12.11.2026

When the contract becomes a tool for embezzlement

Can embezzlement occur when the works contracted by a commercial company have actually been carried out, and the sums of money have been paid directly to the service provider, without the director of the beneficiary company ever having come into possession of them? Case law offers different answers to this question, reflecting distinct interpretations of the constituent elements of the offence of embezzlement. In what follows, we aim to present our own perspective on this issue.

The issue is particularly relevant in the case of commercial transactions where the reduction in a company’s assets is not achieved through the direct misappropriation of sums of money, but through apparently lawful contractual arrangements, such as works contracts or service contracts, in which the value of the services provided is deliberately overvalued.

Firstly, the actual performance of works or services does not, in itself, preclude the existence of the offence of embezzlement. Of course, a distinction must be made between a mere ill-advised commercial decision, whereby the company accepts an unfavourable price, and a situation in which the overvaluation of services is carried out deliberately, with the aim of unjustifiably transferring funds to another natural or legal person. Not every contract concluded at a high price constitutes a criminal offence, just as not every difference between the market value of a service and the agreed price can be equated with fraudulent misappropriation.

The situation is, however, fundamentally different when the price is set artificially, without any real economic justification, and the circumstances surrounding the conclusion and performance of the contract reveal the intention of those managing the company’s assets to transfer part of those assets for the benefit of third parties. In such a scenario, the fact that the contracted works were carried out, in whole or in part, does not, in our view, negate the potentially fraudulent nature of the transaction. What is relevant is not solely the material existence of the service, but the relationship between its actual value and the amount paid, as well as the purpose pursued through the conclusion and performance of the contract. In other words, the difference between the actual value of the service and the price paid may represent precisely the financial value unlawfully appropriated, where overvaluation constitutes the means by which the fraudulent transfer of the company’s funds is effected.

Secondly, the offence of embezzlement does not require the director to have ‘taken possession’ in advance of the sums of money transferred for the benefit of another person. This conclusion follows directly from the provisions of Article 295 of the Criminal Code, which expressly criminalises misappropriation not only for one’s own benefit, but also ‘for another’. However, if it were accepted that the director must, in all cases, first take possession of the assets in order to subsequently transfer them to another person, this latter provision would become meaningless.

All the more so, in the case of book money, the direct transfer of funds from the account of the company under management to a third party’s account may in fact constitute the specific means by which misappropriation ‘for another’ is carried out. Consequently, the relevant criterion is not whether the director personally received the transferred sums, but whether, by taking advantage of their management powers, they caused those sums to be misappropriated, without authorisation, for their own benefit or that of another person.

At the same time, such situations must be distinguished from the use, in bad faith, of the company’s assets or credit for a purpose contrary to its interests, which is criminalised under Article 272(1)(b) of Law No. 31/1990. Where the transaction goes beyond the scope of a prejudicial use of the company’s assets and fulfils the elements of fraudulent misappropriation, the legal classification must be analysed primarily from the perspective of embezzlement, including by reference to the subsidiarity clause provided for in Article 281 of Law No. 31/1990.

Ultimately, determining whether such transactions are lawful or fraudulent requires an examination of the reality and value of the services provided, the economic justification for the contracts, the relationships between the parties involved, and the destination of the transferred sums. The mere existence of contracts, invoices or quotations cannot replace this analysis, just as the finding of an overvaluation cannot automatically lead to a conviction for the offence in the absence of proof of its constituent elements.

In conclusion, embezzlement must not be confused with any detrimental economic decision, nor can it be ruled out simply because the contracted services were performed, in full or in part, or because the company’s funds were transferred directly to a third party’s assets. A contrary interpretation would lead to the artificial exclusion from the scope of criminal liability of certain mechanisms of fraudulent misappropriation, precisely because of the appearance of legality conferred by the contracts used to conceal them.

An article by Mihai Trandafir – Managing Associate (mtrandafir@stoica-asociatii.ro) and Ana Marițiu – Junior Lawyer (amaritiu@stoica-asociatii.ro), STOICA & ASOCIATII.