Aus. FCA Misappropriation Case Includes Former MB, Current Crown Resorts Execs

As we reported earlier, Clyde Campbell and a number of his associates, including his successor Veronica Johns and former boss Ernst Lieb by way of his Motorworld dealerships, are being named in a misappropriation case claiming $30 million AUD was funnelled out of company coffers.

This weekend, more details have come to light, including how Campbell was able to pilfer FCA funds without raising red flags in Detroit.

The story verges on conspiracy and includes the wife of Campbell, his successor, a formerly disgraced Daimler executive, a casino, a boat and extravagant homes paid for by FCA without its knowing. Even Campbell’s wife’s hairdresser received a free Jeep as part of the brand’s “ambassador” program.

Mark Hawthorne of The Sydney Morning Herald remarked, “It has all the makings of a Hollywood script. In Elizabeth Hurley, it even has the presence of a Hollywood star.”

According to the article published today, $20 million (all figures in Australian dollars) was spent on overpriced dealer website services, $550,000 on a “mobile outdoor floating billboard” that is allegedly a 40-foot Chris Craft boat owned by Campbell, $1 million Christmas parties that included Louis Vuitton bags as employee gifts, over $500,000 – and possible nearly $2 million – in travel expenses, and a private suite for Campbell and his friends – including former fired Mercedes-Benz USA CEO and president Ernst Lieb – to enjoy the Monaco Grand Prix.

Campbell served under Lieb

In 2003, Ernst moved to Australia and took the same titles at the Australian arm of the newly-merged DaimlerChrysler. That’s where he became the boss of Clyde Campbell. Ernst would leave Australia in 2006 to become CEO and president of Mercedes-Benz USA, but not before Campbell signed a contract for dealer website services with Motortrak, a British digital retail marketing agency owned by Gary Pask.

By May 2007, Daimler would divest itself from Chrysler, with Cerberus Capital Management taking a 80.1 percent stake in the American business.

Starting January 2008, Campbell served as managing director of Motortrak in its Australian office. His wife, Simone, was director and company secretary starting in May 2009. During his time at Motortrak, Campbell sold a website services deal to Lieb for all Mercedes-Benz dealers in the United States.

“That was the making of Motortrak and the making of Gary Pask as one of the richest businessmen in the UK,” a former Motortrak staff member told The Sydney Morning Herald.

“The whole deal was done by Clyde.”

During this time, Chrysler received $12.5 billion (USD) from the U.S Treasury and $1 billion (CAD) from the Canadian and Ontario governments. The bailout cash was provided under the condition of a Fiat takeover.

Clyde left Motortrak in September 2010, with his wife following one month later. Two days after she left the retail marketing company, Clyde Campbell was appointed managing director of the now-Fiat-controlled Chrysler Australia.

In October 2011, Lieb was fired from Mercedes-Benz USA for using corporate funds to pay golf club fees, granting rentals for vehicles in exchange for flight upgrades, and using $100,000 in corporate money to perform upgrades in his private home – including a home theatre, gym, washer and dryer, and built-in barbecue. A later wrongful dismissal suit launched by Lieb against Mercedes in Germany was dismissed, with the court stating the claims were “so serious that any further employment [at Daimler] would be unacceptable.”

An unnamed Daimler executive at that time told German paper Handelsblatt, “Ernst was warned, but he has done it again.”

Another Motortrak contract, Lieb’s Motorworld and Campbell’s high life

More than $20 million was paid to Motortrak from 2011, claims FCA, “substantially greater than the cost for similar web services provided by Motortrak itself and by competitors.”

Shortly after, disgraced Lieb would return to Australia to become co-owner of the Motorworld dealership group along with David Piva.

“After working all my life in the wholesale sector, I am now in the ‘real’ business of the Automotive Industry – the retail business!” Lieb said in a press release announcing his arrival at Motorworld.

FCA alleges it incurred some $4 million in damages in deals between the Campbell-led subsidiary and Lieb-owned Motorworld, including “marketing support and to help it buy property, specifically the Brighton dealership,” reports The Sydney Morning Herald.

Campbell was well known as one of the biggest-spending marketers in Australia. The company would end up sponsoring horse racing, soccer players in multiple leagues, events, Crown Resorts, professional sports teams, and provide vehicles to celebrities the world over.

While there were only 45 official “ambassador” program vehicles documented in 2013, staff said the number was closer to 100. The program was so pervasive, even Simone Campbell’s hairdresser, Karlose, received a Jeep for free.

Travel expenses skyrocketed. Campbell incurred $537,849 in travel expenses in his own name. However, it is believed he also incurred – in whole or in part – an additional $452,138 in 2012 and $445,556 in 2013 in travel expenses submitted under the names of employees who had no business traveling.

Part of this travel was a trip to Monaco. Campbell, along with Lieb and Pask, enjoyed multiple stays at the Monaco Grand Prix.

Lavish parties were also the norm for Christmas. Approximately $1 million each year was spent on the annual employee Christmas party held at Crown Palladium, with an estimated 100 suites booked at Crown Towers and Crown Promenade hotels for staff, guests, brand ambassadors and media. This started under Campbell’s leadership and continued under his successor, Veronica Johns.

$550,000 “mobile outdoor floating billboard”

My Alfa Romeo, partly owned by Crown Resorts’ Ishan Ratnam (a.k.a. Ishan Kunaratnam) and Campbell’s wife Simone, is said not to have delivered said billboard. Instead, FCA alleges the money was used to purchase a 40-foot Chris Craft boat valued at $400,000 owned by Campbell.

Ratnam’s lawyer, John Price, stated, “There is a contract between My Alfa Romeo and FCA and the billboard was provided. My client denies that assertion, as certainly Fiat Chrysler did receive it.”

From Campbell to Johns, the spending continued

However, the change in leadership didn’t mean the money would stop flowing from FCA.

At the time, FCA touted their new leader Johns as “the first Australian woman to head the local division of a major car company.”

After a $3.1 million renovation of the company’s Melbourne headquarters done by Madok, a construction company controlled by Mitchell Knight, the same company was contracted to perform upgrades to John’s private residence with the work invoiced back to FCA.

Three cars were purchased as prizes for two charities and a soccer club. Two of those vehicles would end up registered to Mitchell Knight and one to Gregory Hede, John’s husband. Knight sold at least one of those vehicles back to the City Chrysler Jeep Dodge dealership at a $20,000 premium. FCA claims the vehicles were funnelled through the Lieb-owned Motorworld group.

A Fiat Abarth race team was funded by the FCA Australian subsidiary under Johns. It was budgeted at $500,000 but cost $800,00 in all. Clyde Campbell and Gregory Hede competed as drivers in those cars, their racing licences paid for by FCA.

Other expenses mentioned in the case include an $11,000 bill rung up by Johns at Crown Towers.

In September 2014, FCA alleges Campbell, his wife Simone, Lieb, his wife Petra and other guests took a three-day trip to a luxury golf and spa resort in New Zealand on FCA’s dime under the leadership of Veronica Johns without proper authorization.

One month later, Johns left FCA for “personal reasons” after less than two years at the post and a total of 16 years with the company.

How did it all happen?

“The spending was out of control,” told former staff member to The Sydney Morning Herald. “And anyone who questioned it was shown the door.”

When Johns left the top post, FCA appointed Chrysler parts business head Pat Dougherty as the new president and CEO of the Australian subsidiary. When he arrived, employees lined up at his door to tell the story, reports The Sydney Morning Herald, which Dougherty then reported back to Detroit.

Auditors arrived in Melbourne in late January.

How it all happened in the first place, Dougherty is keeping mum.

“FCA Australia will not engage in a running commentary on matters currently before the courts”, he told BusinessDay.

However, many think a lack of control and oversight is due to the DaimlerChrysler fiasco and Chrysler’s recent merger with Fiat. With Italian and American managers preoccupied with larger corporate matters, executives in Australia were able to operate virtually autonomously, especially as sales grew.

Campbell is stating he’s innocent through his lawyer.

“We are confident that, in due course, the allegations will be shown to be wrong and will be embarrassing for FCA,” Campbell’s lawyer Sam Bond told The Sydney Morning Herald.

[Sources: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10]