Terry McCrann: Michael Kroger wastes $3m, seeks re-election
IT defies all common sense that the state Liberal Party could consider re-electing a president who has thrown away up to $3 million of increasingly precious party funds in absolutely pointless legal action, writes Terry McCrann.
Terry McCrann
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IT defies all common sense that the state Liberal Party could consider re-electing a president at its council this weekend who has thrown away up to $3 million of increasingly precious party funds in absolutely pointless legal action.
Indeed, it gets even more bizarre, because the way the legal action has ended up — with a decision pending after the weekend vote — the “best” the party can now hope for is to lose the case and lose comprehensively and totally.
Because then it might have thrown away only $2 million!
LIBERAL PARTY MONEY BRAWL OVER HQ
MICHAEL KROGER FACES CHALLENGE
CHAOS MARS YOUNG LIBERAL MOVEMENT VOTE
This is the one simple, utterly devastating and undeniable reality about president Michael Kroger’s decision to “go to war” with the party’s major benefactor, the Cormack Foundation.
Win, lose or draw, the party has thrown away up to $3 million — the combined legal costs of the two sides — of what is either party money or Cormack money that would have come to the party over time anyway.
Indeed, it’s now in the best interests of the party to completely and totally lose the case — then Kroger might (a disturbing qualification) be required to deliver on his promise to fund up to $1 million of the party’s costs.
However, the indemnity is only triggered in the event of a total loss and a costs order by the court against the party.
Just to spell that out, if the party “wins” — and we’ll come back to that, as it now can’t actually win anything substantive and it certainly can’t win control of Cormack’s $70 million — $3 million will have been flushed down the legal toilet and can’t be recovered from anyone outside the party and Cormack. While if the party loses — no qualifying quotation marks required — “only” $2 million might have been flushed down the toilet.
Just let that sink in: the party has as president someone who launched it on a very expensive legal war, where the best outcome for the party — where the party loses “only” $2 million — is now if it loses and loses the legal war not just in part but totally.
Would you really want to re-elect that person to lead the party for another year?
Especially, into an election year, where you desperately need contributors to have confidence their donations won’t be wasted?
EVEN that “best” $2 million loss outcome has a question mark over it — it turns on the precise meaning and enforceability of the conditions of Kroger’s indemnity.
Clearly, the Kroger indemnity must be produced to council delegates before they vote.
It’s impossible to overstate how disastrously misconceived was Kroger’s attempt to get his hands on the $70 million that Cormack had built up over the past 30 years — after paying the party about $60 million over the years.
Cormack was able to build the funds and pay regular sums to the party, precisely because it was not controlled by the party, but independently by experts led by former stockbroker and ANZ Bank chairman Charles Goode.
If the party had directly controlled the money, it would almost certainly have been splurged on a desperate campaign years ago. Cormack would have zilch and there’d be no $3 million-plus in annual payments flowing to the party.
Cormack has always made it clear that it will keep funding the party provided only that the party institutes governance reforms over its financial controls.
As president, Kroger has refused.
Critically he not only can’t win the Cormack money in the Court decision, he actually “gave up” that prospect right at the start of the case.
The “best” decision that the party can now get is 25 per cent of Cormack shares.
From both his business dealings and his political life, even Kroger knows that’s a long way short of the 50.1 per cent you need for control.
It wouldn’t even guarantee that the party got two seats on an eight-person board; and it absolutely wouldn’t get it a cent of Cormack money.
So apart from the basic undeniable fact that Kroger’s truculence has cost the party between $2 million and $3 million — money gone down the legal toilet — he’s really giving delegates a very simple choice.
Vote for me and as long as I am president we won’t get any Cormack money.
Vote for my opponent, Greg Hannan, and the $3 million or so a year will start flowing again.
For someone who’s regarded as a very skilful political operator, proposing that choice to delegates is beyond bizarre. Although it matches what he’s done on the legal front.
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