Fiat Chrysler bid to seize assets of former managing director Clyde Campbell

[vk2jdh]

http://www.smh.com.au/business/fiat-...25-gh8uco.html

Fiat Chrysler Australia is seeking to freeze the assets of former Australian managing director Clyde Campbell and his wife Simone, including his family home in Brighton and holiday homes in Victoria and Queensland.

Lawyers for Fiat Chrysler have targeted Mr Campbell's Brighton home at 533 New Street, which was purchased for $1.5 million in 2008.

Other properties cited in the application for a freezing order include, 27/1364 Gilston Road, a luxury Gold Coast property on the Nerang River in Queensland, and 30 Webster's Lane in Freeburgh, on the Ovens River near Bright in Victoria's High Country.

[LeighP]

Well, maybe now we know why theres no money to hold reasonable stocks of spare parts, perhaps???????
Bloody hell, what happened to reasonable internal auditing and board oversight?

[Tyvokka]

Sounds like many many people and businesses out there. The main aim is for self grandeur and gratification. FIFA, ENRON....... Who then pays for their greed, all of us unfortunately.

People get sent to goal for small theft but these awholes get away with a slap on the wrist.

[WhiteMeat]

Interesting read

http://www.smh.com.au/business/fiat-...0150605-ghh9rq

It has all the makings of a Hollywood script. In Elizabeth Hurley, it even has there presence of a Hollywood star. But the scandal engulfing Fiat Chrysler Australia doesn't look like having a Hollywood ending for many of its cast of characters.

Take the leading man. Last month Fiat Chrysler Australia (FCA) launched legal action against former managing director Clyde Campbell.

It accuses him of misappropriating and misusing more than $30 million of company money to fund an extravagant lifestyle for his family and business associates.

It alleges Campbell authorised the purchase of Chrysler vehicles in Britain for the exclusive use of Shane Warne, Elizabeth Hurley, and Harry and Sheree Kewell. They were described as "brand ambassadors" despite Fiat Chrysler having no brand ambassador program there.

These stars and their cars understandably grabbed the early headlines. There is no suggestion the celebrities did anything wrong, but the deals shine a spotlight on a culture of breath-takingly lavish spending at FCA.

Company money was used, directly or indirectly, to pay for a $400,000 yacht, a plane, trips to New Orleans and Rio de Janeiro, a golf and spa holiday in New Zealand, luxury villas at Crown Casino, Victorian Racing Club memberships worth $244,800, and more than $380,000 in gift vouchers. The detail in all its glory is laid out in court documents reviewed by Fairfax Media.

Leading lady
Every blockbuster needs a leading lady. Enter Veronica Johns, Campbell's hand-picked successor, who also faces claims in the civil court case of misappropriating money.

Johns rose to prominence as the first female chief executive of an automotive company in Australia. She is accused of charging renovations to her family home back to FCA, and diverting cars earmarked as charitable donations to her husband and to her builder.

"The spending was out of control," said one former staff member.

"And anyone who questioned it was shown the door. All we were told was that head office had approved the marketing spend."

The largesse was spread wide. The company Christmas party at Crown cost more than $1 million a year, as more than 100 rooms were booked for staff and guests. Staff got Louis Vuitton handbags as gifts after Johns attended an event at the company's store at Crown Melbourne.

Other expenditure included a budget of $500,000 authorised by Ms Johns and Mr Campbell to fund a Fiat Abarth racing team to compete at the Bathurst 12-hour race last year. The venture ended up costing Fiat Chrysler more than $800,000.

A quiet chat
The party stopped just before Christmas last year.

Johns had departed the top job in October citing personal reasons.

Fiat Chrysler brought in Pat Dougherty as the president and CEO of Fiat Chrysler Australia. A 32-year veteran of the company, Dougherty had headed a Chrysler parts business in the US.

He arrived in Melbourne in early December and found a line of senior staff at his door, seeking a quiet chat.

"I decided I was going to tell the new boss everything I knew before he even got here," says a key whistleblower.

"I walked into his office and let it all out. I don't think he knew what hit him".

Dougherty heard all about the extravagant spending but, perhaps more seriously, details emerged of inside deals with related parties.

He duly reported back to Chrysler's Michigan headquarters.

A team of forensic accountants was dispatched to Australia to investigate and arrived in Melbourne in late January.

"I can definitely recall the day the Americans walked in," says a current member of staff.

"There were half a dozen of them. It probably looked like a normal audit team, but many of us knew what they were here for. The mood of the place was funereal. it still is. This was once a vibrant, exciting office to work in. Now it's a morgue. Barely anyone talks."

Once the audit team arrived on the ground in Port Melbourne, the books and records of Fiat Chrysler Australia started to unravel.

Mystery boat
Among the colourful stories Dougherty heard on his first day was about a mystery boat.

This was high on the audit team's list. They found more than half a million dollars of up-front payments made by FCA for a "mobile outdoor floating billboard".

Company searches revealed that Campbell's wife, Simone, was part-owner in a company called My Alfa Romeo together with one of James Packer's most trusted employees, Crown's senior vice-president of VIP services Ishan Ratnam, a man the Campbells had met through their frequent visits to Crown.

According to court documents, My Alfa Romeo was paid $550,000 by FCA to provide a "mobile outdoor floating billboard" for the company.

It is now alleged that Campbell used the money towards the purchase of a 40-foot Chris Craft boat valued at more than $400,000.

It is just one of many related party transactions that appear under the reign of Campbell and Johns that are now under scrutiny.

In May 2012, Fiat Chrysler signed a three-year deal with Digital Dialogue Media to provide "corporate website services" at a cost of $6.6 million over three years.

Campbell signed the deal on behalf of Fiat Chrysler. Yet, according to court documents, FCA marketing director Sam Tabart had owned almost half of Digital Dialogue Media Holdings the company that would now be selling services back to Fiat Chrysler.

'The more we dug, the more we found'
Campbell also signed a deal for FCA to lease a property at 2 Gould Street in Strathfield, Sydney, for 10 years, paying $145,000 per year in rent. The ultimate owner of the property, again according to the court documents, was Kalamazoo Super, the superannuation fund of Campbell and his wife, Simone.

"The more we dug, the more we found," says one key FCA insider.

"It's all in the court documents."

All up documents lodged with the Federal Court detail more than $30 million of contracts signed with companies allegedly related to either Campbell, his wife, former business partners or other senior executives with the company.

Campbell's solicitor, Sam Bond, said his client's position was that "the allegations in the statement of claim are not only completely denied but considered scandalous".

"We are confident that, in due course, the allegations will be shown to be wrong and will be embarrassing for FCA," Bond said.

"The fact that internal politics within FCA has caused it to want to tarnish the name of Mr Campbell, who took the business to enormous levels of growth, is as unfortunate as it is unfair."

Life in the fast lane
There are few better places to watch the Monaco Grand Prix than from a private suite at the Hotel de Paris. For roughly £5000 a head, you get full champagne service and a seat on the hotel's private balcony with a view of Casino Square, where the cars tackle a right-hand corner in front of the hotel's terrace, before racing towards Mirabeau Corner.

It is, according to the company that sells the exclusive packages, "the most famous section of track in Formula One".

It was also the place where each year Clyde Campbell, Ernst Lieb and Gary Pask would meet up to watch the race.

All three now take centre stage in Fiat Chrysler's investigation into its Australian offshoot.

The relationships go back more than a decade.

According to court documents, between 2003 and 2006, Campbell was general manager at Daimler Chrysler under the leadership of Lieb and was promoted to general manager.

"We were surprised because he was a lawyer and in-house legal counsel," said a former executive.

"He didn't have sales experience, but he and Ernst were tight. Great mates."

One of the deals Campbell authorised at Daimler Chrysler was the signing of an English company called Motortrak to provide websites for the entire dealer network.

Such was the value of the contract, Daimler Chrysler Australia became one of Motortrak's biggest clients.

Gary Pask is the owner of 80 per cent of the shares in Motortrak, which now services more than 3500 dealerships globally with websites.

According to court documents, from January 2008 to September 2010, Campbell was managing director of Motortrak in Australia. From May 2009 to October 2010 his wife Simone was a director and company secretary.

During that time Campbell allegedly sold a contract with Motortrak for the provision of dealer web services across all of the United States to his former boss Ernst Lieb , by then the CEO of Mercedes-Benz USA.

"That was the making of Motortrak and the making of Gary Pask as one of the richest businessmen in the UK," said a former Motortrak staff member.

"The whole deal was done by Clyde."

New job
On October 3, 2010 – just two days after Simone dropped off Motortrak company records as secretary – Campbell was unveiled as managing director of FCA.

One of the first contracts he then signed was a deal with Motortrak to provide "web services" for the company's network of 59 dealerships at a rate of $690 a month each.

In the end, Campbell had upped that price to $4100 per month for each of the company network of 184 dealers.

FCA claims more than $20 million has been paid to Motortrak since 2011, which it says is "substantially greater than the cost for similar web services provided by Motortrak itself and by competitors".

It is also alleged that Mr Campbell "has, or appears to have, an interest in Motortrak and to have benefited personally from the Motortrak contract".

This includes a personal relationship with Pask, who was given an all expenses paid trip by FCA – along with Campbell – to the Australian Dealer of the Year event in New Orleans in February 2013, which coincided with the Superbowl and the Pebble Beach Concours d'Elegance.

Pask has also stayed in a luxury villa at Crown, paid for by FCA, and travelled to New Zealand for a three-day golf and spa trip with Campbell and Lieb, also paid for by FCA.

Lieb, according to documents, has also been a beneficiary of Campbell's time at the helm of FCA.

In 2011 Lieb was sacked by Mercedes-Benz USA for spending more than $US100,000 of company money to upgrade his American home.

Lieb sued the company in Germany for wrongful dismissal, but lost the case. He returned to Australia and became a part owner of a company called Motorworld, which owns Jeep-Chrysler dealerships.

It is alleged in court documents that Campbell authorised the payment of $1.2 million for Motorworld to buy land for its Oakleigh dealership. FCA also paid $2.49 million of "marketing assistance" for Motorworld, when 11 other dealerships received assistance of just $220,000 each.

FCA claims it suffered a loss and damage of more than $4 million from those deals.

"These are three men worked together, played together and partied together," says a source at FCA. "This court case will get to the bottom of what else they did together."

The Italian Job
A key questions being asked inside Fiat Chrysler Automobiles is, if the allegations prove to be true, just how did successive chief executives avoid internal protocols and regulations and authorise such spending?

It's not a topic of conversation that Dougherty plans to broach.

"FCA Australia will not engage in a running commentary on matters currently before the courts", he tells BusinessDay.

The answer to the question lies in Chrysler's recent and tumultuous history.

The $US37 billion marriage between Daimler-Benz and Chrysler was touted as a "merger of equals" back in 1998 but the new entity soon found the going tough.

By 2007, the Chrysler Group had an annual operating loss of $US1.5 billion. It cut 13,000 jobs – almost one in every six people in its entire workforce – just to survive.

Daimler eventually sold 80.1 per cent of Chrysler to private equity group Cerberus for $US7.4 billion, just before the global financial crisis rocked the entire US car industry.

Chrysler's corporate welfare
By 2009, Chrysler was surviving on a $US4 billion loan from the US government, and the ensuing years are occupied with battles to stave off bankruptcy, plunging sales and, ultimately, a merger with Italian giant Fiat.

It's against that backdrop that the company's push into Australia stepped up, as part of a plan that pre-dates the GFC.

"We were selling 8000 cars a year when Clyde arrived, and that went to 34,000 cars a year, and while Clyde was getting results, questions were not being asked," says a company insider.

"Everyone at head office was too busy putting together the Fiat merger."

Slick marketing, slim margins and a soaring Australian dollar were the keys to the company's success in Australia.

"The Jeep campaigns worked, the public liked the product we were bringing in, but the fact is the Australian dollar was the key," says the FCA insider.

"With the Aussie above parity, we could slash prices to build market share. The entire profit margin on a $65,000 Jeep Cherokee was less that $5000. Our rivals would want double that. While the dollar stayed high, we could get away with that business model."

Economy class
As sales soared, Campbell spent. According to Chrysler Group policy, Campbell could not approve expenses in excess of $5000.

He also had to travel economy class on all domestic flights, and all international flights had to be approved by John Kett, his regional boss in the Asia-Pacific region.

According to the writ lodged by his former employer, Campbell instead "incurred excessive travel expenses without business justification and/or the necessary approval".

It is claimed that, during his four years in charge, Campbell was paid $537,849 in personal travel expenses.

But that is only the tip of the iceberg. In addition, Fiat Chrysler alleges Campbell "sought to conceal the true level of his expenditure on travel" by procuring other employees to submit, as their own, travel expenses incurred by him.

To top it off, it is claimed Campbell asked those employees to pass those expenses back to him after they were paid by Fiat Chrysler.

According to the court documents, company employees "who were not expected to incur significant travel expenses" lodged $0 worth of claims in 2010, the year Campbell arrived as managing director.

In 2012, that figure had blown out to $452,138. In 2013, it was a further $445,556. All on staff who had no need to travel.

"The American auditors have been looking at the processes we had, and basically there weren't any," says a company insider.

"You could not spend like we did at any other major multinational without some sort of flag going up. In my opinion, back in Michigan, head office didn't have its eyes on the road. They only had eyes on the Fiat deal."

Who's the boss?
There is also the complicating issue of who Campbell actually worked for, after the series of mergers and ownership struggles.

Officially, Campbell was hired by Chrysler, but that entity is now part of a multi-national conglomerate with headquarters in London and a legal base in the Netherlands.

"It will be very complicated for FCA to prove Campbell breached his work agreement, because which set of rules was he working under," says a lawyer close to the case.

"Was it Chrysler? Of Jeep? Or Fiat? It's a very muddy area. Some of the internal policies on executive expenses are in Italian."

It took a little over a month for the American auditors to complete their work and fly back to Michigan. That work constitutes the basis for the writ against Campbell, and looming action against other former executives, including Johns.

"You can imagine Dougherty's reaction when it all came out," says a senior manager at FCA.

"Here is a bloke who has lived through the merger and demerger, has worked through 13,000 jobs cuts in the US, has seen his colleagues tighten their belts or lose their jobs during the bankruptcy crisis, and here in Australia we have been spending like drunken sailors, having $1 million Christmas parties and buying Louis Vuitton bags for staff.

"Think about it. We have never really made a dollar here in Australia. We have been living off the money of the parent company to build a presence, build market share.

"And for a long period of time that money was coming from US taxpayers as part of the bail-out. I can't even imagine what the reaction is back in Michigan. Someone will have popped a fuse about this."