BEE

CityPress - - Business -

The cost of fronting al­le­ga­tions against a com­pany or its share­hold­ers can be in­sur­mount­able in terms of fi­nan­cial and rep­u­ta­tional cost, re­gard­less of the va­lid­ity of the al­le­ga­tion. The con­se­quences of an un­founded fronting al­le­ga­tion, whether vex­a­tious or un­in­ten­tional, can be equally se­ri­ous for the ac­cuser and ac­cused. Re­la­tion­ships stand to be ir­repara­bly eroded. In the event that the par­ties are still re­quired to en­gage on a reg­u­lar ba­sis, the de­te­ri­o­rated re­la­tion­ship can make ongoing in­ter­ac­tions dif­fi­cult and stress­ful. It will al­ways take time to ap­pro­pri­ately ad­dress any al­le­ga­tions and fol­low the nec­es­sary steps to re­solve the is­sues. Even the threat of fronting can lead to loss of busi­ness as cus­tomers ter­mi­nate con­tracts and dis­tance them­selves from the com­pany. Tak­ing the nec­es­sary steps to re­solve the al­le­ga­tions may also re­sult in costs be­ing in­curred by both par­ties, caus­ing fi­nan­cial strain. In the event that the un­founded al­le­ga­tion re­sults in the fi­nan­cial fail­ure of the com­pany and its po­ten­tial clo­sure, the ac­cusers may also face job losses.

STEPS FOR CLEAR COM­MU­NI­CA­TION:

Have a struc­tured in­for­ma­tion ses­sion with all par­ties to ex­plain their rights and obli­ga­tions;

Avoid gen­er­alised and vague word­ing in com­mu­ni­ca­tion; and Make rel­e­vant doc­u­ments eas­ily avail­able to em­ploy­ees in re­spect of their rights and any fund­ing ar­range­ments at­tached to the trans­ac­tion. Von Steiger is a se­nior as­so­ci­ate with Nor­ton Rose Ful­bright

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