Updated: 15th January 2020
Published: 17th April 2018
When a business partner is found to be stealing money from the company bank account, it has serious ramifications which, unfortunately, can threaten the business’ future. Theft is a serious situation, and your business partner faces criminal charges and/or civil action.
The implications for you as a partner in the business could include investigations into your own financial affairs, as well as those of the business, a loss of reputation both personally and as a company, a potential inability to pay suppliers, and even insolvency in the long-run.
The first step in tackling the situation is to take specialist professional advice. This is a delicate set of circumstances that requires careful planning in order to deal with them effectively, and to obtain the clear evidence that may be needed later on.
Cancelling cheque books and cards for the business account may be necessary, as could amending the mandate so your business partner cannot withdraw money using their sole signature.
You may be advised to conduct an impartial internal investigation at your business, including auditing accounts. You’ll need to agree a method with your professional adviser, of obtaining and recording any evidence you find so that it can be passed on to the police or Serious Fraud Office (SFO) if necessary.
You should also inform your insurance company of the situation as they may be able to offer additional guidance on making claims, and will work alongside the police in this respect.
Whether your partner has committed criminal fraud depends on the circumstances, but there needs to have been an ‘intention’ to commit fraud for their own personal gain. If there’s evidence of this, the police may decide to prosecute as it’s a criminal offence. It’s also possible for individuals to bring private prosecutions in the criminal courts in some instances.
You may be able to take action through the criminal court, the civil court, or both, depending on your aims and priorities, and the seriousness of the case. The level of proof needed to bring a successful civil case against your business partner is lower than that of the criminal court. A civil court requires proof on ‘a balance of probabilities,’ whereas a criminal prosecution requires proof ‘beyond reasonable doubt’ that the individual committed the crime.
By taking action through the civil court you have more control over the proceedings, and your main aim will be to recover some or all of the stolen money, or to receive compensation.
If your evidence against your business partner is clear and compelling, it’s possible that a judgement would be made quickly, which is one of the benefits of taking action through the civil court.
You’re responsible for paying the court costs, however, unless you can secure an order for your business partner to pay. The fact that by taking action through the civil court, your business partner isn’t exposed to formal punitive measures may be viewed as a further downside.
If you decide to take criminal proceedings against your business partner, or the prosecuting authorities bring a case against them, the outcome will be decided by a jury. If convicted, sentence is passed by a judge, and could include a fine, imprisonment for up to 10 years, or both, depending on the severity of the case and where it’s heard.
The police and SFO have extensive powers when investigating potential fraud cases, which is beneficial if you suspect your business partner may have committed other fraudulent or criminal activity.
Another advantage of pursuing a case through the criminal courts is that you won’t be responsible for court costs. There are downsides, however, as although compensation can be sought if your business partner is convicted, it’s not guaranteed that you will receive any compensation in the long-run.
The shock of discovering your business partner has stolen money from your company account is immense, and could have worrying ramifications for both your business and yourself on a personal level.
Insolvency may become an issue depending on the level of theft and the financial position of your business. If suppliers haven’t been paid due to lack of cash, they may decide to take legal action against you and your partner, or the business itself.
Real Business Rescue can offer vital specialist advice if you suspect a business partner is stealing money from your business account. We have an extensive network of 78 offices offering confidential director support across the UK. We can offer a same-day consultation to quickly establish the seriousness of your situation.