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I'd almost say you should hint towards the owner about making sure the cameras are working properly. But then if something was caught right away it'd look like you knew all along and didn't want to tell him.
I'd be more up front with the employee. Give him one more chance. Let him know the consequences of what he's doing to the company, and if he can't respect that, then tell him you'll have to let the owner decide what to do. Easier said than done, but that goes for a lot of things. Just do it, but don't rat him out until you've given him the opportunity to change his ways. If he won't change after you've called him out, then **** em.
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