Dylex Clothiers

Retail
Wrongful Dismissal

Who’s at fault for declining profit?

With shareholder pressure to increase profits in the sportswear division, a Toronto retail company lured a key individual away from a competitor by offering a lucrative three-year guaranteed deal (void if fraud occurs) of $250,000 per year. To shorten the story, the profits never came, so this new management hire blamed and fired his number two — who then sued the company for wrongful dismissal.

The problem here was simple: whom should the president believe, the former employee or the new hire?

Retained by Counsel for the owners, I started by meeting with the new hire to understand the circumstances which led to the dismissal and to acquire the supporting documentation. Unfortunately, the new hire was too busy to spend the necessary time with me.

Here again is another example of what forensic accountants call ‘not in the normal course’ business.

The opposite happened when I interviewed the dismissed employee at his home. The explanations made sense, supported by the documents. Settlement followed.

Lesson Learned: Seeking the truth in live cases is usually played on someone else’s turf. Understanding the human element, particularly the mix of sensitivity and firmness when a person begins to feel boxed in by the truth is part of the knowledge of fraud.