Apart from pulling out his toenails and suggesting that the go and visit a shrink for trust issues, there are quite number of things one can do…..
1. First you can inform friends and colleagues that he has gone loopy.
2. You can ask if he has any written signed agreements to back up his claim on why he should be breaking the agreement.
3. You can tell him that he is breaking the law and causing financial lost which would make the company unable to pay any monies due to him.
4. Inform him that software piracy is just as serious crime as theft.
5. Not working with people has never helped any one.
6. Send him a legal letter…
7. Telling him that he is an asshole and hope that he pays heed.
8. Tell him that it is unfashionable for dictatorships, and democracy is the new thing.
9. Keep your humour and sense of judgement.
That is far as I have got, anybody got any more to add……..