Margin Call: Kroger switches tactics as Victorian Liberal Party stoush goes to arbitration

Michael Kroger. (Stuart McEvoy/The Australian)

Victorian Liberal President Michael Kroger will pursue arbitration with the $70 million Cormack Foundation.

The move is a tactical about face for the controversial Kroger that could give an all-or-nothing resolution to his high stakes battle with the Liberal’s major donor.

A motion to authorise Kroger and Victorian Liberal trustees Alan Stockdale, Richard Alston and Russell Hannan to seek arbitration with Cormack was passed last night at a special meeting of the Victorian Liberals administration committee.

Arbitration would keep the Liberal’s embarrassing family feud out of the courts and provide a definitive answer to the question that has absorbed the Party’s Victorian division: who owns the $70m fund, the Cormack directors or the Liberal Party?

It could end the dispute and restore funding from Cormack well in advance of the Victorian state election in November 2018 and the next federal election.

The move to arbitration appears to be a change of tactics by Kroger. It surprised many admin members, who had only learned it was an option by reading reports in Margin Call last week.

Cormack’s directors — which include former ANZ chairman Charles Goode and Peter Hay, the chairman of gold mining giant Newcrest — prefer private arbitration to litigation in public.

“We raised the issue of binding arbitration with the Victorian Liberal Party five weeks ago and only this week, to our knowledge, are they focusing on it,” said a Cormack spokesperson.

It is understood that Kroger is pushing for a conclusion of the arbitration process by December 15 — an ambitious timetable on which the Cormack directors are unlikely to agree.

Among the terms the two parties would need to agree is who would run the arbitration. Former High Court justices Dyson Heydon, Murray Gleeson and Kenneth Hayne have been proposed.

Last night’s admin committee took place at the Liberals’ Victorian headquarters on 104 Exhibition Street, which has had a mortgage taken out against it to plug the multimillion-dollar shortfall that has resulted from Cormack’s halting of funding over alleged governance issues.

Read the full Margin Call column tomorrow in print and online.