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

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

State president Michael Kroger secures 25% control for party, but signals further legal action to gain all shares

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Victorian Liberal president Michael Kroger outside the court in Melbourne.



Victorian Liberal president Michael Kroger outside the court in Melbourne.
Photograph: David Crosling/AAP

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 two-thirds 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.

With Australian Associated Press

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