The sorry train of events which led the $12 million Melbourne University Student Union into liquidation.  

Much was made on your website late last year about the hilarious
shenanigans that make up life within Student Politics. Strangely
though, there was little reference to the on-going drama at the
Melbourne University Student Union, an institution which as of last
Friday is now defunct; placed into liquidation by the Supreme Court of
Victoria following a disastrous 2 year period littered with fraud,
incompetence, corruption, violence, a $46m deal gone bad, and now it
seems, a death.

In its heyday, MUSU was regarded as the home of Student Politics in
this country. The site of the formation of the National Union of
Students in 1987, it was the largest Guild Structure in the land
(unlike most other Victorian Campuses, Melbourne Uni had one student
association which controlled the provision of services and political
representation under one roof. These two roles are split everywhere
else into separate bodies, such as a Service providing Student Union,
and a politically oriented SRC), with a turnover of more than $12m
every year. That’s $2m more than the ALP. And yet, MUSU seems only to
have rated a mention on Crikey in reference to former Commercial
Services Manager and Banyule City Councillor Dean Sherriff’s infamous
‘last stand’, when he left the Union in a MUSU-owned car with his files
and his computer in tow after being sacked. It has become more and more
obvious every day since why he was so keen to make sure no-one else got
hold of his records after he was gone.

Much was made of the events on campus, though. Left-leaning students
have been crying foul about MUSU for years, claiming that a string of
right-wing administrations have rorted the Union and corrupted its
every nook and cranny for personal gain. Articles have been written in
Farrago, stories have been published on Indymedia and Crikey, even a
documentary has been filmed (due for release soon), covering the 2003
Annual Election.

Nothing has ever been proven of course, and until mid-2003 the powers
that be, in the form of the University that controlled the Union’s flow
of money, or the law enforcement authorities who probably could have
investigated these things, were quite happy to sit back and ignore the
often ludicrous allegations that were bandied about by the Left.
Particularly when for a few years after the late-2000 collapse of a
decade long Labor-left dynasty at Melbourne Uni, the Left was dominated
by the extreme and cultish youth-oriented group called Socialist
Alternative, who fail the reality test so badly that they resort to
publishing their own magazine, as the Green-Left weekly won’t run their
material.

And so it was in June of last year when stories started appearing in
the papers, first in The Oz, and then in The Age, about an ambitious
deal the Union had struck up to develop a property close to Melbourne
Uni into Student Accommodation, and then loan the beds out to
International Students, guaranteeing a permanent stream of income in
the event the Howard Government succeeded in banning the compulsory
collection of Union fees.

The deal made headlines because, as several sets of auditors and
lawyers have pointed out, it was sheer madness. The Union was going to
pay an unheard-of firm called Optima Developments a sum of $46 million
over 20 years for Optima to turn an existing site into apartments. The
apartments where then going to be let out to Students at around $260 a
week. That’s about twice the going rate for a student’s room in a share
house near the University. Moreover, they weren’t really apartments,
per se. They were more like dorms – each ‘apartment’ in fact shared a
common bathroom with at least 4 other residencies. And the deal made
even less financial sense for the Union when you consider that on top
of the $2.3m a year MUSU would be paying Optima, it was also liable to
supply TV’s, beds and fridges to the occupiers of the accomidation.
These weren’t included in Optima’s fee. Moreover, the accommodation
would have to be at maximum occupancy rates, with no vacancies, to turn
a profit.

In other words, the deal had to potential to bankrupt MUSU rather than
save it. Not that Optima (who, according to The Australian, were
registered with the relevant Victorian authorities just 17 days before
the deal was signed) was worried. The contract also included a clause
guaranteeing that in the event MUSU fell over, the University would pay
out the contract from the Amenities & Services fee monies
compulsorily collected from students every year. This made a great
headline in The Age, particularly when it was revealed the University,
was blissfully unaware of this clause until Martin Daly’s story
appeared in the Spencer Street Soviet mid-2003.

Now, I am not one of the law students who populate the
flash new Law Buildings south of Grattan St (and just one block from
the Union’s preferred site for the Optima development), but to me it
seems impossible for one party to sign a contract with another party
binding a third party to do something without the third outfit even
being aware. However, thanks to the mess that exists in Victoria after
the Kennett Government introduced a partial form of Voluntary Student
Unionism, which was then partially repealed by the dim-witted Bracks
Government, no-one is quite sure for certain who legally controls the
A&S fee money. And so, the contract became even messier, even more
of a potential disaster zone.

The Union’s administration should have been aware of the contract’s
potential flaws. The Union Executive approved the deal on December 22,
2002, after a presentation by Dean Sherriff (the guy with the cool car
and computer).  It includes some
lovely little supply-and-demand diagrams, like the ones they teach you
in first-year Microeconomics. It also features a couple of pages of
analysis which leads to the startling conclusion that R = P x Q, or
revenue equals price times quantity. This is followed by some modeling
of potential revenue based around this formula, some photocopied pages
from a Real Estate Institute of Victoria’s report on inner-city
apartments, and the sole recommendation that “Should this deal be
entered into, some negotiation over price and conditions should be
attempted”. You don’t necessarily have to be successful in these
negotiations; just make sure you attempt them. Hey, it worked for Mark
Vaile!

On the next day, December 23rd, the Union’s solicitors reported their
analysis of the proposed contract to the President and Senior
Management. Some 33 separate points were identified as posing major
problems, and a drastic re-negotiation was recommended. On December 27,
however, MUSU President Darren Ray signed the deal. Despite being
advised not to enter into the deal, Darren waited out for Christmas
Eve, Christmas Day and Boxing Day to pass, then went ahead with the
deal with the full support of the Union’s 5-member Executive committee.
One member of that Committee subsequently took over the
Presidency of the Union five days later.

When the controversy surrounding the Optima deal broke in the papers
last year, Darren Ray came out swinging. “It’s not my fault”, the poor
boy cryed, claiming the Union entered into the disastrous contract
because those in charge such as himself were misled by management.
Strange that. You see, I would assume that the ‘management’ who Darren
was referring to includes, say, the CEO of the Union, and the
Financial, Commercial and Student Services managers.

Now, of those four, only two were aware of the contract. They were John
Gunn, the CEO of MUSU, and Dean Sherriff, the Director of Commercial
Services who prepared the report recommending the deal. And Darren
later credited Gunn with bringing the potential Optima deal to his
attention when it was still in its infancy in late 2002. Now, what do
those two management geniuses have in common? Well, they were both hand
picked by Darren during 2002! Ray, who enjoyed the support and
factional allegiance of all five members of the Union Executive, and 16 of
17 Student Councillors (for a lengthy rant on how that situation came
about, check out: A farcical election process), had
led the charge to dismiss the Union’s CEO earlier in the year, and then
reported to the Executive that John Gunn would be an excellent choice
for a replacement. Gunn was then appointed by a motion carried without
dissent. Later, Ray brought in Dean Sherriff to take over Commercial
Services, again his appointment being formalised by the Executive
without a whimper of dissent.

In fact, over the entirety of 2002, Darren supported every single
motion moved at Executive. He moved the vast majority of them from the
chair, and not one was voted against even by a single member of
Executive. Either that’s a most phenomenal piece of continuous
consensus-based decision, or the boys from the Labor Right enjoyed
absolute power at MUSU during 2002!

By early 2003, rumours were swirling around the Union of some grand
development, that the Union was engaged in south of Grattan Street. The
Labor Right boys had been returned to power, but only by relying on the
support of the Liberals and the International Students. A rejuvenated
Left now had a presence throughout the Union, and started asking
questions about the rumoured deal at Executive. With Optima having
trouble locating a suitable site for the property development, the
pressure started to build.

The Finance department of the Union became alert and alarmed when it
found out about the contract, and copies of it started leaking and
turning up in strange places like the ABC’s Southbank studios, and in
the possession of Crawford and Ray’s lefty enemies. The questions at
Executive persisted, and eventually John Gunn was called before the
Committee and answers were demanded. The disastrous nature of the
Optima deal was starting to dawn upon those involved, but Gunn was
unwilling to give details, and actually denied any deal had been
signed. The plans the Union had looked at were just that – plans, he
assurred the committee. Nothing concrete had been put in place, he
said. When the Student Council demanded to see copies of all contracts
worth more than $30,000 the Union was engaged in, they were given a
viewing but, strangely enough, the Optima Contract was not presented.

Gunn never returned to the Executive – this was his last meeting as
CEO. The next week, he stopped coming to work. The President assured
the committee that it was only temporary, but after a month it was
revealed that Gunn had tendered his resignation less than a year into
his contract. The obvious candidate to replace Gunn on a temporary
basis until a more permanent Manager could be found was the Finance
Director, Graham Cornish. Cornish was appointed to the position of
Acting-CEO, with Dean Sherriff controlling the Union’s lucrative
Commercial Services arm and standing by and as the next in line for the
CEO spot.

The pressure continued to build on those involved in the Optima deal,
and stories started to appear in the papers. The ABC’s Melbourne
flagship, 774, featured a story on the deal in its drive-time program,
and was heavily critical of the President for his part in approving the
deal while on Executive. Crawford was interviewed, and claimed not to
know much about the details of the contract, but assured Aunty’s
listeners that all would be well. However, details continued to emerge
about the contract’s nature, and headlines like “$46m deal threatens to
destroy Student Union”, and “Reckoning for a Divided Union” started
popping up all over the place.

When it was revealed that the Union’s accountants feared that the deal
would send the Union broke, the Left went on the attack within the
Union and in public accusing Crawford and Ray of phenomenal
incompetence, or corruption, or perhaps even the incompetent execution
of major corruption. The Liberals started to wonder what they’d got
themselves into, and the International Students found themselves siding
with Left again and again. Suddenly, the boys from the Labor Right
weren’t exactly getting all their motions carried without dissent.

Not to be discouraged though, Darren and his successor Scott led the
charge for justice, blaming the entire cock-up on the Union’s
management staff, and pointing to ‘structural weaknesses’ as the
underlying defect that allowed things to get to bad. In particular,
they targetted the new CEO, Graham Cornish. They conveniently ignored
the fact that Cornish was unaware of the Optima deal until after it was
signed, and instead accused him of gross incompetence and political
nepotism which, they claimed, was the source of the Union’s woes.

Things heated up in the by early July, and eventually, Crawford managed
to convince the Executive that Cornish had been guilty of some great
misdemeanor, and had the acting CEO sacked from his position. The great
outrage which Cornish had committed involved giving directives to the
Union’s lawyers after being instructed to do so by the Executive, but
before getting the President to sign off on the orders. This breach of
the Union’s governance guidelines was small and of no affect, since the
CEO was merely acting under orders from the Union’s highest decision
making body, but Crawford raised it as an example of the most
disgraceful conduct imaginable at a meeting of the Executive which the
Left did not attend.

With the votes of the Labor Right and the Liberals in his corner,
Crawford merely needed the support of either of the International
Students to achieve success, and after a marathon meeting of the
Committee eventually convinced a majority of its members that Cornish
had to go. This wasn’t quite as hard as it may sound, since the
political opposition was all in Adelaide attending the NUS Education
conference at the time.

However, the next day an emergency dash back to Melbourne by the Left’s
representative on Executive led to an emergency meeting of the
Executive, where Cornish was reappointed after an impassioned plea.
With the political momentum suddenly shifting against Crawford, the
meeting turned to the various misdemeanors of Dean Sherriff. Crawford’s
own factional allies turned on him, and Sherriff was dismissed by the
Executive when dissident members of the Labor Right refused to bow to
Crawford’s will. It was at this point that Sherriff left the Union,
never to be seen again, in a Union-owned car, with his Union-owned
computer.

Not long after this, posters started appearing up around the campus.
Slanderous posters. Posters which claimed, among other things, that
Graham Cornish beat up his wife. That he was a dangerous and
hypocritical Christian Fundamentalist. That he was personally
responsible for the Union’s decline, and that he had approved the
Optima deal. Then a website appeared. It was called
www.grahamcornish.com  and it
made similar allegations.

Then, one weekend, postcards appeared in the letterboxes of Graham
Cornish’s neighbours making similar allegations to those outlined
above. Of course, those responsible have never been identified. Maybe
this mild mannered financial services manager had made dangerous
enemies out of people with a lot at stake elsewhere in his life.

With all this attention focused on the Union’s dealings and its
handling of student’s money, the University had to do something. So,
they sent in a team of forensic lawyers and auditors to pull MUSU
apart, put it back together again, and recommend on a course of action.
This team, of course, knew what it was looking for, and it goes without
saying that it focused a lot more on the President’s office than, say,
on the Farrago editors, or the Union’s pro-Queer campaigns budget.

The auditors received the full co-operation of Union management, and
came out with some interesting results. For one, a firm called
Marbaine, which the Union had sold the Uni Bar off to during Darren
Ray’s reign had, in early 2003, received a cheque from the Union for
$54,000. No record of why this cheque was handed over can be found, but
around the same time a director of that firm name Matthew Keats gave
Darren Ray a $10,000 donation for Ray’s unsuccessful campaign in the
Banyule city council. Ray’s running mate was a character by the name of
Dean Sherriff.

Similarly, management also highlighted the infamous ‘travelrorts’
affair, when Crawford and Ray traveled Business class to Canada on
Union money for a Universitas 21 Conference, stayed at the Hilton in
Toronto, then returned via California and Hawaii. This trip cost over
$18,000, but was defended by Crawford on the grounds that it would be
reimbursed by the University. The Uni did reimburse the Union – for the
cost of Crawford’s economy class return ticket to Canada, and
accommodation for one in Toronto, amounting to about $5,000. The
Auditors found that Crawford and Ray were liable for the other $13,000,
and possibly guilty of fraud. This story made the front page of The Age
in late September of last year.

So what would you do if you were Crawford in this situation? Well, the
taunts aimed at Cornish continued, and Crawford continued to blame the
whole mess on structural faults within the Union’s set up, and
mis-management by Graham Cornish. He even went as far as sacking the
Union’s executive and appointing a new, more sympathetic committee,
under the President’s emergency powers. The new Executive immediately
suspended Cornish’s employment and changed the locks on his office.
This move was later struck out by a Magistrates, and Crawford consented
to a ruling reinstating the old Executive and quashing all of his
committee’s resolutions.

However, by this time, Crawford had been re-elected President for 2004.
What? Re-elected? How? Are the students idiots? Well, I could go into a
10 page rant about the conduct of elections at Melbourne University,
but I’m already worried that Crikey won’t publish me because this piece
is waaay to long. Besides, if you’re really interested, a documentary
is coming out soon. Let’s just say that during Darren Ray’s year as
President, a new system was introduced for the conduct of elections
within MUSU which made it significantly harder for anyone other than
Darren and Scott to win elections. A new returning officer was also
appointed for a term of five years; a firm called Global Tertiary
Solutions. This firm was set up by a former Labor Right president of
MUSU, and uses the same lawyers and accountants as Optima and Marbaine.
Small world, isn’t it?

The most amusing part of the election was the withdrawal of one Gidon
Brott. Young Gidon was the Presidential candidate on the major
Right-wing ticket in the election, which was called Go! Now, as is
standard practice in Student Politics, when Gidon nominated for the
position, he was also required to hand over a blank, signed withdrawal
form to his factional masters. This is because a candidate will
invariably be endorsed for a number of committee positions in order to
fill out a ticket, but it may be strategically advantageous to withdraw
that candidate from certain ballots later on in order to fulfill
preference deals or alter quota to your tickets advantage etc. So,
every candidate gives the Authorising officer of their ticket a signed
withdrawal form, just in case.

Except this time around, the form for Gidon was filled in and handed to
the Returning Officer not to remove him from the ballot for some
worthless committee, but to remove him from the ballot for President,
after polling had closed but before counting had started. Which meant
that his votes then flowed to Go!’s No. 2 preference, a Mr. S.
Crawford, who was endorsed by a feeder ticket the Labor Right were
running in the election. As is standard practice, the Right won the
election, and all of the Go! Ticket candidates were elected except the
unfortunate Gidon. Thus, with barely 3% of the primary vote, Crawford
found himself endorsed by the student body for another shot at the
title as Union President!

So what happened next? Well, the University cited the various
improprieties discovered by the auditors as breaches of the funding
agreement between the Uni and the Union, and terminated that agreement.
This sent the Union into a financial freefall, as suddenly it was
without any income stream other than its failing commercial operations.

Then Optima wrote a letter to the Union, via its lawyers Schetzer,
Brott and Appel (Hey, hang on! Brott? You mean like Gidon Brott? Don’t
tell me Gidon’s uncle is representing a firm who is suing the Union.
What’s that you say? That same lawyers also act on behalf of Global
Tertiary Solutions?!? Wow! This is a small world!). In this letter,
it informed the Union that it believed it was entitled to $11m,
immediately, under the terms of the contract entered into by MUSU in
the dying days of 2002.

So what to do now? Well, it just so happens that to take over all the
services which MUSU was inevitably going to find itself unable to
provide to students without any A&S fee money, the University set
up a new body called MUSU Ltd. Although a name like MUSU Ltd implies
that it’s some sort of Student Association, it isn’t. According to MUSU
Ltd’s constitution, its only membership is the University. So it’s more
a trading arm of the Uni, set up to take over the lucrative Commercial
Services division of the Student Union and prevent it from ever again
being subjected to Dean Sherriff style, Piranha brother-esque madness.

A number of assets had to be transferred from the Student Union to MUSU
Ltd, so Graham Cornish called in an Asset Transfer expert. That asset
transfer expert was going through the Union’s computer system one day
when he found emails from Darren Ray to Scott Crawford outlining
proposed motions, to be moved at the first Student Council meeting of
2004, aimed at settling the disputes with Optima and another firm.
These motions would have had the affect of binding the Union’s
management to pay out a sum of more than a million dollars to Optima,
in exchange for a termination of the property development contract.

Now, on January 1, 2004, a new Student Council chaired by Scott
Crawford was due to take over the Union. And this Student Council was
dominated by a majority based on the electoral alliance of Labor Right
and Dry Liberal who had dominated the two previous Union elections. So
it would not have been hard for the Labor Right boys to once again ride
again, albeit this time with a minority of dissent.

So Graham Cornish helped put together an application to put the Union
into provisional liquidation, and have a professional assessor come in
and sort out the Union’s future. This application was heard in the
Supreme Court, and despite threats by Scott to ruin the careers of any
left-wingers stupid enough to publicly support the winding-up of a
Union, it was successful. Instead of handing over a million dollars to
Optima, a provisional liquidator came in and assumed the powers of
Student Council and Executive.

He then assessed the Union’s state, and last Friday reported to the
Supreme Court that the best course of action for students, staff and
the community would be to wind-up MUSU and set up a new Student Union,
free of the contractual and structural legacy of Darren Ray and Scott
Crawford. He also included a sealed section in his report which
highlighted a number of concerns about goings on within MUSU, including
questions over the legitimacy of its elections, and the possibility
that widespread fraud and falsification of records had been committed
during 2002 and 2003. Several matters have been referred to the police,
and it’s rumoured that 3 or 4 prominent MUSU figures are likely to face
serious charges as a result of the liquidators investigation.

Yesterday, Graham Cornish passed away of a cancer related illness. Not
many people knew he was sick, least of the left-wingers who he built a
close relationship with during 2003, or the right-wingers who set about
trying to destroy him when he exposed the folly of their decisions
Whether those responsible for publishing www.grahamcornish.com,
or the slanderous poster that alleged he was a wife-beating, power
crazed, lecherous and deluded enemy of student unionism, or those who
waged a campaign aimed at seeing him driven out of the Union knew he
was sick is not for me to say, but it’s generally agreed almost no-one
within the Union knew he was suffering from cancer. What is certain
though is that he spent his last 12 months fighting to salvage student
unionism at Melbourne University in at least some form, and that he was
put through an intense campaign of vilification for his troubles.

This student certainly can’t wait for those responsible to have their
day in court. I’m reliably informed that day is not far off.

Peter Fray

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