Federal and Victorian Liberal MPs and candidates are sweating over the prospect of former state leader John Pesutto being bankrupted by a bitter defamation battle, which would force him out of parliament during the federal election.
Late last year, fellow Liberal MP Moira Deeming won a defamation action she had brought against Mr Pesutto and was awarded $315,000 in damages.
The Federal Court is now finalising how much the Hawthorn MP must pay in costs after losing the case, with Ms Deeming seeking nearly $2.4 million.
Mr Pesutto also owes his lawyers hundreds of thousands of dollars and there are fears a significant cost ruling against him could bankrupt the MP.
That would trigger a by-election, as bankrupted people are ineligible to sit in parliament.
“It would be a disaster for the party, and for John’ one party figure said.
A decision could be made soon and in a worst-case scenario, Mr Pesutto could be forced from parliament in the middle of the federal election campaign.
Liberal MPs and candidates are worried about the impact, especially in seats in Melbourne’s eastern and bayside suburbs, with fears it will reinforce the perception that the state party is a mess and is dominated by personal issues rather than what matters to Victorian voters.
“There is a deep concern about brand Liberal,” one senior figure said.
Donations at the centre of cost claims
Ms Deeming’s legal case against the former leader was funded through donations, including a multi-million loan from New South Wales developer Hilton Grugeon, which was declared on her register of interests.
She also received financial gifts from other supporters, including businessman Nyunggai Warren Mundine.
It is the repayment of the loan to Mr Grugeon that is at the centre of the costs dispute.
Prominent Liberal figures have tried to broker a deal where Ms Deeming would ask Mr Grugeon to waive the debt.
Other proposals include the party loaning Mr Pesutto the money to cover the costs, while efforts to raise a loan for Mr Pesutto have also taken place and continue.
Mr Grugeon told the ABC he would not back down and said the continued mistreatment of Ms Deeming was a ”disgrace”.
“The pressure put on Moira to make me back off has only made me more determined,” Mr Grugeon said.
“The Victorian Liberals are an absolute disgrace to the Liberal banner.”
Those close to Ms Deeming said she had been put under immense pressure and has been threatened with more political pain unless she backs down. But the issue is not just with Ms Deeming, as the money is owed to Mr Grugeon.
Ms Deeming and Mr Pesutto declined to comment.
