Challenge
A client discovered serious misconduct by their General Manager (GM), including disbursement fraud, embezzlement, and conflicts of interest stemming from competing shareholdings. This posed a significant risk to the company's financial stability and operational integrity. The client sought our assistance to terminate the GM, recover the misappropriated funds, and safeguard the business from future incidents.
Approach
Our team launched a multi-disciplinary investigation, leveraging legal expertise and support from our tax lawyers. After thorough analysis of the company's financial data and legal position, we coordinated a strategic raid at the client's factory. During this operation, we confronted the GM, seized all company laptops and office files, and began a detailed review of the evidence.
Outcome
Fraud Uncovered
The investigation revealed significant fraudulent activities. Under our negotiation, the GM refunded the company approximately CNY 6,100,000 (USD 1 million) through an instant bank transfer.
Operational Control
To stabilize the business, we temporarily assumed control, terminated the Operations Manager without severance, and oversaw day-to-day operations.
Leadership Transition
A trusted new GM was identified and installed, ensuring competent and reliable leadership moving forward.
Safeguarding the Future
We conducted a comprehensive legal, financial, and tax due diligence to address all fraud elements and implemented robust systems of checks and balances to prevent recurrence.
Impact
Our swift and decisive actions restored the client's control over their business, recovered substantial funds, and mitigated long-term risks. The company is now better equipped to detect and prevent fraud, ensuring sustainable growth in a highly competitive market.
Takeaway:
This case highlights the importance of immediate action and a multi-disciplinary approach when tackling fraud in China. Legal, financial, and operational oversight can turn even the most challenging situations into opportunities for business transformation.
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