Dear Friend
From your statement, it is understood that 3 employees were said to be involved in fraud which could not be attributable to any particular person among these three. Further, you are telling that one of the above three is already left your company. How did he leave ? Did he tender resignation for his post after issuing show cause notice? If so, why management accepted his resignation when the sow cause notice was pending? or else whether he has gone on unauthorized absence from duty on receipt of your of show cause notice?
If person who left your company is absents from duty, we have to doubt his integrity and accordingly we need to take disciplinary action against him on the grounds of not only fraud / financial loss to company but also on unauthorized absence from duty. But, you are telling that you gave notices to all 3 three employees and out of that 1 left. The remaining two are saying that they are innocent and and 3rd person who left the service is guilty.
To get the facts of the case, you need to issue charge sheet by framing relevant charge to all 3 including the person who stays away from duty and on receipt of explanation from these three, you need to conduct an inquiry if necessary to establish the charge. The inquiry officer can decides who is guilty of misconduct and accordingly you can award punishment to the person or persons who are said to be responsible for committing fraud.
Without following procedure, you can not establish the charge against any of above 3 employees. Further, you are telling that management does not want to loose the services of other two employees as there was a shortage of manpower. It indicates that your management is having dual stand with regard to employee who are alleged to have been committed financial irregularities. If the manpower is short, then they can take lenient view on any employee who commits misconduct and doing fraud in connection with company business. Is not leads to further indiscipline among other employees in your organisation. If the management stand is like this why they have issued show cause notices to 3 employees who are under reference?
I strongly suggest that person who is said be committed financial irregularity should not be kept in the services of company any longer which may prove detrimental to the interest of company on long run. This my advice and let us have expert opinion from our learned members
Regards