According to his affidavit read in Federal Court on Friday, the business partner of Papas says Westpac’s 600-page statement of claim fails to detail his knowledge of the central fraudulent scheme said to have been masterminded by Papas.

Westpac, along with Japan bank SMBC and French investment bank Societe-Generale, is suing Papas and his liquidated companies for over $400 million in alleged fraudulent loans. Tesoriero is named as a co-respondent in Westpac’s case.

The alleged scam at the heart of the cases involved Forum arranging a portfolio of equipment leases for its customers and borrowing from the banks to cover the amounts it fraudulently claimed were owed for the equipment.

The NSW Police has commenced an investigation into Forum Finance and Papas, and the court has issued an arrest warrant against Papas, who is holing up in Greece and has cut off all communication with lawyers. The warrant was issued after Papas breached an injunction freezing his assets.

The court heard Friday Melbourne-based Tesoriero is seeking to discharge a court order freezing his assets.

“We say the injunction should be discharged because the case falls short of a good arguable case,” said counsel Paul Hayes QC.

“The matter not only is flawed as a matter of substance in terms of what is put against him but the further vice is the lack of particulars of his knowledge of Mr Papas’ role in the alleged conduct.”

Tesoriero’s applications will be heard next March, when Westpac will have a chance to cross examine him on his affidavit.

Counsel for Westpac Jeremy Giles SC told Justice Michael Lee the bank would be asking the court to not accept Tesoriero’s evidence.

“Central to the application appears to be these propositions which arise from Mr Tesoriero’s affidavit: a) Mr Tesoriero invested equity into Forum of some $6 to $9 million, although he can’t give you a document recording any of that; b) he got a little upset with Mr Papas that that money wasn’t realised,” Giles said.

Tesoriero claims he had no involvement in Forum Finance despite signing documents that he never read, the court was told. 

Giles said Westpac had no intention of amending its statement of claim but would be relying on evidence extracted in the cross-examination.

Justice Lee scheduled a two-day hearing for cross examination of Tesoriero starting March 9.

The judge also ordered the winding up of three Forum entities controlled by Papas.

“I have come to the conclusion that there is no likelihool he is returning to Australia in the foreseeable future,” Justice Lee said of Papas.

“He has disconnected his email address and not provided any available means of communicating with him.

“The conduct of Mr Papas shown by the present unanswered evidence…is sufficient to demonstrate a justifiable lack of confidence in his ability to manage the three companies.”

Justice Lee issued a warrant for Papas’ arrest on October 20 for contempt of court after Papas allegedly transferred $720,000 fro one of his companies in breach of a freezing order.

Despite freezing orders made over a number of his companies, Papas asked investment platform Macrovue to transfer $720,000 from one of his companies, Palante Pty Ltd, to Eric Constantinidis who acquired the then liquidated Forum Group business in July.

Papas was last seen in Thessaloniki and has not returned to Australia to face the lawsuits against him. Through his former barrister, Jim Johnson, Papas previously told the court he was in two-weeks isolation after contracting COVID-19 and later claimed he did not have the funds to return home.

“His conduct in relation to this proceeding has been a less than satisfactory one. He has repeatedly disobeyed court orders for the filing of material and provided less than satisfactory information to his solicitors. It might be an exercise in masterly understatement to suggest that the conduct of the proceeding on his behalf has not been consistent with the overarching purpose,” Justice Lee said in ordering the warrant.

Justice Lee noted that despite telling the court he did not have money to purchase an air ticket back to Australia, statements from Papas’ American Express Centurion credit card showed he had spent almost $4,400 at the Hotel King George in Athens and $6,300 at the Danai Beach Resort in Sithonia after arriving in the country in June via Qatar Airway’s business class.

“The evidence discloses that after arriving refreshed by his travel in business class on Qatar Airways, [Papas] then was able to stay at what appears to be somewhat luxurious accommodation in Athens and thence to a beach resort. Whether his American Express Centurion card still remains active, I’m certainly satisfied on the evidence that if he wished to return to Australia, there is no doubt that he would have had access to sufficient funds in order to allow him to do so,” the judge said.

Noting “the impracticality” of Westpac directly serving the contempt charge on Papas, Justice Lee allowed for substituted service of the documents on Papas’ former solicitors Panetta Lawyers, his domestic partner Louise Agostino, and by SMS to his Greek mobile number, which Westpac obtained last month.

Westpac is the largest creditor of Forum by far and is suing to recoup $254 million, which covered equipment allegedly purchased by seven customers. Westpac’s New Zealand branch paid another NZ$42.8 million (AU$40.6 million) to Forum, and that claim has been added to Westpac’s case.

Societe Generale claims a loss of $9 million, which was allegedly transferred for equipment that Forum claimed was purchased by Veolia. 

SMBC is seeking recovery of almost $99 million paid to a unit of Forum Group and Papas. The bank claims it entered into a “receivables contract” with Forum and transferred the $99 million for equipment that Forum claimed had been purchased by Veolia.

Searches have been conducted by independent solicitors from Corrs Chambers Westgarth of four commercial properties owned by Forum in Sydney, Melbourne, Brisbane and Perth, as well as a residential premises in Sydney.

Westpac persuaded Justice Lee to appoint liquidators to Forum Finance in early July, and provisional liquidators to three more related firms, Forum Group Financial Services, Forum Enviro and Forum Enviro (Aust), later in the month. McGrathNicol has stepped in to wind up all four firms.

Papas appointed Mackay Goodwin as voluntary administrators over 25 other companies in the group on July 8. At a creditors meeting later that month, which drew over 200 participants, Mackay Goodwin was replaced by McGrathNicol as administrators over 23 of these firms. Justice Lee ordered the winding up of those companies in late July.

Westpac is represented by Jeremy Giles SC, Victoria Brigden and Catherine Hamilton-Jewell, instructed by MinterEllison. Societe Generale is represented by Sinclair Gray, instructed by Ashurst. SMBC is represented by Emma Beechey, instructed by Jones Day. Tesoriero is represented by Paul Hayes QC and Michael O’Haire, instructed by Madgwicks Lawyers. Forum Group liquidators McGrathNicol are represented by Nick Kidd SC and Ryan Jameson, instructed by Allens. 

The cases are Westpac Banking Corporation v Forum Finance Pty Limited & Anor, Societe Generale v Forum Finance Pty Limited & Anor, SMBC Leasing and Finance, Inc v Forum Enviro (Aust) Pty Ltd (Voluntary Administrators Appointed) & Anor and In the Matter of the Forum Group of Companies Pty Limited (Administrators Appointed) & Ors.

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