been reporting a new case in which
executives of a company are alleged to
have misused the funds of their corporate
employer. The allegations include:
by one of the executives, with a
three-year contract granted to that
company;
others; and
points to either a lack of appropriate
corporate governance controls, or a
failure in the implementation of controls.
Carroll & O'Dea has recently acted
in a number of matters in which an
executive, member of staff and suppliers,
for bribery, misappropriation of funds,
and in connection with holding an
interest in a supplier.
(through appropriate governance
controls) is better than attempting to
recover misused funds after the fact,
bribery and misuse of funds poses
special problems for recovery.
While the employer claims to have
uncovered the alleged frauds in the
case that is being publicized now, some
perpetrators will avoid having anything
in writing that can point back to what
they have done the key incriminating
part of the transaction is frequently cash
in "brown paper bags." This creates not
only difficulties proving the misconduct,
but also difficulties in identifying that
it has happened at all. In the case of
bribery, a later audit might identify
that pricing is above market, but that
will not get the employer to proof of
could equally be explained as a poorly
negotiated deal.
Where the perpetrators have avoided
anything incriminating being in writing,
the victim may never be able to discover
the fraud without a confession by one
of the parties. Even though the victim
may be able to get preliminary discovery
(although even that has its challenges
in bribery cases), there may not be any
documents to discover. Even if there
are documents to discover, it is no small
stretch to suspect that the sort of person
who takes, or pays, bribes, might not
be inclined to comply with discovery
obligations.
Even if the fraud is discovered, a
senior executive who is careful with their
spending is less likely to be motivated
to commit frauds, so it may well turn
out that the fraudster has spent all of
their money and has no assets to satisfy
a judgment. In those cases, the best
avenues for recovery may be against
Carroll & O'Dea Lawyers. His practice includes advising on
a variety of issues for businesses and other organizations,
including acquisitions and disposals, joint ventures, contracts
and employment arrangements, international supply and
distributorship arrangements and associated disputes and
regulatory issues.
Level 18, St. James Centre
111 Elizabeth Street
Sydney NSW 2000 Australia
Fax: +61 2 9221 1117
codea.com.au