$30m car scandal goes to the top

Global Jeep bosses approved $30 million in spending in car industry scandal, new court documents claim

The former car industry executive at the centre of a scandal into the alleged misuse of $30 million in corporate funds — including free loan cars to sporting stars and celebrities such as Harry Kewell, Shane Warne, Liz Hurley and Jesinta Campbell — has lodged his defence in the Federal Court in Melbourne.

The defence documents for former Jeep boss Clyde Campbell claim he had the blessings of the global CEO of Fiat Chrysler Automobiles Sergio Marchionne and the grandson of Giovanni Agnelli, John Elkann, part of the family that has the controlling interest in Fiat and Ferrari, to “not be bound by the rules of the ‘old Chrysler’,” and he had “been given a big opportunity without the constraints normally imposed and that he should make sure he did not waste the chance”.

Mr Campbell claims the instruction to bring a new approach to the job was given to him in one of his very first meetings in Shanghai in his new role in October 2010.

Mr Campbell, the former boss of Fiat Chrysler Automobiles Australia — which also distributes Jeep and Alfa Romeo vehicles — is being taken to court by his former employer because it alleges there was excessive spending and “non commercial” deals under Mr Campbell’s tenure from October 2010 to April 2013.

The 48-page document, filed by high profile Melbourne lawyer Sam Bond, claims much of the alleged overspending was in fact approved by the former Asia-Pacific boss, John Kett, and/or the current global boss of Jeep, Mike Manley.

Australian-born Mr Kett, who was based in Shanghai and Singapore, left the company last Thursday, on the eve of the original deadline for Mr Campbell to lodge his defence.

The deadline to file Mr Campbell’s defence was extended to Wednesday 29 July before Mr Kett’s departure had been made public.

As reported exclusively by News Corp Australia six weeks ago, Mr Kett was said to have arranged a sponsorship deal with the local Melbourne cricket club he and his sons once played for, and was also given a lifetime membership of his favoured Richmond football club as part of Jeep’s sponsorship of the AFL team.

Mr Kett stood in as the boss of FCA Australia for eight weeks late last year between the departure of former boss Veronica Johns and her successor, American Pat Dougherty, who initiated the legal action after his arrival in Australia last December.

The untested defence document includes claims Mr Kett or Mr Manley or both executives were aware of or gave approval for the numerous deals listed in FCA Australia’s statement of claim filed in the Federal Court in May.

In reference to a multimillion-dollar contract awarded to a dealer website services company, which FCA alleges increased from $690 per dealer to eventually $4100 per dealer, Mr Campbell’s lawyer said the deal was approved verbally during meetings and in phone conferences, and that it was cheaper than other tenders.

The detailed document also reveals just how close Jeep came to pulling out of Australia before sales quadrupled under Mr Campbell’s leadership.

The court documents claim Mr Manley told Mr Campbell that if Jeep didn’t increase sales to 20,000 vehicles annually then the US giant would stop making right-hand-drive vehicles and, therefore, pull out of Australia.

By the end of his tenure, Mr Campbell exceeded the target, increasing Jeep sales fourfold, from 5975 in 2010 to 22,170 in 2013.

The defence document also alleges a culture of verbal approval processes, even on multimillion-dollar deals, including extra assistance given to Motorworld Australia, a group of three dealerships in Melbourne’s south-eastern suburbs.

The documents claim the previous Jeep dealer in that area was underperforming, the premises were “dilapidated” and the suburbs concerned were prime targets for Jeep sales.

It is alleged Mr Campbell was urged by the global boss of Jeep to expedite the growth of the dealer network.

“The direction was oral at a monthly Management Group meeting in Shanghai in which, in the presence of other Chrysler … executives, Mike Manley told Campbell that FCA was not going fast enough and needed to match Kia and Volkswagen in volume,” the court documents state.

According to the defence document: “Campbell replied that Kia and Volkswagen had more dealerships and FCA was trying to expand its dealership network. Manley said words to the effect: ‘I’m sick of this excuse. Get 100 dealerships by June next year or you’re out of a job. I don’t care how you do it, I don’t care how much it costs, just get it done. All your marketing is being wasted if you do not have a dealer network to deliver on it’.”

The defence document claims international management knew Mr Campbell’s superannuation fund owned a commercial property in Strathfield that was subsequently rented to FCA for its NSW state office.

Mr Campbell was “authorised and directed by his superiors to cause FCA to enter into the Strathfield Sub-Lease”, the court document states.

“In a conversation in a meeting at FCA’s Port Melbourne premises, Clyde Campbell told John Kett of the Strathfield Premises and proposed to Kett that he (Campbell) would buy the Strathfield Property and lease it to FCA, which Kett approved,” the court document alleges.

The defence papers continued: “FCA would enter into 10 consecutive 1-year leases before Campbell’s departure, and Manley said provided (Mr Campbell’s successor Veronica) Johns thought the premises suitable he did not see any problem.”

Campbell alleges that management was similarly made aware of the multi-million dollar contract to use the rural Victorian resort Villa Gusto as a retreat for VIP customers for 240 days a year.

“Kett raised no objection or protest during the conversation”, the court document alleges, referring to meeting which he claims took place during a media launch for Alfa Romeo in August 2012, which saw Mr Kett, Mr Manley and Mr Campbell arrive by private plane from Melbourne.

“Further, the authorisation and direction was oral in telephone conferences between FCA’s Board of Management and John Kett in which the proposal to enter the Villa Gusto Contract was discussed and Kett said that he agreed and that other Asian country operations would more likely want to bring their customers to an Australian centre than the China centre that Shanghai HQ were considering establishing,” the defence documents allege.

The defence documents claim Mr Campbell “did not have a material personal interest in” sponsorship deals involving a Chris Craft yacht, a private plane, or the construction of Jeep kiosks and “Jeep on a pole” promotional tools.

And nor did Mr Campbell “materially benefit” from a deal with sales trainer and motivational speaker Frank Romano, who was also given a free loan car, fuel card and toll pass as part of his $1.7 million deal as a consultant to FCA.

As reported by News Corp Australia earlier this month, Mr Campbell’s subpoenaed bank statements found Harry Kewell, who signed a $3 million contract to be a Jeep ambassador over three years, had paid Mr Campbell $13,975 in 2013.

“Since identifying Harry Kewell as a suitable candidate for the Jeep Ambassador Program and for sponsorship by FCA, (Mr Campbell) has come to regard Harry Kewell as a friend,” the court documents state.

“The friendship has extended to occasions when he paid personal expenses on behalf of Harry Kewell, for which Harry Kewell subsequently reimbursed him by direct credit to his bank account.”
News Corp Australia has contacted FCA Australia and Mike Manley for comment.

Mr Kett told News Corp Australia: “I’m no longer with FCA and I have no comment to make.”