How 12 good men (and women) stepped in to save John Pesutto

A group of white knights stepped in to personally guarantee a $1.55 million loan from the Victorian Liberal Party to keep John Pesutto out of bankruptcy and resolve a crisis threatening to devour the party’s electoral prospects.

A marathon meeting of the party’s governing board narrowly voted on Thursday night to support the bailout, with Opposition Leader Brad Battin and state party president Philip Davis staking their positions on a financial rescue package that will enable Pesutto to retain his seat in parliament and continue his political career.

John Pesutto (left), Brad Battin and Moira Deeming.Credit: Eddie Jim, Luis Enrique Ascui

Although the administrative committee vote was conducted by an extraordinary secret ballot to protect its members from recriminations and the margin not disclosed at the meeting, sources on both sides of the question believe it was decided by as few as one or two votes.

Davis, as chairman of the administrative committee, spoke in favour of the motion. As soon as the motion passed, he authorised a pre-written message to party members declaring the matter settled.

Battin, who spoke at the meeting about the personal toll the issue had taken on him during his six months as leader, revealed on Friday that he voted to extend a financial lifetime to the man he replaced in the job.

Opposition Leader Brad Battin revealed he supported the party-funded bailout for his predecessor.Credit: Chris Hopkins

He described the administrative committee decision as a line in the sand.

“This decision was not about personalities or past disputes – it was about protecting the interests of the people we serve and ensuring our party can continue its important work,” Battin said.

“The loan arrangement ensures the party avoids further financial and reputational damage, allows us to put this matter behind us, and refocuses our efforts where they belong.”

This masthead knows of at least one MP who told Battin that if the party did not intervene to stop Pesutto being forced into bankruptcy and out of parliament, they and others would follow him out the door.

Credit: Matt Golding

Moira Deeming, the Liberal MP awarded $2.3 million in legal costs after Pesutto defamed her, reacted to the vote by posting a meme of herself on Twitter, in suffragette purple, claiming the party had failed to protect her and punished her for defending herself. “This is what institutional abuse looks like,” her post read.

She did not respond to invitations to comment or be interviewed by this masthead.

Deeming earlier this month attempted to negotiate an alternative settlement in which the party would guarantee her preselection ahead of next year’s state election. A senior party member privy to those negotiations but not authorised to publicly discuss them said the suggestion was not considered.

Deeming’s hold over her upper house seat is expected to face a challenge from Dinesh Gourisetty, a prominent member of Melbourne’s fast-growing Indian community who has built considerable support across the party’s small western suburbs branches.

Preselections will open after the party’s state council meets in September. Annual meetings held this week in some of the party’s largest federal and state branches – Kooyong, Hawthorn and Caulfield – suggest that rank-and-file members are seeking to pull their party back towards the political centre after last month’s disastrous federal election.

In the meantime, a further offer from Deeming for Hilton Grugeon, a NSW property developer who funded her defamation case, to lend Pesutto $1 million to get him out of his financial jam, has been referred to Victoria’s anti-corruption agency, IBAC.

Deeming has described her offer as a genuine attempt to resolve the matter in the interests of all parties.

Pesutto attended Thursday night’s meeting to argue for the rescue package – a proposal he accepted as the best way out after Davis and other members of the administrative committee made clear the party would not gift him the money.

On Friday morning, Pesutto issued a short statement saying he was grateful and humbled by the decision. “I’m totally committed to continuing my work as the Member for Hawthorn and also serving as a member of Brad’s team,” he said. Battin has indicated to colleagues his desire for Pesutto to return to the front bench.

John Pesutto arrives at the party’s administrative committee meeting on Thursday night to plead his case.Credit: Luis Enrique Ascui

This masthead has confirmed from two Liberal sources unauthorised to discuss internal party matters that, if not for the intervention of a dozen unidentified party figures and supporters who agreed to personally guarantee $900,000 of the $1.55 million loan, the proposed rescue package would have collapsed.

The last of these supporters agreed to sign as guarantor only hours before the administrative committee met to consider the proposal. Pesutto guaranteed the remainder of the loan with his superannuation savings and other assets.

The money will be lent by Vapold, a company created by the Victorian Liberal Party to manage the proceeds from the $37.1 million sale of its Exhibition Street headquarters in Melbourne. Pesutto has agreed to repay the loan at a commercial rate of interest, understood to be just under 6 per cent, over a nominal 30-year period.

To repay his debt, Pesutto will embark on a further round of fundraising.

There are 19 members of the administrative committee. Of these, 18 attended Thursday night’s meeting, with party treasurer Karyn Sobels overseas on business. Davis moved the motion, Marg Hawker, the chair of the Liberal Women’s Council of Victoria, seconded, and a further eight to nine members are understood to have supported it.

Former party president Greg Mirabella spoke at length against the proposal. He questioned what the party was buying with the loan, what Pesutto offered the party and whether his conduct merited generosity from the party. A further six members of the committee made clear their opposition to a bailout.

Federal MP Dan Tehan, who sits on the administrative committee as the representative for federal Opposition Leader Sussan Ley, declined to say which way he voted.

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