Westpac swoops on Forum Finance boss’s soccer club

Forum Finance’s liquidators are aggressively pursuing assets overseas in a process that may leave Westpac owning a Greek soccer team, Xanthi.

Westpac is understood to have reprimanded as many as 20 employees as part of a review into the alleged fraud perpetrated against it by Forum Finance and its founder, Bill Papas, above. Sustainable food waste business Iugis was part of the Forum group.

Forum Finance’s liquidators are aggressively pursuing international assets in a process that may leave Westpac owning a high-profile Greek soccer team, as the bank seeks to claw back some of the $300m it claims was defrauded from its coffers.

The liquidator’s activities come as Westpac is understood to have reprimanded as many as 20 employees as part of a review into the alleged fraud perpetrated against it by Forum and its founder, Bill Papas.

Westpac is rounding out an extra tough week after investors and analysts savaged its full-year profit results due to concerns about a sharp decline in home loan margins and rising costs.

The liquidation process being managed by McGrathNicol is now casting its gaze overseas, chasing flows of money that exited the Forum Group Financial Services entity into other companies linked to Mr Papas. The companies in Europe span businesses such as green tea and nut farming and second-division Greek soccer club Xanthi Football Club.

McGrathNicol’s efforts to ramp up legal and retrieval efforts overseas could see Westpac become the owner of Xanthi FC.

While Greek authorities are expected to control the fate of the soccer club, sources said courts could order that Mr Papas is ousted as owner of the club and essentially hand control to Westpac.

The other option would be a forced sale of the club, which would entitle Westpac to make a claim on the funds.

Xanthi is set to begin its regular season in the Greek second division, or Super League 2, with an away match to Pierikos on Sunday in Katerini, an hour’s drive from Thessaloniki where Mr Papas had been living.

In recent months the club has been competing in knockout Greek Cup matches and pre-season friendlies, at least one of which Mr Papas attended.

Mr Papas invested about $15m into Xanthi when he took control of the club late last year, and then appointed Australian coaches who have since been sacked. Socceroos goalkeeper Paul Izzo remains at Xanthi after joining at the same time, and has played in pre-season games.

Two young players, Mohamed Adam and Fabian Monge, joined Xanthi in July from Sydney Olympic – the state league club Mr Papas had backed for several years before resigning as president – but Adam left Xanthi last week and is searching for another European club.

There have been rumours that Xanthi players have not been paid wages in recent weeks, though that is not an uncommon occurrence at cash-strapped lower league soccer clubs.

Forum’s liquidators are expected to pursue other overseas assets linked to the entities, as well as Xanthi. Documents earlier submitted to the Federal Court outlined transactions made to a Greek green tea promoter and Bulgarian nut farmer.

Westpac is chasing Forum Finance’s assets. Picture: NCA NewsWire / Christian Gilles

Former Forum operations chief Craig Rollinson told liquidator court examinations the two entities received the funds to circumvent rules around funding Mr Papas’s Xanthi club.

Theion IKE, a Greek tea promoter, was sent €420,000, while D&D Group, which purported to act as a wholesaler of Greek and Bulgarian nuts, wheat and cereal, received €1.5m.

Mr Papas, who until July – when Westpac’s legal case became public – was the president of Sydney Olympic, bought Xanthi hoping to leverage the club as a way to expand his business interests in Europe. Mr Papas had been residing in Greece since June, but is believed to have departed the country recently.

The Federal Court last month made orders for the arrest of Mr Papas in Greece, after judge ­Michael Lee said Mr Papas “repeatedly disobeyed” court orders and was seeking to avoid being served with key legal documents.

Justice Lee made the order for the warrant, arrest and detention of Mr Papas, and noted that an extradition treaty between Australia and Greece would probably be invoked.

A Westpac spokesman declined to comment on the prospect that the bank may end up owning Xanthi, or on staff matters concerning accountability over the alleged fraud.

According to sources, a couple of senior people in Westpac’s institutional bank within the asset finance unit have left following an accountability review of the alleged fraud against the bank.

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 have already experienced a marked turnover in recent years.

Law firm King & Wood Mallesons was assisting Westpac with a staff review to determine accountability and whether disciplinary action should be ­applied after the bank fell victim to the equipment leasing fraud. It is understood the review did not uncover any evidence of Westpac employees assisting Forum in the alleged fraud, but given the size of the loss to the bank there were issues raised under its consequence management framework.

Westpac chief executive Peter King this week said he was adamant the bank took “appropriate actions” against a group of its own staff, but declined to provide details. “It depends on the individual’s seniority and what they did … I can’t go into individual outcomes,” Mr King said on Monday.

Westpac’s shares tumbled almost 12.2 per cent over this week to close at $22.55 on Friday, with some of the decline due to the bank’s dividend being paid out. But most of the decline reflected analysts questioning why Westpac was chasing market share in the mortgage market at the expense of margin, and if it would be able to rein in costs enough to meet its much-vaunted $8bn cost base by the end of 2024.

The Forum scandal has prompted other banks to reassess their leasing processes.

The Weekend Australian understands McGrathNichol, which is handling the liquidation for a long list of Forum entities, has presented its insights to several other banks on its findings relating to the alleged fraud against Westpac and two global banks. While Westpac is pursuing Forum for about $300m, France’s Societe Generale and Japan’s Sumitomo Mitsui Banking Corporation have also separately lodged civil actions against Forum.

In total, the three civil legal cases amount to alleged fraud of $400m.

The claimed Forum fraud has raised concerns at other financiers about whether they have conducted appropriate checks on their leasing and financing contracts.

Westpac alleges Forum and Mr Papas created fake leasing invoices and forged signatures to secure finance, often for goods that did not exist.