Case Study: Internal Investigation to Liability Decision and Criminal Prosecution

1. INTRODUCTION

Gebze Commercial Court issued a significant decision on 10 April 2025 (Case No. 2023/111, Decision No. 2025/320) regarding the personal liability of company directors under Articles 553 and 626 of the Turkish Commercial Code (“TCC”) in which we successfully represented our client for (i) internal fraud investigation, (ii) employment lay-off procedure, (iii) forced dismissal of the director litigation, (iv) criminal investigation, (v) civil litigation, (vi) criminal prosecution and (vii) collection procedure.

Our client is a multinational forestry company with its HQ in Europe (the “Company”) and operating in the in the Turkish market through its subsidiary, in which it holds the controlling share.

Based on fraud suspicions, we assisted our client primarily with an internal investigation against the sole director of the Company, in which we gathered (i) the financial data, (i) evidence e-mails and (iii) many other documents that became the evidence under litigation and basis of fraudulent actions in a complicated method with the association of Cerebra CPAs & Advisors (“Cerebra”).

Below you may find the entire legal journey that resulted in both civil action victory and criminal indictment for infidel and fraudulent commercial operations of the sole director in question.

2. INTERNAL INVESTIGATION STAGE

Our client is an overseas company with little data provided to it by the sole director in question.

The data provided by her and the employees who she hired and worked under her rule were the only evidence in our internal investigation, and we needed to access many more. We instructed Cerebra under the disguise as of a global M&A transaction and collectively gathered all the required data and commercial intelligence.

As part of the internal investigation, we and Cerebra conducted interviews with the director and employees. During these interviews, the director prevented the company’s accountant from being interviewed and only allowed herself and her team to answer questions. After persistent efforts, the accountant was reached.

Director’s position was except for mandatory documents (such as invoices and cheques), all communication with customers and suppliers was conducted verbally and therefore no supporting documents that might be evidence were available. Despite the director’s attempts to prevent access, the Company’s records were obtained through exceptional effort and diligence.

3. FORCED DISMISSAL OF THE DIRECTOR LITIGATION

In an unexpected meeting, the director in question faced the head office directors, multiple lawyers and fraud investigators and negotiated a settlement, which unsuccessful resulted. As a consequence, she was laid off on the grounds of abusing the employer’s trust by failing to comply with honesty and loyalty, as stipulated in Article 25/2(e) of the Labor Code.

However, the director did not accept the dismissal and, by refusing to hand over the company documents, attempted to continue in her position.

At this stage, we provided legal assistance to the client to reclaim the control by filing an extraordinary general meeting request lawsuit on behalf of the company at the Gebze Commercial Court.

Gebze Commercial Court appointed a trustee. Following this, an extraordinary general meeting was held. This allowed our client, the majority shareholder of the Company that was subjected to fraud and infidelity, legally access all the corporate and tax data.

We also assisted the Company with appointment of new directors and hiring of the officers after the successful lay off of the entire management team.

Cerebra also assisted in a second way for additional reporting, which was crucially helpful under both civil litigation and criminal investigation.

4. CRIMINAL INVESTIGATION

Following the internal investigation and review of all the documents after the dismissal and general assembly, we concluded that the director’s conduct potentially constituted criminal offenses under Articles 155/2 (infidelity) and 158/1(h) (qualified commercial fraud) of the Turkish Penal Code.

The forensic report prepared by Cerebra not only quantified the damages, but also helped us to articulate, structure, and substantiate the criminal complaint.

We alleged that the following actions are fraudulent and basis of infidelity:

• Failure to collect high-volume receivables from known defaulting clients,
• Replacement of bounced checks with new ones, repeatedly and systematically,
• Classification of non-performing instruments as collectible assets in internal ledgers,
• Continuous sale and delivery of goods to clients with no payment history or legal agreements,
• Hiding significant tax liabilities and underreporting intercompany debts
• Intentional distortion of financial statements to the client to conceal the true financial condition

These actions constituted the basis of allegations under Article 158/1(h) of the Turkish Penal Code (aggravated commercial fraud) and Article 155/2 (infidelity).

We submitted the report and a detailed petition to the Gebze Chief Public Prosecutor’s Office. Throughout the investigation phase, we maintained continuous communication with the prosecutor, especially given the technical complexity of financial records and internal company dynamics.

5. CIVIL LITIGATION

We pursued the most cost-efficient procedure by filing a partial claim in accordance with Article 109 of the Turkish Code of Civil Procedure (“TCCP”). Subsequently, through an amendment of pleading pursuant to Article 180 of the TCCP, we achieved a 100% victory in the case.

During the court proceedings, three separate expert reports were obtained. The expert committee examined the Company’s records, income and expense statements, bank statements, and accounting policies, while also taking into account Cerebra’s report.

The experts reported that the damages directly resulted from the director’s negligent conduct and that personal liability arises under Article 553 of the TCC.

Following the court experts’ examination, consistent with the Cerebra’s report, the Court took the indictment grounds as the legal ground for civil litigation, in addition to the following grounds:

• Failure of the Directors to take any action to reach agreement or collect on uncollectible receivables, which is a breach of their duty of care.
• Defendant’s negligent conduct caused damage to the Company.
• Uncollectible amounts were transferred back to receivable accounts in the accounting records and reported incorrectly to Company as “collectible receivables.”

Under its decision, the court emphasized that, pursuant to Articles 553 and 626 of the TCC, directors are required to perform their duties with due care, protect the company’s interests in accordance with the principle of good faith, and act as a prudent merchant. This is also in line with Turkish Court of Cassation precedents.

Furthermore, the decision specifically underlined that the title of director entails not only authority but also responsibility; that passive behavior during the period of company management may be considered negligence; that accusations directed at the controlling shareholder do not absolve liability; and that even if the damage is not directly caused, compensation liability arises due to faulty management.

The Company’ damages totaling a significant 8 figure loss in uncollected receivables and losses due to funds being unutilized were ruled in favor of the Company including together with a massive commercial interest.

To summarize, the evidence gathering at the internal investigation and its proper submission to both criminal and civil courts led to this decision. This decision marks a precedent-setting first-instance ruling regarding a director’s liability.

6. CRIMINAL PROSECUTION

Although justice in our country operates slower than ideal, the case—despite being commercial in nature—was promptly regulated by the indictment which is based on comprehensive expert reports and evidence.

The indictment states that the director committed the crime of infidelity and demands appropriate legal sanctions against her. As a result of these actions, a criminal prosecution has been initiated, and the court is currently examining the evidence to determine the director’s criminal liability. The ongoing proceedings aim to hold the responsible party accountable and ensure justice for the company.

7. COLLECTION PROCEDURE

As a result of the civil litigation, a significant monetary compensation in 8 figures , including the principal amount, accrued interest, court costs, and attorney’s fees, has been subjected to enforcement proceedings

The enforcement proceedings have reached the final attachment stage. The attachment proceedings are ongoing.

8. CONCLUSION

As soon as our client officially accessed information, we immediately began our work and successfully completed the process in a very short time, taking into account the typical duration of legal proceedings in Türkiye.

This success was made possible by the collaboration, expertise, and efficiency of an experienced legal and investigation team. Without the expertise of a specialized firm like Cerebra and proper case management, it could have taken years for experts to conduct such a comprehensive investigation and for the case to be resolved.

Av. Ece Akbaba

Av. Mahmut Barlas