Industrial Court Case Burhan Bin Lasa Malayan Banking Berhad

3/4-475/04 &3(21)/4-1763/04

INDUSTRIAL COURT OF MALAYSIA

CASE NO : 3/4-475/04BETWEEN

BURHAN BIN LASAAND

MALAYAN BANKING BERHAD

CASE NO : 3(21)/4-1763/04 BETWEEN

ABD. JAMAL BIN AHMADAND

MALAYAN BANKING BERHAD

(Consolidated by Order of Court dated 15.1.2005)

AWARD NO : 1078 OF 2010

Before : TUAN FRANKLIN GOONTING – Chairman (Sitting Alone) Venue : Industrial Court Malaysia, Kuala Lumpur

Dates ofReference

: 8.4.2004 (Burhan Bin Lasa)1.6.2004 (Abd. Jamal Bin Ahmad)

Dates of Mention : 11.6.2004, 4.3.2005, 4.5.2005, 28.6.2005, 27.7.2005, 30.8.2005, 17.1.2006, 17.2.2006, 28.2.2007, 1.6.2007, 8.6.2007, 2.7.2007, 12.11.2007, 14.12.2007, 22.1.2008, 18.3.2008, 29.4.2009, 20.8.2009, 2.4.2010, 17.5.2010, 8.6.2010, 23.6.2010, 6.7.2010, 20.7.2010, 12.8.2010

Dates of Hearing : 29.3.2006, 16.11.2006, 11.12.2006, 2.2.2007, 7.2.2007, 27.2.2007, 13.11.2007, 1.4.2008, 25.8.2008, 14.11.2008, 17.12.2008, 24.11.2009, 25.11.2009, 19.2.2010

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Representation : Mr. V.K. Raj,From Messrs P. Kuppusamy & Co.,Counsel for the Claimants.

Mr. Steven Thiruneelakandan Mr. Shamsul Bahrin Manaf Counsel for the Bank.

Reference :

These two references made under Section 20 (3) of the Industrial

Relations Act, 1967 concern the dismissal of Burhan Bin Lasa (the 1st

Claimant) and Abd. Jamal Bin Ahmad (the 2nd Claimant) (hereinafter

referred to as “the Claimants”) by Malayan Banking Berhad (hereinafter

referred to as “the Bank”) on 7.2.2002.

AWARD

These two ministerial references concern the dismissal of Burhan

Bin Lasa (the 1st Claimant) and Abd. Jamal Bin Ahmad (the 2nd

Claimant) by the Bank, both on 7th February 2002. The references were

registered herein as case No: 3/4-475/04 and No. 3(21)/4-1763/04

respectively, and both cases were consolidated by order of court dated

15th January 2005.

The bank operates branches throughout Malaysia as well as in

Brunei. At the time of his dismissal the 1st claimant held the position of

Country Manager, Bandar Seri Begawan, Brunei branch (“the branch”)

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while the 2nd claimant was Credit and Marketing Manager of the

branch.

The bank's business includes the giving of loans to finance

construction projects. The loan amount is released in stages in this

manner: In the course of the contract works progress certificates (PCs)

are issued by the project consultants. The PC performs a dual function

i.e it (1) monitors the progress of the works and (2) regulates the interim

disbursements of the loan to the borrower, that is, the contractor

undertaking the works. The PC is required to be endorsed by the

awarder of the contract. Upon receipt of a PC and verification of such

endorsement the bank will release a specified amount, or drawdown, in

banking parlance, to the contractor/borrower according to the stage of

construction reached as certified by the PC. In the case at hand the

awarder was the Government of Brunei while the contractor/borrower

was one Lau Enterprise Company (“LEC”).

The claimants were entrusted with, inter alia, the duty to ensure

that all documentation was in order, including, especially, the PCs

before release of drawdown. In particular they had to adhere to the

bank's Standard Practice Instructions SPI No (B) FG 56, paragraph

4.1(b) of which reads as follows:

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“Releases

4.1. The advances/credit facilities may be released as

follows:

a) …

b) By way of progressive releases on OD based

on the original Claim Certificates/Bills/

Receipts presented by the customer. These

documents must be endorsed by the Awarder

before the customer is allowed to drawdown

on his OD account. In case of doubt e.g

where original invoices are not presented or

there are alterations to the invoices etc,

Branch should wherever possible call up the

Awarder for confirmation. The drawdown

amount will usually be for a percentage of

the invoice/Delivery Order/Work

Certificates/Receipts depending on the terms

and conditions as specified in the A/A.

c) …”.

(Italics added)

The bank's Brunei branch experienced a practical problem in

calling up to get the awarder's confirmation, the awarder being the

Brunei Government. So, by their joint memo dated 24th May 1999, to

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the General Manager of the bank's International Banking Division, the

claimants proposed, inter alia, as follows:

“Proposal

In view that if we were to insist on having the awarder’s

signature/endorsement on the PC submitted, then it would not

be practical for the borrower to have OD/PC line. We propose

for waiver of this requirement. However, for our confirmation

on the authenticity of the PCs submitted, a certified copy by the

Section Head/Consultant/Project Manager/Supervising Officer

(depending on the department concerned; note: (these party are

appointed by the awarder) is to be endorsed on the PCs

presented prior to advance be made.”.

The bank agreed to this proposal but with the condition that the

party certifying the PCs must be duly appointed or authorised by the

awarder.

It transpired that many of the PCs which had been approved by

the claimants for the release of drawdowns had been forged or falsified

by LEC, and this led to their being charged as follows:

The charges against the 1 st claimant

That he had :

1) Authorised for advance, authorised the computation of the

operating limit in the Register of OD against PCs and over-

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ridden the change of the operating limit for PCs No. 9 and

10 favouring A/C 50009-8 (details mentioned in Table

One) which were not endorsed by the Awarder/Consultant

thus contravening SPI (B) FG 56: Banking Facilities

Against Contract Payments/Progress Certificates (PC)/

Bills dated 29.1.1992.

2) Authorised the computation of the operating limit in the

Register of OD against PCs and over-ridden the change of

the operating limit for PCs No. 11, 12 and 13 favouring

A/C 50009-8 (details mentioned in Table One) which were

not endorsed by the Awarder/Consultant thus

contravening SPI (B) FG 56: Banking Facilities Against

Contract Payments/Progress Certificates (PC)/Bills dated

29.1.1992.

3) Authorised for advance and authorised the computation of

the operating limit in the Register of OD against PCs for PC

No. 6 favouring account No. 50186-8 (details mentioned in

Table Two) which was not endorsed by the

Awarder/Consultant thus contravening SPI (B) FG 56:

Banking Facilities Against Contract Payments/Progress

Certificates (PC)/Bills dated 29.1.1992.



the operating limit for PC No. 1, 3, 4, 7, 10, 11, 14, 15 and

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16 favouring account No. 50186-8 (details mentioned in

Table Two) which were not endorsed by the




5) Over-ridden the change of the operating limit for PC No. 13

and 17 favouring account No. 50186-8 (details mentioned

in Table Two) which were not endorsed by the





Register of OD against PCs for PC No. 5 and 12 favouring

account No. 50186-8 (details mentioned in Table Two)

which were not endorsed by the Awarder/Consultant thus



29.1.1992.

7) Authorised for advance, authorised the computation of the

operating limit in the Register of OD against PCs and over-

ridden the change of the operating limit for PCs No. 19

and 24 favouring A/C 60398-8 (details mentioned in Table

Three) which were not endorsed by the


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the operating limit for PCs No. 16, 18, 20 to 23, 26 to 31

favouring A/C 60398-8 (details mentioned in Table Three)




29.1.1992.

9) Over-ridden the change of the operating limit for PCs No.

2, 3, 5, 6 and 9 favouring A/C 60398-8 (details mentioned

in Table Three) which were not endorsed by the



Certificates (PC) /Bills dated 29.1.1992.

10) Authorised for advance, authorised the computation of

the operating limit in the Register of OD against PCs and

over-ridden the change of the operating limit for PCs No.

5 and, 6 favouring A/C 60640-9 (details mentioned in

Table Four) which were not endorsed by the




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Register of OD against PCs are over ridden the change of

the operating limit for PCs No. 2, 3 and 8 favouring A/C

60640-9 (details mentioned in Table Four) which were not

endorsed by the Awarder/Consultant thus contravening

SPI (B) FG 56: Banking Facilities Against Contract

Payments/Progress Certificates (PC)/Bills dated 29.1.1992.

12) Authorised the computation of the operating limit as

indicated in the Register of OD against PCs and over-ridden

the change of the operating limit for PC No. 31 although

there were already 5 other PCs outstanding namely PCs No.

26, 27, 28, 29 and 30 favouring account No. 60398-8 thus

contravening the intention of SPI (B) FG 56: Banking

Facilities Against Contract Payments/Progress Certificates

(PC)/Bills dated 29.1.1992 and the terms of approval of the

facility that clearly states that the OD/PC facility is subject

to 5 PCs outstanding at any one time.

13) Authorised for advance and/or authorised the

computation of the operating limit as indicated in the

Register of OD against PCs and/or over-ridden the change

of the operating limit for the following PCs that had

exceeded the stipulated advance limit of $500,000 per PC

thus contravening SPI (B) FG 56: Banking Facilities

Against Contract Payments/Progress Certificates (PC)/Bills

dated 29 1.1992.

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i. PCs No. 9, 10, 12, 13 favouring A/C 50009-8.

ii. PCs No. 5, 6, 7, 10, 11, 15, 16 and 17 favouring

A/C 50186-8.

iii. PCs No. 3, 5, 6, 9, 23, 24, 26 to 31 favouring

A/C 60398-8.

iv. PCs No. 5 to 8 favouring A/C 60640-9.

The charges against the 2 nd claimant

That he had :


Register of OD against PCs for PCs No. 1, 6, 7 favouring

A/C 50009-8 (details mentioned in Table One) which were




29.1.1992.



the operating limit for PCs No. 8, 14 to 16 favouring A/C

50009-8 (details mentioned in Table One) which was not

endorsed by the Awarder/Consultant thus contravening


Payments/ Progress Certificates (PC)/Bills dated

29.1.1992.

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the operating limit for PC No. 8, 9 and 18 favouring

account No. 50186-8 (details mentioned in Table Two)




29.1.1992.


Register of OD against PCs for PC No. 10, 11, 13, 16 and 17

favouring account No. 50186-8 (details mentioned in Table

Two) which were not endorsed by the Awarder/Consultant

thus contravening SPI (B) FG 56: Banking Facilities Against


29.1.1992.

5) Over-ridden the change of the operating limit for PC No. 5,

6 and 12 favouring account No. 50186-8 (details

mentioned in Table Two) which are not endorsed by the


Banking Facilities Against Contract Payments Progress




the operating limit for PCs No. 17 and 25 favouring A/C

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60398-8 (details mentioned in Table Three); (A) which were


contravening SPI; (B) FG 56: Banking Facilities Against

Contract Payments/ Progress Certificates (PC)/Bills dated

29.1.1992.


Register of OD against PCs for PC No. 16, 18, 21 to 23, 26

to 31 favouring A/C 60398-8 (details mentioned in Table

Three which were not endorsed by the Awarder/Consultant

thus contravening SPI; (B) FG 56: Banking Facilities

Against Contract Payments/Progress Certificates (PC)/Bills

dated 29.1.1992.

8) Over-ridden the change of the operating limit for PC No. 4

favouring A/C 60398-8 (details mentioned in Table Three)

which was not endorsed by the Awarder/Consultant thus



29.1.1992.



the operating limit for PC No. 7 favouring A/C 60640-9

(details mentioned in Table Four) which was not endorsed

by the Awarder/Consultant thus contravening SPI (B) FG

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56: Banking Facilities Against Contract Payments/Progress



Register of OD against PCs for PCs/No. 2, 3, 5 and 6

favouring A/C 60640-9 (details mentioned in Table Four)




29.1.1992.

11) Authorised the computation of the operating' limit in the


the customer's operating limit for PC No. 16 although there

were already 3 other PCs outstanding namely PC Nos 13,

14 and 15 favouring account No. 50009-8 (details

mentioned in Table One) thus contravening the intention of


Payments/Progress Certificates (PC)/Bills dated 29.1.1992

and the terms of approval of the facility that clearly states

that the OD/PC facility is subject to 3PCs outstanding at

any one time.

12) Authorised the computation of the operating limit as

indicated in the Register of OD against PCs for PC No. 31

although there were already 5 other PCs outstanding

namely PCs No. 26, 27, 28, 29 and 30 favouring account

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No. 60398-8 thus contravening the intention of SPI (B) FG

56: Banking Facilities Against Contract Payments/Progress

Certificates (PC)/Bills dated 29.1.1992 and the terms of

approval of the facility that clearly states that the OD/PC

facility is subject to 5 PCs outstanding at any one time.

13) Authorised for advance and/or authorised the computation

of the operating limit as indicated in the Register of OD

against PCs and/or over-ridden the change of the operating

limit for the following PCs that had exceeded the stipulated

advance limit of $500,000 per PC thus contravening SPI (B)

FG 56: Banking Facilities Against Contract Payments/

Progress Certificates (PC)/Bills dated 29.1.1992.

i. PCs No. 1, 6, 7, 15, 16 favouring A/C 50009-8.

ii. PCs No. 5, 6, 9, 10, 11, 16 to 18 favouring A/C

50186-8.

iii. PCs No. 4, 17, 23, 25 to 31 favouring A/C

60398-8.

iv. PCs No. 5 to 7 favouring A/C 60640-9.”

Two separate domestic inquiries were held to hear the charges

against the claimants on 19th November 2001 and 21st November 2001

respectively. The 1st claimant was found guilty in respect of charge Nos

1 to 11 and not guilty in respect of charge No 12 and 13 while the 2nd

claimant was found guilty in respect of charge Nos 1 to 10 and not

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guilty in respect of charge Nos 11 to 13. Their dismissal ensued vide

the bank's separate letters both dated 6th February 2002.

Where, as in this case, a domestic inquiry has been held, the

Industrial Court's jurisdiction is limited to considering whether there is

a prima facie case against the claimants. See the High Court case of

Bumiputra Commerce Bank Bhd v. Mahkamah Perusahaan

Malaysia & Anor [2004] 7 CJJ 77 which was endorsed by the Court of

Appeal in Jye Tai Precision Industrial (M) Sdn Bhd v. Victoria

Arulsamy [2008] 1 CLJ 760. This court should first consider whether

or not the domestic inquiries held against the claimants were valid and

the inquiry notes accurate. Both claimants had been given due notice

of the respective charges against them. They had attended the separate

inquiries and had had the opportunity to cross-examine the sole

witness, one Encik Gunalan Sabapathy, who was the investigator

attached to the Bank's Audit Division and who had investigated the case

of the fraudulent PCs, and also the opportunity to give evidence in their

defence. Having perused the verbatim transcripts of the inquiry against

the 1st claimant (COB1, pages 38 – 51) and the 2nd claimant (COB1,

pages 122 – 153) as well as the exhibits tendered therein especially the

copies of the PCs tendered and referred to thereat, the court is satisfied

that the inquiries were properly conducted and the inquiry notes

accurate. Furthermore, the propriety or otherwise of the inquiries were

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not disputed by the claimants either in their pleadings or their witness

statements.

At the inquiries the said investigating officer, Mr. Gunalan,

testified that his investigations had revealed:

(i) The PCs presented by the customer, LEC, for advances were

not endorsed by the Awarder/Consultant as required by SPI

(B)FG 56;

(ii) The Brunei branch had granted advances against

photocopies of PCs without seeking confirmation from the

Awarder;

(iii) There were instances of PCs bearing an original rubber

stamp by the consultants while on other occasions the PCs

bore a photocopy of the rubber stamp. However, in all

instances the signatures were photocopied.

(iv) The advances against the PCs were well in excess of the limit

of $500,000/- per PC;

(v) The said branch had granted advances against fresh PCs

even though the advances against previous PCs had not

been fully settled; and

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(vi) The PC values submitted by LEC were grossly inflated.

On the claimants' part, basically it was their position during the

inquiry that as long as there was a signature and a company rubber

stamp, and notwithstanding the fact that these PCs were photocopies

including the signature and rubber stamp thereon, there was no

necessity to verify or conduct proper checking to determine their

authenticity. In this regard the claimants cited past practice. They also

contended that the PCs which they had approved for release of advances

appeared to be regular on their face.

After considering the evidence and the submissions of both

prosecution and defence the inquiry panels found the claimants guilty

of the main thrust of the charges, that is, the failure to obtain the

endorsement of the Awarder/Consultant on the various PCs before the

advances were granted against such PCs. It is the view of the court that

the inquiry panels had reached the correct conclusion having regard to

all the evidence, documentary and oral, adduced at the domestic

inquiries, and it so finds. In the circumstances the court concludes that

the bank has made out a prima facie case against the claimants. It was

not incumbent, therefore, on the court to hear the reference de novo.

Nevertheless, since the bank called witnesses to testify on its behalf, the

court heard these witnesses and now reviews the evidence adduced

herein by the bank.

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The bank had in its possession all the PCs submitted by LEC save

thirteen (13) of them which had been taken away by the Brunei police in

the course of their investigation. Fortunately the bank obtained the

cooperation of the Brunei police and one of its inspectors came to court

and brought along with him the police copies of the PCs for inspection

by the court as well as by the claimants' counsel after which he took

them back to Brunei. The said Gunalan (COW1) led the court through

all the PCs in the bank's bundle of documents, 13 of which

corresponded with the PCs brought by the said Brunei police inspector,

and gave his comments. I will deal with three examples in respect of

each claimant.

PCs approved by the 1 st claimant

(i) PC No. 17 (COB 6 page 31)

This PC was a photocopy but the date stamp and the endorsement

thereon were original. COW1 pointed out that it was not dated, and did

not bear the signature of Pengarah, Jalan Raya. Since LEC had

submitted a photocopy only the officer concerned should have taken

the necessary steps to confirm the authenticity of the document with

the awarder or the consultant, that is, he should have made calls to

verify its genuineness. COW1 stated that in the course of his audit he

sought verification from the consultants and they told him that the PCs

they had authorised were up to No. 15 only and anything beyond that

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was not authorised by them. In other words PC No. 17 was a non-

existent document i.e it was forged.

(ii) PC No. 27 (COB 6 page 71)

COW1 gave his reasons for circumspection concerning this PC.

Firstly, it was photocopied and therefore the officer concerned should

have sought verification from the awarder or the consultant. As

required by clause 4.1 of SPI No. (B) FG 56, in case of doubt e.g where

the original invoices are not produced, etc, the branch should wherever

possible call up the awarder for confirmation. However, the officers

concerned had failed to comply with this requirement. COW1 further

testified that he had noted that the signature of Nordin Mohd Yussof of

Jurutera Tempatan differed from an earlier PC, e.g PC No. 6 on page 55

and No. 16 on page 60. The court looked at these PCs and noted that

the signatures indeed differed. COW1 stated that this alone was a

glaring discrepancy which should have prompted the officers to check

further. Moreover, this PC was not signed by the awarder.

(iii) PC No. 6 (COB 6 page 80)

In respect of this PC, COW1 stated that firstly, it was a photocopy

and therefore the officer concerned should have called up the awarder

for confirmation, and secondly, it bore two rubber stamps of Jurutera

Tempatan, each bearing a different signature and this again was a

glaring discrepancy which would have prompted the officer concerned to

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seek verification from Jurutera Tempatan, especially since the amount

involved was substantial i.e B$919,890/-. This PC, too, was not

endorsed by the awarder and neither was it dated.

PCs approved by the 2 nd claimant

(i) PC No. 14 (COB 6, page 13)

COW1 told the court that, firstly, this PC was a photocopy and,

secondly, the amount had been altered from $386,225.85 to

$368,225.85, and that in view of that the officer concerned

should have called the awarder or the consultant for

confirmation, but did not. This PC had not been endorsed by

the awarder, and, furthermore, it did not have a valuation date

i.e the valuation date was left blank.

(ii) PC No. 15 (COB 6, page 14)

Firstly, it was a photocopy and the PC number had been

changed or amended from No. 14 to No.15. The court observed

that the amendment on the police copy appeared to be original,

and in pencil. Similarly with PC No. 14, this PC did not have a

valuation date and neither was it endorsed. The officer

concerned should, in these circumstances, have been

circumspect and called up the awarder or consultant to confirm

the genuineness of this document, but did not.

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(iii) PC No. 16 (COB, page 15)

This, too, was a photocopy, and the court observed that the only

original endorsement thereon was the “received” date rubber

stamp. It was not dated and did not bear a valuation date and

furthermore, it was not endorsed by the awarder. The 2nd

claimant should, in these circumstances, have been circumspect

and sought verification but did not.

COW2, the panel chairman of the domestic inquiry against the 2nd

claimant, identified and confirmed the verbatim transcript of the inquiry

(COB1, pages 122 to 153) and the panel's findings against the 2nd

claimant (COB1, pages 186 – 190) while COW3, a panel member of the

domestic inquiry against the 1st claimant, identified and confirmed the

verbatim transcript of this inquiry (COB1, pages 38 to 51) and the

panel's findings against the 1st claimant (COB1, pages 69 to 75).

The bank's last witness, Looi Heong Meng (COW4) its Vice

President, Head, Industrial & Employee Relations, Corporate Human

Resources, referred to clause 4.1 of SPI No. (B) FG 56 (reproduced

earlier)and the claimant's proposal vide their joint memorandum dated

24th May 1999 (also reproduced earlier) and confirmed that the bank's

International Banking Division had approved such proposal but had

stressed that the party certifying the PC must be duly

appointed/authorized by the Awarder. COW4 stated that this

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memorandum forms part of the SPI and the two should be read

together. The Section Head/Consultant/Project Manager/Supervising

Officer referred to in the memo steps into the shoes of the awarder in

relation to the SPI and assumes the requirements involving the awarder

in the SPI (particularly clause 4.1 (b)). There had been non-compliance

of the SPI by the claimants: firstly, they had authorised advances to be

made to the borrower based on PCs which were not duly endorsed by

the awarder/consultant. These PCs were only copies of purportedly

endorsed PCs. There were no original endorsements on the PCs, and,

secondly, the claimants did not call the awarder/consultant to verify the

authenticity of the PCs, despite the clear stipulation in the SPI of the

requirement to do so in the event of doubt, particularly when the

documents tendered were not originals.

Continuing his testimony COW4 stated that the domestic inquiry

had found the 1st claimant guilty in respect of charge Nos 1 to 11 and

not guilty in respect of charge No. 12 and 13, and the 2nd claimant was

found guilty in respect of charge Nos 1 to 10 and not guilty in respect of

charge Nos 11 to 13. The bank had decided to terminate the

employment of the claimants because it had viewed their acts of

misconduct very seriously. At the time of these acts of misconduct the

claimants were holding very senior positions, that is, the 1st claimant

was Bandar Seri Begawan Country Manager while the 2nd claimant was

Credit and Marketing Manager for Bandar Seri Begawan. As such they

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were expected to exercise a high degree of diligence when carrying out

their duties and to observe the highest standards of compliance with

banking rules and procedures. Further, their negligence exposed the

bank to a potential loss of approximately B$13,000,000/-. The bank

had lost its trust and confidence in the claimants and therefore had

exercised its managerial prerogative to dismiss them.

In his defence the 1st claimant testified that he had ensured that

the party certifying the PCs was duly appointed by the awarder of the

contract by referring to the contract itself. It was common practice for

the project consultants to endorse the PCs. Upon receipt of these PCs

he complied with the amended SPI (B) FG 56 by double checking with a

copy of the original contract in the branch's records to ensure that the

project consultants mentioned on the presented PCs were in fact the

project consultants named in the contract. This practice was carried on

all along since 1999 and there were no complaints whatsoever from any

parties until he was transferred back to Kuala Lumpur to head the

Bank's Setapak business centre. There had been yearly audits carried

out when he was Country Manager, Brunei, wherein in at least one of

them this problem had been highlighted but after the branch's proposal

in 1999 the issue was put at rest. Hence he was shocked and puzzled

when he received a letter of suspension from the bank. In his opinion

he had done everything necessary to ensure compliance with the

amended SPI (B) FG 56 and the existing practices of the bank at the

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material time. Concluding his testimony-in-chief the 1st claimant stated

that when the branch received the PCs referred to in the charges against

him, it (the branch) did not have any reason to doubt their authenticity,

since, going by the approved amendment, photocopies could be

accepted if they were endorsed by the awarder or the consultant. All the

photocopied PCs had been so endorsed and therefore he had complied

with the bank's requirements.

Under cross-examination the 1st claimant agreed that the PCs

referred to in charge Nos 1 to 11 (reproduced earlier) were all

photocopies. He agreed that some of the PCs were undated and some

did not bear valuation dates and yet he had approved advances against

them. He agreed further that he had approved an altered PC i.e PC No.

14 altered to No. 15 (COB 6, page 14). At this stage Mr. Raj objected

that alterations or absence of valuation dates were not elements to the

charges. After hearing arguments on both sides the court overruled the

objection for two main reasons : firstly, the respondent's counsel was

entitled, by way of cross-examination, to challenge the 1st claimant's

assertion that he had no reason to doubt the authenticity of the PCs

and, secondly, should it find the charges proven, the court is duty-

bound to look for mitigating circumstances when considering the

appropriateness of the punishment imposed on the 1st claimant and if,

in the process, unearths aggravating circumstances, then, such

circumstances, too, would be a relevant factor for the court to consider.

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During further cross-examination the 1st claimant asserted that

while calls were not made to the awarder he did make calls to the

consultants. However, when pressed further he changed this stand

somewhat by adding the words “wherever possible”. When referred to

his defence at the domestic inquiry he conceded that nowhere therein

had he said that he called the consultants. He further conceded that

such an assertion was not even in his evidence-in-chief. This obvious

ground-shifting leads the court to find him to be not a truthful witness.

Enough said at this stage.

The 2nd claimant in his defence stated that it was he who had been

instrumental in discovering that LEC had submitted inflated PCs. Its

managing director had admitted that LEC was not being paid by the

Government of Brunei because it had inflated its claims against the

Government of Brunei. He denied contravening SPI (B) FG 56. In

Brunei there was a problem of getting the original PCs, so, by the said

proposal (reproduced earlier) the Brunei branch had proposed that the

requirement of the original PC be waived and that, as an alternative, the

photocopy of the PC presented to the bank ought to be a copy certified

by the Section/Consultant/Project Manager/Supervising Officer

concerned. This proposal was accepted by the General Manager of the

Bank's International Banking Division with a condition that the

certifying party must be duly appointed/authorised by the awarder of

the contract. As far as he could remember he had ensured that such

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certifying party was duly appointed by the awarder by reference to the

contract itself. Upon receipt of the PCs he had complied with the

amended SP1(B) FG 56 by double checking with the copy of the original

contract in the branch's records to ensure that the project consultant

mentioned in the PCs presented were the consultants named in the

contract. This practice was carried on all along since 1999 and there

were no complaints whatsoever from any parties until the customer LEC

applied for additional facilities some time in April/May 2001. Thus, in

his (the 2nd claimant's) opinion, he had done everything necessary to

ensure compliance with the amended SPI (B) FG 56 and the existing

practices of the bank at the material time.

Under cross-examination the 2nd claimant conceded that he did

not call either the awarder or the consultant. He acknowledged as

correct counsel's restatement or summary of his defence viz : No. 1, he

took the position that as far as he was concerned all the PCs were duly

endorsed by the awarder or consultant, No. 2, regular spot checks were

made either by him or his credit officer to determine the progress of the

project, No. 3, that he had no doubt as to the authenticity of the PCs,

and, No. 4, the reputation of LEC. He conceded that he did not have

technical knowledge and that the spot checks were purely visual. He

also agreed that all the PCs mentioned in the charges (reproduced

earlier) were photocopies. He insisted that he took the PCs at face

value, and, when counsel referred him to some PCs which were

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undated, and to some PCs which did not bear the valuation date, he

maintained that despite all these omissions he had no reason to be

circumspect. He held this ground even when confronted with PCs on

which the signatures purportedly of Noordin Mohd Yusof of Jurutera

Tempatan differred. He agreed that it was on the basis of this stand

that he did not take any steps to verify the authenticity of the PCs.

Evaluation and findings

It is common ground that all the PCs presented by the borrower

LEC to the bank's Brunei branch and approved by the claimants for

loan drawdowns, were photocopies. It has also been established by the

evidence reviewed above that the claimants did not call up the awarder

or the consultant to seek verification of the endorsements on such PCs

or the genuineness of such PCs. By clause 4.1, SPI No. (B) FG 56 (the

SPI) the claimants were specifically required to call up the awarder

for confirmation in case of doubt, e.g “… where original invoices are not

presented or there are alterations to the invoices, etc ...”. They

acknowledge this requirement but take the position that with the

acceptance by the bank of their joint proposal dated 24th May 1999

(reproduced earlier) this requirement to call up the awarder or even the

consultant had been done away with where the photocopied PCs

presented for drawdown were certified by the consultant. The issue,

therefore, is whether the said SPI has been “amended” (the word used

by the claimants) to the extent suggested by the claimants.

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The reason why the bank had agreed to the claimants' said

proposal is clear : It was to solve the problem faced by the Brunei

branch of obtaining confirmation of the authenticity of the PCs by the

Brunei Government/awarder. So, instead, PCs bearing the certification/

endorsement of the consultant could now be accepted. By this revised

arrangement the consultant stepped into the shoes of the awarder.

However, in no way can the approved proposal be said to have

superceded the SPI. The requirement to seek verification of the PCs in

case of doubt, e.g where the original PCs were not presented or where

there were alterations on the PCs, remained intact. In the case at hand

some of the photocopied PCs presented by LEC bore the original

endorsement of the consultant but some bore photocopies of

endorsements. Some PCs were altered. Some were undated. Some did

not bear valuation dates. These were clear warning signs which the

claimants should have heeded, and they should have taken steps to

seek verification of the authenticity or genuineness of these PCs.

Whereas hitherto, under the SPI, they were required to call up the

awarder, now, under the revised procedure, they were required to call

up the consultants for such verification. Under cross-examination the

1st claimant made a claim, from out of the blue as it were, that he did

call up the consultant. His ground-shifting aside, he thereby let slip his

acknowledgement of the need to call up the consultant. Counsel's deft

cross-examination had borne fruit here. How else could the claimants

obtain verification, if not by calling up the consultant? But all that they

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did, if they are to be believed, was to “double check” with a copy of the

original contract in the branch's records to ensure that the consultants

mentioned in the PCs were in fact the project consultants named in the

contract. This falls far short of complying with the mode of verification

expressly prescribed by the SPI, and by thus bypassing such prescribed

mode the claimants were guilty of shirking their duties and

responsibilities as very senior officers of the bank. The claimants'

counsel, Mr. Raj, submits that making such phone calls is not foolproof,

and points out that COW4 admitted as much under cross examination.

(By analogy, and to stretch counsel's argument, might one ignore road

traffic rules just because compliance with these rules does not wholly

guarantee against accidents happening?). The short answer to this

submission is that this does not exonerate the claimants from their

obligation, in the first place, to call up the consultant, not only to

confirm due execution of the PCs but also to verify the particulars

thereon, especially the amount, as a precaution against post-execution

alterations. The claimants cite past practice, but, with respect, even if

it did exist, such practice cannot override the clear terms of the SPI

which was meant to prevent losses through fraud. The very thing that

the SPI was intended to avoid the claimants walked slam-bang into by

their dereliction of duty. In the circumstances it is the finding of the

court that the bank has established the acts of misconduct referred to

in the charges against the claimants.

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The court next has to consider whether such proven misconduct

constitutes just cause or excuse for the dismissal of the two claimants.

See Milan Auto Sdn Bhd v. Wong Seh Yen [1995] 4 CLJ 449 at 455

per Mohd Azmi Bin Kamaruddin FCJ. In this regard the court must ask

itself whether a reasonable employer would have dismissed the

claimants. In British Leyland UK Ltd. v. Swift [1981] IRLR 91 it was

held as follows:

“...The correct test is : Was it reasonable for the employers to

dismiss him? If no reasonable employer would have dismissed him,

then the dismissal was unfair. But if a reasonable employer might

reasonably have dismissed him, then the dismissal was fair. It

must be remembered that in all these cases there is a band of

reasonableness, within which one employer might reasonably take

one view: another quite reasonably take a different view. One

would quite reasonably dismiss the man. The other would quite

reasonably keep him on. Both views may be quite reasonable. If it

was quite reasonable to dismiss him, then the dismissal must be

upheld as fair; even though some other employers may not have

dismissed him.”.

In considering the reasonableness of what a reasonable employer

would have done the court must not substitute its own views as to what

was the appropriate penalty for the claimants' acts of misconduct for

the view of the bank. See Southern Bank Bhd. v. Kamarudin

Othman & Anor [2005] 6 CLJ 387.

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The banking industry belongs to a special kind of business and

services rendered to the public. It is entrusted with other people's

money. Therefore a high quality of discipline and conduct of the highest

order is expected of its staff to win public confidence. The bank

demands from its employees absolute honesty and impeccability. See

Perwira Habib Bank (M) Bhd v. Tan Teng Seng @ Lim Teng Ho

[1997] 2 ILR 839 per Y.A Tan Kim Siong.

The claimants held very senior positions and the bank rightly

expected them to exercise a high degree of diligence when carrying out

their duties and to observe the highest standards of compliance with

banking rules. Further, their negligence exposed the bank to a potential

loss of about B$13,000,000/-. The bank had lost its trust and

confidence in the claimants and had therefore had exercised its

managerial prerogative to dismiss them. Aside from being mindful of

the principle of non-interference endorsed by the Southern Bank case

(supra) the court is of the view that the bank had properly exercised its

managerial prerogative to dismiss the claimants. On the facts of the

case a reasonable employer would have dismissed them. The dismissal

was with just cause and excuse.

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The claims of the claimants are hereby dismissed.

HANDED DOWN AND DATED THIS 17th DAY OF AUGUST 2010

Signed

( FRANKLIN GOONTING ) CHAIRMAN

INDUSTRIAL COURT, MALAYSIA KUALA LUMPUR

k-Ud-13.8-12.00 3.30-save

32

Industrial Court Case Burhan Bin Lasa Malayan Banking Berhad

Documents

burhan bin lasa1

dismissal of burhan

order of court

industrial court malaysia

banking parlance

government of brunei

ministerial references

release of drawdown