Foreign Company Discovers Procurement Payments to a Manager’s Relative: Fraud and Breach of Trust Risks (2026 Updated Guide)

investigate related-party payments, preserve evidence, recover company funds and assess fraud and breach of trust risks.

A foreign-owned company operating in Turkey may discover that substantial procurement payments have been made to a business owned or controlled by a manager’s spouse, sibling, parent, child or another relative. The relationship itself does not automatically establish a crime. However, the situation becomes significantly more serious if the manager concealed the relationship, approved inflated invoices, arranged payments for goods or services never supplied, manipulated tenders, received an indirect financial benefit or used company authority contrary to the company’s interests. In these circumstances, the company should simultaneously examine criminal liability, corporate-law responsibility, employment consequences, recovery of company funds and urgent asset-protection measures.

Is Paying a Manager’s Relative Automatically Illegal?

No. A genuine supplier relationship with a manager’s relative is not automatically fraudulent or criminal. The decisive questions are whether the transaction was genuine, commercially justified, properly disclosed, correctly authorized and performed in the company’s interests.

The investigation should therefore focus on facts rather than the family relationship alone.

When Does the Relationship Become a Serious Warning Sign?

The risk increases where the manager selected the supplier without disclosure, bypassed ordinary procurement procedures, controlled both the purchasing and approval process, concealed beneficial ownership, arranged unusually favorable payment terms, approved excessive prices or prevented competing suppliers from participating.

Several indicators appearing together can justify a much deeper investigation.

Identify the Supplier’s Real Beneficial Owner

The company should determine who actually owns and controls the supplier. The registered shareholder may not necessarily be the person receiving the economic benefit.

Corporate records, payment information, management connections, addresses, telephone numbers, email accounts and other lawful evidence may help establish the true relationship.

Preserve Evidence Before Confronting the Manager

A premature confrontation can result in deletion of messages, alteration of files or coordination of explanations between participants.

The company should first lawfully preserve relevant procurement records, invoices, contracts, payment approvals, accounting entries, corporate emails and other business evidence.

Review the Entire Procurement Chain

Do not examine only the final bank transfer. Reconstruct how the supplier entered the procurement process.

Determine who requested the purchase, obtained quotations, selected the supplier, approved the contract, confirmed delivery, approved the invoice and authorized payment.

This can reveal whether one manager effectively controlled the entire transaction.

Compare Competing Quotations

Check whether competing quotations genuinely existed.

If several quotations were supposedly obtained, determine whether the companies are independent and whether the documents were actually created at the relevant time.

Fabricated or coordinated quotations can materially change the legal assessment.

Examine Whether the Prices Were Inflated

Compare the amounts paid with market prices available at the relevant dates. Significant overpricing can be particularly important where the manager concealed a personal relationship with the supplier.

Independent valuation or industry expertise may be necessary for specialized goods or services.

Confirm That Goods Were Actually Delivered

Invoices alone do not prove performance.

Review warehouse records, delivery notes, inventory entries, serial numbers, acceptance reports, transport documentation and employee confirmations.

For services, determine what work was actually performed and whether there are genuine deliverables.

Payments for Fictitious Services Require Special Attention

Consultancy, marketing, brokerage and other intangible services can be difficult to verify.

Ask what the supplier actually produced, who performed the work, when it was performed and how the company benefited.

Repeated invoices containing vague descriptions can justify closer examination.

Review Bank Payments

Prepare a transaction-level schedule showing the supplier, invoice, payment date, amount, approving employee, bank account and underlying contract.

This allows investigators to identify repeated payments, split transactions and unusual timing.

Look for Payments Flowing Back to the Manager

Where legally obtainable evidence indicates that supplier funds were subsequently transferred to the manager or another connected person, the criminal implications can become substantially more serious.

The evidence must nevertheless be obtained through lawful procedures.

Fraud May Be Considered Depending on the Facts

If deceptive conduct was used to cause the company to make payments and obtain an unlawful benefit, Turkish criminal-law provisions concerning fraud may become relevant depending on the precise circumstances.

The existence of deception, financial benefit, company loss and causation must be evaluated carefully.

Breach of Trust May Also Be Relevant

Where a manager misuses assets, authority or property entrusted to them, breach-of-trust issues may arise depending on the factual and legal relationship.

The legal characterization should be based on how the manager obtained and exercised authority over the company’s assets.

Forgery Risks Should Be Investigated

If purchase orders, signatures, delivery records, invoices, quotations or acceptance documents were fabricated or altered, document-related criminal offenses may also require consideration.

Preserve originals and electronic versions wherever possible.

Do Not Alter Suspected Documents

Keep original electronic files, metadata and document versions intact.

Creating annotated working copies is preferable to modifying the original evidence.

Electronic Evidence Can Become Critical

Corporate emails, internal messaging systems, procurement software, accounting records and access logs may reveal how transactions were arranged.

The company should preserve relevant data in a defensible manner and avoid unnecessary changes to devices or accounts.

Personal WhatsApp Messages Require Caution

The fact that potentially useful evidence may exist on a manager’s private phone does not automatically authorize the company to access it.

Privacy, personal-data and criminal-procedure rules should be considered before accessing personal devices or accounts.

Secret Recordings Can Create Separate Legal Problems

Management should not assume that secretly recording every conversation is a lawful investigative technique.

The legality and evidentiary value of recordings depend heavily on the circumstances.

Conduct a Structured Internal Investigation

The investigation should establish a timeline, persons involved, payment amounts, procurement procedures, corporate approvals and evidence supporting or contradicting the suspected scheme.

Keep factual findings separate from legal conclusions.

Interview Relevant Employees Carefully

Procurement employees, accounting personnel, warehouse staff and supervisors may possess important information.

Interviews should be documented consistently, and investigators should avoid feeding witnesses the answers they expect.

Preserve the Manager’s Right to Respond

Where appropriate in the internal process, the manager’s explanation should also be obtained and preserved.

A related-party transaction may have a legitimate explanation that was poorly documented rather than criminally concealed.

Corporate Authorization Should Be Examined

Determine whether the manager had authority to select suppliers and approve payments.

A transaction may be unauthorized even where the supplier genuinely delivered goods.

Conflict-of-Interest Rules Are Important

Review the company’s articles, internal policies, employment agreement, management resolutions and conflict-of-interest procedures.

A concealed related-party relationship may constitute a serious corporate or contractual violation even if criminal fraud cannot ultimately be established.

Board Members and Company Managers May Face Civil Liability

Where directors or managers breach duties owed to the company and cause loss, corporate-law liability may arise separately from criminal proceedings.

The company should quantify the damage attributable to each disputed transaction.

Employment Consequences Should Be Evaluated Separately

If the individual is also an employee, disciplinary measures or termination may become relevant.

Employment action should be based on properly documented facts and the applicable employment-law framework rather than merely the existence of a criminal complaint.

Filing a Criminal Complaint Does Not Automatically Recover the Money

A criminal investigation and recovery strategy should be coordinated but treated as distinct issues.

The company may need to pursue civil, commercial or other available remedies to recover losses.

Calculate the Company’s Actual Loss

Do not simply add every payment to the related supplier and call the total amount damages.

If genuine goods worth part of the payment were delivered, the actual loss may involve overpricing, fictitious portions, unauthorized commissions or other measurable damage.

Accurate damage calculation strengthens the case.

Can Company Bank Records Be Used?

The company should preserve its own payment and accounting records. Records held by third parties may require appropriate legal procedures to obtain.

Bank transactions can be particularly important for tracing the economic flow.

Asset Protection May Become Urgent

Where there is a credible risk that assets will be transferred or concealed, available interim measures should be assessed promptly.

The appropriate remedy depends on the legal claim, available evidence and assets involved.

Precautionary Attachment May Be Considered

Where the statutory conditions are satisfied, precautionary attachment may become relevant to securing a monetary claim.

It is not automatic merely because fraud is alleged; the evidentiary and procedural requirements must be assessed in the specific case.

Criminal Seizure and Civil Asset Protection Are Different

A seizure ordered during a criminal investigation serves criminal-procedure purposes. A civil or commercial interim measure protects a private-law claim.

Companies should not assume that one automatically replaces the other.

Follow Transfers to Related Companies

If suspicious funds moved from the supplier to another company, investigate corporate and financial connections.

Multiple entities can sometimes be used to obscure the final beneficiary.

Review Cash Withdrawals Carefully

Large withdrawals shortly after company payments can be relevant circumstantial evidence, although a withdrawal alone does not prove that money was delivered to the manager.

The complete transaction chain should be established.

Consider Whether Multiple Managers Were Involved

A procurement scheme may require cooperation between procurement, finance, warehouse or senior management personnel.

Do not assume the first person identified is the only participant.

The Foreign Parent Company Should Preserve Its Own Records

Board reports, compliance communications, internal audit findings and communications with Turkish management may become important.

The parent company should maintain a clear chronology of when it learned of the suspected conduct and what action followed.

Avoid Public Accusations Before the Facts Are Established

Publicly describing a manager or relative as a fraudster before the investigation is complete can create additional disputes.

Internal communications should use accurate and measured language.

Consider Tax and Accounting Consequences

Fictitious or inflated procurement expenses can also affect corporate accounting and tax positions.

The company should determine whether accounting records or tax declarations require separate review.

Review Previous Years

Once a suspicious supplier relationship is identified, examine historical payments involving the same supplier, related entities and approving managers.

A seemingly isolated transaction may form part of a longer pattern.

Search for Similar Suppliers

Look for suppliers sharing addresses, contact details, bank information, shareholders or other connections with company personnel.

This can reveal additional undisclosed related-party transactions.

Review Current Contracts Immediately

Determine whether the supplier still has open purchase orders, unpaid invoices or access to company facilities and information.

The company should avoid making further disputed payments without understanding its contractual position.

Do Not Withhold Undisputed Payments Arbitrarily

If some transactions are legitimate while others are disputed, the company should distinguish them carefully.

Overly broad commercial action can create counterclaims.

Foreign Investors Should Examine Governance Failures

A procurement fraud case often exposes weaknesses beyond the individual transaction.

The company should review segregation of duties, approval thresholds, vendor onboarding, beneficial-ownership disclosure and conflict-of-interest controls.

Introduce Dual Approval for High-Risk Transactions

No single manager should ordinarily control supplier selection, confirmation of performance and final payment for significant transactions.

Separating these functions reduces future risk.

Require Related-Party Declarations

Managers involved in procurement should disclose relevant financial or family interests according to appropriate corporate policies.

The company should maintain a documented process for reviewing such conflicts.

Criminal Complaint Strategy Should Be Evidence-Based

Before filing, organize the evidence chronologically and identify the suspected conduct, persons involved, financial loss and supporting documents.

A large volume of unstructured company records is less useful than a coherent evidentiary file.

Foreign Managers May Need Turkish Criminal Counsel

If foreign directors or compliance officers will provide statements or evidence in Turkey, preparation can be important.

They should understand the distinction between complainant, witness and suspect status and the procedural consequences of each.

Do Not Destroy Potentially Adverse Evidence

An internal investigation should preserve evidence that supports and undermines the company’s theory.

Selective evidence preservation can damage credibility later.

Immediate Action Plan

When a foreign company discovers procurement payments to a manager’s relative in Turkey, it should immediately preserve evidence, identify the supplier’s ownership, reconstruct the procurement process, verify delivery or services, compare market prices, trace company payments, examine approvals and conflicts of interest, interview relevant personnel, calculate actual loss, review previous transactions, assess employment and corporate consequences, consider urgent asset-protection measures and determine whether the evidence supports a criminal complaint.

Frequently Asked Questions

Is purchasing from a manager’s relative automatically a crime?

No. The relationship alone does not establish criminal liability. Concealment, deception, unauthorized benefit, fictitious transactions and company loss are among the facts that can materially change the analysis.

What if the supplier actually delivered the goods?

The transaction can still require investigation if prices were inflated, the relationship was concealed or the manager breached corporate duties. Genuine delivery, however, is highly relevant to calculating any actual loss.

Can the manager be accused of fraud?

Potentially, depending on whether the legal elements of fraud are established by the evidence.

Can breach of trust apply?

Potentially, depending on the manager’s authority over company property or assets and the manner in which that authority was allegedly abused.

Can the company inspect the manager’s private phone?

Not automatically. Access to personal devices and communications raises privacy, data-protection and evidentiary issues.

Should the manager be confronted immediately?

Usually the company should first consider evidence preservation and investigative strategy so that relevant records are not lost or altered.

Can the company freeze the manager’s assets?

Interim asset-protection measures may be available if their legal requirements are satisfied. A mere allegation does not automatically justify an asset freeze.

Does filing a criminal complaint recover company money?

Not automatically. Recovery of financial losses may require separate or coordinated private-law remedies.

Should earlier procurement transactions be reviewed?

Yes. Historical review can determine whether the suspicious relationship was isolated or part of a recurring pattern.

What is the most important first step?

Preserve the evidence before confronting the suspected participants. Then reconstruct the complete procurement and payment chain to determine whether the transactions were genuine related-party business, an undisclosed conflict of interest, a breach of corporate duties or conduct potentially amounting to a criminal offense.

Client-Focused Legal Support for Corporate Fraud and Procurement Investigations

Foreign companies discovering suspicious procurement payments in Turkey may need to coordinate internal investigation, criminal-law strategy, corporate liability, employment measures, asset protection and recovery of company funds. Fırat Fesih Kaya Law Office assists foreign investors and international companies with suspected internal fraud, unauthorized related-party transactions, misuse of corporate assets and manager misconduct in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in preserving and evaluating evidence, preparing criminal complaints, coordinating internal investigations, pursuing recovery claims and assessing urgent measures designed to protect company assets.

Phone:
+90 312 434 22 22

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+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

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