By Richard Willingham and State Political Correspondent
A major Liberal party benefactor will continue to withhold hundreds of thousands of dollars to the cash-strapped party, with Michael Kroger set to remain president of the Victorian branch of the party.
On April Fools' Day the party holds its state conference, where Mr Kroger is set to be re-elected after challenger Peter Reith withdrew after suffering a stroke. He remains in hospital but is making progress in his recovery.
Liberal Party state president Michael Kroger.Credit: Justin McManus
Mr Reith's pitch to members had to been to clean up the party's finances and bring major benefactor the Cormack Foundation back to the fold.
Mr Kroger and the foundation have been locked in a stand-off over the financial governance in the wake of the embezzlement of $1.5 million by former party director Damian Mantach.
Peter Reith is no longer well enough to campaign.
The foundation, which includes senior business figures Hugh Morgan, John Calvert-Jones and Charles Goode, want Mr Kroger to separate the presidency from the chair of the finance committee.
Mr Kroger has previously told members the party was not set up so donors could tell it what to do and it was his work that uncovered Mr Mantach's crime.
The refusal to hand over funds needed to run the party comes at a bad time for the state branch, which is struggling to balance the books, with the party taking on at least $1.72 million of debt.
"Cormack is keen to support the Liberal Party but if the governance is not correct, how can we channel the money there? It is as simple as that," foundation chair Hugh Morgan told The Age.
Mr Kroger is also understood to be furious that the foundation gave money to Family First and the Liberal Democrats.
Mr Morgan did not wish to discuss donations to other conservative parties when asked by The Age.
While Mr Reith is no longer well enough to campaign, there is hope from anti-Kroger forces that people on Mr Reith's ticket can still win critical positions in the executive and administrative committee of the party.
Former premier Jeff Kennett, who has agitated for a leadership change, has been approached to replace Mr Reith but has declined.