In a hearing on Friday afternoon, Westpac’s barrister Jeremy Giles SC said the bank wants Papas to be convicted of contempt for allegedly transferring funds out of one of his firms, Palante Pty Ltd, despite freezing orders over his assets.

“We have brought a motion that Mr Papas be convicted of contempt in relation to dealing with some monies which we allege are in breach of the freezing order,” Giles said.

Papas was last seen in the Greek city of 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.

Westpac, French investment bank Societe Generale and Japan bank SMBC have filed court proceedings seeking to recoup over $400 million in funds loaned to Forum as part of what Justice Lee has called an “elaborate” fraud. Westpac’s suit names founder Papas and Vince Tesoriero as respondents.

Papas goes dark in real life and online

On Friday, Justice Lee heard Westpac had struggled to locate Papas’ postal address after being told that he had dropped his solicitors in the case, Panetta & Associates Lawyers, on September 29.

While Rocco Panetta informed Westpac that Papas’ address for service was a home in the Sydney suburb of Rozelle, Giles noted this was not where the former Forum boss was located.

“We all know that he’s not residing there and your Honour, of course, understands this is of a little importance for us going forward,” the barrister said.

If Westpac won judgment against Papas, there was a foreseeable debate about registering that judgment in Greece, Giles said.

Justice Lee noted that Panetta’s notice of ceasing to act was “irregular” because it listed Papas’ last known address in Rozelle when he had not lived there “for quite some time”.

“Didn’t some leading Australian newspaper find his address?” the judge asked.

“I think that’s right. There’s been photographs of it,” Giles replied.

Papas was also unreachable by email, the court heard.

Judge calls former solicitors to court in search for Papas

In an attempt to swiftly resolve the problem of reaching Papas, Justice Lee ordered Westpac to contact Panetta during the Friday hearing to get the solicitor to appear and offer information about Papas’ location.

“All I want to know is what [Panetta] knows about this man’s whereabouts and I’d like to understand that without the necessity to go through this, to use a technical term, palaver,” the judge said.

After a phone call and email to Panetta went unanswered, the judge adjourned the matter briefly to allow more time.

On returning to court on late Friday afternoon, Giles informed Justice Lee that further attempts to contact Panetta had been unsuccessful.

“Your Honour, I’m instructed that my instructing solicitors have sought to contact Mr Panetta by ringing his mobile, his landline, sending a text message … and by email,” Giles said.

The judge stood the matter over until Wednesday when Panetta will need to appear.

Legal spat looms over $773,000 in Forum funds

The court also heard Friday that claims over funds relating to another home in Rozelle owned by Tesoriero had been made by Westpac, SMBC, Tesoriero and his former lawyers at Fortis Law.

While a $1.2 million deposit on the home had been paid by Tesoriero and returned to him by an unnamed purchaser, around $773,000 had been transferred into a fund now held by Tesoriero’s current lawyers Madgwicks.

“Frankly the only likely debate about that is whether it is solely Westpac’s claim or whether [SMBC] can trace some money into it,” Giles said.

Westpac had found out about the transaction at “one minute to midnight” and didn’t seek to stop it, the court heard.

The bank then opted for its “only commercial alternative”, sending a letter to Tesoriero’s then solicitors at Fortis Law asking for the funds to be paid either into court or into a controlled monies account. While Fortis originally agreed to this, only $773,000 out of the $1.2 million was transferred into an account in their name, with no explanation offered about the difference in funds, the court heard.

After Fortis was dropped by Tesoriero, the law firm said it would continue to hold the money “as security for payment of legal fees in this matter”. This position was then reversed, with the money transferred to Madgwicks.

However, Giles noted that Fortis was still “maintaining their lien” regarding the distribution of Tesoriero’s files, claiming they were owed $233,000 in legal fees.

Justice Lee ordered that the $773,000 be paid directly into court, with a debate about whose funds they actually were to be held at a later date.

Tesoriero’s lawyer, Sazz Nasimi of Madgwicks, initially resisted this, saying that money was “the only liquid funds” available to his client because of global freezing orders over his assets. Even allowing Tesoriero to appear at the future hearing regarding the fate of the money did not help, the solicitor said.

“It doesn’t resolve the issue of there being no funds at the moment to keep the fuel in the car,” Nasimi told the court.

“I’d like to spend other people’s money too. If it is Westpac’s money, he’s spending their money… The quicker that issue is determined the better,” the judge replied.

Justice Lee said he would be open to an application to vary the freezing orders against Tesoriero however.

Creditors circle over alleged $400M fraud

The alleged scam at the heart of the banks’ lawsuits 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 have commenced an investigation into Forum Finance and Papas.

Westpac is the largest creditor of Forum by far and is suing to recoup $254 million, which covered equipment allegedly purchased by seven customers. Those customers were Veolia Environmental Services., law firm HWL Ebsworth, construction equipment provider WesTrac, hospitality and liquor firm ALH Group, shopping mall management giant Scentre, supermarket chain Coles and aged care provider Catholic Healthcare.

Westpac’s New Zealand branch paid another NZ$42.8 million (AU$40.6 million) to Forum, and that claim has now 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. A spokesperson for Veolia has confirmed forged documents had been created but said it had not suffered any financial loss.

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.

Thorn Group has also revealed it may have been ensnared in the alleged fraud, having funds of up to $2.2 million potentially tied up in the collapsed equipment leasing firm.

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.

The Forum group of companies, launched by Papas in December 2011, specialised in hardware and software solutions for business clients. It offered “flexible financial agreements” to enable businesses to improve their technology, according to the company’s website.

Westpac is represented by Jeremy Giles SC, James Arnott SC 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 Madgwicks Lawyers. Forum Group liquidators McGrathNicol are represented by Nick Kidd SC, 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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