Robert Fordham

As industry minister, Fordham oversaw the operation of the Victorian Economic Development Corporation (VEDC), a government agency originally established by Rupert Hamer's Liberal government in 1981, but which was restructured by the Labor government in 1984 to stimulate economic activity in Victoria by providing loan and equity funds to certain companies. In October 1987, the VEDC became involved in the proposed public float of Wallace International, a pharmaceutical company. Despite a global stock market slump following "Black Monday", Wallace proceeded with its float, which then failed, causing the float's underwriters to withdraw from their commitment. In early November 1987, Wallace applied to the VEDC to sub-underwrite the float, and received correspondence from Fordham agreeing to the VEDC acting as sub-underwriter, making further loans to the company, and purchasing $2 million worth of shares.[4]

By the close of the float in January 1989, Wallace's failure to attract investors saw the company call up the VEDC's sub-underwriting agreement in February. The VEDC board met on 19 February, where they were informed of Fordham's agreement with the company for the first time, which it was required to endorse. Despite the funding injection from VEDC, Wallace recorded a loss of around $17.5 million, and in November 1988 the VEDC instituted legal action alleging misleading and deceptive conduct, and seeking the recovery of the $15 million it had invested.[4]

The problems continued with several other VEDC clients going into receivership. The opposition seized upon the agency's failures, and called for Fordham's resignation and a royal commission into the affair. The government appointed accountant Fergus Ryan to conduct an inquiry into the VEDC's finances, management and investments. Ryan's report was released on 21 December 1988, finding that the VEDC had accumulated bad debts of $112 million. Fordham's appointments to the VEDC board were criticised, as were his agreements with Wallace which were seen to have caused the agency to have "entered into an agreement beyond its powers". An election had been held in October 1988 in which Cain's government had been re-elected, losing one lower house seat and control of the upper house. Cain re-shuffled his cabinet, moving Fordham to the Agriculture and Rural Affairs, and Arts portfolios.[4]

Despite further opposition pressure over the VEDC affair, and speculation that Fordham would be forced to resign, Premier Cain backed his deputy, as did the Labor Unity faction of which Fordham was a member. During January, however, Fordham's support within the party dissipated. In particular, the Socialist Left faction had a cross-faction agreement to provide the next deputy premier, and worked actively to force Fordham to resign. He stood down on 31 January 1989, and a week later the caucus elected Joan Kirner to replace him as Deputy Premier.[5]

Fordham served out the rest of his parliamentary term on the backbench, and did not contest the 1992 election.