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IN THE LABOUR COURT OF SOUTH AFRICA, GQEBERHA

 

Not Report 67/21

 

In the matter between:

 

CHRIS HANI DISTRICT MUNICIPALITY                           Applicant

 

And

 

SOUTH AFRICAN LOCAL GOVERNMENT

BARGAINING COUNCIL                                                   First Respondent

 

MXOLISI ALEX NOZIQWABA N.O.                                   Second Respondent

 

BUYISWA NGWENDU                                                       Third Respondent

 

PHILEMON THEMBINKOSI PAMBANISO                        Fourth Respondent

 

Heard:          21 February 2024

Delivered:    27 February 2024

 

JUDGMENT

 

MAKHURA, J

 

Introduction

 

[1]  This Court is inundated with review applications brought in terms of section 145 of the Labour Relations Act[1] (LRA). This is one such matter. The application is brought pursuant to an award issued in favour of the third and fourth respondents (collectively referred to as employees). The award ordered the applicant (the Municipality) to reinstate the employees with full back pay. The employees opposed the application.

 

Material facts and evidence

 

[2]  The third respondent, Buyiswa Ngwendu (Ngwendu) was employed by the Municipality with effect from December 2009. At the time of her dismissal, she held the position of Expenditure Manager.

 

[3]  The fourth respondent, Philemon Thembinkosi Pambaniso (Pambaniso) was employed from December 2003. At the time of his dismissal, he was employed as a Deputy Director: Finance.

 

 

[4]  Both employees had access to the Municipality’s online banking system in terms of which they would authorise and release payments on behalf of the Municipality. They were both dismissed on 9 April 2021 for gross negligence. The material part of the charge reads as follows:

 

‘CHARGE 1: Gross negligence

 

It is alleged that on or about 05 March 2020, you deliberately and/or negligently failed to do due diligence when you authorised the payment of purported Mazangwa Construction invoice of an amount of R554 683.21, resulted into payment of R554 683.21 to an incorrect bank account and in so doing caused a fruitless and wasteful expenditure to the Municipality.’

 

[5]  The facts leading up to the charge are not in dispute. On or about 14 February 2020, Mazangwa Construction CC (Mazangwa), submitted an invoice to the Municipality in the amount of R554 683.21 including VAT. As with any invoice, Mazangwa’s invoice contained the bank account details where payment should be made into.

 

[6]  On 24 February 2020, the Municipality’s Supply Chain Management (SCM) section received an email from “Mishack Matla” mishack.matla@mail.com, whose signature appears as Mazangwa’s Credit Controller with an email address below the signature as mishack.matla@mazangwa.co.za. The email is sent to Pumla Mangqasana (Mangqasana) and Ben Tshikolo (Tshikolo), who work in the SCM section. The subject line is Mazangwa Construction’s corrected new bank details and seeks to amend Mazangwa bank account details. The email refers to the earlier telephone conversation and attached documents such as the identity documents of members of Mazangwa, bank confirmation letter and company registration documents.

 

[7]  It is common cause that the change of banking details is done by the SCM section. Tshikolo was employed as the SCM Manager. After receipt of the documents, the SCM section accepted and effected the changes to Mazwanga’s banking details.

 

[8]  The two employees were not at work from 4 to 6 March 2020. Ngwendu was on annual leave and Pambaniso was on official business in Durban.

 

[9]  On 4 March 2020, the Chief Financial Officer, Mr M Dyushu (Dyushu), submitted a memorandum to Assets, Expenditure and Cash and Bank requesting that they process urgent payments on the same day. These payments included that of Mazangwa.

 

[10]  On 5 March 2020, payment to Mazangwa was captured and loaded by a data capturer, using the new banking details. A payment voucher was prepared. First, the payment voucher was signed by the compiler or data capturer, second it was signed by the Senior Accountant who examined and passed the payment voucher, third it was authorised by the Expenditure Manager (Thobela Kwini – who acted as the Expenditure Manager during the period when Ngwendu was on annual leave) and finally by the CFO, Dyushu.

 

[11]  Just above the signatures, the payment voucher reads as follows:

‘I hereby certify that the above is correct as far as it concerns my Department; that the goods have been received and/or the work referred to carried out in an efficient manner, and that the price is fair and reasonable in accordance with the contract and/or order.’

 

[12]  During cross-examination, Dyushu confirmed that payment of the invoice or release of payment was done after he signed the payment voucher. He said that he authorised payment on the strength of the information presented to him. In his evidence during arbitration proceedings, Dyushu testified as follows regarding his signature on the payment voucher:

‘MS KALAWE: What were you signing on page 4?

M GYUSHU: I was authorising the payment of the transaction.

MS KALAWE: Authorising to which bank?

M GYUSHU: I must honestly, I didn’t look at the bank account because the bank account has been verified and is being taken care by (sentence incomplete). Most of those things are operational matters, by the junior staff, that they look at the bank accounts, do the [inaudible] and then give and then give the account and then I was authorising the payment.’

 

[13]  Dyushu testified further that the issue of the bank details is something that is looked at by the junior staff – clerks and accountants – and the Expenditure Manager. He testified that his authorisation of the transaction was informed by the fact that the junior officials would have done their checks and balances. Regarding the change of bank details by service providers, he testified that:

‘M DYUSHU: The function … was residing with the supply chain … Supply chain is responsible for creating the – the service provider on our system, capturing the service provider on the systems and then that is being processed and then changing the banking details, and then due to separation of duties, Expenditure pays.’

 

[14]  On the same day, Ngwendu received a telephone call from the CFO’s office, informing her that there were two payments that needed to be released. Ngwendu’s evidence was that before she released the payment, she telephoned Kwini, who was acting as the Expenditure Manager, “to confirm that everything is reviewed and checked, is correct”. She also confirmed with Kwini that the CFO received the payment documents and signed them. Kwini confirmed that the CFO signed the necessary documents and that everything was fine. Ngwendu, on the strength of this advice, then proceeded to authorise the payment as the first authoriser. She then sent the CFO a WhatsApp message confirming that she had authorised the payment and also informed Pambaniso so that he could release the payment as the second authoriser. Ngwendu testified that considering that she was not at work, she had done her due diligence by telephoning Kwini who confirmed that everything was fine before releasing payment.

 

[15]  Payment to Mazangwa was made into the new bank account submitted on 24 February 2020. This bank account was not Mazangwa’s. The request to change Mazangwa’s bank details was fraudulent.

 

[16]  On 8 April 2020, Dyushu, in reaction to the fraudulent transaction relating to Mazangwa, addressed a memorandum to all finance staff, advising that the process or practice of changing the service provider’s banking details, which was normally undertaken by SCM section on request by the service provider was no longer permitted and that service providers should be advised to make the necessary changes on the National Treasury’s Central Supplier Database.

 

[17]  The employees were placed on suspension on 12 May 2020. They were later charged and dismissed on 9 April 2021.

 

[18]  Four other employees were charged, including Tshikolo and Mangqasana, the SCM officials who received the email from the fraudster purporting to be from Mazangwa. Of these four employees, only one was dismissed, Kwini. As stated above, Kwini was acting as the Expenditure Manager in Ngwendu’s position.

 

[19]  Tshikolo started his employment as a Senior Order Clerk and was later appointed as an Acquisition Officer. He was the SCM Manager at the time of the incident. He was charged for failing to provide supervision of procurement staff and ensuring effective administration of procurement functions. In the alternative, he was charged with gross negligence for his alleged failure to verify transactional documentation on work performed by his subordinates during the process of change of Mazangwa’s banking details. He pleaded not guilty. He was found guilty by the chairperson of the disciplinary hearing and was demoted one level below the post he occupied. The Municipality did not challenge the decision.

 

[20]  Mangasana and Ms P Thambeka were employed as Senior Order Clerk, Budget and Treasury Office. They were charged with negligence for failing to exercise due diligence when they captured changes to Mazangwa’s banking details. They pleaded not guilty and were found not guilty.

 

Arbitration proceedings and award

 

[21]  To prove its case, the Municipality relied almost exclusively on clause 5.2.7 of the User Accounts Management Policy and Procedure (User Policy). Clause 5.2.7 and 5.2.8 of the User Policy read thus:

‘5.2.7. One of the two users that are authorising will check the voucher, sign the payments list and be the first to authorise on the system.’

 

[22]  The Municipality’s draft Standard Operating Procedure for Expenditure Management describes the CFO’s responsibility in the payment process of the invoice to be that he receives the payment batches from the Senior Accountant Cash and Bank, verifies all the payments, sign the payment voucher and “Bankit” report and then authorises the payment.

 

[23]  The commissioner found that the employees were not guilty of negligence. This decision was based on consideration of various factors. He found that the change of banking details is the responsibility of the SCM section and that the employees were not at the workplace and had no sight of the supporting documents. Significantly, he considered that the CFO had signed the supporting documents to the payment. The commissioner found Dyushu had authorised the payment by signing the payment voucher. In fact, Dyushu had accepted that his signature on the payment signified that he was authorising the payment.

 

[24]  In addition, the commissioner found that it was reasonable for the employees to rely on the officials who were on site, including the CFO, to check and verify the documents. He accepted the employees’ version that when out of office, they do not need to first have sight of the supporting documents before releasing payment. He concluded that the employees were not guilty and reinstated them.

 

The review test

 

[25]  The Constitutional Court has set out the test for the review of arbitration awards.[2] It held that awards would be reviewable when the decision reached by the commissioner is one “that a reasonable decision-maker could not reach”.^[3]

 

[26]  The Labour Appeal Court in Fidelity Cash Management Services v Commission for Conciliation, Mediation and Arbitration and Others, held that this is a stringent test:[4]

‘The test enunciated by the Constitutional Court in Sidumo for determining whether a decision or arbitration award of a CCMA commissioner is reasonable is a stringent test that will ensure that such awards are not lightly interfered with. It will ensure that, more than before, and in line with the objectives of the Act and particularly the primary objective of the effective resolution of disputes, awards of the CCMA will be final and binding as long as it cannot be said that such a decision or award is one that a reasonable decision maker could not have made in the circumstances of the case. It will not be often that an arbitration award is found to be one which a reasonable decision-maker could not have made.’

 

[27]  The Supreme Court of Appeal (SCA) further explicated on the Sidumo test in Herholdt v Nedbank Ltd (Congress of SA Trade Unions as Amicus Curiae),[5] finding that the mere fact that a commissioner erred does not imply that the award is reviewable – the award will only be reviewable if the arbitrator’s failings resulted in the award ultimately being unreasonable.[6]

 

[28]  In Makuleni v Standard Bank of South Africa Ltd and Others[7], the LAC said that the award is liable to be reviewed and set aside if, after a fair reading of the award, in the context of the body of evidence adduced and an even-handed assessment, the conclusions are untenable.[8]

 

Review grounds

 

[29]  The Municipality contends that the award is reviewable and liable to be set aside. It advances various grounds for this contention.

 

[30]  First, the Municipality contends that the commissioner failed to properly consider the evidence. It argues that the commissioner placed more emphasis on the role of the SCM section instead of applying the test for negligence. In the result, the argument continues, the commissioner conducted a “wrong enquiry”.

 

[31]  Second, the commissioner’s finding that there was no rule that required the officials who authorise payments when out of office to have sight of supporting documents is irrational. The Municipality contends that the commissioner approached the matter with a closed mind, ignored relevant and material evidence and failed to discharge his duties as a commissioner. In this regard, the Municipality relies on clause 5.2.7 of the User Policy and submits that the first authoriser is obligated to check the payment vouchers and slips before releasing payment. Further, the employees should have requested the supporting payment documents before releasing payment.

 

[32]  Third, the commissioner is alleged to have misconstrued the evidence, committed a gross irregularity in the conduct of proceedings and issued an unreasonable award. To support this contention, the Municipality submits that the relationship between the parties is strained. Reliance is placed on the new CFO’s evidence who testified that considering the nature of the charges, he would not be comfortable working with the employees.

 

[33]  Fourth, the Municipality contends that the commissioner ignored relevant evidence and misdirected himself. It is contended that had the employees performed their jobs diligently, they would have detected the questionable documents that purported to come from Mazangwa requesting a change of banking details.

 

[34]  Fifth, the commissioner misconstrued the nature of the enquiry. The Municipality contends in essence that the employees should be held accountable for the payment and not the former CFO because the former CFO was entitled to rely on his Accountants and Senior Accountants to verify the invoices and supporting documents because it would make no sense for the CFO to do everything that pertains to the payment of invoice.

 

Evaluation

 

[35]  The review grounds have no merit. Clause 5.2.7 of the User Policy is only applicable to the first authoriser. In this case, Ngwendu was the first authoriser. There is no basis to impute this provision and apply it to Pambaniso, who acted as the second authoriser. In terms of the User Policy, Pambaniso was not required to do due diligence as this is specially reserved for the first authoriser. On this basis alone, Pambaniso should never have been charged. The commissioner’s decision that he is not guilty of negligence is reasonable.

 

[36]  The reading of clause 5.2.7 required Ngwendu, as the first authoriser of the payment, to check the vouchers and sign the payments list before authorising the payment. Ngwendu was on annual leave on the day that she authorised the payment as the first authoriser. After she was requested to authore on 5 March 2020, Ngwendu telephoned the Acting Expenditure Manager, Kwini. She enquired from Kwini if the CFO signed the necessary supporting documents. It is common cause that the CFO signed the documents. Kwini confirmed that indeed the CFO had signed and that everything was fine.

 

[37]  The CFO confirmed that he authorised the payment when he signed the payment voucher. He conceded that he signed without doing due diligence because he relied on the junior officials and Kwini who signed before him. He was never charged with misconduct allegedly because he was entitled to rely on the junior officials. However, Ngwendu was charged because she relied on the CFO to do his job. In my view, considering that Ngwendu was not at work, she did her due diligence by contacting Kwini to confirm if the CFO authorised the payment. She was informed that the CFO had done his work and authorised the payment. Indeed, the CFO had authorised the transaction. After all, he is the head of SCM and Finance sections. The documentary evidence and CFO’s oral evidence support the conclusion that he authorised the payment.

 

[38]  Due to the fact that the CFO did not have access to the online banking profile, all he needed after authorising the payment was a button-pusher to release the payment. Ngwendu proceeded to release the payment, after satisfying herself that the CFO had authorised the payment. The fact that the CFO did not do his due diligence cannot be attributed to Ngwendu. The commissioner’s decision that Ngwendu is not guilty of negligence is free of any irregularities and errors. It is reasonable and there is no basis to interfere with it.

 

[39]  Even if the commissioner’s decision that the employees were not guilty of negligence is unreasonable, that is not the end of the enquiry. The commissioner’s decision that the dismissal was unfair and that the employees should be reinstated still passes the reasonableness threshold.

 

[40]  The Municipality had the onus to prove that the sanction of dismissal was appropriate. This, it attempted to do by leading the evidence of the new CFO. The new CFO has not worked with the employees. He is in no position to authoritatively comment on the continued relationship between the employees and the Municipality.

 

[41]  Further, the Municipality failed to take action against Dyushu, who conceded that he was negligent. Tshikolo, who received all the documents from the fraudster and who oversees the process of changing the banking details and implemented the changes to Mazangwa’s bank details, was not dismissed but demoted. The failure to charge the CFO and the acceptance of the demotion of Tshikolo was indicative of the fact that the transaction did not destroy the trust relationship between the Municipality and those who were involved in the Mazangwa transaction. The fact that the Acting Expenditure Manager was dismissed does not, in my view, change the position.

 

[42]  Accordingly, the commissioner understood the enquiry before him, applied himself to the evidence and issues and reached a reasonable decision that the dismissal of the employees was substantively unfair. The commissioner’s decision to award retrospective reinstatement should not be interfered with as it falls within the bounds of reasonableness. The application stands to be dismissed.

 

Conclusion

 

[43]  Although I consider the decision to launch this application to be ill conceived, I am mindful of the Municipality’s submission that there should be no cost order made, regardless of the outcome. The employees did not seriously oppose this position nor did they seriously pursue a cost order. I therefore decided not to award costs against the Municipality.

 

[44]  In the premises, I make the following order:

 

Order

 

1.  The application is dismissed.

2.  There is no order as to costs.

 

M. Makhura

Judge of the Labour Court of South Africa

 

Appearances:

For the Applicant                         :         Adv. B. Ndamase

Instructed by                               :         McWilliams & Elliot Inc.

For the 3^rd & 4^th Respondent        :      Adv. F.E. le Roux

Instructed by                               :         Wheeldon Rushmere & Cole Inc.

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