Key figure at heart of Forum Finance alleged $294m fraud ‘missing’

Westpac has been unable to locate the key figure at the heart of a $293.4m alleged fraud that has caught up some of the biggest names in corporate Australia.

Westpac chief executive Peter King. Picture: Jonathan Ng

Westpac has been unable to find the figure at the centre of a $293.4m alleged fraud at the bank since mid-June, in a scandal that has ensnared French Bank Societe Generale among other key business names.

Court documents reveal Forum Finance managing director Basille Papadimitriou hasn’t been heard from since June 15, after he failed to meet representatives from a client to explain an $8m discrepancy in loan accounts.

Affidavits from key bank figures reveal Westpac only stumbled across the huge alleged fraud after a routine contact from a customer seeking to secure more leased items.

The documents show WesTrac, one of Australia’s largest suppliers of heavy machinery, contacted Westpac in late May seeking to boost its leasing facility to $50m.

But when Westpac revealed to WesTrac it was nearing its current limit of $12.5m headroom, after drawing down $9.7m, senior business figures were alarmed.

WesTrac treasury operations manager Carly Rosbach-Smith is reported to have told Westpac head of consumers and industrials managing director Nicholas Atony O’Brien “that drawn level seems high”.

Mr O’Brien’s affidavit reveals subsequent communication revealed WesTrac had only sought to secure a $1.6m facility to fund a printer/photocopier.

By June 14 WesTrac’s broker Eqwe had contacted Forum Finance and Mr Papadimitriou, who said that they “would repay the exposure on the WesTrac facility”.

The affidavit reveals assurances from Mr Papadimitriou that Westpac had been paid back $4.4m but that the money failed to eventuate.

The documents show when Mr Papadimitriou was called to Perth to explain the significant discrepancy in funds he reportedly failed to show up.

Westpac head of Consumer and Industrials Nick O’Brien.

“A meeting had been scheduled between WesTrac and Forum to review the situation, but Bill Papas never turned up to the meeting at WesTrac,” Ms Rosbach-Smith is reported to have told Mr O’Brien.

“Thirty minutes after the meeting was due to commence a representative of Forum advised that Mr Papas had suffered some type of medical situation and would be unable to attend the meeting.”

Documents show that following this, Westpac began scrutinising loan documents that raised increasing concerns among staff and the probity of Forum Finance’s contracts.

The bank urged customers not to send anything to Forum Finance while the bank sought to grasp the extent of the potential fraud.

By June 27, Westpac head of credit restructuring Mark John revealed the full extent of exposure that had swollen from the original $9.7m revealed in late May at WesTrac to $294.3m across the bank.

Westpac Australia’s exposure is pegged at $254.5m, while the bank’s New Zealand arm is also exposed to the tune of $39.8m ($NZ42.8m).

The bank had identified at least seven customers who stated “that most or all of the contracts provided to them by Westpac are not genuine and that the underlying assets allegedly financed do not exist”.

On July 1, lawyers for Westpac served a letter at Forum Finance, sparking a flurry of communication from lawyers.

The bank alleges a key factor that allowed the fraud to go unchecked for so long was the payments made by customers not “directly into the Eqwe bank account held at Westpac as required under the Master Sale Agreement”.

However, documents reveal Eqwe director Luke Price alleged: “Westpac has been aware and accepted that the scheduled payments by some customers were not paid into the Westpac bank account as required under the Master Sale Agreement.”

Mr Price is also one of the few people who appeared to know where Mr Papadimitriou is, referenced in one affidavit as having told bank staff “Bill is in a Perth Hospital. Anxiety or heart scare” when he could not be found.

In the wake of the explosive allegations, search warrants were issued for Forum Finance’s Melbourne, Brisbane, Sydney and Perth offices, as well as Mr Papadimitriou’s Rozelle home.

Mr Papadimitriou’s home is owned by Vincenzo Frank Tesoriero, a director in Forum Finance.

Justice Michael Lee ordered that a Dell XPS laptop and the relevant passwords for the iPad seized in the raids at the Rozelle property be searched for “any listed things”.

Westpac has also moved to liquidate Forum Finance and freeze the assets of the company and Mr Papadimitriou in order to claw back the missing millions.

Late last Friday a federal court ordered a provisional liquidator be appointed to the Forum Finance group by Thursday July 8.

A case management hearing is scheduled for Friday morning.

Mr Papadimitriou could not be contacted for comment.