Forum Group director Vincenzo Tesoriero to be called to answer in court for first time

Westpac will cross-examine Forum Group director Vincenzo Tesoriero on his role in an alleged $300m fraud next year. He is seeking to strike out parts of the bank’s claims.

Vincenzo Tesoriero, owner of the above property in Caulfield North Melbourne, is disputing parts of Westpac’s legal case against him. Photo: Aaron Francis/The Australian

Westpac will cross-examine Forum Group director Vincenzo Tesoriero on his role in an alleged $300m fraud next year, as the defendant seeks to strike out parts of the bank’s claims against him and lift an order freezing his assets.

Federal Court Judge Michael Lee has ordered a hearing in March where the court will directly hear from Mr Tesoriero for the first time, in addition to written affidavits he has submitted.

Mr Tesoriero is disputing key aspects of Westpac’s civil action against him, as the bank also sues equipment leasing firm Forum Group, its entities, and founder Bill Papas over the alleged fraud.

In another twist in the case, Mr Papas’s cousin Eric Constantinidis has been added as the 44th defendant in Westpac’s legal action.

The bank’s case centres on allegations that forged signatures and fake contracts were used by Forum and Mr Papas to secure finance for leased goods that often didn’t exist.

The court on Friday heard of the latest affidavit filed by Mr Tesoriero which said he had limited involvement with Forum and he is seeking to end a freezing order on his assets, which include a sprawling property portfolio and a luxury yacht.

Westpac disputed the contents of the affidavit, spurring Justice Lee to call for the cross-examination of Mr Tesoriero beginning on March 9.

“If there is going to be cross-examination of that character, particularly in a case such as this, I think I’d want that to occur in person,” Justice Lee said.

“It seems to me as a matter of procedural fairness then you’ve got to cross-examine him (Mr Tesoriero) ... if you are going to ask me to disbelieve the man’s evidence then I think you’ve got to put it to him.’’

A yacht owned by Forum figure Vincenzo Tesoriero.

Paul Hayes QC, acting for Mr Tesoriero, said Westpac needed to be more specific in its allegations against his client or he would seek to have parts of the case “struck out”.

“The matter not only is flawed as a matter of substance, in terms of what is put against him, but... a further bias in the pleading is a lack of particularity. In particular, his knowledge of Mr Papas’s role in his alleged misconduct in forging the 137 equipment leases,” Mr Hayes said.

He also argued that the freezing order and Westpac’s claims against Mr Tesoriero were “hopelessly weak” in their current form.

But Westpac’s barrister Jeremy Giles SC argued against Mr Tesoriero’s claims and said there were inconsistencies in his affidavits to the court on the amounts, and the nature of the funds he had tipped into Forum.

Westpac wants the freezing order on Mr Tesoriero’s assets continued, and Mr Giles told the court some of the defendant’s claims were not backed by documents.

That included that Mr Tesoriero had subscribed to capital of $6m to $9m in the Forum Group of Companies parent entity, although Mr Giles said he couldn’t provide the court a document to prove that.

“He had hoped, as we understand the evidence, to sell out of the Forum Group of Companies at a profit,” Mr Giles added, referring to a possible sharemarket listing or sale of Mr Tesoriero’s stake in the entity.

Justice Lee turned down a request to provide Mr Tesoriero access to more than $700,000 in funds held with the court for his legal costs, but did raise a court-imposed threshold of $350,000 for legal expenses to $450,000.

Three entities including Forum Group Financial Services, which Westpac alleges was used to funnel money to Mr Papas’s personal accounts and other business interests, were tipped into liquidation from provisional liquidation on Friday.

“Mr Papas who is currently located in Greece, apparently, is the sole director of the three companies,” Justice Lee said.

“Reaching the conclusion that there is no likelihood he is returning to Australia in the foreseeable future and he’s currently not participating in the proceeding (and he has not filed a defence and has not filed an updated notice of address of a service). He has further disconnected an email previously used to communicate with him and not provided any readily available means of communicating with him.

“The conduct of Mr Papas shown by the presently unanswered evidence of the fraudulent way in which Mr Papas has conducted the affairs of Forum Finance, is sufficient to demonstrate a justifiable lack of confidence in his ability to conduct the management of the three companies.”

Mr Papas has been residing in Greece since June after skipping a meeting with Perth-based WesTrac to ask questions about its leasing account. Initially he said he would return to Australia to defend Westpac’s legal action, before citing a positive Covid-19 test, then arguing he couldn’t afford the return flight.

Separate to Westpac’s legal action, French bank Societe Generale and Japan’s Sumitomo Mitsui Banking Corporation are also suing Forum with the three court actions amounting to alleged fraud of $400m.

On Friday, Mr Giles provided the court financial accounts of various Forum entities and queried amounts associated to loans to Mr Tesoriero.

“We don’t accept the characterisation of loans because we think it is stolen money,” Mr Giles said.

Mr Papas was spotted earlier this month attending a game of the Greek football club he owns, despite Justice Lee issuing an Australian arrest warrant which is expected to trigger an extradition order.

Photos posted online showed Mr Papas at Xanthi FC’s game against Pierikos last weekend in Katerini, a town an hour’s drive from Thessaloniki.

Until Westpac’s legal case against Mr Papas became public in July, Mr Papas was president of soccer club Sydney Olympic.

The court had earlier heard claims Mr Papas had breached freezing orders over his assets, after transaction records showed he transferred separate payments of $150,000 and $570,000 to his cousin Mr Constantinidis.

Mr Constantinidis’s lawyers have previously argued the funds were meant to repay debts Mr Papas owed him, including for the repair of a Porsche racing car, race car training, boat hire and almost $300,000 for technology work.

Our Kloud, a technology and server company owned and run by Mr Constantinidis, bought a tranche of Forum’s printer and other equipment leases from administrators in July.

SMBC is seeking leave from the court to serve five foreign defendants in its case against Forum.

Westpac said it will provide further witness evidence and detailed analysis done by the liquidators on the flow of money in and out of Forum entities to the court, ahead of the March hearing date. Liquidator McGrathNicol is also stepping up its pursuit of Mr Papas’s offshore assets, including Xanthi FC.