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1 Dec 2022 CFO dismissed over trip to Formula 1 on private plane

Trip to Abu Dhabi paid for by colleague with fraudulently obtained funds

A CFO lets a subordinate treat him to junket trips, including to the Grand Prix in Abu Dhabi. This involves lavish travel in a private plane and on a private yacht. Later, it was revealed that the colleague had embezzled millions and was summarily dismissed.

What were the facts?

Employee has worked for Spliethoff's Bevrachtingskantoor BV (hereinafter SBK) since 1 August 1995. Go Gracht is part of that concern. Employee joined Go Gracht on 1 January 2004 and has been Group CFO/member of the Executive Board since 1 July 2008. Each year the employee receives a fixed bonus of €13,000 and a variable bonus of €402,760 gross. A Code of Conduct applies within the group, with provisions on 'Conflict of Interest' and 'Bribery & Hospitality'.

In October 2020, the employer discovered that X, deputy managing director at Go Gracht (and thus subordinate to the CFO), had committed forgery by placing a signature of a KPMG employee under the 2019 financial statements. Those financial statements had not yet been approved by KPMG, but had been published. The deputy director was then summarily dismissed. It was also later revealed that X had embezzled €2.5 million. Following this, the employer commissioned a forensic (audit) investigation, during which the CFO was also interviewed. This included the deputy director's private spending with the business credit card. The investigation revealed that the CFO had made a number of trips on a private plane at the deputy director's expense and that the deputy director had paid for accommodation (hotels, accommodation on a private yacht, entry to the Grand Prix in Abu Dhabi) for the CFO and his partner and children on a number of occasions.

You will understand: employer was decidedly not amused and suspended the CFO on 21 December 2020. A severance agreement was then negotiated but ultimately SBK's shareholders' meeting decided on the CFO's proposed dismissal as a director/supervisory director/authorised representative of the CFO at various private limited companies.

What are the views of both parties?

Go Gracht requested the subdistrict court to dissolve the employment contract with the CFO, primarily on the e-ground (culpable action), without awarding a transitional allowance, alternatively with the award of a transitional allowance of €259,644 gross.

The CFO put forward a defence and submitted a counterclaim for the award of a transitional allowance and equitable remuneration, as well as a bonus for 2020 of €402,760 gross and for 2021 of €402,760 gross, conditionally (namely, in case the employment contract would be dissolved as of 1 October 2020), pro rata resulting in: €302,070 gross, as well as €40,000 in legal costs.

What did the subdistrict court rule?

The subdistrict court dissolved the employment contract as of 1 November 2021 due to the CFO's culpable actions. Moreover, according to the subdistrict court, there was serious culpability on the part of the CFO, as a result of which he lost his right to transitional compensation. The CFO's request for fair compensation was rejected because the employer had not acted in a seriously culpable manner. The subdistrict court did rule that the CFO was entitled to the variable bonuses for 2020 and 2021 (€402,760 and €335,633.33 gross respectively).

What does the court of appeal rule on appeal?

On appeal, the CFO resigned his dismissal, but argued that he had not acted seriously culpable and was therefore entitled to a transitional allowance. He also again claims fair compensation. Incidentally, the employer lodged an incidental appeal against the award of the tantièmes.

Unlike the subdistrict court, the court of appeal came to the conclusion that the CFO had indeed acted imputably, but not seriously. In other words, the CFO was still entitled to a transitional allowance, in this case a sloppy €363,660.58 gross. It is also ruled that the employer did not act or fail to act in a seriously culpable manner. Fair compensation was therefore not awarded. The subdistrict court's ruling on the tantièmes awarded remains intact.

You can read the entire judgment here.

Are you an employer or employee and do you have questions about dismissal, transitional compensation, fair compensation or (seriously) culpable behaviour? Get timely information from the experts at SPEE advocaten & mediation.

SPEE advocaten & mediation Maastricht


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