Employee Embezzlement and Misappropriation of Company Funds in Kazakhstan

Employee Embezzlement and Misappropriation of Company Funds in Kazakhstan

Civil Claim or Criminal Prosecution — How to Choose the Strategy That Actually Gets Your Money Back
🔹 For foreign investors, international companies and business owners
🔹 Kazakhstan legal practice (2024–2026)
When an employee of a company in Kazakhstan — including a manager, accountant, financial director, or branch head —:

• steals company funds

• diverts money through fictitious contracts

• abuses trust or authority

• causes financial damage disguised as “business activity”

the key question is not how to punish the employee, but how to actually recover the money.

In real legal practice, an incorrect strategy at the very beginning leads to predictable and often irreversible consequences:

• ❌ criminal case is refused
• ❌ civil lawsuit is lost
• ❌ evidence is disclosed too early
• ❌ assets are hidden or transferred
• ❌ recovery becomes impossible

👨‍⚖️ About the Author
Samat S. Sagidanov
Attorney-at-law, Astana Bar Association (Kazakhstan)
Professional experience: 25+ years

Specialization:

• Employee embezzlement and misappropriation
• Corporate fraud and financial damage
• Asset recovery for foreign-owned companies in Kazakhstan

Below is a realistic legal picture based on practice — without myths, simplifications, or false promises.

📞 Direct Contact (English supported)
You may contact me in English, Russian or Chinese:

📱 WhatsApp / Phone: +7 702 847 80 20
📧 Email: garantplus.kz@mail.ru

👉 I personally organize legal translation and provide accurate, risk-free legal guidance for foreign clients.

Why Most Companies Make a Fatal Mistake in the First Weeks
The most common logic looks like this:

“The employee stole money → we immediately file a criminal complaint.”

This is where the critical mistake happens.

In Kazakhstan, this approach usually results in:

• filing a complaint without financial or legal audit
• incorrect legal qualification
• refusal to initiate a criminal case
• formal classification as a “civil dispute”

After that:

• evidence is already exposed
• the counterparty adapts their defense
• the company’s legal position weakens
• chances of recovering funds drop dramatically

📌 Key principle:
Choosing between a civil lawsuit and criminal prosecution is not an emotional decision, but a strategic legal calculation.

Two Fundamentally Different Legal Paths to Recover Damages
In cases of employee embezzlement in Kazakhstan, there are two core legal mechanisms:

1.      Civil lawsuit

2.      Criminal prosecution followed by a civil claim within the criminal case

❗ These mechanisms are alternative at the starting point, not parallel.
A mistake in choosing the initial path is often irreversible.

Path No. 1: Civil Lawsuit
When It Is the Most Rational and Effective Option
A civil claim is usually the fastest and most predictable way to recover funds if the following conditions exist simultaneously:

• 💰 damage amount up to approx. KZT 100 million
• 📄 primary accounting documents are available
• 📑 contracts, payment orders, acts, reports exist
• 🔍 damage is clear and provable
• ⚖️ relationships are clearly civil/contractual
• 🏦 the debtor is potentially solvent

In such cases, attempting criminal prosecution:

• ❌ does not speed up recovery
• ❌ often leads to refusal
• ❌ weakens the claimant’s position

What Can Actually Be Recovered in Civil Proceedings
Depending on the structure of the case, claims may include:

• recovery of direct financial damage
• recovery of debt or outstanding amounts
• recovery of unjust enrichment
• compensation for losses and lost profit

📌 Critically important:
In most cases, it is necessary to prove either:

• a material (financial) responsibility agreement, or
• another form of official entrustment of funds or property

Without this, even a strong case may fail.

Why Criminal Proceedings for Small Amounts Are Often Harmful
A practical fact rarely stated openly:

👉 An experienced lawyer will not initiate criminal prosecution for minor damages (approximately KZT 2–5 million).

Not because it is impossible, but because:

• investigations last months or years
• financial and economic expert examinations are required
• dozens of procedural motions are filed
• costs are disproportionate to the outcome

In such cases, the civil route is usually the only rational choice.

⚠️ Important Warning for Foreign Companies
Anyone who promises to:

“Guarantee a criminal case even for a small amount”

usually:

• files a formal complaint only
• collects legal fees
• after refusal, reclassifies the case as civil

📌 Result:
Lost time, exposed evidence, weakened leverage.

Who This Strategy Is Suitable For
The civil route is suitable for companies that:

• aim to recover money, not punish at any cost
• value speed and predictability
• prefer professional, strategic action over emotions

📞 Need an Assessment of Your Case?
Contact me directly.
I will honestly explain:

• whether criminal prosecution makes sense, or
• whether a civil lawsuit will bring a better result.

Criminal Prosecution for Employee Embezzlement in Kazakhstan

When It Is Justified — and When It Almost Certainly Leads to Refusal

Criminal prosecution for employee embezzlement and misappropriation of company funds in Kazakhstan is the most complex and high-risk legal path.

It can deliver real results — but only if prepared correctly.

In practice, this is exactly where foreign-owned companies make the most fatal mistakes due to lack of understanding of Kazakhstan enforcement and judicial realities.

When Criminal Prosecution Is Truly Necessary

Criminal proceedings are strategically justified when several of the following factors are present:

💰 damage is large or especially large
(typically exceeding KZT 100 million)
📉 primary accounting documents are partially missing or destroyed
📄 there are signs of fictitious contracts, forgery or falsification
🔁 funds were diverted systematically, not incidentally
👥 multiple episodes or multiple victims exist
🏃 the suspect actively hides assets or traces
📌 Practical reality:
In such cases, a civil lawsuit alone does not work, because:

evidence has been distorted or destroyed
the debtor appears “formally clean”
assets have already been withdrawn or concealed

A Critical Rule: Never File a Criminal Complaint Without an Audit

❗ Key practical rule:
Filing a criminal complaint without prior financial and legal audit almost always leads to failure.

In real practice, this results in:

❌ refusal to initiate criminal proceedings
❌ classification as a “civil dispute”
❌ irreversible loss of time and evidence
Why This Happens

Kazakhstan investigative authorities require:

📊 analysis of cash flow and transactions
🔍 verification of counterparties and affiliates
🧾 a clear financial logic chain
📝 expert or specialist conclusions
Emotional statements or general accusations are not enough.

What Proper Pre-Trial Preparation Includes

Before submitting any criminal materials, the following must be completed:

Financial and legal audit
Analysis of movement of company funds
Identification of fictitious or affiliated entities
Examination of contracts and economic substance
Specialist or auditor’s conclusions (if required)
📌 This is the foundation of a criminal case — not a formality.

Legal Qualification: Why It Determines the Fate of the Case

In employee embezzlement cases, legal qualification is decisive.
A mistake at this stage almost always means failure.

🔹 Misappropriation or Embezzlement of Entrusted Property

Article 189 of the Criminal Code of Kazakhstan

Applicable if it is proven that:

funds were officially entrusted
the person had legal access and authority
funds were spent contrary to their purpose
📌 Typical defendants:

branch managers
chief accountants
financial directors
executives

🔹 Causing Property Damage by Deception or Abuse of Trust

Article 195 of the Criminal Code of Kazakhstan

Used when:

funds were not formally “stolen”
but the company suffered real financial damage
trust was abused
📌 Common in cases where:

actions are disguised as normal business activity
there is no direct physical withdrawal of funds

🔹 Fraud and Related Offences

Applicable when there is evidence of:

fictitious contracts
shell or nominee companies
initial intent to misappropriate
imaginary services or works
📌 Each offence requires:

different evidence
different procedural strategy
involves different risks and sanctions
❗ Incorrect qualification = refusal or collapse of the case

The Key Legal Point 90% of Applicants Do Not Understand

Can You File a Civil Lawsuit and a Criminal Complaint at the Same Time?

In practice — no.

This is critically important:

If you:

first file a civil lawsuit
obtain a civil court decision
or even start civil proceedings
then in most cases:

🚫 investigators will refuse criminal prosecution
🚫 the matter will be classified as civil
🚫 the file will be archived
📌 Reason:
Investigators avoid procedural risks related to conflicting court decisions.

The Only Correct Procedural Sequence

The legally safe and effective sequence is:

Preparation and initiation of a criminal case
Investigation and evidence collection
Transfer of the case to court
Filing a civil claim within the criminal proceedings, or
Filing a civil lawsuit after the criminal verdict
❗ Never the other way around.

The Real Cost of the Criminal Route

Criminal prosecution involves:

⏳ duration of 12–24 months or more
multiple financial and economic expert examinations
extensive documentation and motions
active defense and procedural delays
📊 On average:

total costs reach 13–15% of the damage amount
This path is not suitable for every case.

A Counterintuitive Practice Insight

A common misconception:

“The higher the damage, the higher the chance of criminal liability.”

In reality, investigators focus on:

repetition of actions
multiple victims
fictitious documentation
systematic schemes
📌 Practice paradox:

20 victims × KZT 2 million
is often stronger than
1 victim × KZT 2 billion

Why?

intent is easier to prove
business-risk arguments fail
the “civil dispute” narrative collapses

Why Embezzlement Cases Are Among the Most Difficult

Any lawyer with real experience confirms:

dozens of volumes of case materials
constant procedural motions
expert examinations and audits
high risk of procedural refusal
📌 Conclusion:
A professional assessment before filing is decisive.

How to Choose the Right Legal Strategy to Recover Losses in Kazakhstan
Real Practice, Numbers, Mistakes and Predictable Outcomes
In cases involving employee embezzlement, misappropriation of company funds, and financial damage, the core issue is never whether a violation exists.

The real question is:
👉 Which legal path will produce an actual result in your specific situation — not a formal refusal.

It is precisely at the strategy selection stage that foreign and Kazakhstan-based companies most often lose:

• ⏳ time
• 📄 key evidence
• ⚖️ the possibility of criminal prosecution
• 💰 real chances of recovering money

The Main Strategic Mistake Made by Business Owners
The most common reaction is:

“We were deceived → let’s immediately report it to the police.”

In Kazakhstan, this usually leads to:

• unprepared criminal complaints
• lack of financial and legal audit
• incorrect legal qualification
• refusal to initiate criminal proceedings

As a result:

• evidence is disclosed prematurely
• the opposing party adapts its defense
• the company’s legal position weakens
• subsequent civil or criminal actions become more expensive and less effective

📌 Key principle:
The choice of legal path is not emotional — it is a legal and economic calculation.

Practical Decision Matrix: Civil Lawsuit vs Criminal Prosecution
✅ Civil Litigation Is the Rational Choice If:
·         damage does not exceed approx. KZT 100 million

• accounting documents are available
• there is no systematic falsification or fictitious activity
• only one injured party exists
• the debtor is potentially solvent
• the goal is to recover funds, not to punish at any cost

🔹 Expected result:

• relatively fast proceedings
• predictable court outcome
• controlled legal costs

⚠️ Criminal Prosecution Is Justified If:
·         damage is large or especially large

• documents are destroyed or falsified
• multiple episodes or multiple victims exist
• actions were systematic
• assets are hidden or transferred

🔹 Expected result:

• long and complex proceedings
• often the only real leverage to force recovery

Why Criminal Cases Are Always a Long-Term Process
It must be understood honestly:

• financial and economic examinations are mandatory
• dozens of witnesses may be questioned
• investigations typically last 12–24 months or longer
• defense actively delays proceedings

❗ That is why:
Preliminary audit and expert conclusions are not formalities, but the foundation of the case.

Without them, investigators will not assume procedural risk.

Why the Amount of Damage Is Not the Key Factor
A widespread misconception:

“Large damage guarantees criminal liability.”

Practice shows otherwise.

Investigators focus primarily on:

• repeated actions
• number of victims
• fictitious documents
• accounting manipulation
• use of affiliated or shell companies

📌 Practice paradox:

Several victims × smaller amounts
often look stronger than
one victim × a very large amount

This allows investigators to:

• prove intent
• exclude “business risk” arguments
• avoid civil-dispute classification

Why 90% of Criminal Complaints Fail
The most common reasons:

• lack of a unified strategy
• incorrect legal qualification
• absence of material responsibility or entrustment documents
• attempts to rely on “amount pressure” instead of evidence
• parallel or prior civil litigation

🔻 Typical outcome:

• refusal to initiate proceedings
• classification as a civil dispute
• loss of criminal leverage

📌 Important reality:
An investigator is not a company’s private detective.
Without a solid evidentiary base, no one will take procedural risks.

What Proper Legal Work Actually Looks Like
A real, effective legal model — not declarations — includes:

1.      Pre-filing legal assessment

2.      Financial and legal audit

3.      Strategy modelling:

o    civil litigation, or

o    criminal prosecution (with civil claim only within the criminal case)

4.      Selection of one correct path

5.      Implementation with full control of procedural risks

❗ Any lawyer who “guarantees” criminal prosecution is either incompetent or misleading the client.

What Foreign Companies Often Do Not Know
·         Kazakhstan legal practice is highly formalized

• Investigators prioritize procedural risk, not emotions
• Initial mistakes are often irreversible
• Without local practical experience, foreign owners are vulnerable

Therefore, these cases require not just a “representative lawyer”, but a strategist who understands:

criminal law + civil law + accounting + corporate structure

A Critical Practical Clarification
An experienced lawyer will never initiate criminal prosecution for minor damages (approximately KZT 2–5 million).

Not because it is impossible, but because:

• proceedings are long
• documentation is extensive
• expert examinations are costly
• expenses are disproportionate to results

In such cases, a professional lawyer will:

• recommend the civil route, or
• honestly refuse the criminal case

Final Conclusion for Business Owners
If you are facing:

• employee embezzlement
• misappropriation in a branch or subsidiary
• financial damage caused by abuse of trust

the only meaningful question is:

Which legal path will work in my situation — not which looks stronger on paper?

The wrong answer costs millions of tenge and years of lost time.

📞 Consultation and Strategy Before Filing Any Claims
In these cases, success depends not on emotions, but on precision and speed.

Samat S. Sagidanov
Attorney-at-law, Republic of Kazakhstan
License No. 0000650 dated 26 April 2006

📱 WhatsApp / Phone: +7 702 847 80 20
📧 Email: garantplus.kz@mail.ru

You may contact me in any language — I will personally ensure accurate translation and legally sound guidance.

© Samat Sagidanov
Attorney for employee embezzlement, misappropriation and asset recovery
for foreign companies in Kazakhstan