Influential Liberal Michael Kroger at centre of heated corporate coup

A stoush over the future of a major childcare company has descended into acrimony as Liberal Party stalwart Michael Kroger pushes to oust enemy board members in an extraordinary shareholder meeting on Tuesday.

The influential political figure is embroiled in a battle for control over the $52 million Mayfield Childcare – of which he and his son were previously two of the biggest shareholders – fuelled by a contentious deal three years ago and the alleged embezzlement of $1 million by the company’s former boss.

Michael Kroger with federal Liberal frontbencher Jane Hume at a memorial for former minister Peter Reith in November.Credit: Eddie Jim

Kroger, a former president of the Victorian Liberal Party, has set up a shareholder showdown in Malvern East at which he will push for the removal of directors connected to the current majority owners to be replaced by his allies.

But in an aggressive move to thwart Kroger’s bid, Mayfield’s board have told shareholders of Kroger’s alleged connection to the firm’s former chief executive, who resigned in December 2022 and was later accused of misappropriating more than $1 million.

An internal investigation and a KordaMentha audit alleged the former executive was doctoring invoices and charging Mayfield for personal business.

In a letter to shareholders, Kroger’s opponents on the board said the Liberal figure’s proposed directors had no “experience within the childcare industry or in the governance of an ASX-listed company”. They claimed Kroger had a “long-standing close relationship” with the former chief executive.

Michael Kroger is a Sky News commentator.Credit: Sky News

“Mr Michael Kroger has advised [director] Mr Ashok Naveinthiran that he continues to meet with [the former chief executive] … despite the former CEO’s [alleged] misconduct and misappropriations from the company,” the letter said.

There is no suggestion that Kroger had any knowledge of the alleged misappropriations.

In October, Mayfield reached a $1.06 million settlement over the allegedly stolen funds.

Kroger declined to comment. A source close to him, who declined to be named because they were not authorised to speak ahead of the shareholder meeting, claimed Kroger had only had one short and abrupt meeting with the former executive that lasted minutes.

During his term as Victorian Liberal Party president, Kroger identified the theft of $1.55 million by state director Damien Mantach. Mantach was jailed for five years in 2016.

Former Victorian Liberal state director Damien Mantach.

Kroger’s firm, Riversdale Road Shareholding Company, has claimed the current management was responsible for a “disastrous” deal to buy childcare centres from Genius in 2021 for $39 million. Mayfield bought another two centres from Genius for $2.4 million last year.

The share price slumped in the immediate aftermath of the 2021 announcement but recovered to a record $1.48 within six months and barely moved after last year’s deal. However, the company’s stocks have been falling since January 2023. Mayfield was contacted for comment.

Kroger’s firm also claimed the current majority owners failed to finalise deals to sell Mayfield at a healthy price. On Monday, Mayfield was trading at 0.79 cents. It rejected an offer of $1.35 a share from Genius earlier this year.

“The current trajectory under the existing board and management is unsustainable, and the concerns outlined in this statement underscore the urgent need for a reconstituted board,” Riversdale wrote to shareholders in correspondence obtained by this masthead.

Mayfield said in a statement last month: “[We are] concerned that several statements from Riversdale are incorrect and are misleading to shareholders.”

The acquisition deal at the centre of the dispute is Mayfield’s purchase in December 2021 of 14 childcare centres from Genius, now the major shareholder of Mayfield, run by Darren Misquitta.

The Herald Sun reported in October that Misquitta was being pursued by landlords for $9 million after allegedly failing to pay the rent on a childcare centre. The Australian Financial Review reported in January that Misquitta ran a separate venture that went broke late last year.

Charles Goode was in a long-running battle with Michael Kroger over the future of the Cormack Foundation.Credit: Arsineh Houspian

Kroger, 66, is one of the most prominent Victorian Liberal figures of recent decades, despite never entering state or federal parliament or even seeking preselection.

While he has never taken up openings to become a politician, his behind-the-scenes wielding of power and close relationships with party leaders earned him a reputation as a figure of esteem and intrigue.

The conservative faction leader, who is today less involved in day-to-day party politics in the weakened Victorian party division, served as party president from 1987 to 1992 and again last decade.

In his latest stint, he took on the powerful Cormack Foundation fundraising vehicle run by former ANZ chairman Charles Goode, a member of the exclusive Melbourne Club, which sits about one kilometre from The Australia Club, where Kroger is a member.

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