June 6, 2015 — An erupting scandal involving former Fiat Chrysler and Mercedes Benz executives in Australia snags website provider MotorTrak and potentially threatens its business globally while raising questions about its deal to provide websites to Mercedes Benz retailers in the U.S.
For the last week, media outlets in Australia and New Zealand have been recounting details of an exploding financial scandal involving former Fiat Chrysler executives Clyde Campbell and Veronica Johns along with a slew of other characters. (We provide links to some of the stories at the end of this report).
Here’s the background. In late May, FCA Australia accused Campbell of misappropriation and misuse of more than AU$30 million while he was managing director of the automaker’s Australian operations from 2010 to 2013.
The scandal came to light when Pat Dougherty, a long time Chrysler executive in the U.S., replaced Veronica Johns in December as the president and CEO of FCA Australia following her abrupt resignation in December last year for “personal reasons.”
An investigation soon followed in which a financial forensics team from the U.S. uncovered several cases of financial malfeasance undertaken by both Campbell and Johns.
Many of the instances involved sweetheart deals for vendors that were co-owned by Campbell’s wife, other company executives and former business partners.
The company money allegedly was used to fund the purchase of a AU$400,000 40 ft. yacht, under the guise of it being a mobile outdoor floating billboard. Campbell also leased properties, funded trips to events such as the Monaco Grand Prix and the 2013 Super Bowl in New Orleans.
Meanwhile, FCA has accused Johns of using money meant for charitable donations to renovate her home.
So how is MotorTrak involved in the scandal?
It involves Campbell’s relationship with Lieb. Campbell was a general manager at DaimlerChrysler from 2003 to 2006 according to several media reports. Ernst Lieb, an executive at Daimler Chrysler at the time, had promoted Campbell from staff counsel to general manager.
(Lieb himself had been fired by Daimler while CEO of Mercedes Benz USA in October 2011 for financial improprieties including using company money to renovate his house.)
From 2008 to 2010, Campbell apparently was the managing director for the Australian arm of British website vendor Motortrak. While Lieb was CEO of Mercedes Benz USA, Campbell put together a deal in October 2010 in which Motortrak would provide website services to Mercedes’ U.S. dealers. (Part of this time, Campbell’s wife also was a director and company secretary for Motortrak).
Later that same month, Campbell was named as managing director of FCA Australia. Allegedly, one of his first acts was to sign Motortrak as the website vendor for FCA’s 59 Australian dealers. The dealers paid Motortrak AU$690 a month. In the ensuing years, the contract grew to include 184 dealers who were paying AU$4,100 a month.
Meanwhile, Lieb, after being fired by Daimler, became part owner in Motor World, a dealer group that owns Chrysler Jeep stores in Australia. Court documents also allege FCA paid Motor World several million dollars in marketing support while other dealers only received AU$220,000.
During this time, Campbell, Lieb and Gary Pask, Motortrak’s 80% owner, would meet annually in Monaco to watch the Grand Prix from a private suite. Apparently the three were close friends.
The media reports list several other eye-raising instances of corporate malfeasance by Campbell. There certainly is much more reporting to be done in this story. However, Campbell, for the last few years, was a rock star for FCA in Australia increasing sales significantly in that market. His attorneys are responding forcefully saying FCA will be embarrassed when the allegations are proved false.
Meanwhile, the story does raise the question of how manufacturers choose vendors for their dealers. With stories like this, it’s no wonder dealers are suspicious when automakers recommend or “force” vendors upon them. It’s not rare to hear accusations whispered of how certain vendors will used financial kickbacks and even sex to land business.
In the case of Motortrak, it may be that the company was the best choice for Mercedes and FCA dealers. Certainly, Mercedes dealers in the U.S. have not been hurt as sales continue to climb.
But the unseemly way in which it earned that business likely means it will lose that business here in the U.S. and in Australia.
For more on all the sordid details: