The unfolding fraud drama involving Sydney-based lease financing company, Forum Finance, has caught some of  the world’s biggest banks by surprise.

On July 2, Westpac Bank (ASX:WBC) blew the whistle on a potential fraud committed by its client, Forum Finance (FF), after discovering irregularities with some of FF’s contracts and invoices.

According to court documents submitted by Westpac, FF is accused of falsifying leasing contracts that enabled it to obtain funds from Westpac to the tune of $285 million.

FF’s CEO and founder Bill Papas is said to be somewhere in Greece and has missed the first court hearing, with his lawyer saying he had contracted COVID-19.

Other major banks have since come forward, saying they were also duped by FF.

Japanese-based Sumitomo Bank is claiming $100 million in its litigation, and France-based Societte Generale is filing to recover $9 million.

Meanwhile, small cap BNPL fintech HUMM Group (ASX:HUM) announced that it was also victim in the scandal, confirming that it was potentially exposed to $12 million to FF’s fraudulent activities.

Humm said its records indicate its now decommissioned Managed Services division had generated business linked to FF between 2016 and 2018.

Humm however, has since sold the majority of the Managed Services assets to a third party in 2018, which has left it with the residual $12 million exposure.

The Humm share price dropped 3% on the day it was announced to 98c, but has since rebounded to $1.05 after reporting a record fourth quarter.


Other ASX stocks in hot water recently:

Humm and Westpac aren’t the only ASX companies to have reported or been connected with fraudulent activities this year.

Cann Group (ASX:CAN)

In early February, medicinal cannabis company Cann Group  put itself in a trading halt after uncovering a cyber security incident involving a third party.

The company said it had made payments of approximately $3.6 million to an overseas contractor in relation to works being undertaken for its Mildura facility.

However those payments were instead diverted and received by an unknown third party, as a result of a “complex and sophisticated cyber fraud perpetrated against the company and its overseas contractor.”

Just last week however, Cann said it was able to recover $1.2 million of those funds through a Court proceeding, with criminal investigations still ongoing.

Phoslock Environmental Tech (ASX:PET)

The water tech company announced a bombshell to the market in October 2020, after admitting to accounting irregularities related to its China operations, which led to several of its China-based employees being fired.

The fraudulent activity had been identified by its auditor KMPG, and although no numerical loss figures have been announced, Phoslock’s share price has been on an indefinite trading suspension.

Emerge Gaming (ASX:EM1)

The struggling company has seen its fair share of controversies related to its Miggster gaming platform launched in November 2020.

To market the new platform, the company partnered with Spain’s Tecnología de Impacto Multiple (TIM), and within a matter of months, Miggster had amassed around 150,000 paying subscribers.

However, this has led to queries from the ASX, after it emerged that the first 12,000 invitations to Miggster were in fact sent to a pre-selected group of CROWD1 affiliate members who had pre-registered with Miggster.

CROWD1 is an affiliate of TIM, and has in the past been flagged by various government regulators for operating get-rich-quick schemes.

Just to be clear: there has never been any suggestions that EM1’s directors had acted improperly or unlawfully in any way.

Nuix (ASX:NXL)

The biggest drama of the year has arguably been that of Nuix.

Although no evidence of fraud has been found, corporate regulators ASIC said that gaps in the company’s records have allowed a pre-IPO investor turn a $3,000 investment into an $80 million windfall.

The ongoing saga has also entangled Nuix’s biggest shareholder Macquarie Bank Group (ASX:MQG), which took the forensics data company public in December 2020.

ASIC is currently investigating whether Macquarie had purposely overstated Nuix’s sales forecasts before the listing.

Nuix’s former CEO Rod Vawdrey resigned from the company last month, but there are reports he is now being investigated for his role at a previous company, Fujitsu Australia.


Share prices today: