If you suspect employee dishonesty, act swiftly!

Companies cannot operate without employees having access to their bank accounts and the risk of fraud is therefore sadly ever present. However, as a High Court case showed, with the right legal advice miscreants can be tracked around the world and brought to book.

The case concerned the former chief financial officer of a company that formed part of a large insurance broking group who was alleged to have made, or procured, suspicious payments totalling $1.847 million to two suppliers and repairers of Swiss watches. The funds had been remitted from the company’s account, although it had no commercial relationship with either payee, whose invoices were said to have been falsified.

The company had obtained a worldwide freezing order in respect of the former employee’s assets from a court in Bermuda, where he was at the time believed to be present. It had also been granted an emergency freezing order by a judge in London after it emerged that the former employee had substantial assets in England, including a bank account and a pension policy.

In extending that order following a further hearing, the High Court emphasised that no wrongdoing on the former employee’s part had yet been proved. However, the company’s suspicions were based on credible evidence and there was a good arguable case that he had breached his fiduciary duty by fabricating the relevant invoices. He had also failed to comply with a court order requiring him to disclose his assets within the jurisdiction.

The Court noted that Swiss watches are highly mobile assets and that, since the discovery of the suspicious transactions, the former employee had moved widely around the world. The freezing order had been granted in support of the Bermudian proceedings, and there were good grounds for its continuation.