Made the news again for all the wrong reasons.
Anyone going to nab the alledged mastermind Dunlop yet?
ASX-listed BNPL company IOUpay has entered voluntary administration after the discovery of an alleged $19 million fraud scandal involving former chief financial officer (CFO) Kenneth Kuan and Australian mining businessman Anthony Dunlop.
Key shareholders are fighting the decision, however, with Clee Capital moving to oust the administrators and remove the company from suspension.
$19 million fraud uncovered in March
The fraud allegations first emerged in March, prompting Kuala Lumpur-headquartered IOUpay to suspend trading at $0.05.
IOUpay alleges that Kuan siphoned off up to $19 million over a 12-month period by making unauthorised loans to companies in Malaysia and Indonesia. These companies were affiliated with either Kuan and his wife or with other members of IOUpay's staff.
On 13 March IOUpay announced that it had fired Kuan over unrelated matters, including refusal to follow lawful instructions issued by the board.
The following day, however, IOUpay said it had uncovered 'significant fraud' involving $4 million in missing funds, as well as the falsification of documents from a leading Malaysian law firm that was entrusted with holding the funds.
IOUpay has since launched a civil recovery action against Kuan, whose bank accounts and assets have been frozen by Malaysian authorities. The company has also flagged legal action against Grant Thornton, on the grounds that it failed to adequately check funds during audits conducted in June and December last year.
On 26 April, IOUpay entered voluntary administration, handing control to Daniel Walley and Philip Carter from PricewaterhouseCoopers.
IOUpay is a buy-now-pay-later (BNPL) company focused on the Malaysian and Indonesian markets, offering mobile banking and digital payments and financial services to smartphone users in the region.
The company's valuation breached a peak of around $130 million in 2021. In the same year, it obtained a license from the Malaysian government to engage in money-lending operations, helping it to secure a further $50 million in funding.
Anthony Dunlop allegedly involved with IOUpay loans
The IOUpay scandal allegedly involves one of the leading figures in Australia's mining sector - Western Australian businessman Anthony Dunlop.
In addition to alleging that Kuan has made off with $7 million in funds, IOUpay claims that a further $12 million had been lost on unauthorised loans.
Anthony Dunlop is reportedly the major shareholder of two companies that were recipients of these loans in 2021 - Piminick Investments and Birch Capital.
Dunlop is no stranger to controversy. He is currently facing allegations made by the Australia Securities and Investments Commission (ASIC) that he used his position as director of Capital Mining to make hundreds of thousands of dollars in dishonest payments to both himself and others.
According to a report fromThe Australian Financial Review, documents filed in the Federal Court relating to a separate legal dispute involving IOUpay suggest that Dunlop held considerable sway over the company, despite lacking an official role in its management team or on its board.
The report claims that Dunlop issued instructions via email to IOUpay's managing director Aaron Lee, on matters including board appointments and announcements on the ASX.
Key shareholder wants administration removed
One of IOUpay's key shareholders is fighting against the decision to put the company into voluntary administration. Clee Capital's Terence Clee says he will seek to remove the administrators and retrieve IOUpay from suspension.
'We're not going to be silent on this,' Clee said. 'We're going to be in a fight here.'
According to Clee Capital – which holds a 10% stake in IOUpay – the BNPL company did not need to enter voluntary administration because it still had access to a loan offer from Malaysia's Finran, despite informing the ASX otherwise.
Finran became a 4.9% shareholder in IOUpay after making a $1.5 million investment in the company. On 3 April, it offered IOUpay an interest-free $1.3 billion loan that would be repaid over a 13-month period. Legal documents provided to PwC reportedly indicate that IOUpay considered acceptance of the offer.
