Federal Court appoints liquidators to Forum Finance

A Federal Court judge has labelled the affairs of equipment leasing group Forum Finance a ‘calculated and elaborate’ fraud.

Forum Finance’s Bill Papas.

Federal Court judge Michael Lee has labelled the affairs of Forum Finance a “calculated and elaborate” fraud, as he appointed liquidators McGrathNicol to the equipment leasing group.

In a case hearing on Friday, Justice Lee was scathing on the apparent affairs of Forum, which is the subject of serious fraud allegations made by Westpac. The bank has outlined potential losses of about $294m, from alleged fraudulent invoices and leases and missing goods.

Westpac’s preferred liquidator McGrathNicol was appointed by the court via partner Jason Ireland and chairman Jason Preston over Forum’s suggestion of Korda Mentha. French bank Societe Generale, which is also pursuing Forum and its boss Bill Papas over fraud allegations, also preferred McGrathNicol.

“It is not an overstatement to remark that it appears that Forum Finance has, by some means or another, been involved in a long-running, calculated and elaborate fraud which would rank high in the catalogue of corporate misfeasance,” Justice Lee said.

“We’ve not heard from the man who appears to be primarily responsible, at least until recent times, for the conduct of the affairs of Forum Finance, the apparently peripatetic Mr Papas who left Australia for Europe for reasons not established.... but coincidence with when things started to unravel with Westpac.”

Justice Lee also noted Forum and Mr Papas had not provided a defence to the action lodged against them, nor a reconciliation of assets and liabilities and the parties had missed two court deadlines for disclosure orders.

Forum and Mr Papas did not oppose the appointment of liquidators to the company on Friday.

Mr Papas had earlier this week pledged to return to Australia on Saturday, although Justice Lee questioned his ability to perform his director’s duties and why firm details of an itinerary were not submitted to the court.

“In my mind at least there remain real concerns as to the ability of Mr Papas to discharge his obligations as director of Forum Finance, in a way which is consistent with the legitimate conduct of the affairs of the company, if that company were to continue to trade in some form,” he said.

“It may be that Mr Papas returns to Australia tomorrow (Saturday), although at present that is not entirely clear.”

Mr Papas – who has not outlined any defence to the court – was until last Friday evening the president of Sydney Olympic Football Club and last year bought Greek soccer team Xanthi FC.

Questions started being raised about his whereabouts when he failed to attend a meeting in Perth in mid-June to address concerns about discrepancies with a Forum client’s account.

Westpac has taken civil legal action against leasing group Forum and Mr Papas, whose full name is Basile Papadimitriou.

Forum’s barrister Andrew Martin said the company was not opposing the liquidation order in the interests of a faster outcome in the court.

Westpac counsel Jeremy Giles, SC, told the court on Friday the bank would help fund McGrathNicol’s liquidation process, as it sought to retrieve its funds.

“The evidence establishes a prima facie case that this company (Forum) has engaged in a fraudulent and dishonest scheme and has indeed been the vehicle of that scheme,” he said.

“Mr Papas is out of the country and one doesn‘t have a terribly satisfactory explanation of whether he is going to return or when.”

Mr Giles said Westpac had approval for an indemnity to McGrathNicol of $250,000 for the first few weeks, and thereafter the bank had a “considerably greater” budget at its disposal.

The case continues.