IT HAS been all quiet on the western front ever since Macquarie Group appointed human resources specialist Elizabeth O’Leary to run its embattled agricultural funds business last July.

But sources are wondering whether it’s merely the calm before the storm, with the ever-nimble Macquarie cooking up a deal before it faces an investor vote on a key management agreement.

Macquarie’s MIRA manages more than $1 billion in agricultural businesses and farmland on behalf of clients.

A large chunk of the money sits in the Macquarie Pastoral Fund, which counts the likes of the Bill and Melinda Gates Foundation, Dutch pension fund APG and a vehicle owned by Johnny Kahlbetzer, who is the son of the reclusive John Dieter Kahlbetzer, as investors.

These investors will decide whether to continue with Macquarie as the pastoral fund’s investment manager in coming months. Some suspect disgruntled investors could strip Macquarie of its management rights due to poor performance and a recent scandal involving former employees.

So what could Macquarie do to salvage the situation?

One option may be for Macquarie’s staff to pursue a management buyout, which would enable the bank to get some value for the unit ahead of the potential termination event.

Macquarie has history in spinning off such niche fund managers.

It sold the private equity fund-of-funds advisory business to management last March, who rebadged the unit ROC Equity Partners.

A source close to Macquarie insisted there were no changes brewing. But not everyone is convinced about the millionaire factory’s future in agricultural funds management, particularly after last year’s scandal.

Resignations followed revelationsOn May 28 last year The Australian Financial Review reported that the former head of the agricultural funds management business, Tim Hornibrook, set up a fake family office in Switzerland to extract confidential information from competitors.

The revelation led to the ­resignation of Mr Hornibrook and another employee. Mr Hornibrook used the lure of a Swiss family office with €2 billion ($2.9 billion) under management and wealthy investors, to dupe rivals into handing over confidential information.

“We manage several high-profile ­clients who prefer to keep their ­investment strategies out of the public domain,” said a letter from the Brook Family Office dated June 29, 2012.

Documents sighted previously by the Financial Review show the family office sent out an earlier request for information in October 2011 from the address [email protected]苏州美甲美睫培训学校.

The metadata contained in the email shows it originated from a junior ­marketing employee at Macquarie Funds in London.

The fake family office has challenged Macquarie’s reputation, but the fund has also endured low returns and plummeting cattle station values due to drought and investors shunning the sector. The fund’s operating entity, Paraway Pastoral, which owns some of Australia’s best farming land, lost $46 million last year due to falling land and water valuations. In 2012 it lost $23 million.

Others in the industry say valuing the management rights would be difficult due to fluctuating performance and acquisition fee revenue received by Macquarie over the years.

Macquarie was paid $9.4 million in 2013 by the pastoral fund and $10.2 million the previous year.

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