)
Online classified advertisement group Frontier Digital Ventures (ASX: FDV) has launched an investigation into its Colombian business, Fincaraíz, which the company reveals has been hit by an apparent misappropriation of funds leading to a freezing of the subsidiary's bank accounts.
The company estimates the funds misappropriated could total as much as US$430,000 ($668,000), including payments that should have been made to Colombia’s taxation authority.
Frontier Digital has revealed that the authority has since frozen the accounts of Fincaraíz, an online marketplace for real estate, pending those payments being made.
The company says it was made aware of the missed tax payments last weekend in the first sign that trouble was brewing in the Colombian business.
Frontier Digital owns and operates online classifieds marketplaces in fast growing emerging regions globally, including the Middle East and Asia.
The company says tax payments in Colombia totalling about US$330,000 ($466,000) were supposed to have been made between 15 January and 14 August this year but instead were apparently transferred “with the involvement of a Fincaraíz employee out of Fincaraíz accounts without the company’s approval”.
“Upon becoming aware of the apparent misappropriation of funds, the company immediately began an investigation into the matter,” says Frontier Digital in an ASX announcement today.
Frontier Digital has also since discovered about US$100,000 ($155,000) of allegedly fraudulent corporate credit card expenses that the company says were incurred by “a small number of Fincaraíz employees across 2023, 2024 and 2025”.
“Those funds appear to have been used for personal expenses unrelated to the operations of Fincaraíz and the payments were not authorised by the company or its subsidiaries,” says Frontier Digital.
“This credit card debt has been paid by the group over the relevant periods in the ordinary course of its business operations and has therefore resulted in an overstatement of the company’s consolidated expenses for the 2023 and 2024 financial years, as well as for the half year ended 30 June 2025.”
Frontier Digital says its FY25 half-year accounts will record the credit card expense accompanied by a note disclosing the alleged misappropriation of funds.
Fincaraíz delivered strong revenue growth of 26 per cent in 2024, contributing to the $52.8 million in revenue, up 1 per cent, recorded by the company for its Latin American operations.
Frontier Digital posted a 2 per cent lift in group revenue to $68.08 million in calendar 2024, although EBITDA slumped by 52 per cent to $1.79 million.
Today’s announcement wiped more than $26 million off the company’s market capitalisation as the shares slumped 17 per cent to a low of 29c. The shares were trading 4c lower at 31c at 2.16pm (AEST).
Frontier Digital reveals that a “small number” of Fincaraíz employees are currently under investigation, with those employees on compulsory paid leave without access to Fincaraíz systems pending a full investigation.
As a precautionary measure, employees from within the affected department are also on paid leave “as a precautionary measure only”.
In the meantime, Frontier Digital is putting in place alternative operating systems and funding arrangements to ensure the operations at Fincaraíz continue as normal.
The company plans to pay its Colombian tax bill in full before the end of next week from existing cash reserves, while the removal of restrictions on Fincaraíz bank accounts will occur within 30 to 45 days of the debt being paid. An as yet unknown interest penalty is also expected to be added to the tax bill.
“The company is in the process of appointing a forensic accountant and tax and criminal counsel to conduct a review of the relevant events and identify any other exposures and risks, in order to determine the details and extent of the apparent misappropriation of funds and seek to recover the funds,” says Frontier Digital.
“The group will continue to co-operate with Colombian authorities in relation to the matter. “
Frontier Digital says it is also prioritising a review of internal controls and governance processes across its businesses.
The review will follow a strategic update to be announced by the company in conjunction with the release of its half-year results, with the update expected to address capital allocation priorities and the strategic direction of the group.
)
