Vic­to­rian Lib­er­als win par­tial vic­tory in bat­tle for $70m Cor­mack fund

The Guardian Australia - - News - Amy Re­meikis

Vic­to­rian Lib­eral pres­i­dent Michael Kroger has scored a par­tial court vic­tory in his bat­tle to re­gain con­trol of a $70m fundrais­ing cor­po­ra­tion, but only man­aged to se­cure 25% of the fund’s shares.

Kroger has not ruled out fur­ther ac­tion, as he seeks to gain full con­trol over the Cor­mack Foun­da­tion’s mil­lions, af­ter a dis­pute be­tween the Vic­to­rian arm of the party and the foun­da­tion in 2016 led to a re­la­tion­ship break­down.

But a spokesman for the Cor­mack Foun­da­tion said the judg­ment con­firmed the funds “are con­trolled by an in­de­pen­dent board, gov­erned by its con­sti­tu­tion and are not owned or con­trolled by the Vic­to­rian Lib­eral party as con­tended”.

The spokesman said the judge­ment re­jected the party’s claims to the as­sets and all of the shares in the foun­da­tion, as well as re­ject­ing “its al­ter­na­tive claim to two-thirds of Cor­mack Foun­da­tion’s share­hold­ing”.

“Jus­tice [Jonathan] Beach did or­der the re­in­state­ment of Cor­mack Foun­da­tion shares held by two of the found­ing di­rec­tors, and vested them for the ben­e­fit of nom­i­nees of the Lib­eral party,” the spokesman said in a state­ment.

“How­ever jus­tice Beach said this did not give the party, or its nom­i­nees the power to ap­point di­rec­tors.

“... It re­mains en­tirely for the board to de­ter­mine the tim­ing and quan­tum of any do­na­tions and to con­duct all of its other ac­tiv­i­ties. In this con­text, the re­in­state­ment of the found­ing di­rec­tors’ shares will have no prac­ti­cal im­pact and can at best be con­sid­ered a Pyrrhic vic­tory, if a vic­tory at all.”

The fund was first es­tab­lished in 1988, to man­age $15m raised from the sale of a broad­cast ra­dio li­cence be­long­ing to the party.

Kroger had ar­gued that two of the three orig­i­nal share­hold­ers, Hugh Mor­gan and John Calvert-Jones, held their shares in trust for the Lib­eral party, giv­ing it own­er­ship of twothirds of the funds.

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Both men re­signed from the fund, which now has eight share­hold­ers, last year.

Hand­ing down his de­ci­sion in Mel­bourne on Thursday, fed­eral court jus­tice Jonathan Beach found the party was en­ti­tled to 25% of the shares of the $70m fund.

Kroger said he ex­pected share­hold­ers to hand con­trol to the party.

“In 1988 we in­cor­po­rated Cor­mack, there were 99 shares, the court has said we owned 66 of them,” he said.

“The ques­tion is, how come we don’t own it to­day – we haven’t sold Cor­mack … we have never sold the Cor­mack Foun­da­tion, we never sold our shares in it, so how come we don’t con­trol two-thirds of it to­day?

“And that is be­cause two of our friends, Hugh and John, signed their dec­la­ra­tions say­ing if they got any­one else to be­come a share­holder, they would sign the dec­la­ra­tions say­ing they held their shares in trust for us and they didn’t do that.

“So it has moved out of our hands in a way in which we are very un­happy about. So we now say to them, look, have a look at the judg­ment, it is very clear: we owned this as­set when it started, we have never sold it – why don’t we con­trol it to­day? So we say please ac­cept the de­ci­sion of the court and as a mat­ter of de­cency and in­tegrity, hand the shares back to the Lib­eral party.”

Kroger has at­tempted to shoot down re­ports the Vic­to­rian arm of the Lib­er­als is di­vided un­der his lead­er­ship, af­ter com­plaints he took the Cor­mack bat­tle pub­lic, and is­sues over the di­rec­tion of the party. He has re­peat­edly de­nied there are is­sues as the party pre­pares to face a state elec­tion in five months time, and a fed­eral elec­tion some­time be­fore May.

“We tried as a party on more than 20 oc­ca­sions to set­tle this mat­ter out of court – prime min­is­ters, pre­miers, pres­i­dents of all per­sua­sions on our side ap­proached the Cor­mack di­rec­tors and tried to set­tle this mat­ter. It was not our choice to go to court,” he said.

“…The $19m we were or­dered to­day, are shares, we are not propos­ing to cash them in or sell them, so that is a mat­ter for Cor­mack. All do­na­tions are im­por­tant, but I have to tell you in pol­i­tics, donors come and go – so in the end, peo­ple know that Matthew and the state team have done a very good job, they want to get rid of the An­drews gov­ern­ment and I don’t think it will have a great ef­fect on Mal­colm’s cam­paign, if at all.”

The orig­i­nal fall­ing out was sparked by the foun­da­tion’s do­na­tions to the 2016 elec­tion cam­paigns of Fam­ily First and the Lib­eral Demo­crat.

Kroger’s at­tempt at to­tal con­trol is seen as a de­sire to stop the fund from do­nat­ing to op­pos­ing par­ties, as well as pro­vide much needed do­na­tions to the Vic­to­rian Lib­er­als, with the party still re­cov­er­ing from the loss of $1.5m for­mer state di­rec­tor Damien Man­tach was found to have stolen.

The court case re­vealed that mem­ber­ship of the Vic­to­rian Lib­er­als had fallen from be­tween 18,000 and 22,000 in 1988 when the fund was first es­tab­lished, to 10,000 paid mem­bers and 3,000 pend­ing at the last count.

Pho­to­graph: David Crosling/AAP

Vic­to­rian Lib­eral pres­i­dent Michael Kroger out­side the court in Mel­bourne.

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