How to Protect against Criminal Risks in Business

Internal risks that need to be considered

Risks of prosecution that arise from the actions of the entrepreneur, the actions of his partners and employees are internal risks that can and should be managed.

Businessmen already do this by controlling management, personnel, and accounting records. But there are internal risks which entrepreneurs forget about or do not see as dangerous. Let’s break them down in more detail.

Conflicts with co-owners

It often happens that yesterday the partners were friends and made joint plans for business development, and today they have become sworn enemies. The most common cause is the redistribution of power or money. If the co-owners fail to agree, it can lead to business bankruptcy and subsidiary liability for debts, when these debts have to be paid with personal property.

It happens that the one who lost in a corporate dispute punishes the opponent – pulls out any problematic issue and blames it on the other partner.


For example, he reports violations to the tax authorities, which can lead to a criminal case and a real sentence. The most frustrating thing is that all the compromising information is passed on to the controlling authorities by the former friend, because he has all the accounting data, documents on dividend payments, personnel and other documents of the company.

How to reduce the risk

  • Check the incorporation documents. An ill-conceived charter often provokes problems and impedes decision making. If it is often impossible to come to a compromise with the partners, it is worth consulting a lawyer. He will advise what changes to the articles of association can be made to reduce the risks for all partners. For example, co-owners are constantly in conflict over the distribution of profits. One meets with suppliers, looking for new clients, repairing premises, and the other only comes to general meetings. According to the law, profits are distributed proportionally between the owners, but these proportions can be changed in the charter – entrepreneurs must agree on this immediately, so that no disputes arise in the future.
  • Sign a corporate agreement, which sets out the procedure for resolving conflicts. The law provides quite a few ways to protect the rights of participants with small shares. For example, one participant owns 70% of the shares and three of them have 10% each. To prevent the first participant from pushing his opinion, instead of voting on the size of the shares, you can fix in the contract decision-making on the principle of “one participant – one vote”. It is not always possible to figure out the current problem or to see possible non-obvious points on your own – lawyers can help.

Conflicts with employees

The perpetrator of a criminal case may be an employee who feels offended – for example, that he was not given a promised promotion or was deprived of a bonus. In a fit of revenge, he complains to the labor inspectorate, the tax office, or the prosecutor’s office, often inventing the employer’s faults. Supervisory agencies are obliged to respond to the complaint and come to the company for an unscheduled inspection.

If the offended employee backs up his words with documents that prove tax evasion or the illegality of business operations, it is worth waiting for the visit of investigators.


For example, an entrepreneur has divided one large store into several smaller departments. Employees of the firm register as entrepreneurs, get their area for rent, enter into a contract of guarantee and sell the goods. All these contracts the offended employee can hand over to law enforcement with a description of the scheme of tax evasion by splitting the business.

How to reduce the risk

  • Limit employee access to information. Each employee should have access only to those documents that are necessary for his work. The fewer employees have access to classified documents, the safer for the business will be the audit initiated by the employee.
  • Develop rules for storing information that needs to be protected. This includes information that constitutes trade secrets and personal data. Employees responsible for the production, storage and exchange of such documents should be made aware of the rules. For example, one may enter the room where confidential information is stored only in the presence of the manager or chief accountant.