Jeep's $30m court case stalls

Allegations of misusing $30 million in corporate funds have been dropped just days away from the first hearing.

The Federal Court action taken by US car giant Jeep against two of its former Australian bosses - for allegedly misusing $30 million in company funds - has been dropped just days before the first hearing, avoiding a public slanging match.

Last year Fiat Chrysler Automobiles - the parent company of Jeep - launched Federal Court action against Clyde Campbell, who ran the company from October 2010 to May 2013, and his successor Veronica Johns, who was in charge until December 2014.

Both executives oversaw record sales for the brand during their tenure, but documents filed in the Federal Court in May 2015 claimed the bosses spent company funds on lavish corporate events and “uncommercial” sponsorship deals, including handing out free loan cars to “brand ambassadors” such as model Jesinta Campbell, cricket legend Shane Warne, and soccer star Harry Kewell.

In his defence, lawyers for Mr Campbell said the corporate spending was approved by “the highest levels of management”.

However, the court action has now ended suddenly, with a brief statement being issued by Jeep: “The parties to the FCA Australia v Clyde Campbell legal proceeding have agreed to a settlement without admission of liability of any party. The terms of the settlement are both confidential and mutually acceptable.”

The spokeswoman for Jeep, Lucy McLellan, told News Corp Australia that she “cannot comment beyond the statement agreed to by all parties”.

It is not known what the terms of the settlement include, but News Corp Australia understands there will be no action taken against either of the former bosses, or Mr Campbell’s wife, Simone, who was also named in the statement of claim filed by Jeep in the Federal Court.

In the months leading up to the first hearing due in late September, Jeep had watered down or removed the majority of allegations against its former bosses and associates. The whole case has now been dropped.

News Corp Australia understands earlier this year Jeep had to pay compensation to Harry Kewell after breaking a multi-million-dollar sponsorship deal arranged by the former bosses.

It has been a turbulent two years for Jeep, not only because of the court action and several high profile “viral” YouTube videos produced by customers complaining about the poor quality of its cars.

Sales across Jeep and its associated brands - including Alfa Romeo, Fiat and Chrysler - have hit new lows, down by a staggering 50 per cent, despite two years in a row of record new-car sales in Australia.

The US car maker says price rises driven by currency pressure contributed to the massive sales slowdown - however most other brands also affected by foreign currency movements have posted significant sales gains over the same period.

Jeep recently appointed a new boss, an American-born executive who has worked in the US and overseas for much of his career, Steve Zanlunghi, to oversee local operations.

Mr Zanlunghi replaced American Pat Dougherty, a former high-ranking spare parts expert within the company, who left his Melbourne posting early, after launching the costly legal action against his predecessors within months of his arrival.

Mr Dougherty was appointed as the boss of Jeep Australia in December 2014 on a three-year contract, but it was cut short of the two-year mark in the wake of a dramatic sales slide.

News Corp Australia has approached representatives for former bosses Clyde Campbell and Veronica Johns for comment.