NAB fills cash void for Michael Kroger’s Victorian Liberals

Illustration: Rod Clement.

Andrew Thorburn’s National Australia Bank has lent $500,000 to president Michael Kroger’s Victorian Liberal Party. Does that number ring a bell?

It’s the same as the amount of money the Liberal-aligned, Charles Goode-led Cormack Foundation has withheld from the Victorian Liberals over what it says are governance issues.

As this column has explored this week, that stoush — essentially over who controls the $70 million Cormack Foundation — is far from over.

The new $500,000 NAB facility has been taken out against a portfolio of shares we understand are worth about $3m, which are held by the Liberals’ Vapold company, of which former ANZ chairman Goode has been a director since 1986. Kroger ally and former federal Liberal Party president Richard Alston joined in 2010.

The new loan follows a $2m mortgage from NAB that was taken out last year against the Victorian Liberals’ HQ at 104 Exhibition Street, Melbourne.

So just how bad are the finances in Victoria, once the fundraising jewel of the Liberal empire? Well, we understand the unaudited results for the 2016-17 financial year show the Victorian Liberal Party posted a loss of about $1.3m.

It’s a wonder they can keep the lights on at 104, let alone prepare for Matthew Guy’s tilt at Labor Premier Daniel Andrews at the state election next year.

Unhappy sources in the Kroger camp pin the blowout on Cormack, which they say only paid the division $250,000 in the last financial year after indicating in 2016 that they would pay more than $1.5m.

The Cormack collective, who have spectacularly fallen out with Kroger, have cited governance problems in the division and the demands of the federal election for the shortfall.

Making an opaque situation even less clear is the Victorian Liberal Party’s status as an unincorporated organisation. “Like a bowling club,” one party official explained to us.

Lawyers on stand-by

The famously headstrong president Michael Kroger has held discussions with high-profile Melbourne barrister Robert Richter and other lawyers about taking legal action against the Cormack board.

And in late June, in a brazen escalation of the feud, we understand letters were sent to Cormack’s foundational directors Hugh Morgan and distinguished stockbroker John Calvert-Jones.

The letters — signed by Kroger, Richard Alston, his predecessor as Liberal federal president Alan Stockdale, another Vapold director Russell Hannan and former Victorian Liberal president Helen Kroger — asked for all Cormack’s non-foundational directors to resign.

Those directors are Goode, lawyer Stephen Spargo, company director and businessman Peter Hay, Fawkner Capital executive director Fred Grimwade, investment banker Richard Balderstone and David Williamson, who works at Goode’s boutique investment bank Flagstaff Partners.

The reason? As we understand the letter made clear, those directors — however impeccable their financial, not to mention Melbourne Club, credentials — had not signed a memorandum of undertaking that made clear their position as Cormack directors was given to them, and could be ended, by the Liberal Party.

We understand Morgan and Calvert-Jones signed such an MOU in 1988 when they joined, but subsequent directors — including Goode — had not.

Instead of following Kroger’s orders, the Cormack directors — who over the foundation’s 30 years have grown the $15m fund into a $70m one, while returning about $60m to the Liberal Party — did the opposite.

Morgan and Calvert-Jones, the pair who had signed an MOU, resigned, leaving the remaining directors seemingly confident about their independence.

Now they seem to be preparing for a showdown against Kroger in the Victorian courts.

“They’ve sought and obtained the legal advice of two eminent QCs,” a source close to the Cormack board told us.

And worryingly for those Liberal members wanting a peaceful resolution, both sides seem pretty confident.

In Goode’s corner

Legendary Liberal fundraiser Ron Walker has been mooted by some as a mediator to end the Goode-Kroger dispute.

But it seems those hopes are misplaced. We understand Walker is steadfastly is his longtime friend Goode’s corner.

Perhaps an outsider could encourage the two sides — who, it’s easy to forget, are in the same political party — to find a compromise?

The Liberal Party’s new federal president, Nick Greiner,in coming weeks will visit Victoria as part of his tour of Menzies’ nation.

We understand that Goode has lined up an audience with the former NSW premier.

While it would be a great outcome if the two could sort it out at the Melbourne Club, perhaps in front of the Bengali tiger that hangs in its billiards room, probably best not to bet on it.

Vocus page-turner

The epiphany came to him this Monday.

And by the early hours of Tuesday morning, fuelled by jet lag after a recent holiday to Europe, telco richie turned fund manager James Spenceley had begun writing Vocus: The Book. Move over J.K. Rowling.

“People are enthralled,” Spenceley told us about the response to his retelling, often over a beer, of war stories about the telco he launched a decade ago and then left after a spectacular board stoush last year.

Along with the October boardroom showdown, there’s the story about what it was like founding a business in his garage.

And the one about getting a phone call saying billionaire David Teoh’s rival telco TPG was conducting a raid on its stock.

And, who could forget, the one where Spenceley sold $26m worth of stock in August last year, while he was still on the Vocus board — and made it known to investors that he had no faith in its chief executive Geoff Horth and chairman David Spence?

That was back when the stock was trading above $8, more than twice yesterday’s $3.50 close — either an inspired or traitorous move, depending on who you talk to. It’s certainly still pretty raw with the Vocus board.

Now two private equity shops — Hong Kong-based Affinity Equity Partners and New York-based Kohlberg Kravis Roberts — are circling Vocus.

Spenceley thinks it will make for the perfect end for his book, which — somewhat surprisingly — is still to find a publisher.

“It feels like this will be the last chapter,” he said.