Embezzlement allegation: The Liberal Party will have to rebuild trust
It’s the thousands of ordinary Liberal Party members who should feel most outraged at the alleged embezzlement of $1.5 million of campaign funds. And the party hierarchy will have to work hard to earn their trust back, writes Terry Barnes.
The Victorian Liberal Party is in a state of deep shock after revelations its former state director, Damien Mantach, is accused of embezzling $1.5 million of party funds over a number of years.
While investigations are continuing, Victorian Liberal president, Michael Kroger, has emailed party members saying that Mantach is the only person in the frame, and all will be done to recover as much of the missing funds as possible.
It appears a breathtaking $1.5 million of party funds was diverted for personal benefit. Victorian Liberal parliamentary leader, Matthew Guy, said that what was taken was “a very significant portion of the money raised by the party in fundraising … People did a lot of work to get that. We all feel completely gutted and furious”.
There certainly will be former Victorian Liberal MPs closely defeated in last November’s state election whose anger will be, like Guy’s, white-hot, sharing his view that the missing funds could have saved their campaigns. Current marginal seat federal MPs will feel likewise. But having escaped with their parliamentary pensions or severance packages, they personally got off lightly.
What really angers and disappoints about Mantach’s alleged actions is that they were not really stealing from a mere corporate entity, the Victorian Division of the Liberal Party of Australia. Nor did they ruin the large corporate donors and high net worth individuals who donate to political parties, because that is part of what they do to build political networks, relationships and influence.
No, the grand embezzlement and the governance failures that allowed it to happen are above all an utter betrayal of, and insult to, thousands of ordinary Liberal Party members and supporters across Victoria who are not wealthy or personally powerful but are the soul of the party.
They’re the ones who turn out in all weather at election times to support MPs and candidates, door-knock, stuff letterboxes and talk up the Liberal cause to anyone who will listen.
They’re the ones who greet you at the polling booth on election days with a smile and a how-to-vote card, and look forward to bantering with voters and their counterparts from other parties.
They’re the ones who faithfully attend branch meetings, local party events, run the trivia and soup nights, and buy the tickets in the raffle that inevitably is a part of any political gathering – and donate back the prizes.
They’re the ones who drive up to hundreds of kilometres to attend party councils and pre-selection conventions.
They’re the ones who organise local electorate fundraising functions, work tirelessly to make them well-attended and successful, and cheerfully endure the proverbial rubber chicken and drinks at bar prices, because they buy their own tickets as well as sell them.
They’re the ones who pay membership subscriptions or respond to bigwigs’ circular appeals for donations. Many may not be able to afford to give much, but their trickles join to become a funding river for the party: a river, it seems, that can easily be dipped into by the unscrupulous.
And they’re the ones who are most entitled to feel gutted and angry at what has happened.
As a group, most ordinary members of the Liberal Party are older and more conservative than their MPs. They are often retired, and volunteer for party work because it gives them the satisfaction of furthering a cause, or an MP or candidate, they believe in passionately.
Others are young activists with stars in their eyes and idealism in their hearts.
Unlike the likes of Malcolm Turnbull, most Liberal rank-and-file members don’t have palatial mansions to go home to, nor much spare cash. Contrary to the Liberal silvertail image, many members and local Liberal supporters are students, pensioners or self-funded retirees on very modest incomes, and donate what they often can ill afford.
Yet they do so willingly and turn out for the party because they believe, as the Victorian Division’s website is bannered, that “The Liberal Party exists to provide high quality governments that empower people to solve the major challenges they face in their lives”.
This grassroots faith is what’s been shaken to its core by what has happened.
The Liberal organisation will recover and be reformed. As incoming Victorian president earlier this year, taking office just as Mantach left, Kroger was refreshingly open and honest with his members and the public as soon as the appalling situation was confirmed. That welcome candour is a good start to rebuilding trust in a crisis.
But just as with former Health Services Union leaders Craig Thomson, Michael Williamson and Kathy Jackson, this is yet another case of an elected or appointed official feeling somehow entitled to take advantage of the so-called “little people” who are their rank-and-file members, even though ultimately they owed everything to those they betrayed.
This week’s revelations, be they Mantach’s alleged activities or Jackson’s humiliation in court, should remind elected and appointed office holders in political parties and politically-active organisations alike that respecting the trust of their members and the public is fundamental to public life and a healthy democracy. Their position and status is a conferred privilege, not a personal fiefdom.
Fortunately, most of these office holders, across the political spectrum, work very hard to earn and retain that trust.
The Victorian Liberal Party will likely find, as the HSU has found, and indeed as federal MPs are finding with ongoing public anger over abused parliamentary “entitlements”, when the bond of trust with their ordinary members and supporters is broken, it is very, very hard to restore. But if it looks to its grass roots members, and respects and honours their values, aspirations and commitment in reforming its governance and accountability, the party will recover better and stronger for this scarifying experience.
Tasmanian Liberals assure members former state director repaid all money
The Tasmanian Liberals have assured members the party is not affected by allegations former state director Damien Mantach stole $1.5 million from the election fund of the Victorian Liberal Party.
The police fraud squad is investigating the allegations against Mr Mantach, who served as state director in both Tasmania and Victoria.
The money is alleged to have vanished over four years to fund Mr Mantach’s lifestyle in Victoria.
Tasmanian Liberal Party president Geoff Page used Facebook to confirmed that Mr Mantach did owe the Tasmanian branch money in 2008.
“I have today been advised that Mr Mantach had in 2008 a liability for personal expenses to the Tasmanian division totalling $47,981.78, which was fully repaid by Mr Mantach to the division upon his departure in March of that year,” he said.
Mr Page went on to assure members he was confident no other funds had gone missing.
“As the debt was settled in full the Division considered the matter closed,” he said.
“The Tasmanian division has robust internal financial processes which, in keeping with our obligations to our membership have been periodically reviewed and continually improved since 2008 and are annually audited.”
Police to investigate Liberal Party $1.5m embezzlement claims
The police fraud squad is investigating allegations former Victorian Liberal Party state director Damien Mantach embezzled around $1.5 million of election campaign funds.
The money is alleged to have vanished over four years to fund Mr Mantach’s lifestyle.
An audit of the party’s finances after last year’s state election loss uncovered unauthorised financial transactions linked to Mr Mantach, with money missing from both state and federal campaign funds.
The Victoria Police fraud and extortion squad has been called in to investigate.
Liberal Party president Michael Kroger said Mr Mantach had admitted to wrongdoing.
“We feel profoundly betrayed and terribly disappointed with what’s happened,” Mr Kroger said.
- Liberal Party accuses former state director of embezzling $1.5m
- Alleged theft happened over four years
- Victoria Police fraud and extortion squad called in to investigate
- Party believes Mantach took the money to fund his lifestyle
He said the party believed Mr Mantach had acted alone.
“We’re not aware that anyone at the party head office or any officials had any involvement at all,” he said.
It also emerged that Mr Mantach repaid tens of thousands of dollars during his time as state director of the Tasmanian branch.
In a letter to members posted on Facebook, Tasmanian Liberal president Geoff Page said in March 2008 that when he left the role, Mr Mantach fully repaid a liability of nearly $48,000 for personal expenses.
Mr Page said the division considered the matter closed and had robust internal financial processes.
Mr Kroger said he did not believe the missing money influenced the 2014 election result, or that it would affect the next federal election.
Liberal leader Matthew Guy said the party was furious at what he called a “pretty basic effort at embezzlement”.
“We want our money back,” he said.
“We want this matter sent to the police and we will be doing everything we can to ensure that justice is done.
“I saw someone making a comment that we’re white hot with anger, that’s just the start of it.”
Mr Kroger said the missing money was confined to the party’s Victorian division and he was confident some of it could be recovered through assets bought with the funds.
Mr Kroger conceded the Liberal Party had failed to properly monitor spending.
“Obviously it should have been picked up years ago — it wasn’t,” he said.
Former premier Denis Napthine, who led the party during last year’s campaign, said he was surprised and bitterly disappointed by the allegations.
The party’s administrative committee met this morning to discuss how to deal with the missing money.
Mr Mantach has been contacted for comment.
Australian Broadcasting Corporation
Victoria’s Liberal Party has been blind-sided by claims a former Director stole $1.5 million of funds with the fraud squad investigating allegations and branch members asking if other financial dealings are suspect.
SABRA LANE, PRESENTER: Victoria’s Liberal Party has been blindsided by allegations its former director stole $1.5 million of party funds.
The party believes Damian Mantach siphoned off the money using fake invoices and Victoria police is now investigating.
Liberal politicians are furious and say the loss is a slap in the face to party members.
Late today, the Tasmanian Liberal Party confirmed Mr Mantach had to repay tens of thousands of dollars in personal expenses he racked up while director of that state’s party.
Madeleine Morris reports.
LIBERAL PARTY MEMBER: We’re white hot with anger. That’s just the start of it.
DENIS NAPTHINE, FORMER VICTORIAN PREMIER: I’m surprised, I’m shocked, I’m bitterly disappointed.
MADELEINE MORRIS, REPORTER: Sombre-faced and genuinely shocked, Victorian Liberal MPs arrived this morning to be briefed on the alleged theft of $1.5 million by one of their own.
LIBERAL PARTY MEMBER II: We just want to get to the truth and the bottom of the matter.
MICHAEL KROGER, LIBERAL PARTY VIC. BRANCH: Good morning, everybody. Well as you know, the Liberal Party is today referring some matters to the Victoria Police relating to the unauthorised removal of some party funds from the party head office, solely the work of one person. It should’ve been detected a long time ago. It wasn’t, which is regrettable. And the party’s obviously gonna make sure that this never happens again.
MADELEINE MORRIS: That person is Damien Mantach, the Victorian Liberal Party’s state director until March this year. The party believes that over a period of four years, Damien Mantach siphoned off money from Victorian Liberal headquarters via fake invoices for fake work.
The irregularities were uncovered when new state Liberal president Michael Kroger ordered a forensic audit of the accounts when he took over after last year’s disastrous state election.
NICK ECONOMOU, POLITICAL ANALYST: The state Liberal Party is in a bit of trouble and it’s been subject to a great deal of internal tension. There’d been problems within the parliamentary wing of the party. That contributed of course to the Liberals’ defeat at the last state election. And we also know that there were all sorts of tensions in the party organisation, the party membership.
DENIS NAPTHINE: I’m absolutely devastated, but particularly for the candidates across the state of Victoria who worked extremely hard, for the Liberal Party members and volunteers who worked extremely hard. This is a real shock to all of us.
MADELEINE MORRIS: That includes Angelo Kakouros, chair of the party’s South Barwon branch. He’s been fielding calls from party members all day.
ANGELO KAKOUROS, CHAIR, LIBERAL PARTY SOUTH BARWON BRANCH: It is a lack of trust and great, great disappointment.
MADELEINE MORRIS: But Mr Kakouros says his branch has been worried about the former state director for some time.
ANGELO KAKOUROS: I’ve had concerns with Damien Mantach for the last three to four years as a state director and personal experience and just the way things have operated and the communication between Damien, the administrative committee and some of the people within the organisation with their communication here locally in our area.
NICK ECONOMOU: It’s a very, very big task to try and keep track of what’s going on and to keep paid full-time officials answerable and accountable in what is essentially a voluntary organisation. The state treasurer of the Liberal Party would be a volunteer after all. Now, on top of this we’re getting increasing regulation to try and regulate the flow of donations. … But I suspect that that may be encouraging clever people to be a bit tricky here and try and find ways to squirrel resources away.
MADELEINE MORRIS: Today, Michael Kroger admitted there was a systemic problem with the Liberal Party accounting and changes were being made.
MICHAEL KROGER: More people in the accounting section and different oversights in relation to levels of authorised expenditure and a greater role for the party finance committee and more attention on these matters by the party executive.
MADELEINE MORRIS: It’s not the first time Damien Mantach has been in the headlines. Two years ago, he was investigated and ultimately cleared over payments he authorised to a former Liberal staffer who quit after being implicated in a scandal that snared the Police Minister.
And late today, the Tasmanian branch of the Liberal Party confirmed Mr Mantach had to repay nearly $48,000 in personal expenses when he was Tasmanian branch state director.
The fallout today extended all the way from Spring Street to Canberra.
BRENDAN O’CONNOR, FEDERAL LABOR MP: In 2013 the Prime Minister said, and I quote, “I know Damien Mantach well. He’s a person of integrity. So let’s see where this investigation goes. He has my confidence.” Does the Prime Minister agree that this ringing endorsement is yet another failure of judgment on his part?
TONY ABBOTT, PRIME MINISTER: But I can inform the House that matters concerning the individual in question have this morning been referred to the Victorian Police.
MADELEINE MORRIS: Today, no answer at the Mantach family home and Damien Mantach couldn’t be reached on the phone.
There is palpable shock here in Victoria that this could’ve happened to the party which prides itself on good financial management, particularly amongst Liberal rank and file. One branch chair told me it was like finding out the priest had been stealing from the collection plate. But there’s also relief it’s been uncovered by the party’s new state leadership.
ANGELO KAKOUROS: Michael Kroger, the state president, he’s doing a fantastic job in order to bring honesty and transparency back into the party.
MADELEINE MORRIS: The impact for the party may yet be felt in the place it will hurt most: the coffers.
NICK ECONOMOU: The Liberal Party really does rely heavily on membership fees and donations, so I think something that might damage the reputation of the party’s fundraising ability could be really seriously damaging to the Liberal Party.
LIBERAL PARTY MEMBER III: I think this is simply a matter of we’ve been robbed. We want our money back and we want justice done. Police will investigate and i think that’s all I should say at this point in time.
SABRA LANE: Madeleine Morris reporting.
ELEANOR HALL: Let’s go now to Victoria where that state’s branch of the Liberal Party is having some trouble of its own.
The Liberal leader Matthew Guy has accused the former state director of the Victorian Liberal Party, Damien Mantach, of embezzling $1.5 million in the election campaign funds.
Mr Guy says his party is “white hot” with anger, and that the funds could’ve made a difference in last year’s election.
In Melbourne, Rachael Brown reports.
RACHAEL BROWN: The Liberal Party says discrepancies were uncovered during a forensic audit of the party’s funds after last year’s state election loss.
The party’s former state director Damien Mantach is being accused of stealing $1.5 million over four years, but the audit continues.
Mr Mantach has not responded to the ABC’s calls.
Liberal party members were called into a crisis meeting this morning, and heading in, the party leader Matthew Guy made no attempt to mask his feelings.
MATTHEW GUY: We are furious; we want our money back.
RACHAEL BROWN: The matter has been referred to the Victoria Police Fraud and Extortion Squad, which says it’s investigating the disappearance of funds, but can’t comment further.
Mr Guy says, if the allegations prove true, it’s a massive betrayal of trust.
MATTHEW GUY: An enormous part of our election war chest, enormous. People did a lot of work to get that. I mean, we have a fundraising team who’ve done a huge amount of work; they’re always under a lot of scrutiny as you can imagine, and a lot of pressure.
But they’ve done a huge amount of work. We’ve got a lot of supporters, a lot of branch people who have worked their guts out for this party. And for what it appears to be one individual to do this to us leaves us bitterly cold.
RACHAEL BROWN: The Liberal party leader says the funds could’ve changed last year’s election result, which saw Labor’s Daniel Andrews dismissing the Napthine Coalition government.
Denis Napthine, who led the Victoria’s first one-term government in 60 years, says the fraud allegation is shocking and bitterly disappointing.
The party’s new president, Michael Kroger, has released a statement saying, when the audit turned up suspicious transactions amounting to $1.5 million between 2010 and 2014, Damien Mantach was asked to explain himself.
It was after this discussion that the party’s administrative committee voted to refer the matter to police.
Mr Kroger admits there’s a weakness with the Liberal Party’s checks and balances.
MICHAEL KROGER: Yeah, well on this occasion they clearly failed. So yep, quite up front about that. I’ve only been in the job four months, as you know. This has been going on for four years, so you know, it should have been picked up before and wasn’t, unfortunately.
RACHAEL BROWN: But he says there won’t be a clean out of branch holders, that the alleged fraud didn’t extend to other employees, officials or office bearers, and was limited to the party’s Melbourne headquarters.
He says civil action hasn’t been decided on.
MICHAEL KROGER: We’re sensitive to a number of issues, including the fact the person involved has a wife and family, and there are other matters which we want to take into account. But yes, we’ll be recovering a good deal of the funds in a cooperative relationship with the person involved.
RACHAEL BROWN: Mr Kroger says he doesn’t know where the money’s gone.
And he’s hit back at a suggestion that this is in a similar vein to the trade union boss Kathy Jackson being forced to repay $1.4 million of misappropriated members’ funds.
MICHAEL KROGER: When the Liberal party becomes aware of a serious matter like this, what do we do?
We investigate it quickly, we report it to the appropriate authorities, who in this case will be the Victoria Police. We don’t hide it; we don’t ignore it; we deal with it.
On the other hand, it’s taken a royal commission at massive public expense bringing these union and Labor leaders kicking and screaming before the public to get any type of information from them at all, at massive public expense. And even now they want to sack the umpire.
RACHAEL BROWN: One commentator has told The World Today that there might be more to this than meets the eye.
Damian Mantach stepped down from the director’s job in March. A couple of years ago he was one of the senior Liberals secretly recorded during the police command crisis that led to Ted Baillieu resigning as premier.
The commentator says this audit and slur on a former power player in the executive committee might have more to do with the ongoing power struggle and factional rifts at the upper levels of the Victorian Liberal party.
ELEANOR HALL: Rachael Brown with that report.