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- IOUpay (IOU) says its former Chief Financial Officer (CFO), Kenneth Kuan Choon Hsuing, is under investigation by the Malaysian police for “significant” fraud
- The digital banking firm says it has “strong grounds” to suspect that Mr Hsiung misappropriated up to $7 million in company funds
- Investigations to date have uncovered multiple unauthorised loans made out to business entities operating across Malaysia and Indonesia
- Meanwhile, Mr Hsiung — who was sacked by the company earlier this month — is part of a group taking legal action against IOUpay to replace the company’s board
- The ASX suspended IOUpay shares from trade on Wednesday morning, with the company last trading at 4.1 cents
IOUpay (IOU) has announced its Chief Financial Officer (CFO), Kenneth Kuan Choon Hsuing, is under investigation by the Malaysian police for “significant” fraud.
The company said it had “strong grounds” to suspect that Mr Hsiung misappropriated up to $7 million in company funds relating to the its partnership with IDSB in September last year.
“The sophisticated fraud involved actively concealing the true status of approximately A$7 million in cash that was purportedly held by a reputable stakeholding firm in Malaysia, as a stakeholder for completion of the IDSB transaction,” IOU said in a press release.
“Following the renegotiation of that transaction in August 2022, only A$3 million was required for completion, with the remaining A$4 million classified as cash available in the company’s financial reports.”
The company said based on the current status of the investigation, its accounts would need to be re-stated.
IOU’s board has begun discussions with auditors Grant Thornton Malaysia and MNSA to determine how the misappropriation of funds remained undetected.
Meanwhile, further investigations have uncovered multiple unauthorised loans made out to business entities operating across Malaysia and Indonesia.
As it assesses the extent and nature of the alleged fraud, however, IOUpay also faces a legal challenge from shareholder Clee Capital, who — among a group of other shareholders — is looking to remove and replace the current IOU board.
Mr Hsiung, who was sacked earlier this month, is part of the group taking legal action against IOU.
IOU has started removing employees from the company’s Malaysian office who were associated with the former CFO.
Further reductions in the headcount will be made in the coming weeks while IOU prioritises areas including marketing, technology and finance to sustain optimum levels to ensure business stability.
IOU has temporarily paused its BNPL business, though it expects this segment to resume by the end of March with a focus on a strictly limited number of existing profitable merchant customers.
The ASX has suspended IOU shares in light of today’s news, and IOU will not be added back onto the ASX until it can demonstrate that its financial condition is adequate to warrant the quotation of shares.
The company intends to apply for reinstatement once it has finalised discussions with its financiers to ensure sufficient cash flow.
IOU last traded at 4.1 cents.
