Biotech company Phosphagenics has accused its former chief executive, Esra Ogru, and another former employee of being implicated in the theft of $5.7 million from the company.
In what one analyst called the "worst scandal" in the sector for years, Phosphagenics said an investigation by forensic accountants Deloitte claimed funds totalling $5.7 million had been misappropriated between 2005 and 2013.
This had involved the company "paying funds in respect of false invoices", it said. "Dr Esra Ogru has been dismissed by the board as an employee of Phosphagenics. The company alleges that she is implicated in and has benefited from the misappropriated funds," Phosphagenics said.
The report has not been released. Dr Ogru did not respond to Fairfax Media's requests for comment.
Simon Marais, from the company's biggest shareholder, Allan Gray Australia, which has a 13 per cent stake, described the announcement as "very unfortunate" but said "these things seem to happen from time to time".
Dr Ogru was suspended by Phosphagenics on July 1, after the company noticed irregularities in its invoicing and accounting records. Earlier this week, its shares plunged 19 per cent on Dr Ogru's resignation. Phosphagenics said on Wednesday that six people were involved in the alleged theft and it was confident it would receive "substantial restitution and compensation from the various parties responsible for the misappropriations".
An unnamed legal firm is working on Phosphagenics' behalf to retrieve funds. The Australian Securities and Investments Commission declined to comment and Victoria Police did not respond.
Phosphagenics, which is valued at $117.4 million, is developing a portfolio of cosmetics for the global beauty industry. It has $14 million in cash and 37 employees.
The company founder, joint chief executive and second-largest shareholder, Harry Rosen, flew back from New York on Monday to take control of its operations, a move welcomed by Mr Marais.
"He knows how to run the company and has money in the business," Mr Marais said.
Bell Potter healthcare analyst Stuart Roberts called Mr Rosen a "good operator" and said the stock was in "good shape". Still, this was "probably the worst scandal" he had seen in years of covering the sector.
Former Phosphagenics chief financial officer Ashley Arnott said there was no sign of trouble when he left in January. He told Fairfax Media this week: "I was there until after the financial-year process was through, and the audit, and that was all fine." The company is audited by Ernst & Young.
Dr Ogru, a molecular biologist with a PhD, had been joint chief executive since 2010.
She has been a regular on home shopping channels to promote Phosphagenics' beauty treatments. Its products are sold in hundreds of shops in Australia, including Myer and David Jones.
Property records show Phosphagenics last week slapped caveats on four properties owned by Dr Ogru, together valued at more than $2.3 million. Dr Ogru also has more than $680,000 of Phosphagenics shares.
Phosphagenics shares edged up 4.55 per cent on Wednesday to close at 11.5¢.