‘Cash for the boys’: How underworld figures pulled the strings at ASX company

The British-born tech titan held the purse strings at Dubber, a company that specialises in voice recording technology used by Telstra, Optus and other major groups with call centres, and counts leading Sydney fund manager Regal as well as the Thorney Investment Group as significant shareholders.

With Dubber looking for better interest rates for its cash reserves, the company had allowed McGovern to deposit its cash in the trust account of Madafferi’s law firm on the proviso it would then be invested in term deposits brokered at above-market rates by Madafferi’s son, Chris Madafferi, a finance broker.

Unknown to Dubber’s board, the term deposits were never taken out.

Instead, Madafferi’s trust account, stuffed with Dubber’s cash, became a piggy bank for the underworld figures who for years bankrolled McGovern’s private business investments.

Madafferi and McGovern’s money troubles with gangland figures spectacularly unravelled earlier this year when the company discovered $26.6 million of reserves that were supposed to be kept safe in term deposits had disappeared, leading to an investigation by the corporate watchdog and McGovern leaving the company.

According to a report prepared by KPMG for Dubber, drawn from emails, text messages and a ledger of the trust fund, more than $90 million was funnelled into the trust account between 2016 and 2024. Almost $75 million came from money raised from Dubber’s unknowing shareholders in various capital raising.

The report does not include any texts from McGovern to Madafferi in response to the lawyer’s pleading.

On April 1, 2020 – eleven days after those fateful messages referencing the ‘boys’ and their demand for payment – Dubber launched a capital raising to bring in $10 million from shareholders. Those shareholders would include billionaire Alex Waislitz, keen technology investor and the former son-in-law of Visy magnate Dick Pratt, who had no idea of the trouble McGovern was facing.

A week later, Abou-Eid texted McGovern: “Money has landed…Boys are happy…Thank you mate”.

The text exchanges are just one part of the report that has tried to piece together the flow of funds in and out of the Madafferi trust account.

The report also lists dozens of six figure and seven figure payments to figures with underworld links, drawn from the trust fund’s ledger which was provided by Madafferi to Dubber after the cash shortfall was identified.

Those payments include $200,000 to John Khoury at Star Casino in 2019 who at that time was banned from gambling in casinos in Sydney and Melbourne due to police concerns.

Ugo Fanizza, a former Victorian Police detective and associate of Gatto and Khoury, is also listed in the ledger, as is an entity – since deregistered – managed by colourful sharemarket investor Charles Pellegrino.

The ledger also shows that entities associated with Abou-Eid and his family members received $4.7 million in payments from the trust fund but also deposited $2.6 million into the trust.

A further $6 million in payments out of the fund and $9 million were listed under “unidentified parties”, according to the report.

As well as the millions sent to underworld associates, Dubber’s cash was also used to pay out old business debts incurred by McGovern during earlier business ventures and for property deals.

Some of these deals include people with no links to any gangland activities. This includes private lenders who provide lines of credit to people at high-interest rates who are known to provide short-term loans to start up businesses around Melbourne. Others are property developers who appear to have been conducting separate business with McGovern and Madafferi.

The report also indicates underworld figures had held large tranches of shares in Dubber.

According to the report, a month after the April 2020 capital raising, Abou-Eid texted McGovern: “Looking to sell 2m shares at $1.05 if you can orchestrate it please mate”.

Fifteen days later, Abou-Eid sent another text to McGovern regarding the shares: “Steve, no stress which way you decide to go. $1.14 -$1.15 would be a good exit for me and John if you can organise it please. We can discuss next moves after that.”

The report does not make it clear whether any share transfer took place.

Who exactly “the boys” are also still remains a mystery.

According to KPMG: “For context, we understand the term “the boys”, may be a colloquial term referring to Mr Dominic “Mick” Gatto and his associates, including John Khoury and possibly Ugo Fanizza.”

Fanizza and Gatto did not respond to messages.

Khoury told this masthead: “I have never had anything to do with Dubber.”

“I have known Mark Madafferi for a long time. I have had business dealings with him and everyone else you mentioned in your message (Fanizza, Abou-Eid). So yes, I’ve done deals with Mark Madafferi.

“I can tell you that Mick Gatto has nothing to do with this. He has nothing to do with Dubber or Madafferi and he’ll tell you that himself. He’s one million per cent not involved.”

Khoury also denied ever owning any Dubber shares. “Also, I don’t like being called an underworld figure. It’s caused problems for me,” he said.

Abou-Eid also responded to this masthead’s inquiry over text saying: “Mark Madafferi has acted for me in his capacity as a lawyer numerous times.”

“I have in the past helped him raise funds for his clients when needed, and they have been duly returned. John Khoury and myself have been close friends for decades.

“Steve McGovern was introduced to me by Mark Madafferi, as one of his clients over the years.

“There is nothing more to add.”

This masthead is not suggesting Khoury, Fanizza, Pellegrino or the Abou-Eids are engaged in criminal activities or had any knowledge that any money they received from the trust had been allegedly sourced from Dubber’s cash reserves. This masthead is not suggesting that Gatto had any knowledge of the fund, just that the report includes that allegation.

As for Madafferi, he has long insisted that the troubles with Dubber’s cash were a problem for McGovern that he had been helping to resolve.

Madafferi sent a searing message to McGovern and another Dubber executive in 2018 saying he had provided legal advice for years to Dubber without payment.

“I am not a partner of the Dubber group, I did not receive the % of shares I was promised, and not even the number of shares I was promised, for work done up to the listing.

“What are you going to do for me???”

McGovern did not respond to questions. Chris Madafferi declined to answer questions, telling this masthead: “As the matter is still under investigation, I have been advised it would be inappropriate to answer any questions from the media.”

The lawyer for Mark Madafferi, Bill Doogue, also said that because the matter was under investigation he had advised his client not to comment to the media. Mark Madafferi appears to have retired from law in August this year.

In response to questions from this masthead, a spokesperson for Dubber said: “The company is continuing its investigations, as is ASIC, into the circumstances of the misuse of company funds. It would be prejudicial and inappropriate for the company to comment as it follows the appropriate legal recovery processes.”