JUDGMENT.
(Before Hon. Justice Abuodha Jorum Nelson)
1. By a memorandum of claim dated 27th April, 2020 the claimant pleaded among others that:
i. That the claimant was employed by the respondent sometimes in the year 2011 as Key Accounts Manager earning a salary of Kshs.175,000/= on a permanent and pensionable basis.
ii. That she rose through the ranks of respondent to the position of Divisional Manager AC-East Africa where she was earning a gross salary of Kshs.832,053/=.
iii. That the claimant worked for the respondent in different capacities the latest being Divisionl Manager AC-East Africaon a permanent and pensionable basis.
iv. That on the 16th of April, 2020 she was summarily dismissed from her employment without any justifiable cause.
v. That according to the said dismissal letter the grounds for her dismissal were alleged fictitious payments of invoices, conflict of interest and insurbordination.
vi. That on the 6th of April, 2020 she wrote her response to the show cause letter.
vii. At the time of the termination of his contract the claimant was being paid a gross salary of Kshs.584,453/= (excluding commissions of Kshs.200,000/-) by the respondent.
viii. It was unfair for the respondent to expect the claimant to know and enforce processes outside her scope and area of responsibility and expertise such as ETR receipts on invoices, supplier payment dates; LPO generation and credit limit approvals.
ix. Pinpointing all the gaps within a process and blaming it on the claimant wth complete disregard of the different areas of responsibility, duties and job description is outright harassment.
x. The claimant did not have any instances in insubordination in the nine years she had worked at Henkel. She had a clean record, upstanding in character morals and performance.
xi. Due to high performance, she received several global and regional accolades she had a star performance and got top ratings on all appraisals.
xii. That Mr. Philippe Huenermann is not new to the business and has for the last seven years sat in the basiness reviews has been fully aware of the decisions that the claimant took for the business, appointment of distributors included and severally commenced her for the same ther were instrumental in the growth of the business. He also severally presented the same strategy performance to his superiors and therefore his suddent change of opinion spells malice.
xiii. That there were numerous business reviews, internal and external audits that the claimant’s department was subjected to through out since 2013 and none ever raised malpractices or irregularities or negative findings.
xiv. That there have been several instances where compliance policy was violated knowingly and unknowingly by several individuals as highlighted during the respondent’s internal audit. The actions proposed were the responsible parties to put in remedial actions within a time frame.
xv. That on the matter of insurbodination, all LPOs signed by the claimant were rightfully actioned within her signing mandate (EUR 30,000) and indeed had two pairs of eyes as per the respondent’s company policy. And therefore, signing the same did not contravene the policy as stipulated by the compliance function.
xvi. That LPOs are prepared by the Purchasing department who then obain the requisite signatures before issuing the same to the suppliers. It is therefore their onus to ensure all required signatures are in place before issuing the same.
xvii. That purchasing procedures and function are outside the scope of the claimant’s responsibility and job description.
xviii. The allegations on conflit of interest are based on hearsay as the respondent have not proof that Judy Mwangi was a friend of the claimant friend and former neighbour. This is despite her explaining that Judy Mwangi has never been her friend or neighbour.
xix. The claimant learnt about her deceased brother’s involvement with Ngumbau Traders two and half years after his demise. Information that she shared with the respndents when signing the conflict of interest declaration forms. She asked for the shares to be liquidated in order to resolve the conflict.
xx. The claimant employment contract was terminated without the laid down procedures provided for in the company policy and thus the termination is unlawful and illegal.
xxi. That the respondent has defamed the claimant in its allegation imputing that:-
a) That the claimant is a fraud
b) That the claimant was paying fictitious invoices
c) That the claimant was approving invoices without LPO
d) That the claimant was carrying out fake activations
e) That the claimant is a thief
f) That the claimant is untruth worthy person.
xxii. The matter came to the attention of the claimant on 31st March, 2020. Prior to this several remarks and statements were made by Mr. Philipe Huenermann, to persons within and outside of the company as regards to her character based on unverified allegations. The term “Cartel” was used whilst referring to her.
2. As a result the claimant sought orders inter alia:-
i. Reinstatement and/or in the alternative and without prejudice;
ii. A declaration that the claimant’s rights and guarantee for fair labour practices and a reasonable working condition under Article 41(2)(a)(b) of the Constitution have been violated, remain violated by the respondent.
iii. A declaration that the claimant’s right to be treated with dignity as provided for under article 28 and 54(1) of the Constitution has been and remains violated and threatened by the respondent.
iv. The full salary with effect from April 1, 2020 to the date of the judgment at Kshs.832,053/= per month
v. In the alternative, an order to be issued compelling the respondent to pay the claimant a sum equivalent to the unexhausted statutory working years until teg ae of 60 as a guarantee at Kshs.832,053 per month.
vi. Special damages as enumerated hereunder
a. Payment of one months in lieu of notice 832,053/=
b. Unpaid salary for the month of April, 2020 832,053/=
c. Unpaid leave for each full year worked 14,976,954/=
d. Bonus 600,000/=
e. Breach of contract 150,000,000/=
f. Damages for defamation 40,000,000/=
g. TOTAL 217,241,060/=
vii. General damages
viii. Costs of this suit
ix. Interest at court rates on i, ii, iii, iv, v, vi until payment in full.
x. Any other/further relief that this honourable court can grant.
xi.
3. The Respondent filed its Amended Statement of Response, Counterclaim and set-off dated 8th June, 2022 and averred inter alia:-
i) By an appointment letter dated 15th September, 2011, the Claimant was employed by the Respondent to serve in the capacity of Key Accounts Manager at a gross monthly salary of Kshs. 175,000/=, from which she rose in ranks to the position of Respondent's Divisional Manager, AC- East Africa. The letter of appointment states in part that:
a) The Claimant to carry out all such reasonable and lawful duties and instructions as from time to time assigned to her properly and diligently;
b) The Claimant to obey and comply with all lawful and reasonable instructions given to her by the Respondent;
c) The Claimant to be honest in her dealings with the Respondent, its customers and suppliers;
d) The Claimant to support the Respondent's policies and programs in, inter alia, employment equity and cultural diversity;
e) The Claimant to strictly keep separate, her private interests and interests of the Respondent and to avoid situations that may lead to conflict between her personal interests and those of the Respondent.
f) The Claimant was also required to act in the best interest of the Respondent to the exclusion of any personal advantage when and during contracts involving the Respondent. The Claimant was to adhere to the Global Henkel Code of Conduct and the Respondent's HR Manual.
ii) The Claimant's assertion under paragraph 5 of the Statement of Claim that she was earning a monthly gross salary of Kshs. 832,053/- is NOT true. As at 16th April 2020 when the Claimant was dismissed, she earned a monthly gross salary of Kshs. 479,453/-, car and airtime allowances of Kshs. 100,000/- and Kshs. 5,000/= respectively.
FACTS OF THE DISPUTE AND RESPONSE TO THE CLAIM
iii) In or about early 2020, the Respondent learnt that the Claimant had engaged herself in activities that appeared to be in breach of the Respondent's policies and practices as well as the Claimant's contract of employment. The Respondent in line with its Human Resource Management Policy, decided to investigate and inquire on the suspected misconduct. On completion of the investigations, the Respondent instituted disciplinary action against the Claimant.
iv) By a letter dated 31st March, 2020, the Respondent invited the Claimant to show cause as to the allegations that had been raised against her.
v) The particulars of the Claimant's suspected misconduct as captured in the show cause letter of 31st March, 2020 were as follows:
a) Two suspected fictitious marketing activities, MIT (Market Impact Teams) were invoiced by a marketing agency Evolv Ltd (Evolv) in 2017 and 2018 but the Claimant caused the money to be paid by Evolv to her personally and other staff members in her department, for private use as explained below.
Concerning Invoice Number 077;
a) In her capacity as the Head of Consumer Adhesives, the Claimant approved the payment of Invoice No 077 dated 6th November 2017 from Evolv Ltd of KES 954, 851.32 which amount was hastily paid on 17th November 2017. The rushed payment was out of the ordinary and usual practice of making such payments within the Respondent Company.
b) The Claimant approved payment of the invoice without a Local Purchase Order (LPO) contrary to best practice and established procedures within the Respondent Company. The LPO was issued on 21st November 2017 after the settlement of the invoice, which is not proper.
c) The Claimant approved the invoice yet there was no Electronic Tax Register (ETR) Receipt, contrary to established practice and legal requirements.
d) The Respondent confirmed that no MIT activities took place in the territory in question in the month of November or December 2017 as invoiced (and the payment was thus suspected to have been fictitious. The Claimant instead caused the monies to be paid to her and other staff members in the Claimant's department, for private use.
Concerning Invoice No. 106;
a) In her capacity as the Head of Consumer Adhesives, the Claimant approved payment of Invoice No 106 dated 10-March-2017 (read 2018 since 2017 appears to have been an error) of KES 1,075,305.00 from Evolv Ltd which was paid on 23rd April 2018.
b) The Claimant approved payment of the invoice without an LPO contrary to best practice and established procedures. The LPO was issued on 14th March 2018, after fact which was not proper.
c) The Claimant approved the invoice yet there was no ETR Receipt, contrary to established practice and legal requirements.
d) The Respondent confirmed that no MIT activities took place in the territory in question in the months of March or April 2018 and the payment was thus fictitious. The Claimant instead caused the monies to be paid to her and other staff members in the Claimant's department, for private use.
Concerning Conflict of interest regarding Ngumbau Five Star Co. Limited (Ngumbau Traders) in that;
a) Ngumbau Traders is Henkel's distributor in the Eastern region of Kenya. Ngumbau was formed in 2013 and started trading with the Respondent in the same year. The Company was granted credit facilities in 2015.
b) Records from the Registrar of Companies show Martin Muema the Claimant's brother (now deceased) as a principal shareholder together with Jane Mulei and Victoria Mutua. The Respondent only knew of the Claimant's relation to Martin Muema in 2020 after the Claimant submitted her Conflict of Interest Declarations on 10th and 11th January 2020.
c) She did not declare the conflict of interest until January 2020 yet Ngumbau Traders has been trading with the Respondent since 2013, a period of 7 years.
d) The Respondent had reason to believe that Ngumbau Traders has been receiving preferential treatment.
Concerning Conflict of interest relating to Juker International (Juker) / Gluetex Builders Distributors Limited (Gluetex) and related reasons in the following manner:
a) Juker International was at all material times one of Henkel's distributor of consumer adhesives in Central Kenya. The Company was registered in March 2014 shortly before commencing the distribution business with Henkel.
b) The directors of Juker International are Judy Mwangi and Esther Kerubo. Judy Mwangi was believed to be the Claimant's close friend and former neighbour in Embakasi estate.
c) Juker's directors are believed not to have expertise in distribution business since Judy Mwangi runs a school while Esther Kerubo is known as an official working in the purchasing organization of the United Nations offices in Nairobi.
d) The Claimant granted Credit facilities to Juker in June 2014, soon after the commencement of the business relationship. (Pages 23 to 24 of the Respondent's bundle of documents PH 1).
e) Towards the end of 2018 Juker ran into financial difficulties and defaulted on payments of Kshs 9,431,500 owed to Henkel. Juker stopped trading with Henkel but the debt remained outstanding in the sum of Kshs. 4,365,742. Out of this Kshs. 4,000,000 was only paid to Henkel in March 2020 following the intervention by Henkel's Managing Director and the credit block of Gluetex's account.
f) A new company by the name Gluetex Builders Distributors Limited (Gluetex) was subsequently registered in November 2018 and it took over the business previously conducted by Juker. The directors of Gluetex are the same Judy Mwangi referred to above and one Doris Mwende Kianga.
g) The Claimant caused and allowed Gluetex to start trading with Henkel notwithstanding Juker's previous and continuing default in settling the outstanding amount. Until February 2020, the Claimant was generally lax in pursuing settlement of this debt.
h) The Claimant granted credit facilities to Gluetex in December 2018.
i) The credit application falsely stated that Gluetex has been in business for the past 5 years a fact the Claimant knew or ought to have known was false. In January 2019, the Claimant raised the credit limit for Gluetex from Kshs. 5 million to Kshs. 25 million without informing her line manager, Philippe Huenermann who had approved the initial application.
j) The Claimant did not at any point disclose her close association to Juker, Gluetex and Judy Mwangi.
vi. The above matters relating to Ngumbau Traders, Juker and Gluetex amounted to conflicts of interest and thus a violation of the following:
a) The clause on conflict of interest in the Claimant's letter of appointment.
b) Clause 2.3 Human Resources Policy Manual (the Manual) which requires Henkel employees to avoid conflicts of interest.
c) Clause 2.4 of the Manual which requires employees to ensure that their actions and decisions are free from personal conflict of interest in all cases.
d) Clause 2.7 of the Manual which prohibits conflict of interest and gives as an example a conflict arising from ‘Business relationships with a company in which an employee, a relative or a friend of an employee has a direct or indirect stake in the form of a significant shareholding'.
e) Clause 2.9 of the Manual that extends conflict of interest with business partners to even the appearance of conflict of interest.
f) Clause 5.3.2 of the Manual which requires employees to disclose and report a conflict of interest failing which such serious fault shall be actionable under the disciplinary procedure.
g) Clause 5.3.3 of the Manual which provides that conflict of interest ‘may take the form of a shareholding or having a family member or friend working for a Company or a Contractor associated with Henkel'
h) Clause 5 of Global Henkel's Code of Conduct.
vii. Concerning insubordination and disobeying lawful instructions. The Claimant failed to abide with an instruction issued by her line manager on numerous occasions in that:
a) On 31st May 2019, the Respondent's Managing Director, Mr. Philippe Huenermann, being the Claimant's line manager expressly instructed her by email to always obtain approvals from him for any purchase order relating to promotion activities, advertising materials, events, sponsorships etc.
b) Among others, the following orders for such goods and services were procured without obtaining authorization from Philippe Huenermann as her line manager as required:
c) Purchase order 27571 of 23-Sep-2019 to Smart Printers Ltd for 10 Floor Stand Displays valued at Kshs. 230,000.00.
d) Purchase order 27676 of 7-Oct-2019 to Smart Printers Ltdfor 5,000 wall calendars valued at Kshs. 390,000.00.
e) Purchase order 27693 of 29-Oct-2019 to Vaja's Manufacturers for 3,000 dustcoats valued at Kshs. 1,470,000.00.
f) Purchase order 28121 of 10-Dec-2019 to Kraft Brand Design Ltd. for 7 Free Standing Units valued at Kshs. 519,003.00.
g) Purchase order 28439 of 23-Jan-2020 to Smart Printers Ltd for various AC stickers valued at Kshs. 261,000.00.
h) Purchase order 28440 of 23-Jan-2020 to Brand Central Ltd. for 50 branded hoodies valued at Kshs. 90,000.00.
viii. By the same show cause letter of 31st March 2020 and in line with Clause 27 of the Respondent's. Human Resource Manual and Section 41 of the Employment Act, 2007, the Claimant was asked to submit her written submissions/response to the allegations raised against her by 6th April, 2020. She was also invited to a disciplinary hearing at the Respondent's Nairobi office on 7th April, 2020.
ix. On 6th April, 2020, the Claimant by a letter dated 3rd April, 2020, responded to the Respondent's show cause letter denying all the allegations that had been raised against her.
x) On 7th April, 2020, the Claimant attended the disciplinary hearing whereupon she was given another opportunity to make her oral representations.
xi) As can be noted from the minutes (which were signed by the Claimant), and also considering the Claimant's response, the Claimant did not give satisfactory explanations to the issues in that;
ix Concerning the suspected fictitious marketing activities,
a) The Claimant was informed of multiple allegations by whistleblowers of suspected fictitious payments to Evolv and that even Evolv's Managing Director admitted to inflating the number of activation days to allow for payment of kickbacks. The whistle blowers' details included information given to the Respondent by Titus Kajume, a former employee of the Respondent who closely worked with the Claimant at all material times. Details of the whistle blower information will be set out in the Respondent's witness statements and supplementary bundle(s) of documents to be filed herein.
b) As noted in the minutes of the disciplinary hearing, the allegations of kickbacks were discussed during the session and the Claimant admitted knowledge of the kickback allegations relating to Evolv and also admitted that she did not escalate the issues to her superiors.
c) While the Claimant alleged that the marketing activities were postponed from March 2018 to June 2018, the Respondent did not find any evidence to support this allegation. Mr. Ogema, the supplier of the goods confirmed that the marketing activities did not take place as invoiced.
d) In any case, if indeed the activities were postponed as alleged, the Claimant did not give a satisfactory explanation of the hasty manner in which advance payment of the invoices concerned was made and this made the Respondent believe that there was indeed impropriety in the payments in question. According to the Respondent's Corporate Standards on Purchasing any such advance payments needed an extra level of approval, that is by a person having the MC1 mandate (which the Claimant did not have), Purchasing or by delegation Country CFO or President.
e) The Claimant did not provide a satisfactory explanation for the non-compliant LPO creation process being the manager responsible for all sales and marketing spends of her department. The assertion that this was not under her docket is not true. She was responsible for the sales and marketing expenditure for her department.
f) It is very important to note that she has indeed admitted the fact that approving LPOs was a function that fell within her docket at paragraph 29 of her affidavit and paragraph 22 of her statement of claim, where she admits that she signed certain LPOs concerning marketing activities, within her authorization mandate.
x. With respect to the conflict of interest over Ngumbau;
a) The Claimant did not declare the conflict of interest until January 2020 yet Ngumbau Traders has been trading with Henkel since 2013.
b) The Claimant alleged that she did not know of the conflict until October 2019. The Respondent did not find this to be a satisfactory or reasonable explanation given that the person involved is her brother!
c) The Respondent considered that is more probable than not that the Claimant knew of the conflict but failed to disclose until January 2020.
d) It is important to note that Ngumbau Traders was formed in 2013 principally to trade with the Respondent. The Respondent, therefore, had reason to believe that the Claimant knew of the conflict but failed to disclose it.
e) In any case, the Claimant did not explain why she did not disclose the conflict in October 2019 when she allegedly became aware of it.
f) While the Claimant initially alleged that she was not aware of the conflict of interest requirements, she eventually admitted that she did when it was pointed out that the requirements are expressly set out in her letter of appointment, Henkel's Global Code of Conduct and HR Manual.
g) Given that the Claimant has maintained herein the allegation that she did not know of the conflict until only recently, the Respondent has recently conducted further investigations subsequent to the Claimant's dismissal which investigations confirm that the Claimant's deceased brother frequently visited Henkel and interacted with the Claimant and other staff members as a representative of Ngumbau on numerous occasions before his death. The details of these will be adduced by the Respondent's witnesses at trial. The allegation by the Claimant that she knew of the conflict only in October 2019 cannot therefore be true.
xi.With respect to the conflict of interest over Gluetex/Juker
a) While the Claimant alleged that Judy Mwangi was not a close friend of hers, the Respondent did not consider the Claimant's explanations to be satisfactory given the apparent preference accorded to Juker.
b) In particular, Juker was appointed a regional distributor yet it had no known established experience and capability having been established solely and exclusively to trade with the Respondent.
c) No significant effort was undertaken by the Claimant to collect the outstanding amount from Juker after they stopped dealing with Henkel. Judy Mwangi was allowed to continue trading with Henkel as Gluetex while clearly not complying with the terms of the agreed payment plan for Juker.
d) In view of the suspected close association with Juker, the Respondent was not convinced of the Claimant's explanation and had reason to believe that the Claimant falsified Juker's experience in the credit application form.
e) The Claimant also did also not give a plausible explanation on why she irregularly enhanced Juker's credit limit.
f) The Claimant's explanation during the disciplinary hearing that she was not aware of guidelines on the appointment of distributors was not satisfactory and she even admitted that she did not seek any clarification if indeed there was lack of clarity.
xii. With respect to insubordination and disobeying lawful instructions regarding the instruction to the Claimant to obtain approvals from her line Manager, Philippe Huenermann for any purchase order relating to promotion activities, advertising materials, events, sponsorships etc.;
a) The Claimant's response was a bare denial and in fact raised more questions than answers.
b) Philippe Huenermann, the Claimant's line manager specifically asked the Claimant to always seek approval from him for the LPOs for the sponsorship activities. This was by the email of 31st May 2019.
c) It was extremely important for the Respondent to ensure that there were controls on the LPO creation and approval process given the history of matter as more particularized below.
d) The Claimant confirmed that she would adhere to her line manager's instructions but blatantly ignored and approved the LPOs without his approval.
e) It is not true that the Claimant was not involved in the approval of LPOs. She as the head of Consumer Adhesives had the last say on approval of invoices but then she was required to ensure she seeks approval from her Line Manager given the history of the matter.
f) The LPOs in question were actually signed by her.
g) She has even confirmed at paragraph 22 of her Statement of Claim that the signed LPOs were within her signing mandate.
h) The LPOs were indeed within the Claimant's signing mandate as per the Respondent's Corporate Standard on Commitment Authorization but this did not justify her deliberate contravention of her supervisor's instructions.
i) The Claimant confirmed by her email of 31st May 2019 that she would adhere to her line manager's instructions. She suggested by the same email that Emma Etyang of purchasing department assists in ensuring that her line manager's instructions were adhered to but her line manager did not respond to her suggestion.
j) Given the sensitivity and history of the matter, Philippe Huenermann was deliberate in asking the Claimant as the Head of her department to ensure that she does not approve any such LPOs without his permission.
k) The fact that the Claimant insisted during the disciplinary hearing and has also done so herein, that the role of ensuring her line manager's instructions were adhered to was of the Purchasing Department confirms that she disregarded her line manager's instructions and relied on her own suggestions which he had not affirmed. The Claimant's line manager's instructions were solely directed to her and not to any other person. This was clearly insubordination.
l) The issue of the approval of LPOs for marketing, sponsorships and like activities had a sensitive history, which was well known within the Respondent generally and particularly the Claimant in that:
m) In or about mid-2019 (just around the time the above email of 31st May 2019 was sent to the Claimant), the Respondent learnt that certain staff members appeared to have been involved in receiving monies personally on the pretext that they were meant for sponsorship of a basketball team.
n) The Respondent carried out investigations which led to the institution of disciplinary action against a former employee who exited the Company in the course disciplinary process.
o) The Claimant was suspected to have been implicated in the irregular and fictitious payment and particularly due to her involvement in the signing of a contract between Henkel and the basketball team which was irregular in that;
p) It was signed by the Claimant who, alone had no signing authority for the Respondent.
q) It had no “two pairs of eyes” as required by the Respondent's standards.
r) The contract was not vetted by Henkel's legal department and no payments ought to have been made.
s) The contract was not transparently shared with Henkel and was not uploaded into the global sponsorship database.
t) The Contract did not give the amount payable by Henkel to the basketball team;
u) The Claimant's line manager raised the foregoing with the Claimant as can be noted in email threads exchanged in May, 2019.
v) Philippe Huenermann questioned the Claimant on the issue and she was also questioned by the Respondent's In-house Legal Counsel, Antje Peth-Anders. The two noted inconsistencies in the Claimant's answers as can be noted from the email thread exchanged between Philippe Huenermann and Antje in June 2019.
w) While no disciplinary action was taken against the Claimant concerning the basketball team payments, the foregoing narrative is key to set out the sensitivity and history which formed the backdrop of the email Philippe Huenermann sent to the Claimant on 31st May 2019 asking her to specifically seek approval from her Line Manager on LPOs relating to sponsorship and marketing payments. The Respondent has subsequently decided to file a counterclaim arising from the irregularities committed by the Claimant in entering into the contract. The details are set out below.
x) Given the history and sensitivity of the issue, the Claimant should have strictly adhered to her Line Manager's instructions but she did not and hence the insubordination.
y) Subsequent to the Claimant's dismissal, the Respondent also learnt that the Claimant singly signed yet another contract with Majid Al Futtain Hypermarkets Limited trading as Carrefour on 3rd December 2019 in gross violation of the Respondent's Corporate Standards on Conclusion of Contract (CSCC). The Claimant signed the Carrefour contract despite having been instructed by her line manager in or about early 2020 not to do so after she had previously signed the basketball contract as explained above. The violations with respect to the Carrefour contract included signing the contract without the involvement of legal counsel and also violating the “2 pairs of eyes principle”. The CSCC and the Carrefour contract are produced in the Respondent's supplementary bundle of documents.
xxii. While the foregoing did not form a ground for the Claimant's dismissal, it is a relevant factor in considering the issue of insubordination and the Claimant's previous conduct.The Claimant having failed to satisfactorily respond to the issues set out in the show-cause letter and in line
[...truncated]
(Before Hon. Justice Abuodha Jorum Nelson)
1. By a memorandum of claim dated 27th April, 2020 the claimant pleaded among others that:
i. That the claimant was employed by the respondent sometimes in the year 2011 as Key Accounts Manager earning a salary of Kshs.175,000/= on a permanent and pensionable basis.
ii. That she rose through the ranks of respondent to the position of Divisional Manager AC-East Africa where she was earning a gross salary of Kshs.832,053/=.
iii. That the claimant worked for the respondent in different capacities the latest being Divisionl Manager AC-East Africaon a permanent and pensionable basis.
iv. That on the 16th of April, 2020 she was summarily dismissed from her employment without any justifiable cause.
v. That according to the said dismissal letter the grounds for her dismissal were alleged fictitious payments of invoices, conflict of interest and insurbordination.
vi. That on the 6th of April, 2020 she wrote her response to the show cause letter.
vii. At the time of the termination of his contract the claimant was being paid a gross salary of Kshs.584,453/= (excluding commissions of Kshs.200,000/-) by the respondent.
viii. It was unfair for the respondent to expect the claimant to know and enforce processes outside her scope and area of responsibility and expertise such as ETR receipts on invoices, supplier payment dates; LPO generation and credit limit approvals.
ix. Pinpointing all the gaps within a process and blaming it on the claimant wth complete disregard of the different areas of responsibility, duties and job description is outright harassment.
x. The claimant did not have any instances in insubordination in the nine years she had worked at Henkel. She had a clean record, upstanding in character morals and performance.
xi. Due to high performance, she received several global and regional accolades she had a star performance and got top ratings on all appraisals.
xii. That Mr. Philippe Huenermann is not new to the business and has for the last seven years sat in the basiness reviews has been fully aware of the decisions that the claimant took for the business, appointment of distributors included and severally commenced her for the same ther were instrumental in the growth of the business. He also severally presented the same strategy performance to his superiors and therefore his suddent change of opinion spells malice.
xiii. That there were numerous business reviews, internal and external audits that the claimant’s department was subjected to through out since 2013 and none ever raised malpractices or irregularities or negative findings.
xiv. That there have been several instances where compliance policy was violated knowingly and unknowingly by several individuals as highlighted during the respondent’s internal audit. The actions proposed were the responsible parties to put in remedial actions within a time frame.
xv. That on the matter of insurbodination, all LPOs signed by the claimant were rightfully actioned within her signing mandate (EUR 30,000) and indeed had two pairs of eyes as per the respondent’s company policy. And therefore, signing the same did not contravene the policy as stipulated by the compliance function.
xvi. That LPOs are prepared by the Purchasing department who then obain the requisite signatures before issuing the same to the suppliers. It is therefore their onus to ensure all required signatures are in place before issuing the same.
xvii. That purchasing procedures and function are outside the scope of the claimant’s responsibility and job description.
xviii. The allegations on conflit of interest are based on hearsay as the respondent have not proof that Judy Mwangi was a friend of the claimant friend and former neighbour. This is despite her explaining that Judy Mwangi has never been her friend or neighbour.
xix. The claimant learnt about her deceased brother’s involvement with Ngumbau Traders two and half years after his demise. Information that she shared with the respndents when signing the conflict of interest declaration forms. She asked for the shares to be liquidated in order to resolve the conflict.
xx. The claimant employment contract was terminated without the laid down procedures provided for in the company policy and thus the termination is unlawful and illegal.
xxi. That the respondent has defamed the claimant in its allegation imputing that:-
a) That the claimant is a fraud
b) That the claimant was paying fictitious invoices
c) That the claimant was approving invoices without LPO
d) That the claimant was carrying out fake activations
e) That the claimant is a thief
f) That the claimant is untruth worthy person.
xxii. The matter came to the attention of the claimant on 31st March, 2020. Prior to this several remarks and statements were made by Mr. Philipe Huenermann, to persons within and outside of the company as regards to her character based on unverified allegations. The term “Cartel” was used whilst referring to her.
2. As a result the claimant sought orders inter alia:-
i. Reinstatement and/or in the alternative and without prejudice;
ii. A declaration that the claimant’s rights and guarantee for fair labour practices and a reasonable working condition under Article 41(2)(a)(b) of the Constitution have been violated, remain violated by the respondent.
iii. A declaration that the claimant’s right to be treated with dignity as provided for under article 28 and 54(1) of the Constitution has been and remains violated and threatened by the respondent.
iv. The full salary with effect from April 1, 2020 to the date of the judgment at Kshs.832,053/= per month
v. In the alternative, an order to be issued compelling the respondent to pay the claimant a sum equivalent to the unexhausted statutory working years until teg ae of 60 as a guarantee at Kshs.832,053 per month.
vi. Special damages as enumerated hereunder
a. Payment of one months in lieu of notice 832,053/=
b. Unpaid salary for the month of April, 2020 832,053/=
c. Unpaid leave for each full year worked 14,976,954/=
d. Bonus 600,000/=
e. Breach of contract 150,000,000/=
f. Damages for defamation 40,000,000/=
g. TOTAL 217,241,060/=
vii. General damages
viii. Costs of this suit
ix. Interest at court rates on i, ii, iii, iv, v, vi until payment in full.
x. Any other/further relief that this honourable court can grant.
xi.
3. The Respondent filed its Amended Statement of Response, Counterclaim and set-off dated 8th June, 2022 and averred inter alia:-
i) By an appointment letter dated 15th September, 2011, the Claimant was employed by the Respondent to serve in the capacity of Key Accounts Manager at a gross monthly salary of Kshs. 175,000/=, from which she rose in ranks to the position of Respondent's Divisional Manager, AC- East Africa. The letter of appointment states in part that:
a) The Claimant to carry out all such reasonable and lawful duties and instructions as from time to time assigned to her properly and diligently;
b) The Claimant to obey and comply with all lawful and reasonable instructions given to her by the Respondent;
c) The Claimant to be honest in her dealings with the Respondent, its customers and suppliers;
d) The Claimant to support the Respondent's policies and programs in, inter alia, employment equity and cultural diversity;
e) The Claimant to strictly keep separate, her private interests and interests of the Respondent and to avoid situations that may lead to conflict between her personal interests and those of the Respondent.
f) The Claimant was also required to act in the best interest of the Respondent to the exclusion of any personal advantage when and during contracts involving the Respondent. The Claimant was to adhere to the Global Henkel Code of Conduct and the Respondent's HR Manual.
ii) The Claimant's assertion under paragraph 5 of the Statement of Claim that she was earning a monthly gross salary of Kshs. 832,053/- is NOT true. As at 16th April 2020 when the Claimant was dismissed, she earned a monthly gross salary of Kshs. 479,453/-, car and airtime allowances of Kshs. 100,000/- and Kshs. 5,000/= respectively.
FACTS OF THE DISPUTE AND RESPONSE TO THE CLAIM
iii) In or about early 2020, the Respondent learnt that the Claimant had engaged herself in activities that appeared to be in breach of the Respondent's policies and practices as well as the Claimant's contract of employment. The Respondent in line with its Human Resource Management Policy, decided to investigate and inquire on the suspected misconduct. On completion of the investigations, the Respondent instituted disciplinary action against the Claimant.
iv) By a letter dated 31st March, 2020, the Respondent invited the Claimant to show cause as to the allegations that had been raised against her.
v) The particulars of the Claimant's suspected misconduct as captured in the show cause letter of 31st March, 2020 were as follows:
a) Two suspected fictitious marketing activities, MIT (Market Impact Teams) were invoiced by a marketing agency Evolv Ltd (Evolv) in 2017 and 2018 but the Claimant caused the money to be paid by Evolv to her personally and other staff members in her department, for private use as explained below.
Concerning Invoice Number 077;
a) In her capacity as the Head of Consumer Adhesives, the Claimant approved the payment of Invoice No 077 dated 6th November 2017 from Evolv Ltd of KES 954, 851.32 which amount was hastily paid on 17th November 2017. The rushed payment was out of the ordinary and usual practice of making such payments within the Respondent Company.
b) The Claimant approved payment of the invoice without a Local Purchase Order (LPO) contrary to best practice and established procedures within the Respondent Company. The LPO was issued on 21st November 2017 after the settlement of the invoice, which is not proper.
c) The Claimant approved the invoice yet there was no Electronic Tax Register (ETR) Receipt, contrary to established practice and legal requirements.
d) The Respondent confirmed that no MIT activities took place in the territory in question in the month of November or December 2017 as invoiced (and the payment was thus suspected to have been fictitious. The Claimant instead caused the monies to be paid to her and other staff members in the Claimant's department, for private use.
Concerning Invoice No. 106;
a) In her capacity as the Head of Consumer Adhesives, the Claimant approved payment of Invoice No 106 dated 10-March-2017 (read 2018 since 2017 appears to have been an error) of KES 1,075,305.00 from Evolv Ltd which was paid on 23rd April 2018.
b) The Claimant approved payment of the invoice without an LPO contrary to best practice and established procedures. The LPO was issued on 14th March 2018, after fact which was not proper.
c) The Claimant approved the invoice yet there was no ETR Receipt, contrary to established practice and legal requirements.
d) The Respondent confirmed that no MIT activities took place in the territory in question in the months of March or April 2018 and the payment was thus fictitious. The Claimant instead caused the monies to be paid to her and other staff members in the Claimant's department, for private use.
Concerning Conflict of interest regarding Ngumbau Five Star Co. Limited (Ngumbau Traders) in that;
a) Ngumbau Traders is Henkel's distributor in the Eastern region of Kenya. Ngumbau was formed in 2013 and started trading with the Respondent in the same year. The Company was granted credit facilities in 2015.
b) Records from the Registrar of Companies show Martin Muema the Claimant's brother (now deceased) as a principal shareholder together with Jane Mulei and Victoria Mutua. The Respondent only knew of the Claimant's relation to Martin Muema in 2020 after the Claimant submitted her Conflict of Interest Declarations on 10th and 11th January 2020.
c) She did not declare the conflict of interest until January 2020 yet Ngumbau Traders has been trading with the Respondent since 2013, a period of 7 years.
d) The Respondent had reason to believe that Ngumbau Traders has been receiving preferential treatment.
Concerning Conflict of interest relating to Juker International (Juker) / Gluetex Builders Distributors Limited (Gluetex) and related reasons in the following manner:
a) Juker International was at all material times one of Henkel's distributor of consumer adhesives in Central Kenya. The Company was registered in March 2014 shortly before commencing the distribution business with Henkel.
b) The directors of Juker International are Judy Mwangi and Esther Kerubo. Judy Mwangi was believed to be the Claimant's close friend and former neighbour in Embakasi estate.
c) Juker's directors are believed not to have expertise in distribution business since Judy Mwangi runs a school while Esther Kerubo is known as an official working in the purchasing organization of the United Nations offices in Nairobi.
d) The Claimant granted Credit facilities to Juker in June 2014, soon after the commencement of the business relationship. (Pages 23 to 24 of the Respondent's bundle of documents PH 1).
e) Towards the end of 2018 Juker ran into financial difficulties and defaulted on payments of Kshs 9,431,500 owed to Henkel. Juker stopped trading with Henkel but the debt remained outstanding in the sum of Kshs. 4,365,742. Out of this Kshs. 4,000,000 was only paid to Henkel in March 2020 following the intervention by Henkel's Managing Director and the credit block of Gluetex's account.
f) A new company by the name Gluetex Builders Distributors Limited (Gluetex) was subsequently registered in November 2018 and it took over the business previously conducted by Juker. The directors of Gluetex are the same Judy Mwangi referred to above and one Doris Mwende Kianga.
g) The Claimant caused and allowed Gluetex to start trading with Henkel notwithstanding Juker's previous and continuing default in settling the outstanding amount. Until February 2020, the Claimant was generally lax in pursuing settlement of this debt.
h) The Claimant granted credit facilities to Gluetex in December 2018.
i) The credit application falsely stated that Gluetex has been in business for the past 5 years a fact the Claimant knew or ought to have known was false. In January 2019, the Claimant raised the credit limit for Gluetex from Kshs. 5 million to Kshs. 25 million without informing her line manager, Philippe Huenermann who had approved the initial application.
j) The Claimant did not at any point disclose her close association to Juker, Gluetex and Judy Mwangi.
vi. The above matters relating to Ngumbau Traders, Juker and Gluetex amounted to conflicts of interest and thus a violation of the following:
a) The clause on conflict of interest in the Claimant's letter of appointment.
b) Clause 2.3 Human Resources Policy Manual (the Manual) which requires Henkel employees to avoid conflicts of interest.
c) Clause 2.4 of the Manual which requires employees to ensure that their actions and decisions are free from personal conflict of interest in all cases.
d) Clause 2.7 of the Manual which prohibits conflict of interest and gives as an example a conflict arising from ‘Business relationships with a company in which an employee, a relative or a friend of an employee has a direct or indirect stake in the form of a significant shareholding'.
e) Clause 2.9 of the Manual that extends conflict of interest with business partners to even the appearance of conflict of interest.
f) Clause 5.3.2 of the Manual which requires employees to disclose and report a conflict of interest failing which such serious fault shall be actionable under the disciplinary procedure.
g) Clause 5.3.3 of the Manual which provides that conflict of interest ‘may take the form of a shareholding or having a family member or friend working for a Company or a Contractor associated with Henkel'
h) Clause 5 of Global Henkel's Code of Conduct.
vii. Concerning insubordination and disobeying lawful instructions. The Claimant failed to abide with an instruction issued by her line manager on numerous occasions in that:
a) On 31st May 2019, the Respondent's Managing Director, Mr. Philippe Huenermann, being the Claimant's line manager expressly instructed her by email to always obtain approvals from him for any purchase order relating to promotion activities, advertising materials, events, sponsorships etc.
b) Among others, the following orders for such goods and services were procured without obtaining authorization from Philippe Huenermann as her line manager as required:
c) Purchase order 27571 of 23-Sep-2019 to Smart Printers Ltd for 10 Floor Stand Displays valued at Kshs. 230,000.00.
d) Purchase order 27676 of 7-Oct-2019 to Smart Printers Ltdfor 5,000 wall calendars valued at Kshs. 390,000.00.
e) Purchase order 27693 of 29-Oct-2019 to Vaja's Manufacturers for 3,000 dustcoats valued at Kshs. 1,470,000.00.
f) Purchase order 28121 of 10-Dec-2019 to Kraft Brand Design Ltd. for 7 Free Standing Units valued at Kshs. 519,003.00.
g) Purchase order 28439 of 23-Jan-2020 to Smart Printers Ltd for various AC stickers valued at Kshs. 261,000.00.
h) Purchase order 28440 of 23-Jan-2020 to Brand Central Ltd. for 50 branded hoodies valued at Kshs. 90,000.00.
viii. By the same show cause letter of 31st March 2020 and in line with Clause 27 of the Respondent's. Human Resource Manual and Section 41 of the Employment Act, 2007, the Claimant was asked to submit her written submissions/response to the allegations raised against her by 6th April, 2020. She was also invited to a disciplinary hearing at the Respondent's Nairobi office on 7th April, 2020.
ix. On 6th April, 2020, the Claimant by a letter dated 3rd April, 2020, responded to the Respondent's show cause letter denying all the allegations that had been raised against her.
x) On 7th April, 2020, the Claimant attended the disciplinary hearing whereupon she was given another opportunity to make her oral representations.
xi) As can be noted from the minutes (which were signed by the Claimant), and also considering the Claimant's response, the Claimant did not give satisfactory explanations to the issues in that;
ix Concerning the suspected fictitious marketing activities,
a) The Claimant was informed of multiple allegations by whistleblowers of suspected fictitious payments to Evolv and that even Evolv's Managing Director admitted to inflating the number of activation days to allow for payment of kickbacks. The whistle blowers' details included information given to the Respondent by Titus Kajume, a former employee of the Respondent who closely worked with the Claimant at all material times. Details of the whistle blower information will be set out in the Respondent's witness statements and supplementary bundle(s) of documents to be filed herein.
b) As noted in the minutes of the disciplinary hearing, the allegations of kickbacks were discussed during the session and the Claimant admitted knowledge of the kickback allegations relating to Evolv and also admitted that she did not escalate the issues to her superiors.
c) While the Claimant alleged that the marketing activities were postponed from March 2018 to June 2018, the Respondent did not find any evidence to support this allegation. Mr. Ogema, the supplier of the goods confirmed that the marketing activities did not take place as invoiced.
d) In any case, if indeed the activities were postponed as alleged, the Claimant did not give a satisfactory explanation of the hasty manner in which advance payment of the invoices concerned was made and this made the Respondent believe that there was indeed impropriety in the payments in question. According to the Respondent's Corporate Standards on Purchasing any such advance payments needed an extra level of approval, that is by a person having the MC1 mandate (which the Claimant did not have), Purchasing or by delegation Country CFO or President.
e) The Claimant did not provide a satisfactory explanation for the non-compliant LPO creation process being the manager responsible for all sales and marketing spends of her department. The assertion that this was not under her docket is not true. She was responsible for the sales and marketing expenditure for her department.
f) It is very important to note that she has indeed admitted the fact that approving LPOs was a function that fell within her docket at paragraph 29 of her affidavit and paragraph 22 of her statement of claim, where she admits that she signed certain LPOs concerning marketing activities, within her authorization mandate.
x. With respect to the conflict of interest over Ngumbau;
a) The Claimant did not declare the conflict of interest until January 2020 yet Ngumbau Traders has been trading with Henkel since 2013.
b) The Claimant alleged that she did not know of the conflict until October 2019. The Respondent did not find this to be a satisfactory or reasonable explanation given that the person involved is her brother!
c) The Respondent considered that is more probable than not that the Claimant knew of the conflict but failed to disclose until January 2020.
d) It is important to note that Ngumbau Traders was formed in 2013 principally to trade with the Respondent. The Respondent, therefore, had reason to believe that the Claimant knew of the conflict but failed to disclose it.
e) In any case, the Claimant did not explain why she did not disclose the conflict in October 2019 when she allegedly became aware of it.
f) While the Claimant initially alleged that she was not aware of the conflict of interest requirements, she eventually admitted that she did when it was pointed out that the requirements are expressly set out in her letter of appointment, Henkel's Global Code of Conduct and HR Manual.
g) Given that the Claimant has maintained herein the allegation that she did not know of the conflict until only recently, the Respondent has recently conducted further investigations subsequent to the Claimant's dismissal which investigations confirm that the Claimant's deceased brother frequently visited Henkel and interacted with the Claimant and other staff members as a representative of Ngumbau on numerous occasions before his death. The details of these will be adduced by the Respondent's witnesses at trial. The allegation by the Claimant that she knew of the conflict only in October 2019 cannot therefore be true.
xi.With respect to the conflict of interest over Gluetex/Juker
a) While the Claimant alleged that Judy Mwangi was not a close friend of hers, the Respondent did not consider the Claimant's explanations to be satisfactory given the apparent preference accorded to Juker.
b) In particular, Juker was appointed a regional distributor yet it had no known established experience and capability having been established solely and exclusively to trade with the Respondent.
c) No significant effort was undertaken by the Claimant to collect the outstanding amount from Juker after they stopped dealing with Henkel. Judy Mwangi was allowed to continue trading with Henkel as Gluetex while clearly not complying with the terms of the agreed payment plan for Juker.
d) In view of the suspected close association with Juker, the Respondent was not convinced of the Claimant's explanation and had reason to believe that the Claimant falsified Juker's experience in the credit application form.
e) The Claimant also did also not give a plausible explanation on why she irregularly enhanced Juker's credit limit.
f) The Claimant's explanation during the disciplinary hearing that she was not aware of guidelines on the appointment of distributors was not satisfactory and she even admitted that she did not seek any clarification if indeed there was lack of clarity.
xii. With respect to insubordination and disobeying lawful instructions regarding the instruction to the Claimant to obtain approvals from her line Manager, Philippe Huenermann for any purchase order relating to promotion activities, advertising materials, events, sponsorships etc.;
a) The Claimant's response was a bare denial and in fact raised more questions than answers.
b) Philippe Huenermann, the Claimant's line manager specifically asked the Claimant to always seek approval from him for the LPOs for the sponsorship activities. This was by the email of 31st May 2019.
c) It was extremely important for the Respondent to ensure that there were controls on the LPO creation and approval process given the history of matter as more particularized below.
d) The Claimant confirmed that she would adhere to her line manager's instructions but blatantly ignored and approved the LPOs without his approval.
e) It is not true that the Claimant was not involved in the approval of LPOs. She as the head of Consumer Adhesives had the last say on approval of invoices but then she was required to ensure she seeks approval from her Line Manager given the history of the matter.
f) The LPOs in question were actually signed by her.
g) She has even confirmed at paragraph 22 of her Statement of Claim that the signed LPOs were within her signing mandate.
h) The LPOs were indeed within the Claimant's signing mandate as per the Respondent's Corporate Standard on Commitment Authorization but this did not justify her deliberate contravention of her supervisor's instructions.
i) The Claimant confirmed by her email of 31st May 2019 that she would adhere to her line manager's instructions. She suggested by the same email that Emma Etyang of purchasing department assists in ensuring that her line manager's instructions were adhered to but her line manager did not respond to her suggestion.
j) Given the sensitivity and history of the matter, Philippe Huenermann was deliberate in asking the Claimant as the Head of her department to ensure that she does not approve any such LPOs without his permission.
k) The fact that the Claimant insisted during the disciplinary hearing and has also done so herein, that the role of ensuring her line manager's instructions were adhered to was of the Purchasing Department confirms that she disregarded her line manager's instructions and relied on her own suggestions which he had not affirmed. The Claimant's line manager's instructions were solely directed to her and not to any other person. This was clearly insubordination.
l) The issue of the approval of LPOs for marketing, sponsorships and like activities had a sensitive history, which was well known within the Respondent generally and particularly the Claimant in that:
m) In or about mid-2019 (just around the time the above email of 31st May 2019 was sent to the Claimant), the Respondent learnt that certain staff members appeared to have been involved in receiving monies personally on the pretext that they were meant for sponsorship of a basketball team.
n) The Respondent carried out investigations which led to the institution of disciplinary action against a former employee who exited the Company in the course disciplinary process.
o) The Claimant was suspected to have been implicated in the irregular and fictitious payment and particularly due to her involvement in the signing of a contract between Henkel and the basketball team which was irregular in that;
p) It was signed by the Claimant who, alone had no signing authority for the Respondent.
q) It had no “two pairs of eyes” as required by the Respondent's standards.
r) The contract was not vetted by Henkel's legal department and no payments ought to have been made.
s) The contract was not transparently shared with Henkel and was not uploaded into the global sponsorship database.
t) The Contract did not give the amount payable by Henkel to the basketball team;
u) The Claimant's line manager raised the foregoing with the Claimant as can be noted in email threads exchanged in May, 2019.
v) Philippe Huenermann questioned the Claimant on the issue and she was also questioned by the Respondent's In-house Legal Counsel, Antje Peth-Anders. The two noted inconsistencies in the Claimant's answers as can be noted from the email thread exchanged between Philippe Huenermann and Antje in June 2019.
w) While no disciplinary action was taken against the Claimant concerning the basketball team payments, the foregoing narrative is key to set out the sensitivity and history which formed the backdrop of the email Philippe Huenermann sent to the Claimant on 31st May 2019 asking her to specifically seek approval from her Line Manager on LPOs relating to sponsorship and marketing payments. The Respondent has subsequently decided to file a counterclaim arising from the irregularities committed by the Claimant in entering into the contract. The details are set out below.
x) Given the history and sensitivity of the issue, the Claimant should have strictly adhered to her Line Manager's instructions but she did not and hence the insubordination.
y) Subsequent to the Claimant's dismissal, the Respondent also learnt that the Claimant singly signed yet another contract with Majid Al Futtain Hypermarkets Limited trading as Carrefour on 3rd December 2019 in gross violation of the Respondent's Corporate Standards on Conclusion of Contract (CSCC). The Claimant signed the Carrefour contract despite having been instructed by her line manager in or about early 2020 not to do so after she had previously signed the basketball contract as explained above. The violations with respect to the Carrefour contract included signing the contract without the involvement of legal counsel and also violating the “2 pairs of eyes principle”. The CSCC and the Carrefour contract are produced in the Respondent's supplementary bundle of documents.
xxii. While the foregoing did not form a ground for the Claimant's dismissal, it is a relevant factor in considering the issue of insubordination and the Claimant's previous conduct.The Claimant having failed to satisfactorily respond to the issues set out in the show-cause letter and in line
[...truncated]