This buddy of mine has been accused of stealing office supplies from his previous workplace but there was never a formal case. He was just discharged when his contract ended.
If it's not on the official record as a reason for separation, then you would be raising an unsubstantiated allegation, which puts you at risk if someone equally chatty spills the beans to the "grapevine" about why he was passed over for this position. Do you want to be paying a portion of your paycheck to this person for an extended period of time?
Sounds like there are ample reasons that are already known to not hire this buddy. If they are willing to hire him knowing about rampant absenteeism, unwillingness to meet work day standards and a lousy attitude about his work.... despite all of those things, is "hey, he stole a bundle of paper for his printer at home" going to override all those other red flags, warning flares and alarm sirens that they already have?
I don't see that this is information that they need to make a decision. It seems like a pretty clear "slam dunk" that your buddy is a DO NOT HIRE candidate. I don't see that there is evidence to back up this claim. I don't see how this makes you look better or more professional, and it would possibly put you at some personal financial risk.
If you remain silent, they hire him, and you find yourself in a work environment where no one ever has paper clips available, post a question here asking about how to deal with the guilt, and I'll show up to take responsibility for your situation.