Dubber cash chase turns to $30m bank account

Listed software business Dubber is still chasing tens of millions of dollars which were diverted away from a company account.

Dubber CEO Steve McGovern has been suspended. Picture: David Geraghty

Listed call recording software company Dubber is chasing millions of dollars which have been diverted away from an interest bearing term deposit, believed to have been held with National Australia Bank.

The company on Friday suspended its chief executive, Steve McGovern, after funds totalling almost a third of its market value were “applied for other purposes”.

The company’s inquiries are now believed to centre around recovering funds which were meant to be in the bank account, although both the suspended company and NAB declined to comment on Monday.

Dubber’s last annual report said that it had $2.86m of cash and cash equivalents at the end of June, in addition to $30m of cash at call in an interest bearing term deposit. It disclosed only that it was held with a AA3 rated financial institution with a 31 day call back in the name of the company’s legal firm as trustee for the company.

The Melbourne-based legal firm which has been reported as acting as trustee for the funds, Christopher William Legal, is not suggested to have acted illegally and did not comment on Monday.

 Separately, a number of caveats have been lodged against Mr McGovern’s home in Warrandyte in suburban Melbourne over the last month.

They include a company associated with a small construction firm and major financial lenders. There is a mortgage to Macquarie Bank secured against the property, according to title records.

It is not known whether the loans and caveats lodged over the last month are connected to the issues related to the company.

Dubber’s investors include Melbourne billionaire Alex Waislitz, who holds a 15 per cent stake, mainly via his TIGA fund. Mr Waislitz said on Friday he would be “monitoring developments very closely”.

Dubber suspended Mr McGovern after its audit review for its half-year accounts found funds which should have been held on behalf of the company by a third party trustee appeared to have been diverted elsewhere, and its maximum exposure totalled about $26.6m, against the company’s market value of $86.06m.

Senior sources said the board had not authorised money to be spent and allocated in such a way. Mr McGovern is believed to be in the country and assisting the company with its inquiries as it seeks to recover the funds and it is not suggested he has acted illegally.

However, if Dubber is unable to recover funds rapidly, it may be in a position where it would require an equity injection to restore its balance sheet.

Acting CEO Peter Pawlowitsch did not respond to inquiries.

Before entering a trading halt on Tuesday, Dubber’s shares had jumped 37.5 per cent to 22c per share in the past month after it touted its AI capabilities.

The company kept its full-year revenue guidance of $45m — a 50 per cent lift on 2023 — and said delivery of Dubber services to its global customer base was unaffected.

Almost 18 months ago, in a late Friday filing, Dubber disclosed an $18.5m hole in its balance sheet. It related to about $10.3m of payments it was entitled to under contracts “not probable” of being collected, and therefore no longer classified as revenue.

Dubber also failed to collect a further $8.2m from a “single customer,” but continued to do business with the client, describing the relationship as “sound”.

When Dubber released its latest quarterly results in January, Mr McGovern talked up the company’s “unique AI capabilities” as enterprises continue to deploy cloud-based unified communications technologies such as Cisco Webex Calling and Microsoft Teams.

“Dubber’s unique proposition is to be the data capture backbone for the world’s telecommunications networks, having a long-held belief that AI based services will be fundamental to every type of network-based communication in the future,” Mr McGovern said at the time.

When it released its results in August 2023, Dubber talked up its relationships with Optus and Telstra, and said it had established “partner agreements” with NuWave and Alianza in North America and Nuuday in Denmark.