Libs split after Cormack Foundation fails to back embattled MP over crippling court costs

The Victorian Liberal Party is exploding in acrimony over the Cormack Foundation’s handling of its huge wealth as former state leader John Pesutto risks being sent bankrupt.

Left to right: Former Victorian Liberal leader John Pesutto, Cormack Foundation chair Charles Goode and Liberal candidate Amelia Hamer.

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The Victorian Liberal Party is exploding in acrimony over the Cormack Foundation’s handling of its huge wealth despite a donation to form a new policy unit to help unseat Labor at next year’s state election.

Cormack has failed to bail out state leader John Pesutto despite concerns at the highest levels of the party that the former Liberal leader could be sent bankrupt and ousted from the parliament.

Powerbrokers are already considering running Amelia Hamer in the state seat of Hawthorn if Mr Pesutto goes bankrupt over the Moira Deeming affair and the Liberals fail to regain the federal seat of Kooyong.

Moira Deeming speaks to the media at Parliament House in Melbourne after being accepted back into the Liberal Party in December. Picture: NewsWire / Andrew Henshaw

Cormack, which is chaired by prominent businessman Charles Goode, has agreed to fund a special policy unit inside the Liberal secretariat to prepare for what it hopes is the transition to government at the 2026 state election.

But the opposition is struggling to work out how to keep Mr Pesutto, the former state leader, from bankruptcy after he lost his defamation case against Ms Deeming.

If he goes bankrupt he will be ineligible to remain in the parliament.

Cormack is believed to be worth at least $110m, depending on the share market.

Mr Pesutto has growing support in the party, including from former premiers Jeff Kennett and Ted Baillieu and MPs, but Cormack will not be providing him financial relief, according to well-informed sources.

Mr Goode did not respond.

The financial cost of the defamation case could be as high as $3 million.

Senior Liberals are questioning why Cormack, one of the nation’s wealthiest political donors, has refused to help Mr Pesutto to prevent a possible by-election in a state seat that is a key part of Kooyong.

It is is possible that the decision on Mr Pesutto’s costs will be made during the federal election, causing campaign embarrassment and focusing attention on the state party.

One reported option is for the Liberal Party to provide a loan to Mr Pesutto, but his backers believe any solution should be “absolute”.

“He’s a former leader who was doing his job. It wasn’t handled well but we can’t cut him adrift,’’ a senior Liberal said.

Another senior Liberal said Mr Pesutto had not made a direct request to the party for funds to cover the looming costs.

There have been long-running concerns about the way Cormack functions, leading several years ago to a bitter court case between it and the party.

Cormack’s directors now include former federal treasurer Peter Costello and respected lawyer Allan Myers. It is not known whether the new members of Cormack considered any request or approach to help Mr Pesutto.

Tensions between Cormack and the Liberal Party exploded in 2016 when the foundation donated $25,000 each to Family First and the Liberal Democrats, which preferenced against the Liberals in two seats.

Under former Liberal president Michael Kroger, court action was taken against Cormack but the party failed to seize control of the corpus.

Former Liberal Party state president Michael Kroger. Picture: David Caird

Now the anger at Cormack has spread beyond the Kroger years.

“What is the point of Cormack if it’s not to defend a Liberal leader?’’ one senior MP said.

Cormack also donates to the federal Liberal Party but not before senior figures are asked to stipulate exactly how the money will be used, in what is seen as a political begging process.

Ms Deeming won a defamation action against Mr Pesutto last year, securing $315,000 in damages after a court found she had been defamed soon after the last state election after attending a rally that was gate-crashed by neo-Nazis.

It sparked a lengthy battle between Mr Pesutto and Ms Deeming.

It is now widely accepted that Mr Pesutto was too aggressive in his handling of the incident on the steps of the parliament but he has growing support over his financial plight. His total bill could be $3m.

A spokesman for Liberal leader Brad Battin welcomed the Cormack resources for the policy unit.

“The continued support from the party is a vote of confidence for our plan to be elected by the Victorian people and our plan to support them once in government,’’ he said.

“The policy unit is there to engage with Victorians and businesess, and to develop meaninful and responsible proposals, to address the massive and many issues facing our state.

“Most of which have been created or worsened by the current Labor government.’’