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Accountant excluded after leeching off firm's tax helpline

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An ICAEW member has been excluded from the institute after using another firm’s name and policy number to call a tax advice helpline for more than a year after her contract was terminated.

20th Dec 2021
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Katherine Hardy, the sole director of audit registered firm Lightwater Accountants, was found by an ICAEW disciplinary tribunal to have called another firm’s tax helpline to get help for her clients after her contract with that firm was terminated. 

As reported in December’s ICAEW disciplinary report, Hardy was thrown out of the ICAEW and ordered to pay £15,105 costs after a disciplinary tribunal said she “demonstrated little in the way of acceptance that her wrongdoing involved deceit on numerous occasions and was serious”. 

The case

The tribunal heard how Hardy made telephone calls to ‘DE’ Limited’s tax helpline by dishonestly using the Surrey-based accountancy firm’s name and policy number where she did audit work for their clients and preparation of financial statements until April 2017. 

The annual subscription helpline was there for clients of the Surrey firm to receive tax investigation insurance and also tax advice for the firm’s staff. Only current working employees and subcontractors are allowed to call the service and they are restricted to ask advice for only the client work relating to the firm.

But Hardy broke these rules by continuing to use the helpline after her contract with the firm was terminated in April 2017. 

Hardy was rumbled in May 2018 after a worker on the tax helpline received a call from someone quoting the Surrey-based firm’s policy number but after the call was disconnected, the helpline worker tried returning the call and no one at that firm’s team had used the service that day. 

Furthermore, the mobile number used to call the service belonged to Hardy. Furthermore, between 21 April 2017 and 25 April 2018, the team at the firm had only made eight of the 28 calls to the service. 

Hardy denied the complaint

Hardy conceded that she made the calls to the helpline but insisted in her statement to the ICAEW that she did so to help clients of the Surrey-based firm who had turned to her for help and even claimed in one case that she called to get evidence for an ACCA complaint.  

She also admitted that she used the helpline to help prospective clients seeking free advice. 

Hardy recognised that she acted “without integrity” and that she should have told prospective clients seeking free advice that she couldn’t help them and they should find someone who knew the answers.

In another twist to the story, Hardy told the tribunal that she had been fired and was “basically thrown out on her ear” and was “basically cut off” from speaking with clients she had gained for the firm.  

Hardy took the termination of her contract hard and it led to her struggling to get her practice up and running and even said that the helpline was a “friendly voice to talk to and to bounce ideas off” but soon realised that she would be far better off telephoning an HMRC inspector.

She then turned attention to the ICAEW and argued that she “had received no help from the Institute, despite being a member for 30 years”. Hardy also told the ICAEW tribunal that she “had done her best for her previous clients who had come to her for help and her conscience was clean”.

Sentencing

In reaching a decision on Hardy’s sentencing, the tribunal acknowledged that the termination of her contract had put her in a difficult situation and that she had not made any financial gain from accessing the paid for service.

But the tribunal returned to the fact that this was not a momentary mistake. In fact, the tribunal said it was repeated and continued over a long period of time - and would have continued had she not got caught out when the call was disconnected. 

“Whilst she had had the opportunity before the Tribunal to make a forthright apology and show remorse for her actions she had failed to do so, instead choosing to maintain that she was the victim,” the ICAEW tribunal said in the case notes. 

The tribunal concluded that exclusion from the Institute was a starting point for the scale of dishonesty shown by Hardy and ordered that she also pick up the investigation committee’s costs of £15,105. But it opted against imposing a fine. 

Chris Cope, a consultant with Blake Morgan, said:

This case went through three tribunals before reaching finality. Originally, when appearing before the first Disciplinary Committee (DC), Hardy admitted the facts, but denied that she was guilty of dishonesty or lack of integrity.

The complaints were found not proved. Very unusually, the Investigation Committee appealed.

The Appeal Committee decided that the DC had been wrong to acquit. It found that the DC had failed properly to apply the test for dishonesty as decided by the Supreme Court in Ivey v Genting Casinos( 2017) UKSC 67.

It found that on a correct application of the objective test in Ivey, any ordinary person would have unhesitatingly said that the conduct was dishonest. It determined that the DC should have found that the complaint of dishonesty had been proved and remitted the case to the DC for sanction.

It was at that hearing that Hardy conceded that she had lacked integrity. However, she still did not accept that she had been dishonest. There was no further appeal.

Chris Cope is a consultant with Blake Morgan and a member of the Accountancy Regulatory Department. The team is available to assist with any disciplinary, regulatory and compliance matters arising in the accountancy profession - click here if you require any of their services.

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By Justin Bryant
20th Dec 2021 16:02

I liked this bit "...but soon realised that she would be far better off telephoning an HMRC inspector."

Not a great advert for DE Ltd's tax advice services! (Although I guess she just said that to downplay the benefit of her dishonest conduct and so it's not a genuine complaint or compliment to HMRC for that matter.)

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Replying to Justin Bryant:
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By towat
22nd Dec 2021 11:21

Good luck getting through to an HMRC Inspector, is this 1985?

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Replying to Justin Bryant:
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By gillybean04
22nd Dec 2021 14:02

Oh I don't know, it's all about how you spin it.

She did, after all, rely on the service 2.5 times more than the entire team at the firm did.

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By ireallyshouldknowthisbut
20th Dec 2021 16:56

I have met someone like that. Everything is someone one else's fault.
I like the "help clients of the Surrey-based firm who had turned to her for help"
Its quite interesting to unpack that. You get fired, and client from your old firm rings you up and you
(a) tell them you no longer work for them, and terminate the call
(b) pretend you still work there and answer the call????!!!!!?????

And then after a long period in which you have had to reflect on this..........pretend this perfectly normal in a tribunal????
The mind boggles.

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Replying to ireallyshouldknowthisbut:
Red Leader
By Red Leader
20th Dec 2021 17:13

It's the professional person's version of "yes but no but".

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
20th Dec 2021 17:16

As she chose option (b), she presumably didn't bill client for her time but notified her ex-employer that they could raise a bill ... which is why she had such a clean conscience?

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Replying to ireallyshouldknowthisbut:
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By gillybean04
20th Dec 2021 19:06

You've met just one person like that? Are you sure you're an accountant? ;)

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Danny Kent
By Viciuno
20th Dec 2021 21:32

Wait, what on earth is the ICAEW playing at? Excluded? Is that a joke?

Just a few weeks ago we were reading about a partner in a big 4 firm acting in an “obscene” and “aggressive” manor, who said to a trainee “I’m going to f*ck you”.

He got a severe "reprimand" and the amounts fined were pocket change to a partner at EY. Where is the consistency in these rulings? Do the panel just make it up as the go along?

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Replying to Viciuno:
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By Paul Crowley
20th Dec 2021 22:42

I agree, this excessive solely because of no contrition
First disciplinary accepted not a big deal, complaints found unproved.

"This case went through three tribunals before reaching finality. Originally, when appearing before the first Disciplinary Committee (DC), Hardy admitted the facts, but denied that she was guilty of dishonesty or lack of integrity.

The complaints were found not proved. Very unusually, the Investigation Committee appealed."

The inconsistency is disturbing
No profit in this for the former member
Yet trainees and members claiming fictional expenses are not always excluded.

There does seem to be a big firn/small firm divide
I would genuinely have no idea whether a former employee had used our similar free helpline
Even if they had I would not look to ruin their life.
All they would get is advice that I would give them for free if they asked me

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Replying to Viciuno:
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By wilcoskip
20th Dec 2021 22:39

I don’t think you’ve quite grasped how this works. Look, there’s a very clear chain of command.
ICAEW have authority over the small firms, lord it over the small practitioners, and cream in a fair amount of money for very little in return. It’s a nice racket.
And the large firms have authority over the ICAEW and tell them what they can and can’t do.
Once you grasp this, it all makes a sad, depressing kind of sense.

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Replying to wilcoskip:
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By Paul Crowley
20th Dec 2021 22:46

The big firms do appear to run the ICAEW
I wonder why in this case the investigation committee decided to challenge the ruling
She admitted the facts right from day one at first disciplinary.

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Replying to Viciuno:
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By towat
22nd Dec 2021 11:25

I think her big mistake was criticising the ICAEW.

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Replying to towat:
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By Paul Crowley
22nd Dec 2021 16:29

Agree
ICAEW cannot be fair to members who are critics
But ICAEW suck up to to the big firms. Consider the top end untouchable but will exclude their trainees for claiming reasonable expenses
£10 if staying with friend is for exclusion
£100 hotel is all OK

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By Calculatorboy
20th Dec 2021 23:31

Absolutely a joke...no loss to any of the public and obviously a lot more between the defendant and her previous employer than is reported

The message is ....you just have to flagulate yourself in front of the icaew ..and repent as a retched sinner ..

As we see the paid whipping boys aka investigation committee calls the shots

Thankfully i will soon deprive them of much needed revenue

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Replying to Calculatorboy:
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By Justin Bryant
21st Dec 2021 12:00

I'm not sure that's the correct use of the expression "whipping boy".

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By Brend201
22nd Dec 2021 11:05

As an aside, the mistaken use of metaphors is rampant nowadays. I think it is because people read less serious writing such as newspapers, books etc.

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By ireallyshouldknowthisbut
21st Dec 2021 12:14

Eyebrows raised to note respondents on here bashing the ICAEW on this.

This is quite appalling and unprofessional behaviour over an extended period of time.

An ex-employee talks to your clients. That alone is a heavy disciplinary on its own, and I imagine a breach of employment contract and any sensible termination agreement. The only rational reason to do this would be to try and poach the clients, which again would be against the ICAEW rules. The ex employee admits this in her evidence.

Coupled to which I note the ex-employee moans that they are "cut off" from the businesses own clients! I mean, what do they expect, the employer to gift a block of fees as a leaving gift? Unbelievable lack of understanding here about basic ethics.

An ex-employee deliberately lies to a third party and pretends they are still working for you in order to access a helpline. TWENTY TIMES. That is not only dishonesty, its fraud. TWENTY TIMES. This is not a one off mistake or error of judgement, its a routine.

And worst of all, rather than facing up to the facts, the ex-employee thinks they are somehow the victim.

This is not OK behaviour for anyone, let alone a Chartered Accountant.

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Replying to ireallyshouldknowthisbut:
Danny Kent
By Viciuno
21st Dec 2021 17:43

ireallyshouldknowthisbut wrote:

Eyebrows raised to note respondents on here bashing the ICAEW on this.

To clarify, I'm not condoning the behaviour of the defendant.

I'm shocked that ICAEW think this behaviour is worse than intimidating your employees and making multiple lewd comments to them (on multiple occasions if I remember correctly).

We should call a spade a spade. The EY partner got a slap on the wrist. This woman has lost her livelihood.

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Replying to ireallyshouldknowthisbut:
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By graydjames
22nd Dec 2021 11:24

I don't see anyone writing that this was "OK behaviour". It is a very weak argument you have if you portray those querying the punishment as condoning the wrong doing.

The question is, did this punishment fit the "crime" and does it compare logically and morally with other punishments that we have seen? The answer to that, in my opinion is a clear NO! I agree fully with the dissenters who see this as excessive punishment and, as a long-standing, practising Chartered Accountant, I won't kowtow to your holier than thou attitude simply because of any fear that you might assume that I would willingly, freely and without compunction carry out a similar transgression. Of course, I would never even have thought of such a thing, but I still think this was unfairly harsh.

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Replying to graydjames:
By ireallyshouldknowthisbut
22nd Dec 2021 12:01

I cant see how a dishonest accountant can be a competent accountant technically, especially if the dishonesty is not recognised.

You can however be competent accountant technically, but a repulsive individual.

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By Roland195
21st Dec 2021 12:40

Wait until they find out she's still been using her Ex's Netflix password...

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By TASG
22nd Dec 2021 10:36

It's absolutely not against ICAEW rules to "poach" clients, and any unduly restrictive covenants in termination agreements, especially agreements which do not put clients' interests and right to chose their own representation first, are potentially unlawful as a restraint of trade and against public policy.

It is on a moral level wrong to entrench middle aged partner's wealth by using their privileged access to the law and the ICAEW to stomp down on younger employees who leave to set up on their own and offer clients a responsive service at an attractive price (not claiming that this lady was offering either - I simply don't know - I'm commenting on the general principle).

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Replying to TASG:
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By Rammstein1
22nd Dec 2021 13:44

Are you saying it is morally correct to train up a youngster, pay for them to obtain their qualifications and they are then entitled to walk out with your client list? Why would anyone want to employ youngsters?

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Replying to Rammstein1:
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By Self-Employed and Happy
22nd Dec 2021 18:00

Rammstein1 wrote:

Are you saying it is morally correct to train up a youngster, pay for them to obtain their qualifications and they are then entitled to walk out with your client list? Why would anyone want to employ youngsters?

If they are able to do that then maybe the employers didn't have a good enough relationship with the client in the first place.

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Replying to Self-Employed and Happy:
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By Rammstein1
23rd Dec 2021 08:24

But that isn't answering the question is it?

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Replying to Rammstein1:
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By TASG
10th Feb 2022 09:59

Of course. Perpetual indentured servitude is not something that is in the interests of the public. If your clients leave you in droves for your junior staff, do better, or get ahead of the game and sell up.

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By Arcadia
22nd Dec 2021 10:59

The difference is that the EY partner would have had expensive representation who would have advised contrition, co-operation etc. His punishment will also include the sanctions that EY will have placed on him, which we will never know about, and the shame he feels re colleagues/family etc. This lady appears to be unrepresented, and reading between the lines has shown so little remorse and rubbed the committee up the wrong way so badly they decided to teach her a lesson.

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By dstickl
22nd Dec 2021 11:06

I note that the editor of AccountingWEB has reported that:
QUOTE
Furthermore, the mobile number used to call the service belonged to Hardy.
ENDQUOTE
Perhaps the caller could have used the mobile's facility to switch OFF "Show My Caller ID" ?
Here's how to do that on some Apple iPhones:
Settings > Phone > Show My Caller ID > [move switch virtual button to the LEFT].

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Replying to dstickl:
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By dstickl
22nd Dec 2021 11:45

Furthermore the UKSC’s webpage
https://www.supremecourt.uk/cases/uksc-2016-0213.html
where their press release on webpage
https://www.supremecourt.uk/cases/docs/uksc-2016-0213-press-summary.pdf
first paragraph, last sentence, quite clearly states, in part:
The appeal raises questions about the meaning of the concept of cheating at gambling and the relevance of dishonesty to that concept.
So UKSC 67 (2017) looked at … the relevance of dishonesty to that concept … of cheating at gambling.
Turning now to their “Press summary’s” pre-penultimate paragraph, which allegedly overturns the long established ruling in R v Ghosh [1982] EWCA Crim 2, some say that the UKSC appears to moan unduly with their: However, the second leg of the rule adopted in Ghosh has serious problems. The principal objection is that the less a defendant’s standards conform to society’s expectations, the less likely they are to be held criminally responsible for their behaviour. The law should not excuse those who make a mistake about contemporary standards of honesty, a purpose of the criminal law is to set acceptable standards of behaviour. [54, 57-59]
And so, in their penultimate paragraph: The fact-finding tribunal must ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts and then determine whether his conduct was honest or dishonest by the (objective) standards of ordinary decent people.
All of which seems, so some say, to be nonsense in a multi-cultural society, because to QUOTE determine whether his conduct was honest or dishonest by the (objective) standards of ordinary decent people ENDQUOTE nowadays seems to vary with the diversity of the traditions of the ordinary decent people of the various so-called “communities” , for example as applied to those several "Christmas Parties" complained of in the media, etc.

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By Mr J Andrews
22nd Dec 2021 11:13

So - we've had a Disciplinary Committee , an Investigation Committee and an Appeal Committee to eventually dish out what was rightfully deserved.
How about another Committee to investigate the original Committee members who found''.......Complaints Not Found To Be Proved.........'' Or at least send them off for a free check up at Specsavers.

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Replying to Mr J Andrews:
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By dstickl
22nd Dec 2021 11:46

No.
Specsavers is too full, in this dreadful time of COVID, thank you.

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Replying to Mr J Andrews:
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By dstickl
22nd Dec 2021 11:47

.

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Replying to Mr J Andrews:
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By Paul Crowley
22nd Dec 2021 16:51

ICAEW excuded this person. This person used someone else's free help line
I have the same. People selling the cover with free helpline encourage use by all and sundry to demonstrate the product value
PM me and I will let you use mine. No cost to me

ICAEW did not exlude a person who stole money from the employer (BIG SUMS)
through false expenditure claims. Why? because the person was sorry and got Dad to pay it back, but only once that person had been caught

The "legal decisions" of ICAEW are just so inconsistent that I would not dare to pick up rubbish in the street to put it in the bin in case ICAEW decided that I had stolen by finding

Seriously look at the last five years of decisions and try to find consistent treatment

In the same report a trivial penaties for failure to hold PII and tading without a practice certificate

Man in street would consider the latter two much more serious than using a freebie helpline

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Jennifer Adams
By Jennifer Adams
22nd Dec 2021 16:17

Actually I found this quite sad.
As many readers know - it's very very hard to pass ICAEW exams - years of studying and exams and she's thrown it all away.
And after 30 years of membership as well.

It doesnt cost much to pay to belong to ICPA for example who give a free helpline. (no.. I'm not a member but you get what I mean).

What a waste- after all that time working in the profession - she should have known better.
I dont understand why. As others have said.. I feel there is a bit more here.

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By Paul Crowley
22nd Dec 2021 17:07

The Article is without doubt looking for discussion, picking the example of the most weak reason ever for an exclusion as the item for comment
ALL the other exclusions in the same ICAEW report seem to be reasonable
But a lot of lower penalties for people who were represented and really really sorry sir despite making money or saving money from their actions.
PII expiry means emails from just so many sellers
How could anyone trading and auditing claim to forget?

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By Roland195
23rd Dec 2021 10:58

From the limited information available, this case reads very much as the casus belli for Mr F of Firm A to strike the final blow in a long running dispute, that the ICAEW took up cudgels on his behalf quite readily (and effectively in seems).

If this was justified I can't say, but the defendant seems to have a knack of rubbing people up the wrong way that is evident in even the Tribunal notes - why she felt the need to criticise the advice lets say cheekily obtained and how she felt this would help her case is beyond me.

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Replying to Roland195:
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By Paul Crowley
23rd Dec 2021 17:09

I am confident that I would not get along with any of the parties involved
But at least 2 out of 3 were determined to exclude the other party for what most ordinary outsiders would consider a comparatively small matter compared with the other exclusion cases

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Replying to Roland195:
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By bobsto12
25th Dec 2021 10:37

I'm not sure mounting a robust defence is rubbing people up the wrong way. Did she simply misunderstand the process, ie perhaps it's like a show trial and you have to admit guilt and hope those with power over you are merciful.

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By bobsto12
25th Dec 2021 10:36

Is it just me or is this incredibly harsh for the scale of wrong doing. If you got fired might you not be tempted to get a little even by using the service. If you use lack of contrition as an excuse to impose severe penalties you are stopping people defending themselves. If she felt it was trivial and not a disciplinary matter she was entitled to say so.

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