Fiat Chrysler takes CEO to court alleging multi-million dollar misuse of marketing budget
Fiat Chrysler has launched Federal Court action against its former CEO Clyde Campbell alleging he misused more than $30m of company funds during his four year tenure, much of it related to marketing services.
Papers lodged with the Federal Court by the carmaker, whose brands includ Jeep and Alfa Romeo, include allegations Campbell used $550,000 set aside for a “mobile outdoor floating billboard” to buy a 40-foot boat, and another $190,000 in invoices for production costs “were used toward the purchase of a plane”.
It also claims Campbell charged the company for Chrysler cars given to former cricketer Shane Warne and then partner Liz Hurley, and ex-Soceroo Harry Kewell and his wife as “brand ambassadors” for the company in the UK, with Fiat Chrysler claiming it “did not have an interest in brand ambassadors in the United Kingdom territory”.
The company also alleges Campbell had a stake in digital marketing company Motorak, which had a contract for “website services” which went from costing the company $488,000 per year to $9.16m per year between December 2010 and May 2015.
In the court documents, which have been seen by Mumbrella, it claims: “The cost of the Motortrak Contract was substantially greater than the cost for similar web services provided by Motortrak itself and by competitors.”
A Fiat Chrysler spokesperson told Mumbrella issues had arisen “during a routine audit” of its books.
“During a routine audit, we discovered what at best appears to be incomplete documentation pertaining to certain transactions and vendor relationships initiated or approved by Mr Campbell during his tenure as CEO of FCA Australia. As such, we are seeking all relevant information he has on these matters,” they said.
Campbell did not respond to Mumbrella’ request for comment, but his lawyer Sam Bond told Fairfax Media the allegations were “scandalous” and motivated by internal politics within Fiat Chrysler.
An interlocutory hearing is scheduled for May 27.
“Mobile outdoor floating billboard”
Among the allegations are that Campbell authorised payments of $500,000 to a company called My Alfa Romeo, of which his wife was one of the directors.
The company issued three invoices for $137,500 to cover the costs of a “mobile floating billboard” for the years 2014, 2015 and 2016, as well as $139,000 for the same service for 2013.
Campbell authorised these payments to be made through Fiat Chrysler’s media agency Maxus, but “neither Maxus nor the Applicant (Fiat Chrysler) received a mobile outdoor floating billboard from My Alfa Romeo”.
In the legal papers it alleges: “The Applicant suspects that Campbell used the money towards the purchase of a 40-foot Chris Craft boat valued at in excess of $400,000.” Mumbrella does not allege any impropriety on behalf of Maxus.
Maxus today declined to comment on the matter as it is before the court.
Photography services
The writ also alleges Maxus received invoices from Andrew Vukosav Photography totalling $191,192 but states that “neither Maxus nor the Applicant (Fiat Chyrsler) received services from Vukosav Photography. According to the documents Fiat Chrysler suspects that Campbell “used the money towards the purchase of a plane”.
The company alleges Campbell had a close relationship with Vukosav who allegedly joined him on a three-day golf and spa holiday in New Zealand in September 2014 and on Fiat’s Australian Dealer of the Year event in Rio de Janeiro in mid-2014, which coincided with the FIFA World Cup.
Harry Kewell sponsorship
Fiat Chrysler signed soccer star Harry Kewell in August 2012 to become a Jeep ambassador.
The player received a monthly retainer of $41,500, plus $1 million a year to operate the “Jeep/Harry Kewell Don’t Hold Back Program”.
However, his contract was soon renegotiated where in return for agreeing to play for the Melbourne Heart Football Club Fiat would provide additional housing support of $2,000 per week, school fees to a maximum of $75,000 a year; and eight return business class airfares a year between the UK and Melbourne.
On April 30, 2014, Jeep “irrevocably” extended Kewell’s contract to December 2018.
According to the writ, Campbell breached his employment contract in the negotiations by “not following the review process for special contracts set out in the Corporate Process Guideline on Contract Negotiation and Review”.
Mumbrella does not allege any impropriety on behalf of Harry Kewell.
https://www.youtube.com/watch?v=37uouZimaYY
Digital Services
Among the allegations made against Campbell are claims that in 2010 he hired digital marketing firm Motortrak to provide services for the company’s network of dealerships at a rate of $690 a month each.
As of May 2015, the contract value had increased to $4,100 per month for each of the company’s 184 dealers, with the value of the contract surging from an estimated $488,520 in December 2010 to $9.1m in May 2015.
According to the writ “(Campbell) has, or appears to have, an interest in Motortrak and to have benefited personally from the Mototrak contract”, with the alleging the contract “was uncommercial and detrimental to the interests of the applicant.”
Similar conflict of interest allegations have been made in relation to a $6.6m contract with Digital Dialogue, signed in May 2012, with Fiat Chrysler’s writ questioning whether the company’s then marketing director Sam Tabart had a stake in parent company Digital Dialogue Media Holdings.
The writ alleges: “Tabart had and has a personal interest in Digital Dialogue Media… (he received) a benefit or gain where there existed a conflict or possible conflict with Campbell’s fiduciary duty.”
The documents alleged Tambart relinquished that stake at the time the contract was signed, but emerged as owner of 48 per cent of the shares of Digital Dialogue Media Holdings, the parent company. Comment has being sought from Campbell, Tambart, Digital Dialogue and Motortrak.
Outdoor services
The writ by Fiat Chrysler also questions contracts entered into with outdoor company Spring Media which it alleges was owned by an associate of Tabart, Anthony Loxton. Loxton is also a director of Digital Dialogue.
Spring Outdoor Media agreed that Maxus would rent Pop Up Retail Containers and Jeep Poles from Spring on behalf of Fiat, with the company spending some $2.24m on the items which “were of negligible benefit to the applicant.”
Digital Dialogue and Loxton declined to comment to Mumbrella.
Nic Christensen
Looks legit to me. In fact quite transparent by comparison to other efforts I’ve seen.
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Wouldn’t be the first or last time that an exec has a relationship / ownership of an contracted agency. There are a few floating around that are well known especially in the QSR space. How ethical this is remains questionable.
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paragraphs.
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Considering he used to be MD of Motortrak…
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The digital agency with which my agency shares space charges its clients $165/hr for website management tasks. $4,100 per month equates to about 25 hours’ work per month.
Now I don’t know anything about what was involved in the Motortrak contract but 25 hours per month doesn’t seem like an unreasonable amount of work. Could well have included content updates, website management / hosting, on-going bug fixes, scoping new features, help desk function, etc. I could easily see those tasks adding up to 3 days’ work per month.
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[Edited by Mumbrella] If these allegations are proven, he will be looking at 3-5 years in the clink ( prison farm)
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So Harry Kewell didn’t buy a Jeep?
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@ do the math … It’s $4100 per month x 185 … which is close to 10m per year … do you still think it’s a fair amount?
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Wonder if the “web services” included a migration to The Cloud™, without a proper cost analysis being done? That can get real expensive real quick.
Oh look, their sites appear to be hosted on AWS…
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I bought a Speedboat
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@dothemaths – the web contract was $4100 per dealership, per month. 180-odd in Australia. that’s a lot of content updates. please don’t tell me the jeep dealership in Hornsby needs completely different content to Mosman or Parramatta.. no way known there’s 25hours of time spent, for EACH of 180 delaerships, every single month.
[Edited by Mumbrella]
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a mobile floating bloody billboard ?!!!
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Here’s the Jeep on a pole proof of posting:
https://mumbrella.com.au/jeep-puts-a-car-on-a-pole-70504
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Surely a 40 foot boat could qualify as a “mobile outdoor floating billboard”. Nothing to see people, go about your business citizens.
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#8 & #11… have you looked at any of the dealer websites concerned?
e.g. first one I googled was City Jeep in Melbourne. It’s has 7 top-level menu items, 15 2nd level menu items, plus find us/request brochure/request quote/book test drive plus usual disclaimer stuff.
A total of 81 cars for sale on the site, each with individual pages (that’s cars actually on the lot, not models that you can order).
I can easily see managing that as being a 3-day per month proposition. If you don’t think so, maybe you’d like to quote on the website builds I’m briefing out?
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@dothemaths – the client here obviously disagrees with you, as they are taking the CEO to court “alleging the contract “was uncommercial and detrimental to the interests of the applicant.”
If you reckon charging $9m per year is fine for something that used to cost $488k per year, then we are not in the same jurisdiction
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#16… you’re assuming that the scope of the work remained the same when the cost increased.
Plus, if you actually read my comments properly, you’ll see that I’m not aware what services were covered by the contract. It *could* be that the client was being massively overcharged. But I can easily see $4k a month being a reasonable figure depending on the amount of work done on each site. I have seen clients happily pay $1,500 per month retainers purely for maintenance and bug fixes, not including managing content updates.
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@Do the maths is correct.
Clients with Franchises, or multiple locations, often then need additional support. I have been in a position where a client with lots of Franchises was severely undercharged for support & account management. Not saying that the jump was legit, as that is pure conjecture – but it is not inconceivable that providing website support for 180+ locations, with individual managers & staff – would easily add up to 3 days work a month.
It is entirely possible that the support and retainer was underquoted in the initial contracts to win the client.. and then, as dependence on the sites became higher and more complex to support (we are looking at a 5 year period here — a lot has shifted), scope was reviewed. It seems high, but not necessarily out there either.
Digital by and large is something that businesses don’t value, or see the resources required… so it’s unsurprising that digital spend gets thrown into a laundry list of grievances.
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I bought a………………………………………………………………………………………………………………
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