Alleged fraudster Bill Papas diverted funds to Greek football club Xanthi from Australia via an elaborate structure that involved the creation of a Bulgarian nut farmer and Greek green tea promoter, supposedly to evade local ownership rules.
Former Forum Group Executive Craig Rollinson said that the creation of two companies that received funding from an Australian entity, which in turn was loaned money from the group, may have been “designed to get around those rules”.
Mr Rollinson was questioned on Monday by Nick Kidd, a barrister for Forum’s liquidator McGrathNicol, as the advisory and restructuring firm probes the failure of Forum on behalf of creditors.
Bill Papas, Forum’s founder and CEO left for Greece weeks before an alleged fraud was made public, as banks, including Westpac, attempted to recover around $400 million.
A subsequent investigation into the group’s dealings has exposed a convoluted maze of payments out of Forum Group Financial Services, the entity at the centre of an alleged fraud that has entangled a trio of global banks.
Forum Financial Services paid funds into multiple entities that liquidators are attempting to track down. Among them was an entity named 286 Carlisle Street, which earlier this year made investments of €420,000 in Theion IKE, a Greece-based promoter of tea, and a €1.5 million in D&D Group, which was set up as a wholesaler of Greek and Bulgarian nuts, wheat and cereal.
Mr Kidd told Mr Rollinson that contracts to invest in these companies, executed by Mr Papas’ associate Vince Tesoriero, were fake contracts. He asked if the genuine reason for the existence of these contracts was to hide payments for Xanthi FC, and to deceive Greek authorities.
“Initially that was not the only purpose, but I was aware they were likely to move funds to Xanthi football club,” Mr Rollinson said.
Mr Kidd presented an email from Mr Papas’ Greece-based lawyer to Mr Rollinson dated February 24 stating that €1.5 million was needed for the club.
A breakdown showed €236,000 was needed for “Popovich” and a total of €974,000 for cash and investments, as well as funds required for scouting an Australian football club.
Mr Rollinson explained that he was conscious Greek football ownership rules meant those investment entities could not be owned by Mr Papas and disclosed to him via WhatsApp they could be connected to Forum and associated entities.
Earlier in the day, Mr Rollinson was presented with an email where he was warned of allegedly fake serial numbers for office equipment, more than three years before allegations of a “Ponzi scheme” operated by Forum surfaced.
Emails produced in an examination of Mr Rollinson in Federal Court on Monday showed he received correspondence from Forum IT employee Mark Elgar on May 25, 2018, connected to equipment contracts worth $550,000 to the Cerebral Palsy Alliance and $1.27 million to Seven Group-owned mining equipment business WesTrac. The email included signed acceptance of delivery notices.
“This is purely so you are aware. These two (big) deals are all fake serials, invoiced to finance,” Mr Elgar wrote.
Mr Rollinson acknowledged he did not follow up on the matter any further after reporting it to Mr Papas. He said he had a conversation with Mr Elgar about the serial numbers for the equipment not being in the company’s systems.
“Knowing what you know now, you know, don’t you, that those two deals were deals involving fake equipment leases, being presented to external funders?”, Mr Kidd asked.
Mr Rollinson replied: “Yes, that is correct, hindsight given clarity.”
The apprehensive exchange between Mr Kidd and Mr Rollinson continued, as the barrister inferred Forum’s alleged fraud could have been revealed in May 2018, had Mr Rollinson done more at the time.