Victorian Liberals plunge into chaos as John Pesutto faces second ...

Returning from a break, this week’s sitting of parliament was meant to signal a fresh start for the Victorian Liberal leader, John Pesutto.

The dust from his aborted plan to expel controversial MP Moira Deeming from the parliamentary party six weeks earlier – exposing his vulnerability in the top job – seemed like it was starting to clear.

Instead, Deeming’s nine-month suspension has continued to plague Pesutto’s leadership and descended the Liberals further into chaos, with MPs accusing “terrorists” within the party of holding it “hostage”.

The internal warfare can be traced back to the fateful 27 March party room meeting, during which Deeming was suspended due to her attendance at an anti-transgender rally gatecrashed by neo-Nazis.

Pesutto, who had initially sought to expel Deeming, told reporters she had made “important concessions” prior to the meeting, including condemnation of comments made by the rally’s headline speaker and organiser. Within hours of his press conference, Deeming was posting on Twitter that she hadn’t.

According to sources close to Deeming, Pesutto had also made concessions: they allege he was meant to publicly exonerate her of being affiliated with Nazis via a joint statement.

Six weeks on, no statement was forthcoming. In an email on Thursday, Deeming demanded one by 2pm or said he would face legal action. Pesutto stared down the threat.

“I can say categorically that the exoneration that Moira has sought in the email this morning … will not be happening,” he said, denying he ever accused her of being a Nazi or having Nazi sympathies.

After the 2pm deadline passed, she emailed all MPs saying she would be mounting a legal challenge to her suspension.

One MP described the move by Deeming as “going nuclear”. The MP, who sympathised with her plight in March, is now among several considering whether there should be a new expulsion motion moved against her if she follows through.

Another said some within the party room felt they had been “taken in” by Deeming, who had vowed to keep her head down during her nine-month suspension.

“Any reservoir of goodwill will completely dry up the moment she sues the leader,” the MP said.

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In addition to the legal threats, Pesutto was also forced to deny he was a bully after allegations were made he had brought Renee Heath, an upper house MP, to tears during another party room meeting on Tuesday.

Some MPs alleged Pesutto “belittled” Heath – a Deeming ally – and accused her of leaking the minutes of the meeting to Sky News anchor Peta Credlin. Others alleged he was “calm” and “courteous” and denied leaking even came up.

Heath later wrote to her colleagues saying she felt “so shaken” by the way she was allegedly treated in the meeting: “The way I have been treated and the way other conservative women in this party are treated is nothing short of bullying.”

That email also made its way on to Credlin’s program.

For his part, Pesutto said Heath, who as party secretary is responsible for taking minutes during meetings, provided three “very different versions” of the minutes from 27 March. He said because of this, he moved a motion to reject them which was supported by an “overwhelming” majority of MPs.

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Several MPs said the later versions of the minutes contained verbatim quotes from the party room meeting, leading them to believe it had been secretly recorded.

Detailed notes of what was said during the meeting, said to be a copy of one iteration of the minutes, was subsequently reported by the Australian.

“It’s all rather disingenuous and mischievous,” one MP said.

Several MPs are furious by the disunity, especially when the focus should be on the Labor government ahead of the state budget and the release of an anti-corruption inquiry’s findings.

Speaking to reporters on Thursday morning, Brighton MP James Newbury said the were a “group of three or four terrorists who care more about blowing up the Liberal party than they do Daniel Andrews”.

“They’re holding the Liberal party hostage,” Newbury said. “They need to work out whether they’re Liberals or whether they want to sit on the crossbench. Everybody’s had enough.”

The former opposition leader Matthew Guy echoed the sentiment.

“There’s a couple of terrorists within the parliamentary party who need to work out whether they want to sit with the parliamentary party or not,” he said.

As for Pesutto, it is clear he will not make the same mistake he did in March in seeking compromise. At Thursday’s press conference, he said reform of the party would be “challenging” and that he was not willing to pay the terrorists a ransom.

“If people don’t want to be a part of that reform project, then I think it’s important that they consider their position – do they want to remain in the parliament long term?” Pesutto said.