Deductible expenses are expenses that are ordinary and necessary. "An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary."
There is no reason that repair or replacement of equipment would not be an allowable expense, even if the machine was intentionally broken.
(I will note that illegal expenses are not deductible, such as bribes and kickbacks. But this does not seem to be involved here. Even if an employee did something illegal, that does not mean you did something illegal, unless they did it at your direction and control.)
