Japanese giant SMBC joins Forum Finance pursuit

Exposures linked to alleged fraud by Forum Group and its related entities have eclipsed $400m as Japan’s SMBC joined the pursuit of Forum and its boss Bill Papas.

Forum director Bill Papas, also known as Basile Papadimitriou.

Exposures linked to alleged fraud by Forum Group and its related entities have eclipsed $400m, as Japan’s SMBC Leasing and Finance became the latest company to separately pursue Forum and boss Bill Papas in the Federal Court.

Court filings show SMBC Leasing – part of Sumitomo Mitsui Banking Corporation – filed proceedings against Forum Enviro, an entity that is one of several in the Forum stable that is in voluntary administration. Forum founder and soccer identity Mr Papas, whose full name is Basile Papadimitriou, is listed as a defendant in the proceedings.

The SMBC action was filed on Wednesday and adds to the intrigue and two other cases against equipment leasing group Forum Finance alleging fraud. The two other cases were separately filed by Westpac and French bank Societe Generale.

Westpac has outlined potential losses of about $294m related to Forum Finance across Australia and New Zealand, from alleged fraudulent invoices and leases and missing goods.

Societe Generale has disclosed a potential $9m exposure and is also suing Forum Finance, in a case relating to waste digester machines not being provided to end leasing customer Veolia. Waste digesters are essentially a bin that converts food waste to liquid.

In its legal action, SMBC is seeking to force Forum and Mr Papas to hand over details of their finances and assets. It wants a judgment against them in the amount of $98.9m, plus GST and interest, the court documents show.

SMBC did not respond to requests for comment.

Forum Finance on Wednesday also finally outlined its position in the Westpac case, via an outline of submissions. The court is, though, yet to release the document.

The parties are in court again on Thursday as the legal saga continues.

The court cases and potential exposures to the alleged fraud have been growing since Westpac lodged its case early this month.

ASX-listed Humm Group has disclosed a maximum historical exposure to Forum Finance of $12m, associated with a decommissioned services business that provided equipment finance.

The SMBC court application alleges improper conduct by Forum and calls for: “An order that the second respondent (Mr Papas) pay damages in deceit.”

It also seeks an order that Mr Papas “pay equitable compensation” and pay damages for the “tort of unlawful means conspiracy”.

It requests a declaration that Mr Papas holds on trust for SMBC all funds he has received “or controls that were paid” in connection with receivables contracts, or “traceable property” acquired using those funds.

“An order that the second respondent (Mr Papas) disclose to the applicant all facts within his knowledge as to the present whereabouts of the funds received by the first respondent (Forum) from the applicant (SMBC),” the court documents said.

Federal Court judge Michael Lee appointed liquidators McGrathNicol to Forum Finance on Friday and labelled the company’s affairs a “calculated and elaborate” fraud.

Mr Papas was until July 2 – when Westpac made the court action public – president of Sydney Olympic Football Club and last year bought Greek soccer team Xanthi FC.

Questions began 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.

Mr Papas had mid-last week pledged to return to Australia from Greece on July 10, but did not provide the court with exact details of his itinerary.

The Australian has been unable to confirm whether Mr Papas has returned, after questions were raised about whether the Japan Airways flight his solicitor cited was in fact flying into Sydney over last weekend.

Justice Lee last week questioned Mr Papas’s ability to perform his director’s duties and why firm details of an itinerary were not submitted to the court as evidence of his intention to return.

“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,” Justice Lee said.

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

Separately, firm 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.

Mackay Goodwin said Forum Group employed about 200 staff.

“The administrator has since closed operations of one business unit, Iugis Food Waste, because this business unit‘s ongoing operation was not viable,” the firm said in a statement.

“The administrator is currently reviewing the viability of ongoing operations for two other business units of the Forum Group, those being Forum Group Managed IT Services and Autonomous Energy – a solar panel business.”

Some 30 jobs have been shed from the closed division, meaning staff within the group total 170.

“The administrator has been able to successfully obtain the release of funds to enable payment of wages until 8 July, 2021 for both businesses,” Mackay Goodwin said.

In court last week, the parties were also trying to resolve the issue of a wages bill of $700,000 that was due to be paid to Forum employees.

The administrator’s statement noted “significant interest” in the acquisition of the Forum Group Managed IT Services and Autonomous Energy units, with 95 parties having signed nondisclosure agreements.

The first creditor meeting is July 20.