The long pursuit of alleged fraudster, Forum founder Bill Papas

The fraud squad has been keeping close tabs on a Westpac’s Federal Court case that is pursuing Bill Papas, pictured in Greece last year.

The wheels of justice are turning slowly in the quest to close the net on alleged bank fraudster Bill Papas.

Westpac, Sumitomo Mitsui Banking Corporation and Societe Generale are separately chasing Papas in the Federal Court over allegations of fake and fraudulent equipment leases that led to the banks being defrauded by as much as $500m.

Westpac also referred the matter to NSW Police mid-last year. It’s been a long process, but this column understands key Westpac employees have been interviewed by police as they step up their evidence gathering on the case.

It’s understood the authorities are also probing whether Papas may have broader criminal links, associated with money laundering rings. Papas’s closest confidants and associates are also being scrutinised by police.

Depending on the material and evidence provided against Papas it may lead to charges being laid. Westpac has been providing the police with reams of material for close to a year.

The Financial Crimes Squad has been concurrently keeping close tabs on Westpac’s Federal Court case which is pursuing Papas in an attempt to claw back hundreds of millions of dollars. Papas has refused to engage with that legal process prompting a warrant for his arrest after the Federal Court found him in contempt of orders.

That related to Papas allegedly breaching court orders that froze the usage of funds and assets. He now resides in Greece after leaving Australia in mid-2021 when questions started being asked about the validity of his company’s equipment leasing contracts.

NSW Police referred the inquiries to the Financial Crimes Squad about a year ago. NSW Police were contacted for comment on Thursday. Westpac, which made a provision for the alleged fraud in its accounts, did undertake an accountability review last year as it assessed how the equipment leasing fraud was able to occur undetected.

Last year, a couple of senior people in Westpac’s institutional bank within the asset finance unit left following the accountability review of the alleged fraud.

About a dozen employees had their bonuses axed or docked in relation to not properly undertaking their role, and those numbers would have been higher but the relevant divisions had already experienced marked turnover in recent years.

Westpac’s relationship with Papas and his Forum Group is said to date back to the bank’s acquisition of business units from Lloyds Banking Group Australia in 2013.

Westpac agreed to acquire Capital Finance Australia Ltd and BOS International Australia for $1.45bn. That transaction included a $3.9bn motor vehicle finance book, a $2.9bn equipment finance book and a $1.6bn corporate loan portfolio.

The subsequent mess that emerged eight years later underscores the importance of a due diligence process that is thorough and leaves no stone unturned. This matter, and the lessons the bank hopefully takes away from it, will take many years to play out.

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AMP’s shrinkage

As AMP’s investors call for the wealth and asset management group to beef-up its capital return, there may be another stake to add to the divestment pile.

Asked about AMP’s joint venture holdings on Thursday, chief executive Alexis George said at least one of those was on the block. She was referring to AMP’s 24.9 per cent stake in Los Angeles-based real estate investment manager PCCP.

AMP chief executive Alexis George. Picture: John Feder

“Given we’ve just sold all of our real estate assets that’s probably not a strategic holding for us, it’s something we’ll begin to look at,” George told this column. AMP’s first-half accounts value the PCCP holding at $169m and also list $317m in assets held for sale.

George said AMP intended to retain its strategic holdings in China Life Pension Company and China Life AMP Asset Management. “That is pretty much aligned with what we do in terms of pensions and asset management, and they’ve been a good asset for us. We have strong relationships with them so that’s not something that we’d be looking at immediately,” she added.

While AMP has reportedly dropped away from lodging a final bid for Westpac’s platforms business, George wasn’t ruling out other acquisitions on Thursday.

“As we look forward, scale is still important for the businesses,” she said. “I don’t want to pursue FUM (funds under management) for FUM’s sake … It’s also capability. There’s other aspects of our wealth business where we might want to buy some capability in that space. I think it would be mainly around the digital, data kind of area.”

George wouldn’t confirm reports AMP is no longer in the race for Westpac’s platform business, ahead of final bids being due late this month. “I am absolutely committed to returning that $1.1bn of capital and won’t say anything else at this point.”

AMP told analysts it had about $300m in capital that was earmarked for potential mergers and acquisitions or would be returned to investors. It was also holding on to some deal proceeds to meet new regulatory capital requirements and pay out a hybrid note issuance.

Over the past year, AMP has agreed to sell its Collimate business which spans real estate and infrastructure, and has already completed transactions to offload its global equities and fixed income unit and infrastructure debt business. It also sold a residual stake in its life insurance arm.

On the sale of Collimate – which will complete over two deals in coming months – AMP noted $20m in stranded costs, spanning technology and employees that would need to be removed over time.