Answer:
a) The key issues are the sue for libel and the evidence.
b) I would make a deal with her and implement a security program in the company.
Explanation:
The main issue in this case is that Pam Jones sued the company for libel, and the company remains in a position in which it has to prove that the internal investigation followed the right steps and indeed, the proves reflected that she was guilty and the fact that she got fired was correct.
The important here is exactly that the theft can be proved.
As an HR Director, I would give the correct proves in order to win the case, and if that is impossible, because of the tools and evidence, I would make a deal with her where both parts can be adequate to the problem.
She can´t be working again in the company but she can get financed according to her working years; also I would use this case as a growing opportunity by implementing new security methods that give more confidence between the company and its employees.