How accountants stole 300 million from a company, and the court ordered the CEO to pay 250 million
I continue the column with a review of judicial practice. I found an interesting case with interesting names 🙂
Aigul Shadrina
Expert. Founder of the accounting company S4 Consulting and tax consultant.
If the chief accountant has a “snout in the cannon” and 300 million rubles have quietly disappeared from the company's accounts in an unknown direction, should the CEO be held responsible for this? The courts have case No. A56-35890/2015 There is no consensus. I am reviewing a lawsuit filed by a fish company from St. Petersburg against its former CEO.
What is the essence of the matter?
A large fish company from St. Petersburg, let's call it ZAO Rybka, filed a lawsuit against its former CEO, who led the company for 13 years: from 2000 to 2013.
The problem began when the company was opened, when the director let the accounting department run its course, gave them his electronic digital signature (EDS), did not look into where large sums of money were going, and was not interested in the auditor's reports.
In October 2013, the CEO resigned. A new director came and began to take over.
During the audit of accounting and tax reporting, I discovered that over 13 years, the previous chief accountant, in collusion with an accountant (with the famous surname Rotenberg), had withdrawn a total of almost 340 million rubles from circulation to shady companies. The money was gone, the fake transactions were covered up with fictitious documents, the accounting was somehow corrected, and the chief accountant and his accomplice quit.
A criminal case was opened on this fact, the thieves were found and arrested. The Oktyabrsky Court of St. Petersburg considered civil case No. 2-6040/2015, found the former accounting employees guilty of fraud (Part 4 of Article 159 of the Criminal Code of the Russian Federation) and collected about 50 million rubles from them.
The court recognized the civil claims of Rybka CJSC against the convicted persons in the amount of 332 million rubles.
The plaintiff, ZAO Rybka, went further and filed a claim in the Arbitration Court of St. Petersburg and the Leningrad Region to recover ~ 611 million rubles from the former CEO, including all damages in the amount:
stolen from the company’s accounts — 339 million rubles;
interest on loans – 170 million rubles;
interest for using stolen funds – 100 million rubles.
At the same time, the plaintiff asked the court to involve the chief accountant and her assistant as third parties, because the judicial act on their case had not yet entered into legal force.
According to the applicant, the former CEO is directly to blame for the embezzlement of money by accounting representatives.
After all, he violated his official duties as the head of the company, which he was supposed to perform according to Articles 274 of the Labor Code of the Russian Federation, 103 of the Civil Code of the Russian Federation and 69 of the Federal Law “On Joint-Stock Companies”, according to the employment contract and job description. For example, he did not take seriously the selection of qualified personnel and did not control the actions of employees.
How the former leader fought back
The former CEO insisted that he had been misled, that he had completely trusted professional accountants and had no idea about the payments to fictitious companies. And he had no idea that the experts had left detailed comments about all the dubious transactions in the auditor's reports.
Since he wasn’t there, wasn’t a member, didn’t have one, then he shouldn’t be held accountable for it.
Controversial opinions of the courts and how the case ended
The legal battle lasted from 2015 to 2017 and even reached the Supreme Court, which put an end to the case.
The courts treated the presented justifications differently. The former CEO managed to fight back in the court of first instance, but that was where his luck ran out. As a result, January 16, 2016 The Supreme Court ordered him to compensate Rybka CJSC 254 million.
What the court of first instance decided
Arbitration Court of Saint Petersburg and Leningrad Region in decision of February 24, 2016 dismissed the claim entirely, not being convinced by the plaintiff's arguments.
The judge considered that the situation in which the head of the organization was deceived by the accounting staff was beyond the scope of normal business practice. Therefore, the head should not be held responsible for the actions of employees who stole money from current accounts and prepared false documents for non-existent transactions.
This is where the former leader's luck ended.
Objections and arguments of the courts of the following instances
The Thirteenth Arbitration Court of Appeal partially overturned the decision of the arbitration court by decree of June 14, 2016the former manager filed appeals several times, but the courts refused.
The courts agreed with the original decision on only two points:
The amount of interest of 100 million is not based on the norms of substantive law and is not a loss, since losses are one of the types of liability and interest is not accrued on them.
Interest for the use of loans in the amount of 170 million is not subject to collection, because the company's activities during the specified period were not unprofitable and there was no need to take out loans.
The courts' arguments on the overturned part of the decision, namely on the recovery of money stolen by the “robber accountants”:
The defendant did nothing to prevent the theft, ignored the results of audits and did not increase the accounting staff as recommended.
The organization’s accounting policy was not drawn up in such a way that the manager controlled the accounting department (Federal Law of November 21, 1996 No. 129-FZ “On Accounting”).
The company did not comply with information security rules when using the manager’s personal digital signature.
The manager's inaction resulted in damage to the company, and he is also to blame for the theft of money (clause 9 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 30.07.2013 No. 62). According to Article 277 of the Labor Code of the Russian Federation, the manager is obliged to compensate for the damages.
In the end, all the courts agreed and ruled to overturn the decision of the first instance and collect 298 million rubles from the former CEO, but since part of the money, 44 million rubles, had already been collected from the chief accountant and her assistant, the following was to be collected:
How to avoid such situations?
The recipe is simple:
Do not transfer your digital signature to third parties, including employees. Or transfer it, but introduce control points – introduce a system for coordinating the signing of documents and periodically audit the signed documents.
If the function of coordinating payments lies with the CEO and the entrepreneur, then delve into the essence of the payments and understand where the money will go.
Conduct annual inventories. Commodity and monetary.
If the company is large enough and there are risks that top managers and executives may work on kickbacks, then conduct an independent audit, including price analysis.
Make accounting and tax accounting hygiene: conduct an annual audit with a reconciliation of the original data sources. During the audit, transactions that were not reflected in accounting or were replaced with others will be discovered.
It is possible that in this case the CEO acted in concert with the accountants and knew about these machinations, but refused and set up his accomplices in order to avoid criminal charges. Indirectly, this may be indicated by the dates of withdrawal of funds and the end date of the CEO's powers. Payments were made over 2 years from 2011 to 2012, and the CEO left in 2023.
What do you think? Can accountants withdraw 300 million from a company with revenue of 5-6 billion per year within 2 years without the CEO noticing? Share in the comments, I'd like to know your opinion.
