Competition Fraud Hamburg – Breach of Contract | Violation of Non-Compete Agreements

In most cases, competition fraud is defined by an employee deceiving their employer. Regardless of the industry, most employment contracts contain a clause stating that the employee may not engage in secondary employment with a company offering the same products or services as the primary employer during the period of employment (and in certain cases also afterwards), as this creates a risk of conflicts of interest, poaching and disclosure of confidential information.

If you suspect one of your employees of acting disloyally and in a manner detrimental to your business, contact the detectives of Kurtz Detective Agency Hamburg: +49 40 2320 5053.

Disclosure of Confidential Information by Employees

Employees with dual roles who, in addition to their main employer, are paid by a second company (usually undeclared) to pass on internal company information to unauthorised third parties are corporate spies. They commit the criminal offence of “breach of confidentiality” (Section 203 of the German Criminal Code, which also applies to trade secrets). The transfer of sensitive company information to third parties or competitors can cause severe damage to the affected business (loss of revenue, staff migration, reputational damage, loss of clients, etc.). Even the slightest suspicion should prompt action, and the mole should be identified by our Hamburg detectives: kontakt@kurtz-detektei-hamburg.de.

Case Study of Competition Fraud by an Employee

Time and again, employees are tempted to pursue two tracks – the primary motivation being greed. The fact that they are also harming their main employer seems to be of little concern, as demonstrated by the following case from 2004:

The Müller family (all names changed) has inherited a considerable sum and wishes to build a house. A developed plot of land measuring 1,200 square metres has already been purchased; the house is to have a footprint of approximately 140 square metres, include a basement, an upper floor and an attic suitable for conversion, and also feature direct access from the house to the garage. After researching possible construction companies, they ask the company Walter for a cost estimate. The owner, Mr Walter, is delighted and sends his best client manager, Mr Dietrich, to the Müllers. Mr Dietrich provides comprehensive advice, and the family is impressed with his plans and calculations, agreeing to sign a preliminary contract. The contract value amounts to approximately 230,000 euros. Up to this point, everything is in order. Mr Dietrich fills in the preliminary contract form between the Müller family and entrepreneur Winter; the Müllers only need to sign. They do so, and Mr Dietrich promises to be in touch shortly.

Summary Dismissal Upon Proof

Do you spot the mistake? Mr Walter’s employee entered the construction company Winter into the preliminary contract. Why? He is employed by Walter as a client manager and simultaneously works as a managing director for Winter. Mr Walter, however, is unaware of this secondary activity and later wonders why the Müller family no longer responds. Upon enquiry, the deception is uncovered: Mr Dietrich is summarily dismissed, and with the help of a solicitor the Müller family is also able to withdraw from the preliminary contract. Mr Dietrich not only attempted to enrich himself but also caused (initially) significant financial damage to his employer and jeopardised Mr Walter’s professional reputation.

Proof of competition fraud is not always as straightforward as in this case. Employers often do not even consider the possibility of being deceived and therefore carry out no investigations. In other cases, competition fraud can only be documented and proven in a court-admissible manner with the help of detectives. The commercial investigators of Kurtz Detective Agency Hamburg are your IHK-certified expert specialists: +49 40 2320 5053.