How Should HR Handle a Veteran Employee Accused of Submitting Inflated Bills?

Dear All,

Recently, it has been brought to the notice of the management that a certain person (Purchase) is submitting inflated bills. This employee has access to various confidential data and is a veteran in the organization. HR has been asked to deal with this. I need your help in understanding what is the right process and if you could give me some formats of:

1. Show cause notice
2. Domestic enquiry
3. Warning Letter, etc., pertaining to the above.

Can we withhold the salary of the employee until such time the investigation is ongoing if we provide him with the same in writing? How can we recover the costs?

Looking for urgent help from the fraternity.

Thanks

What is the proof held within the organization regarding the submission of inflated bills? If there is evidence, then first conduct an inquiry and obtain conclusive proof. All other procedures such as show cause notices, punishment, etc., come well after guilt is proven. Natural justice is vital in the proceedings. Please go step by step, considering that he is your employee, a veteran, etc., and remember that suspicion cannot be a substitute for proof.

Dear Nikki77,

Our learned member, Mr. Nathrao, has correctly advised you to first investigate the fraud and then conduct a second inquiry, which will be a domestic inquiry to investigate the misconduct of the fraudster. The first inquiry should be conducted to investigate and find out not just the failure of the persons but also the system's failure. The second one is based on the first and is obviously directed towards the persons involved.

You have written: "[Recently it has been brought to the notice of the management that a certain person (Purchase) is submitting inflated bills. This employee has access to various confidential data and is a veteran in the organization.]"

You have given two sentences, but both are unconnected. When you say "bill," do you mean invoices submitted by the vendors? In that case, were vendors in cahoots with the Purchase professional? If yes, how did you discover it, and why was it not discovered in the purchase audit? How long was this going on? Also, investigate whether the person has inflicted losses on the company and whether he had any personal pecuniary gain.

Since I conduct training for procurement professionals, I know they are often viewed suspiciously. Therefore, you need to investigate whether there was an inadvertent error but to gain "brownie points," some smart official has labeled it as fraud?

Secondly, how access to confidential data is connected with the padding of the bills is not understood.

Well, friend, since you have brought someone's integrity under scrutiny, I recommend proceeding cautiously. What you do should be consistent with the principles of natural justice, and any shortcuts could prove costly.

Thanks,
Dinesh Divekar

Adding to the comments given by Mr. Divekar above, on a precautionary note, let's assume the employee is guilty. However, it is not proven until a domestic inquiry is conducted. On administrative grounds, I recommend you issue an immediate show cause notice. If you are satisfied with the reply, then the matter will be closed. However, if a satisfactory reply is not provided, then suspend the employee indefinitely and file a charge sheet against him, followed by a domestic inquiry.

Ensure that you pay the subsistence allowance to the employee during the suspension period. Fifty percent of the Basic + DA is to be paid as a subsistence allowance for the first 90 days of suspension. After 90 days, it will increase to 75%, and after 180 days, it will be 100%. EPF will not be deducted; however, ESI/TDS will be deducted.

Suspicion, gossip, and innuendo cannot be the basis of show cause notices.

First question

What is the source of information about the padding of bills, etc.? Are purchases solely done by one single person? An in-house discreet check on the particular transaction can bring out facts. Presently, as per what is written, the nature of the information is not specified, and I wonder what type of show cause notice can be given?

Show Cause Notice

A Show Cause Notice is a notice sent to any person by any authority, i.e., government, employer, government employees, passport authority, etc., to any other person in order to reply back with a reasonable cause as to why a particular action shouldn’t be taken against them regarding the defaulting act done by them. Now, what act of omission has been determined to have been made out against the senior official?

My advice would be to go step by step—investigate and then take action as per law.

Dear colleague,

At this juncture, it appears there are some pointers towards fraudulent acts on the part of the purchasing personnel, raising suspicion. A thorough investigation must be conducted to completely confirm the existence of prima facie documentary and oral evidence that can establish guilt. This evidence will be crucial for a full-fledged inquiry that will be required at a later stage.

If the prima facie investigation shows that the employee has engaged in serious misconduct, they should be promptly suspended pending the issuance of a show-cause notice or a chargesheet. Subsequently, the show-cause notice should be issued, the response awaited, and then proceed to issue the chargesheet and initiate further actions, including conducting a domestic enquiry.

Regards,
Vinayak Nagarkar
HR Consultant

Dear Nikkie, I would suggest first of all holding a fact-finding inquiry as it appears you are not clear about the extent of fraud and dishonesty by the employee. The inquiry can be conducted by any senior person familiar with the purchase and finance functions. Let them also take hold of the records related to the matter and identify the witnesses so that when the domestic inquiry is held, you have all the necessary material to support the charges. Once you have obtained the requisite details, proceed with disciplinary action.

Alternatively, after collecting the details of the fraudulent actions, you can confront the employee and ask for their resignation, especially if you are in the private sector.

In such cases, a preliminary inquiry is a must to establish any wrong bills or inflated bills produced. If sufficient proof is available, then proceed with further steps of disciplinary action. If the individual is very senior, conducting the preliminary inquiry itself may cause mental distress.

Thank you all. We conducted a domestic enquiry, and the employee agreed to the charges. The necessary actions are being taken.

Notwithstanding the employee has pleaded guilty, take all evidence on record which by itself should prove that charges are true.

Employee may land up in court and allege pressure, etc., for pleading guilty. Take actions as required after compiling all evidence and acceptance of guilt.