Billionaire investor Alex Waislitz looks on as Dubber suspends its CEO over ‘missing’ $26.6m

A Melbourne firm that counts Alex Waislitz among its investors, has called in regulators after an audit revealed a missing $26.6m.

Dubber has suspended CEO Steve McGovern with immediate effect. Picture: David Geraghty

Call recording software company Dubber has suspended its chief executive, Steve McGovern, after funds totalling almost a third of its market value, were “applied for other purposes”.

The company’s investors include Melbourne billionaire Alex Waislitz, who holds a 15 per cent stake, mainly via his TIGA fund. Mr Waislitz said 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. This compares with the company’s market value of $86.06m.

It has since referred the matter to the Australian Securities & Investments Commission.

Billionaire investor Alex Waislitz owns about 15 per cent of Dubber.

“A preliminary investigation by the company has uncovered that funds, purported to have been held in a term deposit account, may have been applied for other purposes and are not currently available to the company,” Dubber said in an ASX announcement on Friday.

“Approximately $3.4m of these funds has been recovered and, as it continues its investigation into this matter, the company is evaluating avenues for further recovery of the balance and action that may be required to support any additional funding requirements as a result.

“As a consequence of this matter and as the company continues its investigations, the employment of managing director and CEO Steve McGovern has been suspended with immediate effect. Executive director Peter Pawlowitsch has been appointed to the role of acting CEO during this period.”

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

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

“The company will provide further updates on any material developments in this matter and continues to work with its auditor, Ernst and Young, to finalise and release its 31 December 2023 half-year accounts,” it said.

Almost 18 months ago, in a late Friday filing, Dubber disclosed an $18.5m hole in its balance sheet.

That matter related to about $10.3m of payments it was entitled to under contracts “not probable” of being collected and therefore no longer being 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.

“The Dubber platform is uniquely positioned and capable of fulfilling that opportunity, being integrated into over 215 networks of the world’s most prominent communications service providers, capturing voice and other communications across those networks and enabling the benefits of Conversational AI for the users of the network.

“The company had previously completed a two-year investment in a unique AI capability which has the potential to transform the telecommunications sector by enabling the possibility for AI based outcomes for every communication across a network.

“This investment has the company strongly positioned to continue to expand its product suite in a rapidly growing market.”