Liquidators investigating the alleged $400 million bank fraud committed by Forum Group and its founder, Bill Papas, have claimed that the company may have acted in a similar way as far back as 2013.
A report issued by McGrath Nichols on the findings of a team of forensic investigators tied to liquidators McGrathNichol, Jason Preston, Jason Ireland and Katherine Souzou said that while the focus of their work was from 1 July, 2018 to 30 June, 2021, they had found documents that suggested similar acts were committed “as far back as at least 2013”.
According to the “Australian Financial Review”, McGrathNichol alleged in the report that fraudulent contracts across the Forum Group and associated entities were worth over $500 million.
The report findings were based on the analysis of 4.9 million documents, 110,000 transactions in 150 bank accounts held by Forum and its associated entities.
It further alleged that Mr Papas and others deliberately omitted entries into financial accounts, manipulated financial accounts and established Forum Group Financial Services outside the holding company and which held the rest of the Forum Group entities.
“It appears that [Forum Group Financial Services] was set up in 2017 as the scheme was escalating, predominantly to disguise the source and applications of the funds that had been obtained under the scheme within the Group,” the report stated.
The AFR had reported in September that suspicions about the conduct of Forum Group arose before it had begun its dealings with Westpac bank in 2018, when Melbourne finance and investment firm Wingate Group and Sydney-based MAIA Financial began to question financial arrangements with the group in 2017 and 2018. Forum Group cut off its links to the two companies.
The alleged fraud on Westpac began to surface following a chance call in May this year with its West Trac client which exposed an anomaly in a contract with Forum Group.
Mr Papas left Australia for Greece on 17 June, six days after Westpac contacted him about the contact anomaly.
The Sumitomo Mitsui Banking Corporation of Japan and Société Generale of France have joined Westpac in claiming fraudulent activities involving Mr Papas and Forum Group. The report showed that around $297million was taken from the banks as part of the fraudulent scheme.
“The extent of the alleged fraudulent activity and scheme escalated throughout the period of focus between 2018 to 2021, with new financiers being introduced to meet ongoing operational and financial obligations,” the McGrathNicol report noted.
It said that a large portion of the funds went to meet prior financial obligations. The remainder of the funds went into supporting loss-making businesses, investment in new ventures, buying new properties and supporting the extravagant lifestyles of Mr Papas and business associate Vincenzo Tesoriero.
The role of Forum’s chief financial officer Tony Bouchahine was also examined, but that this was subject to a previous suppression order. The report does not suggest whether Mr Bouchahine made any financial gain from the Forum Group’s alleged fraudulent activities.
“The liquidators will be lodging Mr Papas and Mr Bouchahine’s ROCAPs (Report on Company Activities and Property) with ASIC (Australian Securities and Investments Commission) shortly, noting they are largely incomplete and have not complied with the Liquidators’ requests in substantiation,” the report stated.
“Additionally, in the event Mr Tesoriero does not comply with the above second and final request in the requested timeframe, he too will be reported to ASIC for non-compliance.”