Operating funds have vanished, accounting records may have been falsified, and a secret bank account may have been discovered. In any case, you discover that one of your partners is stealing money from the company.
So, what should you do now? Should you confront your business partner and risk losing everything?
Criminal Breach of Trust (Embezzlement)
Theft of property that one possesses but does not own is the definition of the act known as embezzlement. Someone must have given that person permission to use the property, and then that person must have used the property dishonestly in order to gain an unlawful advantage.
Criminal Breach of Trust (CBT), defined by sections 405–409 of the Penal Code, is the usual charge brought forward in cases of alleged embezzlement in Singapore.
Section 405 states that a person commits CBT when they:
- dishonestly misappropriate property or funds that were entrusted to them, or over which they have dominion; or
- converts such property for their own use; or
- dishonestly uses or disposes of such property in violation of any express or implied contract or law prescribing the mode in which such trust should be discharged; or
- intentionally allows any other person to do so.
A person who is found guilty of embezzlement may be sentenced to a maximum of seven years in prison, a fine, or both depending on the specifics of the general CBT. The maximum possible sentence for aggravated CBT is twenty years in prison. This occurs when the person accused of the crime holds a position of trust, such as a public servant, banker, or agent.
What to do if your Business Partner steals from you?
- Get Immediate Advice
It is imperative that you take prompt action in the event that you discover that your business partner has stolen or improperly spent money. The most essential thing you need to do is get in touch with a lawyer who specialises in corporate law and can guide you through the process of developing a plan for the future.
- Act Rational
Before you react emotionally and rush to confront your business partner, you need to think things through and take measures to ensure the safety of your company. Because the scope of the embezzlement may be more extensive than it seems at first glance, you and your attorney will need to formulate a strategy that is both effective and efficient in order to combat it.
The following actions are some of those that your attorney will advise you on taking:
- Taking control of your finances means doing things like getting rid of old cheque books and updating the authorization settings on your company bank account.
- Notifying vendors and clients that they should avoid doing business with the dishonest partner and should ignore any requests or demands for payment that they receive from him or her.
- Your personal responsibilities as a director, which include reporting the incident to the police.
- A claim for embezzlement can be brought.
- The company will be liquidated, and you will collaborate closely with the Official Receiver to salvage as many of its assets as possible.
- Act on the attorney’s advice
When embezzlement is suspected, a business or its partners should seek legal counsel immediately to ensure that any subsequent investigation is prompt, unbiased, clear, recorded, documented, and agreed upon. If your lawyer suggests an internal investigation, you’ll need to figure out how you’ll gather and keep track of evidence. This eliminates the possibility that crucial evidence will be lost or tainted before the case is reported to the police.
- Report to authorities
A report to the authorities is required once you and your attorney have determined the full scope of the embezzlement. Also, contact your insurance provider. They can give you guidance and coordinate with law enforcement to handle any claims you file as a result of the fraud.
- Initiating and Defending Claims in Civil Court
Your attorney will discuss your options for recovering some or all of your losses. You can sue for damages in a few different ways, each one appropriate depending on the kind of relationship you had, the extent of the embezzlement, and the structure of your business.
- Litigation is the process of bringing a claim before a court.
- Alternative Methods of Dispute Resolution, including Mediation (although the negative state of the relationship between yourself and the fraudulent partner may prevent this from being successful).
- You can also go to court to get an injunction to prevent your business partner from engaging in certain types of commercial activities.
- You may also find that you are required to defend claims that have been brought against you by customers, suppliers, employees, or creditors.
When you find out that one of your business partners has been stealing, it can set off a chain reaction of aggravation and problems, as well as put your personal and professional health and finances in jeopardy. You will be able to lower your risk and exposure to embezzlement and develop a strategic plan to lower the amount of damage that will be done to your business and reputation with the assistance of an experienced solicitor.
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you require legal advice, please contact us at: firstname.lastname@example.org.