Victorian Liberals dispute with Cormack fails to win it money

THE Victorian Liberal Party has had a partial victory in its lawsuit against its largest donor, the Cormack Foundation but it does not mean money will flow to the party.

THE Victorian Liberal Party has had a partial victory in its lawsuit against its largest donor, the Cormack Foundation.

Federal Court Judge Jonathan Beach has this morning ordered that 25 per cent of the shares in the Cormack Foundation — which holds between $70-80 million — be handed to nominees of the Liberal Party.

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But he has refused a Liberal Party bid that would have given it total effective control of the organisation.

The Liberal Party had asked Justice Beach to reinstate the 33 shares in the Cormack Foundation that were held by former directors John Calvert-Jones and Hugh Morgan.

Hugh Morgan, Charles Goode and other Cormack directors outside Federal court earlier this year. Picture David Geraghty

They had also demanded that the shares held by six other directors be cancelled.

Justice Beach found that “even if one accepts that Mr Calvert-Jones’ and Mr Morgan’s shares were held on trust (for the Liberal Party) and that they should be reinstated to the register … I cannot unwind the other share issues, the appointment of directors, or the various impugned changes to the original memorandum and articles of association and now constitution of the Cormack Foundation”.

The decision means that while the Liberal Party has acquired shares in the Cormack Foundation, it will not have enough votes to force the appointment of a director or to force it to make donations to the party.

The Cormack Foundation, which for several years has been the largest donor to the Liberal Party, has refused to give it money because of arguments over governance of the party’s finances.

The dispute arose after former state director Damien Mantach was jailed for five years for stealing $1.5 million from the party.

Party president Michael Kroger, who launched the legal bid, flagged after the judgement was handed down that there could be further legal action.

“What it means is that the party will now expect the Cormack directors to acknowledge the decision of the court and hand control back to us,” he said.

“If that doesn’t happen, then obviously further options will need to be examined.”

Michael Kroger (right) leaves a hearing on the dispute earlier this year. Stuart McEvoy.

A statement from the Cormack Foundation board said it was pleased “our independence has been confirmed by the Court”.

It said the Liberal Party’s 25 per cent shareholding did not entitle it to either board representation or “any funds”.

“The Liberal Party has completely failed to achieve its objective of confirming ownership or control of Cormack Foundation,” the board said.

“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 board also said the legal dispute “should have been avoided”, given the “productive and amicable relationship” between the foundation and Liberals over 30 years.

State Liberal leader Matthew Guy today backed Mr Kroger’s decision to take the party’s biggest donor to court.

“I think everyone believed, at the end of the day, that clarity was needed,” he said.

“The issue has been around for about 35 years, it has been debated since the ‘80s.”

Mr Guy added: “I support Michael’s approach on Cormack, I think he has done the right thing by the party.”

He also said that he “comfortable” with the party’s election war chest to take on union-backed Labor, even if Cormack decided not to donate.

“I’m not going to discuss the party’s fundraising and finance capabilities at a press conference but I’m very comfortable that we are in a reasonable position financially,” Mr Guy said.

The partial win for the Liberals means that Mr Kroger will not be on the hook to pay the Cormack Foundation’s costs — an undertaking he gave to the party.

Justice Beach said he was not inclined to award costs to either party but would hear argument on that point at a later date.

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