Liberal Party bails out John Pesutto, agreeing to $1.5m loan

The Victorian Liberal Party has agreed to loan former leader John Pesutto the money he needs to pay the legal bill of his colleague Moira Deeming, stave off bankruptcy and avoid a byelection in his marginal seat.

The party’s administrative committee on Thursday night voted to loan Pesutto $1.55 million after a lengthy debate over whether to use party funds to resolve his protracted dispute with Deeming, who had threatened to pursue other Liberal figures for the costs owed to her.

John Pesutto arrives at the Administrative Committee meeting to plead his case.Credit: Luis Enrique Ascui

In an email to party members, state president Phil Davis declared the decision would enable Pesutto to pay Deeming and for the party to do its job of holding the government to account.

He noted that Pesutto would repay the money at a market-based interest rate, providing the party with a return on its intervention.

“Settling this matter once and for all is in the interests of the Party, as it will see an end to the ongoing commentary that is letting Labor get away with their appalling performance,” Davis said.

“By ensuring that Mrs Deeming has been paid, there will be no Hawthorn byelection, and the State Parliamentary team can focus on the urgent needs of the Victorian community, particularly campaigning to change the government at the 2026 election.”

The decision defuses a crisis that had already cost Pesutto his job and was threatening the leadership of Brad Battin, who earlier in the day refused to say whether he would support the proposed, party-funded rescue package.

The party’s 19-member administrative committee began meeting shortly after 6pm to decide the proposal to help Pesutto cover the balance of court-ordered costs he owes colleague Deeming following her successful defamation case against him.

When asked on Thursday how he would vote at the meeting, Battin declined to answer but expressed confidence the meeting would resolve the crisis. “After tonight, we will hopefully have a clear path,” Battin said.

The details of the proposed loan were still being worked out hours before the meeting, with disagreements over security arrangements and guarantors. Pesutto had proposed offering his superannuation savings as collateral to secure the loan, which was made through a party entity, Vapold.

The administrative committee was evenly split heading into the meeting between members who want to use party funds to halt bankruptcy proceedings against Pesutto and those who are vehemently opposed to any party-funded bailout.

Opposition Leader Brad Battin.Credit: Christopher Hopkins

The three most critical votes around the table were Battin, the Liberal Party’s most senior federal parliamentarian, Dan Tehan, and Davis, who has worked at length with Pesutto and other party office holders to develop the rescue package.

Speaking as he entered the meeting, Pesutto said he hoped the vote would go his way but was bracing for a long night.

“I’m very aware of what’s riding on this decision, so I’ll give it my best presentation, as I’ve always tended to do in public life,” Pesutto said.

“Hopefully, they’ll make a decision that goes my way as well. I don’t think there’s a colleague I haven’t spoken to today.”

Broadcaster and Tony Abbott’s former chief of staff, Peta Credlin, has earlier warned that party members will never forgive any official or MP who votes to lend party money to Pesutto.

Deeming’s dispute with Pesutto and other party colleagues began in March 2023 when she spoke at a women’s rights rally which was gate-crashed by neo-Nazis. In a panicked response, Pesutto falsely accused Deeming of associating with neo-Nazis and pushed for her suspension and eventual expulsion from the party room.

The dispute culminated in a Federal Court finding that Pesutto had defamed Deeming. He was ordered to pay her $315,000 in damages and $2.3 million in legal costs. Despite his fundraising efforts, he is still $1.5 million short of what he owes. If he cannot meet his debt by June 27, he will be declared bankrupt and forced out of parliament.

Deeming’s lawyers and the NSW property developer who funded her defamation case, Hilton Grugeon, have flagged their intention, in the event of Pesutto’s bankruptcy, to pursue third-party costs from former premiers Jeff Kennett, Ted Baillieu and Denis Napthine as well as sitting MPs Georgie Crozier and David Southwick, who all donated small amounts to Pesutto’s defence fund.

Kennett publicly urged the administrative committee two weeks ago to act decisively and “put this issue to bed quickly”.

Battin replaced Pesutto as party leader on a promise to welcome Deeming back into the party room. He has since made her his personal spokesperson for Melbourne’s western suburbs.

His attempt to make peace between Deeming and Pesutto and heal the divisions in his party room tainted his leadership, after he personally passed on to Pesutto an offer from Deeming and Grugeon for the property developer to lend him the money needed to cover his debt. Deeming also asked the party to guarantee her pre-selection ahead of the next state election.

The offer facilitated by Battin included a stipulation by Grugeon that Pesutto could not challenge for the party leadership during the three-year life of the loan. Pesutto rejected the offer.

That episode, revealed by this masthead, prompted Premier Jacinta Allan to interject during Thursday’s heated question time in parliament: “I’ll never be someone’s bagman, just remember that.”

University of Melbourne public law expert Professor Joo-Cheong Tham has called for Victoria’s peak anti-corruption body, the Independent Broad-based Anti-corruption Commission, to investigate if the offer of a $1 million loan from a property developer to a sitting MP constitutes corrupt conduct.

Deeming defended her conduct on Thursday, claiming that Liberal Party figures had “begged” her to come up with a solution. “I handed over the five point plan and yes it included my preselection but I never blackmailed anybody,” she said.

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