Court Upholds Dismissal of Consolidated Bank Employee Over Alleged Conflict of Interest

The Court of Appeal in Nyeri has overturned a High Court decision that had awarded Ksh 2 million in compensation to a former Consolidated Bank employee, affirming the lawfulness of her dismissal in a case involving personal financial dealings with a client.

Lydia Kaguri, who served as a customer service officer at the bank’s Maua branch, was terminated in 2017 following an internal disciplinary process. The bank cited a conflict of interest, alleging that she had loaned Ksh 300,000 to a client and received interest in return — conduct the bank said contravened internal policies and amounted to engaging in a business that potentially conflicted with her official duties.

Additionally, the bank accused Kaguri of withdrawing Ksh 20,000 from the customer’s account without proper authorization and cited failures in her role as custodian of the branch vault, which it linked to a reported loss of Ksh 641,500.

A three-judge bench—comprising Justices Sankale Ole Kantai, Jessie Lesiit, and Abida Aroni—found that Consolidated Bank had followed due process in the disciplinary proceedings. The court ruled that Kaguri’s explanations were not satisfactory and upheld the bank’s decision to dismiss her.

The appeal, led by the bank’s counsel Charles Mwongela, successfully argued that the termination was both lawful and justified. The court dismissed Kaguri’s claims of unfair dismissal, loss of earnings, and breach of contract. She had sought reinstatement, Ksh 1.8 million in compensation, Ksh 36.8 million in alleged salary shortfall, and Ksh 230,000 in half salary arrears.

In her defense, Kaguri denied operating a lending business and claimed the funds were extended as personal assistance to a family friend, who later lodged a complaint against her.

Despite this, the appellate court concluded that her actions were inconsistent with her employment obligations and upheld the dismissal.

Case Link:
https://new.kenyalaw.org/akn/ke/judgment/keca/2025/356/eng@2025-02-28