Covid-19 positive keeps Forum Finance boss Bill Papas away from fraud claims

Forum Finance boss Bill Papas has blamed a positive Covid-19 test for scuppering his return to Australia from Greece to face serious allegations of a $400m fraud.

Westpac is suing Forum Finance in the Federal Court. Picture: NCA NewsWire / Gaye Gerard

Forum Finance boss Bill Papas has blamed a positive Covid-19 test for scuppering his return to Australia from Greece to face serious allegations of a $400m fraud, brought by Westpac and two other banks.

But legal efforts by Westpac to target Mr Papas’ empire progressed on Thursday after the Federal Court ordered that Forum Financial Services, which appeared to have functioned as a company treasury, be placed into liquidation.

However, Federal Court judge Michael Lee knocked back attempts by the bank to topple Mackay Goodwin administrators, who are overseeing 24 Forum Group companies, in favour of McGrathNicol ahead of a Tuesday creditor’s meeting.

Mr Papas, who headed the Forum group of companies, was due to return to Australia last week to face allegations of fraud which have now grown to $400m in potential losses across three banks.

But in a Federal Court hearing on Thursday, Mr Papas’s barrister Jim Johnson submitted a medical certificate from Greece that showed the positive result for a Covid-19 test, conducted on July 8.

The fraud allegations come after Westpac uncovered irregularities in accounts suggesting Forum Finance had wrongfully been paid $294m since 2018.

Westpac first confronted Mr Papas about concerns relating to alleged fraud on customer accounts on June 11, but his whereabouts have been unknown since June 15 after he failed to show up for a meeting to explain the escalating situation.

Westpac moved on Thursday to expand its attempts to freeze Mr Papas’ assets, targeting his international assets including the Greek football team Xanthi FC.

Justice Lee used the hearing on Thursday to express frustration that Mr Papas had not adhered to disclosure orders he made to outline all his assets.

“I’ve made two orders. I don’t make orders on the basis that they can be treated like traffic lights in Athens, I want them complied with,” he said.

However attempts by Mr Papas’ lawyers to have him swear an affidavit have been complicated by him being in Greece.

Mr Johnson, acting for Forum Finance and Mr Papas said it was now unclear whether he could even return to the country.

“The current approach by the Australian government, it appears unlikely that the government will allow my client to come back into the country,” he said.

Mr Johnson also noted there would be difficulty in the identification of Mr Papas’ property for the swearing of any affidavit.

“There’s a lot been said about my client and we need to be very careful,” he said.

Mr Johnson asked the court for Mr Papas be able to access $2500 per week for living expenses. That does not include a $50,000 capped amount to pay legal expenses.

Mr Papas’ and Forum Finance’s assets are the subject of a freezing order while the matter is contested in court.

Societe Generale and Japan’s SMBC Leasing and Finance, also allegedly victims of fraud from Forum Finance and associated entities, were also heard on Thursday supporting Westpac’s claim.

The three court actions relate to allegations of fraudulent activity, including forged and fraudulent invoices and leases, and missing goods.

But Mr Johnson said Forum Finance would put on evidence in the coming days that “large amounts” of money had gone back to Westpac.

Forum Finance boss Bill Papas.

Westpac told the court Forum’s bank records showed huge sums of money had flowed to other entities.

The bank’s barrister Jeremy Giles, SC, reading through bank records said funds were being funnelled to prop up the group.

“The idea that forum group does not have a business that is being propped up and dependent on those fraud seems to be plainly fanciful,” he said.

“The idea that there is a business there that can be saved through the voluntary administration process is beyond belief.”

That follows Justice Lee appointing liquidators McGrathNicol to Forum Finance on July 9, when he labelled the company’s affairs a “calculated and elaborate” fraud.

Mr Papas – whose full name is Basile Papadimitriou – was until July 2 president of Sydney Olympic Football Club and last year bought Greek soccer team Xanthi FC.

Westpac Australia’s exposure to the alleged fraud is pegged at $254.5m, while the bank’s New Zealand arm is also exposed to the tune of $39.8m.

The New Zealand claim is not part of the Federal Court case, but Westpac flagged it may seek to roll up the matter into the current case.

SMBC on Wednesday became the latest bank to separately pursue Forum and boss Bill Papas in the Federal Court, with its claim amounting to $98.9m, plus GST and interest.

Societe Generale has an exposure of $9m to Forum Finance.

Westpac’s barrister led the charge to widen freezing orders against Forum and Mr Papas, targeting his assets outside of Australia.

The move comes after the bank was able to access bank account records of the company, with Westpac’s submitting the bank statements revealed a web of transactions between Forum Finance companies and offshore entities.

However, efforts to gain access to Forum’s documents has been complicated by its data manager OurKloud, which the court heard was now asking for $8,100 to cover the costs of handing over the records.

Mr Giles said Westpac was concerned about assets in Greece, Germany, the United Kingdom, and The United Arab Emirates. He also noted corporate interests in Singapore and Mr Papas’s acquisition of the Xanthi club.

“There is reason to believe there are assets in the hand of individuals, which frankly we want to be aware of as quickly as possible,” Mr Giles said.

Westpac said it was now seeking the freezing order cap be raised to target a return of “circa $360m” representing the trio of banks’ claims.

Mr Giles also made several references to “a gentleman of whom I suspect we may be hearing more of” in his submissions.

Mr Giles said the bank was even more motivated to freeze Mr Papas’s and his colleague Vincenzo Tesoriero’s assets given the two “just won’t comply with your honours asset affidavit orders” to hand over a statement of their holdings. Mr Tesoriero is a Forum director, be says he attempted to resign from the entity.

SMBC’s barrister Emma Beechey raised issues on Thursday about the conduct of an entity called Forum Enviro Australia.

An SMBC spokesman on Thursday said: “Due to the pending case, we will not be able to reply.”

Mackay Goodwin was appointed as voluntary administrator over the Forum Group of companies on July 8, and has been investigating various entities and reviewing their viability.

The first creditor meeting is July 20.