Clyde Campbell points finger at Fiat Chrysler’s top executives
If former Fiat Chrysler Australia boss Clyde Campbell goes down over allegations he misused tens of millions dollars of company money, he might just threaten to take the entire Australian operation of the global automaker and several executives with him.
Mr Campbell on Wednesday opened the door for a tax investigation of Fiat Chrysler for engaging in transfer pricing, after lodging his defence in the Federal Court. Mr Campbell claims the company’s profits were adjusted for transfer pricing.
Transfer pricing occurs when a multi-national car maker moves profits between countries by changing the prices of vehicles and parts, and is a breach of strict taxation laws in Australia.
As part of his 48-page statement of defence, Mr Campbell alleges the company only made $30 million Australian profit in his final year in charge, despite notching an astonishing $1.66 billion of sales and revenue in this country.
According to the document, that net profit was calculated “after tax and transfer pricing adjustments”.
Ominously for FCA, Mr Campbell’s lawyers state “Further particulars of [net profit] after [transfer pricing adjustments] will be provided after discovery.”
The allegation could pique the interest of the Australian Tax Office, although Fairfax Media believes FCA has been reviewed in recent years and is considered a “low risk” of tax avoidance by the ATO.
In 2009 the ATO employed 60 dedicated investigators to examine transfer pricing in Australia.
In 2010 Toyota Australia was hit with a $247 million tax bill over the practice, which forced the company into the red for the year.
“They are the two words no car company in Australia wants to see written anywhere,” said one industry executive. “It would seem the allegation of transfer pricing is the one bullet Campbell has against his old employer.”
In May, Fairfax media revealed that Mr Campbell was accused of misappropriating and misusing more than $30 million of company money to fund an extravagant lifestyle for his family and business associates. In court documents. FCA alleged that Mr 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.
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 is laid out in court documents reviewed by Fairfax Media.
Mr Campbell claims the lavish spending under his leadership had the verbal approval of his superiors, and says he acted on the implicit instructions of global Fiat Chrysler Automobiles boss Sergio Marchione, global Chrysler boss Mike Manley and former Asia Pacific boss John Kett. He also says spending was approved by a number of other past FCA executives.
Mr Campbell claims he was told by senior international Fiat Chrysler executives that his job was to boost sales to 20,000 a year within three years and they “didn’t care how he did it”.
In his statement of defence, Mr Campbell alleges he did not breach the company’s integrity code, which was ” vague, uncertain and unenforceable”.
One of the deals called into question is the use of millions of dollars of company money to help buy dealerships for Mr Campbell’s friends, former Daimler-Chrysler executives Ernst Lieb and David Piva.
Mr Campbell claims he authorised that expenditure on the instructions of Mr Manley, who “implied by a direction to increase FCA’s dealerships to 100 by June 2012” that such deals were needed.
According to Mr Campbell, at a management meeting in Shanghai in 2012, Mr Manley told him FCA needed to match the sales volume of Kia and Volkswagen in Australia.
Mr Campbell claims he replied that Kia and Volkswagen had more dealerships and FCA was trying to expand its dealership network.
According to the court documents, Mr Manley replied with 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”.
Mr Campbell’s statement of defence contains many claims of such conversations, but is almost bereft of supporting documentary evidence, such as emails or written instructions, from his superiors.
Last week Fairfax Media revealed that Mr Kett, the man who appointed Clyde Campbell as the boss of Fiat Chrysler Australia, had suddenly resigned from the Italo-American car maker.
