I should also note here that I know that the first mistake I made was allowing this situation to happen in the first place. We have policies now, but we didn't push this employee to adhere to them at the time he joined.
Help?
Help?
If any of that data were ever to be released, it wouldnt be hard to point the finger at the few people who had access (and especially motive). It would be incredibly short-sighted of him to release anything.
This thread has some great advice, but in addition to that it sounded like hes a friend to you? Perhaps soon after he is let go you can have a word with him as a human instead of as a business and just say: "Look, thanks for your hard work, I really appreciate what you've brought to the table. Be aware that people here at the company will notice if you release or reuse anything you worked on here so you might want to make any copies of work stuff you still have disappear. I know its not good timing but youre sitting in a timebomb and I dont want it to blow up under you"