‘Case study in funny money’: Report on failed Eloque is close

Neither the Victorian government nor Xerox’s Palo Alto Research Centre, which led the joint venture and had a 62.5 per cent stake, have fully explained the reasons for Eloque’s collapse.

In February last year, Xerox chief executive John Visentin said Eloque was “seeing success with the installs in Australia and is working with multiple state departments of transportation in the US to start deploying pilots in 2022, while continuing talks in select European countries”.

But on November 30, Eloque went into liquidation with the value of some 14 million shares written off.

Victorian Liberal treasury spokesman David Davis alleged the project was “a case study in funny money, crooked processes and secrecy”.

The initial establishment of Eloque raised concerns among some engineers, some of whom protested that contracts should have been put out to open tender rather than being awarded directly to the new joint venture.

The Victorian government rebuffed the criticism, claiming that the technology had been “subject to a robust trial period.”

Eloque had offices in Melbourne’s Docklands district and was run by Campbell Rose, the former chief executive of VicTrack who stepped aside from his day job to pursue the venture. In February last year, Mr Rose went “on leave” according to VicTrack. He formally departed the rail agency without explanation on February 7 this year.

Eloque was created as a for-profit company in Australia in May 2021 and reported holding $15.8 million in cash in its first year.

During 2021, it emerged as “separate and distinct from VicTrack, including the employment of key VicTrack employees,” according to financial accounts filed in August with the Australian Securities and Investments Commission.

The accounts disclosed that Eloque’s “key management personnel” were paid $1.5 million in the 11 months to November, up from $446,566 during the period from May to December 2021.

The accounts do not specify the names of the key management personnel who were paid but list Mr Rose as well as former Eloque chief financial officer Matthew Johnson and Xerox executive Eduardo Rodriguez as directors. Mr Rose ceased being a director last September.

Eloque took a post-tax loss of $6.35 million for the 11 months ending in November 2022, down only slightly on the year-earlier loss of $7.6 million.

The Australian Financial Review requested details of all forms of correspondence between Mr Rose and VicTrack board members under Freedom of Information laws. The information released was limited to some emails and was mostly redacted. One email sent in April 2022 referred to “putting effort in selling eloque [sic] in Canada.”

VicTrack, which will release its annual report for the 12 months to June 30 next month, declined to comment on how much money Mr Rose earned in 2022. “Employment matters remain confidential between VicTrack and Mr Rose,” a VicTrack spokeswoman said.

Chris Olds would continue as VicTrack’s acting chief executive until a new CEO was appointed, she said. A recruitment process is still under way.

The Financial Review could not reach Mr Rose for comment.

Since the collapse of Eloque, Xerox has donated PARC to a non-profit group, Stanford Research Institute International, in April. The company took a $US132 million ($205 million) charge on the donation in its second-quarter accounts, contributing to its second quarter group net loss of $US61 million.