconciliations could be done within the People Department.
• his decision to fight corruption within BIA is the reason why BIA’s management begun fighting and victimizing him. Prior to his tribulations, he had called out the BIA’s Managing Director on what he perceived to be irregular financial dealings which the said Managing Director refused to account for. As such, he was a victim of witch-hunt.

BIA’s Arguments:

• that part of Onyangos’s responsibility as its Finance Director was to ensure that all payments it made were properly accounted for and were legitimate. Further, Onyango was charged with the duty of monitoring and auditing its accounts in order to prevent fraud.
• Onyango neglected this responsibility by failing to detect the fraud that was committed through the payroll system. Onyango failed to supervise processing of payroll data and allowed payroll payments to be made without the requisite accompanying payroll approvals.
• Onyango failed to sufficiently explain the variances in staff related expenses each month and did not provide a fully reconciled balance sheet account for the payroll and related accounts. The duty to reconcile the payroll lay with Onyango and not the payroll team as asserted by him. As such, Onyango failed to provide it with accurate financial statements in his capacity as its Finance Director.
• Accountants in Onyango’s department were responsible for posting inaccurate and fraudulent financial journals. He negligently approved and posted the aforesaid entries without first verifying their authenticity.
• Despite several requests, Onyango refused or negligently failed to reconcile and explain variances in the payroll account. As a result of this, BIA’s finance team in India was tasked to check the entire financials of BIA following which, it (the team from India) discovered the impugned inconsistencies.
• The results of the KPMG investigation demonstrate that there was lack of oversight and verification of the data which was uploaded onto the M-Pesa platform. It contended that the investigations confirmed that the responsibility for this oversight lay with the Claimant.

Court Findings:

a. Whether the termination was substantively fair (Did the employer have a valid reason?) Finding: Yes. The court held that BIA had valid grounds to believe Onyango was negligent. His job description included implementing controls to prevent fraud. The KPMG report highlighted a failure of oversight in his department, and email evidence showed he was aware of significant financial variances but failed to address them adequately. The standard of proof (balance of probabilities) was met.

b. Whether the termination was procedurally fair (Was due process followed?) Finding: No. While BIA notified Onyango of the charges, gave him a chance to respond, and attempted to accommodate his schedule for the hearing, it committed two critical procedural failures: It failed to provide the Claimant with the complete, unredacted KPMG report crucial for his defense. It failed to allow him access to his work laptop to retrieve data necessary for his defense. These failures violated the principles of fair administrative action and compromised Onyango’s right to a fair hearing.

c. Lawfulness of Compulsory Leave Finding: Lawful. The court, following binding Court of Appeal precedent, held that an employer can place an employee on compulsory leave pending investigations even if it is not explicitly provided for in the contract or handbook.

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