Managing Director found not liable for EUR 54 million damages in “Fake President Fraud” | ZFZ Postcard Cases
The Austrian Supreme Court recently ruled on the liability of a managing director in a case of “Fake President Fraud” – a scam under which the scammer poses as a company’s executive, and manipulates an employee of the company into transferring funds.
In the case at hand, an accounting employee transferred a sum of EUR 54 million to fraudsters who posed as the company’s managing director in an elaborate identity theft fraud.
In respond to the attack, the company sued its now former managing director in attempt to recover the lost funds, based on the managing director’s statutory liability. The company argued that the managing director had not taken sufficient precautions against such attacks. However, the Supreme Court held that the managing director had established an adequate control system as detailed within the framework of the statutory business judgement rule to prevent such losses.
The Court ruled that as the “Fake President Fraud” specifically aims to circumvent such a generally effective control system, the managing director cannot be held liable for the lost funds.
Read more on this decision (in German) here.