Harper James advises UK businesses on recovering misappropriated funds under the laws of England and Wales. The response usually combines urgent financial controls, evidence preservation and civil recovery proceedings, with criminal or regulatory reporting where appropriate.
The company should restrict further access to bank accounts, payment systems and confidential records, while preserving emails, accounting data, invoices, approval records and device information. It should avoid deleting or altering material that may later be evidence. The board should record the suspected loss, appoint a small investigation team and separate the investigation from people potentially involved. Banks should be contacted promptly because payment recalls, account freezes and fraud reporting are time-sensitive. The company should also review its insurance, audit and reporting obligations.
A claim can include breach of contract, breach of fiduciary duty, fraud, deceit, unjust enrichment or dishonest assistance, depending on the facts. Where funds have been transferred into other accounts or used to acquire assets, tracing principles can support a proprietary claim. The company can seek urgent court orders, including an injunction preventing disposal of identified assets or a freezing order restricting dealings with assets generally. A freezing order requires evidence of a good arguable case and a real risk that assets will be dissipated. Applications also require full and accurate disclosure to the court.
A properly scoped internal investigation establishes the payment history, identifies the people and entities involved, and quantifies the loss. The company should consider employment issues, directors’ duties, confidentiality, data protection and legal professional privilege when collecting evidence. A letter before action normally sets out the allegations, legal basis, amount claimed and required response. Proceedings can then seek compensation, repayment, interest and costs. Reporting to the police, the Serious Fraud Office or another regulator depends on the value, conduct and regulatory setting of the matter. Reporting does not replace civil recovery steps.
After recovery action begins, the board should review payment approvals, segregation of duties, supplier onboarding, bank mandate controls and management information. It should also assess whether directors complied with their duties and whether the company is solvent. If the business is insolvent or approaching insolvency, recoveries must be considered alongside creditor interests and possible office-holder claims. A written incident record, independent review and revised financial controls provide a basis for reducing the risk of further loss.