Dubber turfs CEO Steve McGovern over alleged misuse of millions, downgrades revenue and rattles tin for $24m

Communications software provider Dubber has shown its chief executive and co-founder the door following an investigation into the alleged misuse of more than $25 million of company funds.

The cloud-based call-recording technology company on Wednesday said Steve McGovern had been sacked with immediate effect.

His bombshell departure comes almost six weeks after Dubber put its shares into a trading halt to reveal that funds — which it said were supposed to have been held by a third party trustee in a term deposit — may have allegedly been misused by either or both Mr McGovern and the trustee.

Its shares have since been suspended on the Australian Securities Exchange and last changed hands at 22¢.

The financial “inconsistencies” were uncovered as part of an audit of Dubber’s half-year accounts and Mr McGovern was suspended on March 1. It managed to recover $3.4m as it launched an investigation but put its full exposure at about $26.6m.

“From the investigation conducted to date, it is alleged that Mr McGovern and the trustee were likely involved in the unauthorised use of those funds, including for purposes which were not for the company’s benefit,” Dubber said in a statement to the market on Wednesday.

“As a consequence, the company has today terminated the employment of Mr McGovern with immediate effect. Mr McGovern has also ceased to be a director of the company.

“The company will undertake further investigations into the matter as part of its efforts to pursue recovery of the funds.”

Dubber said the investigation showed evidence of recipients of payments that included “certain personnel of the company or entities or individuals associated with them ... however no conclusive evidence has been identified to date that any individual connected to the company other than Mr McGovern was involved in the alleged misappropriation of funds”.

The company named Melbourne law firm Christopher William Legal, whose principal is Mark Madafferi, as trustee.

It said about $60m had been deposited into the trust account to be held in term deposits since mid-2019, with a final payment of $30m deposited in August last year.

“Less material deposits for purported commercial purposes were also made by the company without the express purpose of being invested in term deposits, resulting in a total of $74.8m of payments into the trust account since 2018,” it said.

“As at the date of this report, $26.6m of the funds remain unaccounted for.”

Dubber said the matter had been referred to the Legal Services Board of Victoria and corporate watchdog the Australian Securities and Investments Commission, which secured interim travel restraint orders against Mr McGovern and Mr Madafferi late last month.

It also announced that Peter Pawlowitsch, who took on the top job during Mr McGovern’s suspension, would continue to act as CEO on a salary of $160,000 until a permanent replacement is found.

The announcements coincided with the release of Dubber’s financial results for the six months to the end of December, which showed a 37 per cent jump in revenue compared to a year earlier to $18.73m thanks to solid growth in its European and Americas markets.

It reported an improved net loss of $22.2m but did not declare a dividend. It also downgraded full-year revenue guidance from $45m to between $38.1m and $41.6m.

Dubber is now also rattling the tin for $24.06m through a fully underwritten capital raising priced at a massive discount of just 5¢ a share, with directors committing to $500,000.

Just over $20m will come from a one-for-one accelerated non-renounceable pro-rata entitlement offer, with the remainder sourced via an institution placement to bring in just over $3m.