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Counterblow

/Counterblow

Counterblow

20 January 2006

Standard Bank

Counterblow

FM Focus Edited by Shannon Sherry

When a senior compliance officer reported irregularities involving an operations director at Standard Bank stock brokerage Andisa Securities, the career of the accused man apparently suffered no setbacks. Though his actions contravened company and group personal account trading and risk policies, Grant Talbot is now chief operating officer at the brokerage.

Nor did the JSE view his activities in a serious light when they were reported in December 2002. Though they fell foul of JSE directives, Peter Redman of the JSE’s surveillance department says they were “of an administrative nature, did not affect the integrity of the market or interests of investors and were one-off”.

He said he was satisfied with the disciplinary action taken by Andisa “and no further action was warranted”. But Allison Pedzinski, who blew the whistle on Talbot and others in November 2002, was dismissed several months later as part of alleged retrenchment proceedings. A labour court judgement has found her dismissal unfair and described the reason given as “spurious and a sham”. It is the first outright victory in the courts for a whistle blower, says Nicola Smit, an expert in labour and social security law at the University of Johannesburg’s department of mercantile law.

The judge awarded punitive compensation equal to 24 months’ remuneration – the maximum compensation provided for by the statutes. Standard bank has lodged an application with the court for leave to appeal against the findings. Central to the action brought by Pedzinski was whether her disclosure was protected under the Labour Relations Act and whether her dismissal contravened the Protected Disclosures Act. According to the judgement it was “common cause” that Pedzinski discovered irregularities committed by Andisa employees “at the instance of Talbot”. Talbot at the time was senior manager to Pedzinski’s line manager, chief compliance officer Chris Schnetler.

The judgement describes the disclosures as “of a serious nature in that fiscal regulations were breached and likely to jeopardise the position of the senior managing director involved”. Pedzinski reported the irregularities, which related to share trades, to Schnetler on November 18 2002, and to others in the SCMB Group compliance structures. At the hearing Pedzinski testified that some of the employees involved in the irregular share trading were given written warnings but there was no evidence that Talbot was among them.

Though Schnetler testified in court that Talbot was given a written warning, he could not produce any proof. On December 31 Pedzinski, who worked part-time because of a back problem, received a letter telling her she would be required to work full-time. She was not able to comply for medical reasons and negotiations between the parties about her future employment broke down. She was dismissed in April 2003.

The court found that Talbot’s conduct was not adequately addressed “even though he admitted having committed irregularities”. It determined that Pedzinski’s disclosures fell within the ambit of the Protected Disclosures Act. And it found that Schnetler requested Pedzinski to work a full day, “well knowing it would be impossible” because of her back problem. The judgement concluded that “the only probable and reasonable inference to be drawn from Schnetler’s conduct is that, after the applicant had made to protected disclosure, which exposed the unlawful conduct of Talbot and other employees, he was not happy about the manner in which the disclosure was reported.

“The only reasonable inference to be drawn is that the applicant was dismissed because of the protected disclosure made. The decision to retrench was not genuine, it was a sham. The respondent used the applicant’s health condition as ammunition to rid itself of an employee who proved herself to be diligent and committed in the execution of her duties”. “The signal sent to the market is that employers ignore the Protected Disclosures Act at their peril,” says Pedzinski’s attorney, Tzvi Brivik. “Allison’s success will encourage employees to blow the whistle and errant employers will pay heavily if they penalise employees for doing so.”

2018-11-04T11:32:08+00:00May 8th, 2015|

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