The board of ASX small cap IOUpay handed management to PricewaterhouseCoopers as voluntary directors on Wednesday after a significant fraud that siphoned off thousands and thousands of {dollars} left the fintech unable to pay its payments.

Shares within the Malaysia-focused fintech (ASX:IOU) have been suspended at $0.04 cents for the reason that fraud was first uncovered in mid March.

The fintech supplies smartphone cellular banking and digital funds in Malaysia and Indonesia alongside BNPL companies and OTT (over-the-top) media companies by way of native telcos.

IOUpay has been looking for round $5 million to recapitalise over the previous a number of weeks, and had agreed to debt funding with Sydney finance firm Finran when the lender pulled the deal.

Daniel Walley and Philip Carter from PwC at the moment are directors.

The alleged fraud concerned the corporate’s former CFO, Kenneth Kuan Choon Hsuing, who was sacked over different issues on March 13, together with refusal to obey the board’s lawful directions.. The lacking funds had been uncovered the next day in what the corporate referred to as a “important fraud” and concerned falsified paperwork from a number one Malaysian regulation agency, which claimed to be holding capital in belief.

IOUpay referred to as a halt to commerce in its shares the next day and is now flagging authorized motion towards auditors Grant Thornton for failing to verify the funds existed throughout audits in June and December final 12 months.

The preliminary discovery of the fraud in its Malaysian workplace concerned round $7 million in money allotted in the direction of an acquisition. Solely $3 million was used and the excellent $4m was supposedly being held by the regulation agency. The corporate now believes as much as $19 million could have been siphoned off over the previous 12 months in a sequence of unauthorised loans to corporations in Malaysia and Indonesia related to Kuan and his spouse in addition to different former IOUpay staff.

Kuan is at the moment being investigated by Malaysian authorities. In an replace to the market final week IOUpay mentioned it had launched civil restoration motion towards Kuan, and the financial institution accounts and property of the defendants had been frozen to help with restoration proceedings.

After the Malaysian Excessive Court docket accredited a raid on the previous CFO and associated events, 23 digital units and plenty of paperwork had been seized, and at the moment are being analysed forensic IT specialists.

IOUpay additionally detected and blocked plenty of makes an attempt to realize unauthorised entry to the corporate’s pc techniques by different administration personnel related to Kuan. These individuals have been dismissed, and reported to Malaysian police.

The fintech has already spent the final two years heading off litigation by its former company advisor Clee Capital, which assisted with a $50 million capital elevate in early 2021. Clee enlisted Kuan as a part of its authorized actions.

One dispute concerned 15 million IOUpay choices at an train worth of $1 as a part of the capital elevating deal. The corporate finally granted Clee the choices in November final 12 months.

The corporate, which floated at $1 a share in 2000, hasn’t seen its share worth rise about $0.14 cents within the final 12 months.

Clee Capital returned to the courts final month trying to dismiss the board a fortnight after the fraud was revealed, utilizing a witness assertion from Kuan as a part of its case.

Clee sought to restrain IOUpay from elevating capital and coming into into any mortgage agreements.

The matter was thrown out earlier this month by the Federal Court docket, with prices awarded towards Clee.

The judgment outlines the monetary state of IOUpay intimately, which shed greater than 100 jobs to depart it with simply 42 employees within the wake of discovering the fraud.

In its assertion to the ASX yesterday, IOUpay’s board mentioned “the directors will likely be finest positioned to guage all real proposals to ship the perfect consequence for collectors and shareholders.

“The Directors can even evaluation and report on current occasions, and particularly examine any allegations of fraud involving the Firm or its subsidiaries. The Administrators welcome this evaluation, and can cooperate in full,” the corporate mentioned.

The corporate’s working subsidiaries in Malaysia, iSentric Sdn Bhd and IOUpay (Asia) Sdn Bhd, proceed to function as regular and there will likely be minimal enterprise disruption.

A common assembly had been referred to as for Could 3 to think about the elimination of administrators, however the appointment of the directors means shareholders can not take away or appoint board members with out their approval. Whether or not the assembly proceeds is now as much as the directors.