NAB rejects Victorian Liberal Party’s bid to increase mortgage on Melbourne CBD headquarters

BANKERS have rejected a bid by the Victorian Liberal Party to borrow more money against its headquarters in the Melbourne CBD.

Victorian Liberal Party president Michael Kroger is feuding with the party’s largest donor. Picture: Stuart McEvoy

BANKERS have rejected a bid by the Victorian Liberal Party to borrow more money against its headquarters in the Melbourne CBD.

The Herald Sun understands that earlier this month, the National Australia Bank turned down a request from the cash-strapped Victorian division to increase the mortgage on its Exhibition St ­building.

In February last year, the party was forced to mortgage the building, reportedly worth about $20 million, in order to borrow $2 million to pay staff wages and operational costs.

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Following the rejection, the party has now set up a facility to borrow money against the party’s $3 million share portfolio — but this has not yet been used.

The cash crisis comes amid open warfare between the Liberals’ largest donor, the Cormack Foundation, and party president Michael Kroger.

Earlier this year Mr Kroger wrote a letter to party members saying the foundation was withholding $500,000 of funding “unless the Liberal Party makes certain constitutional changes to the role of its office bearers”.

The demand to change governance rules stemmed from a review initiated in the wake of the embezzlement of jailed former state director Damien Mantach who stole $1.5 million from the party.

Liberal sources say Mr Kroger recently told the admin committee he had spent $80,000 seeking advice from criminal barrister Robert Richter QC on whether the Liberal Party can sue the Foundation and its directors for withholding money.

The party’s administrative committee has not been provided with the advice.

Some fear the ongoing feud will cost the party $1.5 million this year which would cripple the party’s bid to win next year’s state election.

One Liberal source said the NAB knock-back of a loan wasn’t surprising because banks often feel squeamish about lending to political parties, schools, and other such organisations “because there’s a lot of reputational issues if they have to foreclose”.

But one Liberal source said the rejection was tied to concerns about the party’s ability to service the loan.

Another Liberal source said the party is well-funded and comfortable with its legal position regarding the Cormack dispute.

“What does the Liberal Party do, cave in? It can’t, it needs to stand up for itself,” the source said.

A party spokesman declined to answer questions from the Herald Sun.