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Has a business partner embezzled from your company?

On Behalf of | Mar 9, 2023 | Business Partnerships |

A business partnership, like a marriage, is a relationship that works best when there is a strong foundation of mutual trust and respect. When one partner begins to suspect the other of misconduct, that is an early warning sign of potential difficulties to come.

Partners who don’t trust one another to be honest or to act in the best interests of the company may have a hard time running an organization together. At the same time, well-founded suspicions should not simply be ignored in the interests of keeping the peace. How should someone who suspects their partner of embezzlement approach the issue?

Confirm your suspicions before taking action

One of the worst things someone running a business with a partner could do for the future of their organization would be to make unfounded accusations against their partner. The relationship would likely never recover.

Bringing in a forensic accountant, performing a quiet internal audit and otherwise attempting to verify whether financial misconduct actually occurred is one of the most important steps when addressing embezzlement by a business partner.

Have a meeting to address the matter

Only after a review of records makes it clear that misconduct has occurred should the partners meet to discuss the matter. Talking about embezzlement and misconduct could likely lead to denial or emotional confrontations between partners.

Gathering sufficient documentation and being neutral and calm when approaching the topic will both be important. Sometimes the partner accused will have an explanation for the situation. Other times, they may argue and try to deny responsibility. In some cases, a business partner will quietly step down as a means of avoiding prosecution when embezzlement has had a major impact on a business.

Be prepared for court proceedings

Someone who confronts a partner about suspected embezzlement but then takes no future action beyond that will not effectively protect the business. It is only through follow-up after a discussion that one business partner can protect an organization from the misconduct of the other partner.

Being ready to go to court to hold a partner responsible for a breach of duty to the business and a violation of their contract with their partner or the organization may prove to be key to mitigating the consequences of embezzlement. Knowing what steps to take during a dispute with a business partner can benefit those who are hoping to preserve an organization’s integrity after a partner’s misconduct has damaged it or threatened to damage it.

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