PFS founders say Australian buyers used inquiry to avoid €55m payment

Morans claim EML Payments ‘saw opportunity’ in Central Bank audit

Valerie and Noel Moran. Photograph: Alan Betson

The Meath-based founders of Prepaid Financial Services (PFS) have claimed its new Australian owners saw an opportunity because of a Central Bank investigation into the business to avoid paying out on the final €55 million part of the deal.

Noel and Valerie Moran, who sold PFS to Australian fintech EML Payments in a multimillion euro deal last year, contend the buyer incurred significant costs related to the inquiry that would depress the earnout owed to the couple.

PFS has been the subject of a seven-month investigation by the Central Bank over anti-money laundering and counter-terrorism financing concerns. The business, which represents more than a quarter of EML’s revenues, was founded by the Morans in 2008.

EML clarified in August that the Central Bank had not identified any instances of financial crime, anti-money laundering or counter-terrorism financing events, nor deficiencies with respect to safeguarding, capital adequacy or solvency measures. It gave permission for the Irish subsidiary to sign new customers last week, albeit with restrictions.


Speaking publicly for the first time since the investigation began, Noel Moran said the couple had been severely affected by the audit, both financially and in terms of reputational damage.

The Morans, who owned 81 per cent of PFS, saw the value of their 6.9 per cent stake in EML collapse when news of the audit was announced, with Aus $58.5 million (€36.6 million) wiped off their holding. In addition, they contend that EML, which is listed on the ASX, ramped up costs on the back of the investigation.

Costs incurred

The fintech has incurred costs and provisions of at least Aus $11.4 million (€7 million) to date in relation to the inquiry, although Mr Moran believes the overall bill will be considerably higher. This has an impact on the earnout due to be paid to the couple. While payment is to be made over a three-year period, the targets that must be met are tougher after year one.

“They [EML] saw an opportunity. It was just perfect timing for them because they would have had to pay a significant part of the earnout in year one but then the Central Bank came in and it gave EML an option to accrue a lot of expenses that meant they didn’t have to pay us,” Mr Moran said.

Legal action is considered likely after the Central Bank investigation concludes as the Morans seek to claw back money they believe is owed to them.

The investigation has yet to fully conclude but Mr Moran contends that the remaining aspects of the inquiry are focused on governance, which he said related to PFS’s parent rather than its former owners. He said that in allowing the company to begin taking on customers, the Central Bank had essentially vindicated the couple.

The businessman urged the regulator to review the way by which it informs publicly listed companies of possible investigations.

“Had the Central Bank handled things better initially when informing the new owners about the inquiry then, no public announcement would have even been necessary,” he said.

‘Just an audit’

Mr Moran said the manner in which the regulator had presented the news to EML Payments and the way in which the company had announced it made things seem much more serious than they actually were.

“At the end of the day this was just an audit, the type of audit that takes place all the time. But the way it was announced made things look considerably worse,” he said.

“If you read the letter the Central Bank sent out at face value then you would have thought they were coming in to close the business. I brought up this with them but they said it was just the standard letter sent out in these situations. I think they should have factored in the impact it might have when sent to a publicly listed company,” Mr Moran added.

EML Payments declined to comment. The Central Bank said it does not comment on its engagement with individual firms.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist