by Arnoldt | Apr 11, 2020 | News and Info
How cryptocurrency Ponzi schemes work
At their cores, most cryptocurrency Ponzi schemes are just old-fashioned Ponzi schemes wrapped in the modern, high-tech veneer of cryptocurrency. While the cryptocurrency lingo can be confusing, the schemes themselves are relatively easy to understand. Generally, the fraudsters solicit investments in a cryptocurrency-related business, promise high returns in a short period of time and use the contributions of later investors to pay off earlier investors. At some point, the fraudsters stop making payments and abscond with their investors’ money.
In the BitClub Network case, the defendants offered investors shares in cryptocurrency mining pools. Cryptocurrency mining is the process of verifying previous cryptocurrency transactions in exchange for potential rewards of cryptocurrency. Through cryptocurrency mining, individuals can earn cryptocurrency without having to buy it. However, the cryptocurrency mining process is costly, time-consuming and rarely profitable. It is more likely to be successful when multiple people work together in groups called cryptocurrency mining pools.
From 2014 to 2019, the BitClub Network used online videos and presentations in multiple countries to recruit thousands of investors. The defendants promised high returns in a short period of time, as well as financial incentives for recruiting new investors. According to the defendants, investors would be paid a percentage of the profits from the Bitcoin mining pools operated by the BitClub Network. In reality, internal communications showed that the payment amounts were arbitrary and unrelated to the performance of the mines. To encourage investment in the BitClub Network, the payouts to early investors were very high and they decreased consistently thereafter. However, the defendants knew that the payouts were still too high for the enterprise to be sustainable on a long-term basis. Meanwhile, according to the DOJ, the defendants spent their investors’ money “lavishly.”
by Arnoldt | Nov 12, 2019 | latestnews, News and Info
There has been some confusion as to the charge of THEFT BY FALSE PRETENCE.
I personally accepted that the said offence forms part of what we collectively referred to as Commercial crimes, being fraud, forgery, uttering, theft by false pretences, theft and corruption.
During investigations whereby I could identify the named crime, SAPD will refuse to accept such allegation and would confirm that any case with an identified offence involving theft by false pretences must be referred to as fraud. Should the prosecutor decide to prosecute, it will be prosecuted as fraud, and should the prosecutor decide not to prosecute, a civil claim could be initiated.
Further, numerous investigators still refer to theft by false pretences as an easy alternative to fraud despite not being a competent verdict on a charge of either theft or fraud or vice versa. However, see S v Mia and Another 2009 (1) SACR 330 (SCA) where the SCA held that theft by false pretences is, in fact, a competent verdict on a charge of robbery.
Jonathan Burchell holds the following view in South African Criminal Law and Procedure, 4th ed, vol 1 at chapter 14, 237:
“In the case of theft it is contended that a taking is invito domino (without the owner’s consent) unless the consent is real and that consent is not real for the purpose of the criminal law if it is induced by fraud whether or not intention to pass ownership is nullified. Where X induces Y to hand to him R200 on the pretext that he will bank it for him and X makes off with the money, it is theft (even though it is also theft by false pretences and fraud) because, although Y consents to hand over the money, he does not consent to X stealing it.”
Fraud is defined by Snyman as follows:
“Fraud is the unlawful and intentional making of a misrepresentation which causes actual prejudice or which is potentially prejudicial to another.”
And further defines the offence of theft by false pretences as follows:
“A person commits theft by false pretences if she unlawfully and intentionally obtains movable, corporal property belonging to another with the consent of the person from whom she obtains it, such consent being given as a result of a misrepresentation by the person committing the crime, and appropriates it.”
Snyman describes the elements of the crime to be the following:
“(a) a misrepresentation (b) actual prejudice (c) a causal link between the misrepresentation and the prejudice (d) an appropriation of the property (e) unlawfulness and (f) intention.”
Kruger A, Hiemstra’s Criminal Procedure, issue 9, summarises the differences of opinion of our courts and authors pertaining to the crime of theft by means of false pretences as follows;
“There is a difference of opinion on whether a finding of “theft by means of false pretences” is competent on a charge of theft. The concept was correctly described by Van den Heever J in S v Mofoking 1939 OPD 117 as a deformed legal concept and by De Wet in Strafreg 4th ed at 416 as a monstrosity. The offence is nothing other than fraud. Hunt Criminal Law II at 754 calls this a “shadowy and ambiguous crime.” He says it is fraud, although not called such. The Free State High Court in S v Kudjiwane 1975 (3) SA 335 (0) unambiguously decided that on a charge of theft no finding of theft by false pretences is possible. One consideration in coming to that conclusion was that theft by false pretences is a more serious crime than theft simpliciter because false representations are added. The prosecutor should simply see to it that theft is charged according to the facts or that, if there was a misrepresentation, fraud is charged.”
“In the Transvaal Provincial Division, the origin of the view that such finding is possible is in R v Hyland 1924 TPD 336. The correctness of this view was doubted in several cases discussed in R v Levitan 1958 (1) SA 639 (T) where the Hyland principle was grudgingly accepted. In S v Stevenson 1976 (1) SA 636 (T) the designation of the offence was rejected obiter. The Natal High Court has not rejected the offence, as either an eo nomine offence or as a competent verdict (R v Teichert 1958 (3) SA 747 (N); S v Nkomo 1975 (3) SA 598 (N)). The view in the Natal Provincial Division is that the particulars of the false pretences must be given otherwise the accused would be prejudiced.
It is submitted that the offence eo nomine is unnecessary and that it is not a competent verdict on a charge of theft because section 264 does not authorise it, nor does section 270 because it is a wider offence than theft. The charge should simply be fraud.”
Snyman states that the “(C)riminal law would be none the poorer if this crime were discarded.” The author submitted that it would not be satisfactory to treat all cases of theft by false pretences simply as cases of fraud and that the best way of treating such cases would be to charge the accused with ordinary theft, but to include a specific allegation in the charge sheet to the effect that the accused obtained the property as a result of false pretences.
For this submission, the author relies on Levitan and Teichert supra as well as S v Knox 1963 (3) SA 431 (N) and S v Salemane 1967 (3) SA 691 (O). Snyman’s approach is supported by Du Toit et al, Commentary on the Criminal Procedure Act, service 56, vol 1 at 26-17.
The aforementioned views of Kruger, Snyman and Du Toit should not be viewed in isolation and it is necessary to consider the Free State judgments of Salemane and Kudjiwane. In Salemane the court accepted that theft by false pretences as a crime eo nomine existed but stated that theft simpliciter was sufficiently wide to include theft by false pretences and that accused persons could be successfully charged with theft even where the State relies on false pretences. Where evidence of false pretences is available, the prosecutor may choose in a judicious manner whether to charge in respect of theft or theft by false pretences. If the prosecutor decides to proceed with a charge of theft, the court must consider with a view to prejudice whether the accused is entitled to further particulars, even if he does not ask therefore.
In Kudjiwane the Free State High Court accepted the correctness of the reasoning and conclusions in Salemane at 336E-G, but concluded that insofar as theft by false pretences includes an element of falseness, it is a more serious crime than theft and therefore a conviction of theft by false pretences is not permissible on a charge of ordinary theft.
Supreme Court of Appeal in S v Mia and Another 2009 (1) SACR 330 (SCA).
In this judgment the SCA found that theft was a generic offence that encompasses theft by false pretences. The court found that although fraud was not a competent verdict on a charge of robbery, it was competent for a court to convict an accused on the competent verdict of theft where the charge is one of robbery.
Clearly it is competent for a court to convict on the competent verdict of theft where the charge is one of robbery. Theft is a generic offence that encompasses theft by false pretences. See Ex parte Minister of Justice: In re R v Gesa; R v De Jongh 1959 (1) SA 234 (A) at 239E – H where it was stated:
“If there was deception so fundamental that the will of the victim did not go with the act, there could be a taking and therefore larceny, called larceny by a trick. But if the deception was not so fundamental as wholly to nullify the voluntariness of the act, there was no room for larceny. Yet the deceiver’s conduct had to be punished and so the crime of obtaining goods by false pretences was devised.”
As was pointed out by RAMSBOTTOM J., in Dalrymple, Frank and Feinstein v. Friedman and Another, 1954 (4) S.A. 649 (W) at p. 664, it is not correct to say that our law’s treatment of both types of fraudulent acquisition of another’s goods – the larceny by a trick type and the obtaining by false pretences type – as theft by false pretences owes its origin to English practice. On the contrary in 1895 in R.v. Swart, 12 S.C. 421, De Villiers, C.J., stated that our law differs from the English law and has always treated facts covered by the English crime of obtaining by false pretences as theft. Ten years later in Rex v. Collins, 19 E.D.C. 163, Kotze, J.P., said that theft in our law has a much wider scope than the corresponding term in English law and that our crime of theft is wide enough to include the obtaining of goods by false pretences. The belief that our law of theft incorporated theft by false pretences under the influence of English law, a belief expressed, for instance, in Rex v.Mofoking, 1939 O.P.D. 117, may have been encouraged by the mistaken notion that there is in English law a crime of theft by false pretences (cf. Rex v. Hyland, 1924 T.P.D. 336 ).
It is true that the name of the English crime of obtaining by false pretences may well have suggested the use of the expression ‘theft by false pretences’ (cf. Transkeian Penal Code, secs. 191 to 193), but our law successfully resisted any tendency that there may have been to confine theft within the narrow limits of larceny.
Notwithstanding some of the old authorities it appears as if the Mia judgment is authority for the usefulness of the crime of theft by false pretences. More importantly, when on a charge of theft the evidence shows that the accused committed theft by false pretences, there is no reason why he/she should not be convicted of theft as charged.
In POLLEX The Archives, Retired Brig. Brig Dirk Lambrechts states the following; “According to Snyman, on p487 of his Criminal Law, third edition as published by Butterworths, the common law offence of fraud (Afrikaans: “gemenereg bedrog”) is defined as follows:
“Fraud is the unlawful and intentional making of a misrepresentation which causes actual prejudice or which is potentially prejudicial to another.”
And on p499 of the said Criminal Law appears the definition of the common law offence of theft by false pretences (Afrikaans: “diefstal deur valse voorwendsels”)*, namely –
“a person commits theft by false pretences if s/he unlawfully and intentionally obtains movable, corporeal property belonging to another with the consent of the person from whom s/he obtains it, such consent being given as a result of an intentional misrepresentation by the person committing the crime, and appropriates it”.
The misrepresentation (Afrikaans: “wanvoorstelling”) referred to in the definitions of common law fraud and in theft by false pretences supra*, may be made either by means of:
■ words;
■ conduct;
■ words and conduct;
■ writing;
■ omission (Afrikaans: “late”) or silence;
■ opinion;
■ puffing (Afrikaans: “ophemel/opjaag/reklame maak vir”); or
■ regarding a future event.
Bear also in mind that all cases of theft by false pretences* are in fact also fraud, although the converse is not so. The difference between the two is, inter alia, according to Snyman supra on p500 that fraud is completed the moment the misrepresentation has come to the notice of the representee.
For theft by false pretences to be completed, it is further required that the misrepresentation be followed by the handing over of movable corporeal property (Afrikaans: “roerende liggaamlike saak”) (like for instance a meal but not accommodation), whereas no such restriction as regards the object (Afrikaans: “voorwerp”) of the offence applies to fraud.
In case of doubt. Police officials must always remember that it is easier to explain why a police case docket had been closed, than to explain why a docket was not opened.
* In the light of remarks by Snyman supra on p499 and further, Burchell and Milton supra on p498, Hiemstra on p640 of his Suid-Afrikaanse Strafproses, fifth edition by Kriegler as published by Butterworths, as well as the authority quoted by the learned authors, it is doubtful whether the offence of theft by false pretences still exists in our law.”
Accordingly, it is suggested that such an offender be charged with theft by false pretences alternatively fraud or only with fraud, because, as was stated supra, all theft by false pretences is in fact fraud.
by user_admin | Jul 19, 2019 | News and Info
Original article by John Rotondi, Port Washington NY, 516 944 8880 and re-posted with his permission.
On August 28, 2017, the SEC issued “Investor Alert: Public Companies Making ICO-Related Claims” (https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_icorelatedclaims). Fraudsters behind public companies are claiming that those companies are associated with, or engaging in, an initial coin offering (ICO). These false claims are being made so as to manipulate the company’s stock in a “pump and dump” scheme. Fraudsters follow current news closely, and will use these events in their pitch. For example, a popular investment scheme in the 1960s was mining for gold in the sea. SEALAB, an experimental underwater habitat developed by the U.S. Navy, was popular at that time, and helped cement the scam. In recent years, companies purportedly involved with virtual currency, and legal marijuana, as well as Ebola and Zika cures, have lured investors. Now, ICOs are all the rage. The fundraising from these offerings have accelerated, like a gold rush, pulling in more than $1 billion in 2017, and a total of more than $2 billion since the first one by Mastercoin in mid-2013. Such coin offerings can be tracked at https://www.tokendata.io.
In an ICO, a start-up company uses blockchain technology, i.e., a decentralized and transparent way in which transactions are maintained on an electronic ledger, to create a new digital coin (a “token”) that it sells in exchange for, most often, cryptocurrencies, such as Bitcoin or Ethereum, or, less often, fiat money, like U.S. dollars. The money raised is used by the start-up to fund its project, while the tokens are designed to be used to purchase the project’s product or service. The tokens can also be traded in a secondary market. In some respects, ICOs are similar to initial public offerings. However, unlike IPOs, ICOs don’t typically register with a securities regulator before they are sold, so there’s no prospectus or offering document with comprehensive disclosures available to investors. Another difference is that IPOs trade on a regulated stock exchange; whereas, the tokens from an ICO trade on unregulated markets.
While some of these ICOs may be legitimate, others are not. Regulators appear particularly concerned about outright fraud, inadequate disclosure (ICOs typically issue meager “white papers” prior to an offering), money laundering, and security vulnerabilities, i.e., a lack of adequate cybersecurity controls. (With certain ICOs, investors have insisted that projects use multi-signature wallets to enhance security.) Many questions concerning their applicability to securities, and other laws, remain unanswered. To what extent are ICOs maintaining detailed transaction and Know Your Customer (KYC) records, in order to combat money laundering? To what extent do these transactions fall under state money transmission laws? Are the tokens securities? If not, are they commodities? Under what jurisdiction is it being sold? Are ICO sponsors trying to circumvent securities regulations through jurisdictional arbitrage? Are they incorporating offshore and prohibiting U.S. participation by blocking Internet Protocol (IP) addresses? Is this sufficient to preclude them from falling under U.S. securities law? Are U.S. residents skirting this control by utilizing international Virtual Private Network (VPN) connections, which will show they have foreign internet addresses, in order to buy the ICO? ICO sponsors who have created unique tokens have argued, unsurprisingly, that they’re not securities. They claim that the tokens are designed to be used for paying for the software they’re producing. However, these functions are not mutually exclusive; a token can be both a form of payment and a security.
While it appears ICOs have been in a regulatory grey zone, governments are starting to take note, issuing recent announcements indicating that certain token offerings may be securities, and, if so, need to be regulated as such. On August 1, 2017, the Monetary Authority of Singapore (MAS) published its regulatory position on the offer of digital tokens (http://www.mas.gov.sg/News-and-Publications/Media-Releases/2017/MAS-clarifies-regulatory-position-on-the-offer-of-digital-tokens-in-Singapore.aspx). On August 24, 2017 the Canadian Securities Administrators (CSA) released a Staff Notice on token offerings (http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20170824_cryptocurrency-offerings.htm). These were both preceded by the SEC’s “Investor Bulletin: Initial Coin Offerings” (https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings) and “Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934” (https://www.sec.gov/news/press-release/2017-131), released on July 25, 2017. The SEC concluded in its report that the sale of tokens in 2016 by The DAO (a “virtual” decentralized autonomous organization existing on a distributed ledger) violated U.S. federal securities laws. However, the SEC declined to take any action against The DAO. Instead, it used the case as an opportunity to publicize its views regarding these offerings, and their applicability to U.S. federal securities laws.
The Investor Bulletin does not state that all tokens sold in ICOs will be considered securities. Instead, the SEC takes the position that “facts and circumstances” will determine when tokens sold in an ICO are securities subject to U.S. federal securities laws. The SEC has stated that these ICOs “may provide fair and lawful investment opportunities.” It’s also possible that they may not. The SEC has taken the position that the tokens are “securities” under both the Securities Act of 1933 and the Securities Exchange Act of 1934, Both definitions include the term “investment contract,” which has been defined by the U.S. Supreme Court, in the 1946 case of SEC v. W.J. Howey Co., as an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the entrepreneurial efforts of others. Lower courts have determined that such items as bullion, chinchillas, citrus groves, condominium units, diamonds, minks, pay phones, real estate, and warehouse receipts are all securities when sold pursuant to all aspects of the “Howey Test.” If the tokens are securities, then Section 5 of the Securities Act of 1933 requires that their offer and sale be registered, unless there’s an exemption, such as a limited offering to accredited investors.
The tokens that are created in an ICO can be freely traded and, therefore, their prices can trade above or below the ICO price. As such, the SEC has determined that these secondary virtual currency trading platforms also require registration, just like a stock exchange would, unless there’s an exemption they can rely on. Currently, however, none of the major virtual currency exchanges, including Coinbase, Gemini, and Poloniex, are currently registered. Because these exchanges may not be registered securities exchanges or alternative trading systems regulated under the U.S. federal securities laws, investors purchasing and selling virtual currencies may not have the same protections that would apply in the case of stocks listed on an exchange.
The SEC has stated that ICO sponsors and other participants should consider whether their business model results in an entity that needs to be registered as an investment company under the Investment Company Act of 1940. Also, if anyone provided advice about an investment in the token, then they could be considered an investment advisor.
While a particular ICO’s application to federal securities law remains uncertain, when companies misrepresent public announcements
regarding ICOs in order to manipulate the price of the company’s stock, then it appears they are violating the law. As such, the SEC recently used its authority under Section 12(k) of the Securities Exchange Act of 1934 to suspend, for ten business days, the trading in certain issuers; namely, First Bitcoin Capital Corp. (BITCF), CIAO Group (CIAU), Strategic Global (STBV), and Sunshine Capital (SCNP). First Bitcoin was trading for a nickel at the beginning of the year, and then traded as high as $3.15 before being suspended for concerns about the accuracy and adequacy of its publicly available information, including the value of its assets and its capital structure. The SEC also said “arrivederci” to CIAO Group. It was trading at $0.02 at the beginning of the year and traded as high as $0.50 before being suspended for inaccurate and incomplete information about its purported business plans in the telecommunications industry, as well as plans for an ICO. Strategic Global was trading at less than a penny and rose to as high as $0.14 before it was suspended over questions about the accuracy of its press releases, including one about a planned ICO. Sunshine Capital also had inaccurate press releases about the liquidity and value of the company’s asset – a cryptocurrency known as DIBCOINS. Each of these issuers is now designated on OTCMarkets as being “Caveat Emptor” (“Buyer Beware”), and has been branded with a skull and crossbones, as have bottles of poison.
The SEC cautions investors about putting money in a stock that was the subject of a trading suspension, since its one warning sign of possible stock fraud. As to possible ICO-related fraud, the SEC asks investors to look out for public companies claiming that their ICO is “SEC-compliant” without further explanation and/or they purport to raise capital through an ICO or earn revenue through ICO-related business. Investors should be aware that investing in an ICO may limit their recovery in the event of fraud or token theft. Third-party wallet servicers, payment processors, and virtual currency trading venues that play important roles in the use of coin offerings may be located overseas and/or be operating illegally. Before investing in an ICO, investors should inquire about whether the virtual tokens are securities and whether those selling them registered the offering with the SEC. They should ask what the money raised will be used for and what rights the token provides to them. The ICO sponsor should have a clear and detailed business plan that’s available to investors. Also, investors should ask about the details of how and when they can get their money back. If the ICO sponsor acknowledges that the token is a security, then the investor should make sure that the investment professionals and firms making the offering, or advising them, are appropriately licensed and registered, respectively. Investors should ask whether the blockchain is open and public, whether the code has been published, and whether there has been an independent cybersecurity audit. Unfortunately, virtual currency exchanges and other entities holding tokens may be at risk of technical glitches, malware, or hacks. As such, the tokens may be stolen. Most importantly, investors should be skeptical, as it’s relatively easy for anyone to make an ICO offering, and its related project, look impressive, even though it’s really a fraud .
Regulators, and other law enforcement officials, could encounter challenges when investigating ICOs, including the inability to trace money. Traditional financial institutions, such as banks, aren’t involved with ICOs. Also, it may be time-consuming, or impossible, to obtain information from overseas. There’s no central repository detailing the users conducting these transactions, forcing regulators to rely on various other sources to obtain the information. Finally, it’s difficult for law enforcement to freeze investor funds when those funds are in virtual currencies. Virtual currency wallets are encrypted and unlike money held in a bank, virtual tokens may not be held by a third-party custodian.
by user_admin | Jul 19, 2019 | News and Info
The essence of constructive dismissal is that the relationship between the employee and employer has become so intolerable that the employee has no other option but to leave employment with the employer.
In terms of our law, an employee generally has to prove the following aspects to show that he was constructively dismissed:
- The employment circumstances were so intolerable that the employee could not continue to remain in employment.
- The intolerable circumstances were the reason for the employee’s resignation.
- There existed no other reasonable alternative for the employee but to resign in order to escape the intolerable circumstances.
- The intolerable circumstances were caused by the employer.
- The employer had some form of control over the intolerable circumstances.
The common thread in the above relates to the intolerable circumstances which the employer causes and which the employee finds himself being subjected to, leading to his resignation.
Our law provides for remedies for any person who has been unfairly dismissed – ranging from compensation to reinstatement with the employer. Reinstatement is seen as the primary remedy for unfair dismissal, but reinstatement is generally not perceived as a plausible remedy where the circumstances surrounding the dismissal are such that a continued employment relationship would be intolerable. Accordingly, given the intolerable nature of the relationship in a claim of constructive dismissal, one would not regard reinstatement as a plausible remedy in such a case and could argue that such a remedy would in general not be applicable to constructive dismissal cases.
In the decision of Western Cape Education Department v General Public Service Sectoral Bargaining Council and Others [2013] 8 BLLR 834 (LC) the court had to consider whether reinstatement was a possible remedy for an employee who claimed constructive dismissal.
In this case, the employee had worked for the Western Cape Education Department for 23 years. The employee in 2006 suffered a heart attack, which led to him being diagnosed with post-traumatic stress disorder and clinical depression. In 2007, the employee applied for ill-health retirement and temporary incapacity leave from the Department.
Between 2007 and 2009 the employee corresponded with the Department regarding his application. Due to a technical error on the Department’s side, he was informed that he would need to resubmit his application for temporary incapacity leave, which he did three months later. The Department regarded this submission as being late and informed the employee during 2009 that the period of leave that the employee had taken would retrospectively be regarded as unpaid leave. In addition he was informed that the Department would take action to recover money paid to him by making monthly deductions from his salary in order to recover amounts that had been paid to him in his absence. These deductions would effectively leave him with an income of R2 159 per month.
The employee submitted a formal grievance regarding the steps taken by the Department, but when the grievance process broke down he resigned and referred a constructive dismissal dispute to the Bargaining Council.
The arbitrator found that the employee had been constructively dismissed as the Department’s deductions which left the employee with virtually no income had created an intolerable circumstance which justified the employee’s resignation. In an unprecedented finding, the arbitrator also ordered the reinstatement of the employee.
The Department took the decision on review to the Labour Court arguing that the order of reinstatement was incompatible with the resignation of the employee. The Labour Court, however found that as the circumstances which resulted in the employee’s resignation, namely, excessive deductions, would no longer exist, reinstatement would be appropriate.
The Labour Court thus confirmed that where an employee’s intolerable circumstances are no longer intolerable after resignation, the employee can claim reinstatement as a remedy, thereby creating precedent for employees to claim reinstatement – as well as standing as a warning to employers that reinstatement could be possible in the case of constructive dismissal.
by user_admin | Jul 19, 2019 | News and Info
The need for greater and more stringent security measures in the business environment, has seen the introduction of sophisticated control and security systems. These systems increasingly make use of biometric information such as fingerprinting, blood typing, voice recognition, retinal scanning etc. as unique personal identifiers allowing access to/egress from physical locations, programmes, systems or networks. For an employer to implement such control measures, biometric information must be collected from employees, raising the question as to whether employees can be forced to provide biometric information, under which circumstances and for what purposes.
Biometric information refers to measurable personal physical characteristics that can be subjected to authentication techniques to automatically verify identity. To date, our law has not specifically dealt with whether biometric information can be collected or not. Our Constitution recognises the right to privacy of each individual and that this includes the right to be free from intrusions and interference in one’s personal life. Yet our courts have also recognised that this right is not absolute and that as a person moves into communal relations and activities involving business and social interactions, the scope of personal space and privacy shrinks accordingly.
The new Protection of Personal Information Act (POPI) provides us with more concrete direction as to how employers should approach biometric information. POPI in general determines that the collection of personal information of an employee is not allowed, unless the processing is carried out with the consent (implying that the employee must be aware of such collection and the reasons therefor) of the employee or is required by law. The term “personal information” is defined very widely in POPI and can include biometric information. The employee can withdraw his consent and object to the continued use of the biometric information as well as even request the deletion or destruction of the personal information. Additionally, the employer may only use the biometric information for the specific reason for which consent was provided and must further ensure, and even put measures in place to ensure, that no unauthorised access to the biometric information is obtained.
So how must an employer go about ensuring that its obtaining and use of biometric information is in compliance with POPI? The first important requirement is to obtain the consent of its employees. Provision for consent can be included in the employment contract or conditions of service of staff. Such consent should flow together with an explanation of the reasons for the obtaining and use of such biometric information as well as an explanation of the consequences for the employee should such consent not be provided. Additionally, provision should be made for employees to object to the use of and/or request the deletion of such biometric information, again with an explanation of the consequences of such actions. Such consequences, depending on the security needs of the employer, may include a range of consequences, from additional security measures that have to be employed to verify the identity of an employee not being allowed access to offices or systems and consequently being unable to provide his services effectively, which could lead to dismissal for a failure to perform. Where biometric access and security measures are inherent requirements to perform a job, it would also be important to prior to appointment inform potential candidates that such biometric information will be required as a condition of employment and that should such not be provided or consent for use be withdrawn, termination of the contract of employment may result as a direct consequence.
Employers should also when installing biometric systems, ensure that the systems are POPI compliant as to storage and access of the biometric information and that staff that have access to such biometric information are aware of the requirements of POPI as to the access and use of such biometric information.
POPI is not yet in effect, but this should not lull any employer into a false sense of security. If you are an employer using or wishing to use biometric technologies, it is recommended that you review your employment contracts and policies and align these with the requirements of POPI.
by user_admin | Jul 19, 2019 | News and Info
“I was recently fired as a manager of a retail company. The company held me responsible for stock theft that happened under my watch, claiming that I was negligent in my duties. I was asked to leave without any warnings or a disciplinary hearing. Surely, I should at least have had a chance to give my side of the story.”
You are correct. In terms of our labour legislation, an employer cannot just dismiss you without a fair disciplinary hearing. Generally, employees can be dismissed for one of three reasons, namely misconduct, incapacity and operational requirements. In your case, the dismissal is for alleged misconduct.
Once misconduct is identified, the employer should conduct an investigation into the allegations against the employee and once it has been established that there is a case for the employee to answer to, the employee must be informed of the allegations against him/her and invited to present his/her side of the story in response to the allegations. This provides both parties an opportunity to state their respective cases. The employee should also be informed of his/her rights at the hearing which include, among others, the right to be represented by a co-worker or shop steward and the right to call witnesses in his/her defence.
At the disciplinary hearing, an independent chairperson must be appointed by the employer with the role to direct the hearing process to ensure that both parties have an opportunity to present their case, and after having heard all the evidence, make a finding on whether the employer has proven that the employee is guilty of the alleged misconduct as well as the disciplinary sanction to be applied.
If this process has not been followed, and provided there are no exceptional circumstances to justify dispensing with a hearing, you have the right to challenge the dismissal for procedural unfairness and that you were deprived of an opportunity to defend yourself in response to the reasons for your dismissal. The bottom line is that our labour law requires every dismissal to be procedurally and substantively fair and you must therefore have an opportunity to respond to the allegations against you and the allegations must be proven by the employer.
If this was not the case, you may challenge your dismissal at the CCMA or the Bargaining Council under whose jurisdiction your employer may fall within 30 days from the date of your dismissal failing which you can ask the CCMA/Bargaining Council to pardon your late referral. It may also be prudent to obtain the assistance of a labour specialist to assist you with the referral, should you decide to continue to challenge your dismissal.
