How do I deal with a business partner whose incompetence will tank my company?

My small but well-known company was founded by my business partner. One year later, his best friend got in the contract as a “silent investor” after lending the business a small amount of money to complete a project. This guy has never worked for the company and his “loan” was actually paid off, but he was never removed from the contract as an investor. This was before I was in the company.

I joined the company 4 years ago as an employee and worked my way up to become a partner. Everything was going well until a few months ago when this “silent investor” got fired from his job in politics because of his horrible relationship with people and utter incompetence (basically no one wanted him around anymore and started pushing him out). The guy suddenly decides he’s coming to work in our company – he just showed up one day – and that he is dissatisfied with the way “his money was handled” (since he claims to be an investor). Before I could do anything about it, he put his claws in our financial department and is now officially our CFO.

The whole thing happened in a very political manner – he took advantage of the fact that my partner is his best friend and will not do anything to jeopardize their friendship. My business partner and I talk about this constantly and profoundly and I can see that he is trying to get us out of this predicament, but is not able to break the friendship barrier. I respect him 100% and do not want to push him into ending the longest and most important friendship in his life (which will inevitably happen if we force the guy out). I understand how hard it must be for him.

The thing is this guy is by far the most incompetent, lazy, egotistical and self-assured person I’ve ever worked with. He’s a perfectly pleasant and intelligent person to be friends with but I think he has issues when it comes to his professional life, because he is simply the worst coworker I have ever had to deal with. His antics don’t bother me nearly as much as his incompetence. There’s no other way to say it: the guy’s a moron and shouldn’t be allowed to work with anything that requires minimum responsibility.

Both me and my business partner have tried to talk to him about it multiple times, showing him the exact consequences of his incompetence (which includes taking us out of the loop and than making the wrong decisions on money matters; losing every single deadline; spending money that we don’t have; not resolving issues to a point where either me or my partner have to get involved and fix negotiations he lost – costing us a shitton of money; sending wrong documents; writing emails we have to apologize for in his behalf; treating our mostly horizontal and super competent team with hierarchy, condescention and sexism, among other problems). However, he simply won’t take any constructive feedback or criticism, and acts superior, as though he is saving us from ourselves. It’s that annoying thing where we know he will miss a deadline, so we ask about it ahead of time trying to help and he’ll get mad he was even asked about it, say everything is fine, not let us help, and then miss the deadline anyway.

Anyway, this guy is going to tank my company. In 5 years of existence we rode out huge debt and got back on our feet and everything was going the right way… until he walked in and it’s getting bad again – to the point we’re scared we won’t be able to pay our employees salaries next month. Since I cannot override my business partner’s decisions, my hands are tied regarding removing him from the company. What can I do to lessen his negative impact on us?