Cormack: blue blood will be spilt

Illustration: Rod Clement

Only two more sleeps until the Michael Kroger-led feud with the Liberal Party’s greatest donor, the $70 million, Charles Goode-led Cormack Foundation, is heard before Justice Jonathan Beach in Melbourne’s Federal Court.

After more than a year of grumbling — much of it behind the private walls of the Cormack-favoured Melbourne Club and Kroger’s Lib HQ around the corner at 104 Exhibition Street — the blue blood biffo is on the cusp of becoming flagrantly ­public.

From Monday, the two sides will wrestle over who has ownership of Cormack’s $70m: the Liberals or Goode and his Cormack directors.

There is considerable unease within much of Malcolm Turnbull’s Liberal Party about what is about to be aired in the Federal Court.

As the PM told the Herald Sun in December: “When any dispute — particularly between ­organisations that have got a shared history — ends up in court, it’s unfortunate.”

The legal costs of this long running fight have, naturally, caused great angst.

In November, president Kroger pledged to personally pay up to $1m in legal expenses in the event the Liberals lose.

Liberal president Michael Kroger

Margin Call understands that pledge was brought up at Thursday night’s state executive meeting, the last before the Liberals’ Sydney star barrister Bret Walker duels with Cormack’s Melbourne star barrister Allan Myers.

According to sources, Kroger’s $1m commitment should more than cover any cost order from Beach should the party lose. Perhaps not surprisingly, former ANZ chairman Goode’s camp disagrees. Sources in the Goode bunker reckon by the end of the trial both parties’ combined legal costs may approach $3m — a number that could leave the financially challenged Liberals in considerable shortfall, even after the Kroger pledge.

That costs discrepancy, and the bigger dispute that spawned it over ownership of the $70m honey pot, will soon be decided in Court 6K. Bring your popcorn.

Take a holiday

Another one for the “Only in Melbourne” file. The fallout continues after the aborted nomination of Kevin Rudd’s decorated former chief mandarin Terry Moran for membership of the men’s only Australian Club (which counts Kroger as one of its notable members).

Wayne Swan, former PM Kevin Rudd and Terry Moran

Margin Call has heard deep mutterings from the private club’s disgruntled membership for Moran’s proposer Peter Heerey, a former Federal Court judge, to “do the gentlemanly thing” and “take a holiday from the club — a long one.”

Can you believe these guys?

Heerey’s supposed sin, as we noted earlier this week, was failing to appreciate the ongoing unease among much of The Australian Club’s membership over Moran’s 2008 putsch — alongside fellow revolutionaries including then ACCC chairman Graeme Samuel, former Victorian Liberal Party state director John Ridley and a former national ALP secretary Geoff Walsh — to get the Athenaeum Club, another Melbourne men’s only private institution, to admit female members.

The continuing membership revolt makes for an inglorious end to the John Hood era. Mercifully, Hoody will on April 19 be replaced as president of the Australian Club by accountant Jim Downey (the brother of comedian Marg Downey of Fast Forward fame).

Not only has the nominations process become
an embarrassment, the Australian Club’s most recent accounts are none too flash, either.

In 2016, the last year for which records are available,
the Australian Club made an operating loss of $81,000. But, like a pensioner in a Bill Shorten speech, the Australian Club has a mountain of assets: $56m worth, including investments of $40.2m which are managed by Crestone, the former UBS investment manager.

The diverse portfolio, watched over by a board that includes Gresham investment banker David Feetham, includes Australian and international investments, local and international fixed income securities, alternate assets and cash.

Which is ace of clubs?

Meanwhile, up on the Paris end of Collins Street at Moran’s former private institution the Athenaeum Club (which had 1500 members on its last declaration and, fun fact, used to have billionaire Solomon Lew’s Myer nemesis Garry Hounsell as a director), the operating balance is better (a surplus of $1m, with reserves of $10m), but the assets are relatively modest ($15m), according its 2016 results, the most recent available.

And what of Peter Costello’s preferred institution the Melbourne Club?

The financial state of that august Collins Street institution — whose members include Goode, Newcrest chairman Peter Hay, their fellow Cormack directors and two former Cormack directors Hugh Morgan and John Calvert-Jones — remains a mystery to Margin Call.

Although, we have learned that on April 18, medico John Collins will be replaced as the Melbourne Club’s president by lawyer Cam Johnston.

The dynamic David Hawker, the speaker of the House of Representatives at the end of Howard era, will take over as vice president.

These institutions aren’t going anywhere.