Ol’ Andy is not a fan of the personal responsibility or good governance things.
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NSW Crown casino inquiry report: ‘Crown should not be given a licence’ | Herald Sun
The commissioner of an inquiry into James Packer’s Crown Resorts has told the NSW government that the company is not suitable to operate its $2.2bn Barangaroo Casino and recommended Mr Packer be forced to sell down his 36.7 per cent stake in the company unless he receives approval from a new casino regulatory body.
The finding represents a heavy business and personal blow to Mr Packer, who had conceptualised the Barangaroo casino as a capstone achievement for his company and the realisation of a decades-long ambition.
At Crown Resorts’ current market capitalisation, which has been depressed by COVID-19 related interruptions to its operations, Mr Packer’s stake is worth around $2.3bn.
Commissioner Patricia Bergin recommended a new regulatory body for casinos – the Independent Casino Control Commision – should be established via legislation to act as a “dedicated, stand-alone, specialist casino regulator” with the powers of a standing royal commission.
Among the other findings:
- Crown CEO and former CFO Kenneth Barton maintained a “totally inexplicable” approach towards money laundering risks and ILGA would be “justified” in declaring it had no confidence in him as CEO.
- Chairman Helen Coonan “has demonstrated the qualities that are necessary to have taken her into the leadership role of Crown and is exquisitely aware of the depths of the problems within the company of which she is now chairman.”
- Packer nominee director Michael Johnston should “conclude his tour of duty as soon as possible to enable the Authority to be comfortable in due course that Crown will be a suitable person to be a close associate of the Licensee.”
- Independent director Andrew Demetriou’s “quite bizarre performance” as a witness justifies the regulator declaring no confidence in him as a board member.
- Widespread reform to the Casino Act, including overhauls of compliance obligations and measures of suitability among applicants.
In a brief statement to the ASX, Crown Resorts said it was currently considering the report.
“Crown will work with the New South Wales Independent Liquor and Gaming Authority (ILGA) in relation to the findings and recommendations of the Inquiry Report as contemplated by the regulatory agreements between Crown, ILGA and the State of New South Wales” it said.
It is understood that Crown Resorts is quietly hopeful of forging a path of rehabilitation that would enable it to regain approval to operate a NSW licence in future.
However, the report is also highly critical of Crown Resorts chief executive Ken Barton, raising questions over whether he can continue into the role.
“Mr Barton has demonstrated that he is no match for what is needed at the helm of a casino Licensee or a close associate of the Licensee,” the report said.
“His problems will not be cured by the appointment of people expert in the field who report to him,” it added.
“The Authority would be justified in concluding that it cannot have any confidence in dealing with Mr Barton as a director of the Licensee or Crown”.
In contrast, the report said of chairwoman Helen Coonan that evidence tendered showed “her character, honesty and integrity has not been and could not be called into question.”
Commissioner Patricia Bergin in the report said “it is recommended that the Casino Control Act be amended to provide that a person may not acquire, hold or transfer an interest of 10 per cent or more in a Licensee of a casino in New South Wales or any holding company of a Licensee without the prior approval of the ICC.”
Ms Bergin also recommended that each casino in the state should be barred from dealing with gambling promoters - or junkets - and should have an ICC approved auditor perform annual compliance reports.
However, Ms Bergin did say Crown Resorts could undego reforms to become a suitable licensee of Barangaroo.
“If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation,” she wrote.
“The Authority would understand that many of the problems that rendered the Licensee and Crown as unsuitable, stem from poor corporate governance, deficient risk management structures and processes and a poor corporate culture.”
Necessary steps include:
A full and wide-ranging forensic audit of all accounts for signs of money laundering.
An end to control of the company by Mr Packer and his executives - or “remote maneuvering” - and the establishment of a mechanism that will satisfy the regulator that Crown does not return to “the old ways.”
The removal of CEO Kenneth Barton, Nominee director Michael Johnston and Independent Director Andrew Demetriou.
The removal of Independent director Harold Mitchell if a civil penalty or declaration is made against him in relation to the “minor breaches” he was found to have made as director of Tennis Australia.
The appointment of an independent agent retained by the authority to monitor the implementation of remedial plans at Crown’s cost.
All directors to undergo or and/or provide certification of the completion of appropriate anti money laundering/CTF education, annually.
A written remedial by Crown provided to the authority detailing any and all changes being made in pursuit of suitability.
Earlier on Tuesday, Crown Resorts entered a trading halt ahead of the report’s release, as it prepared to digest the findings.
The NSW Independent Liquor and Gaming Authority’s response to the report will be formally considered at its next board meeting on February 17.
Ms Bergin’s report marks the close of a gruelling 18-month inquiry that began following media reports that alleged Crown turned a blind eye to money laundering and ignored risks posed to staff in China who were later arrested for breaching local gambling promotion laws.
The inquiry was also prompted by Mr Packer’s attempted sale of 19.9 per cent of his shareholding in Crown to Macau gaming magnate Lawrence Ho’s Melco Resorts.
Half the sale was completed before it was discovered that Mr Ho’s late father Dr Stanley Ho - who was forbidden from taking an interest in Crown under its restricted gaming licence in NSW - held an interest in Melco through a complex trust arrangement.
Melco later sold its 9.99 per cent interest in Crown to private equity group Blackstone.
Over the course of 2020 Ms Bergin interviewed more than a dozen witnesses, including Mr Packer as well as current and former board members and executives.
The often contradictory and off-beat evidence given by some witnesses turned the inquiry into a media spectacle.
Crown’s Barangaroo casino and hotel rises above Sydney Harbour. Picture: Damian Shaw
At the close of the inquiry, counsel assisting had recommended Ms Bergin find Crown Resorts to be an unsuitable associate or licensee of the Barangaroo casino due to a “culture of denial and arrogant indifference to regulator compliance.”
It was argued this applied to the fields of money laundering, risk reporting, and through association with international gambling promoters – or junkets – with known organised crime links.
It was also argued that Mr Packer was not suitable to be associated with Barangaroo Sydney, and that he acted as a “de facto director” of the company after leaving the board in 2018, with his “powerful personality”creating a profits-first culture that encouraged rule bending and had a “deleterious” impact on the company.
The inquiry’s revelation that Mr Packer sent serious threats to private equity figure Ben Gray in 2015, over a take-private plan that fell through, was also used to argue for his unsuitability.
The exact nature of the threats were not made public - as they were discussed during a closed session of the inquiry in October - but Mr Packer admitted his actions were “shameful” and “disgraceful.”
Commissioner Patricia Bergin.
Mr Packer said his actions at that time were due to his bipolar disorder, which he is now being treated for, but no evidence of this was submitted to the inquiry.
Counsel assisting recommended numerous remedies to Mr Packer’s influence, the most prominent being that Mr Packer not exercise more than 10 per cent of his voting power, and that his private company CPH only have one nominee director sit on Crown’s board instead of the current three.
Despite Mr Packer telling Ms Bergin “I think caps on shareholders may be something that you will think about,” Crown’s legal team pushed back against these recommendations.
The company did however concede to counsel assisting’s recommendations that it no longer share confidential financial information with CPH and Mr Packer under special protocols and to cease having CPH directors take on executive roles.
It also pledged to no longer deal with junkets that are not cleared by regulators where it operates, by overhauling its anti-money-laundering compliance system and by undergoing a process of board and executive renewal.
Australian Resorts CEO Barry Felstead has left the company, as has CLO and anti-money laundering officer Joshua Preston after damning evidence emerged regarding their approach to risk management in the field of China operations and money laundering respectively.
Independent director Professor John Horvath stepped down of his own accord after Mr Packer’s stake saved him from being voted off the board at the last AGM.
Ms Bergin’s findings will also influence the approach other regulators take in their own examination of Crown.
In October, the Victorian Commission for Gaming and Liquor Regulation issued Crown Melbourne with a notice to show cause why the gambling company should not be disciplined over its dealings with junket players linked to organised crime.
On Monday The Australian revealed that the regulator asked Crown for more information in relation to the show cause notice as it is poised to conclude its investigation into the arrest of Crown Resorts’ staff in China.
Last October financial crimes regulator AUSTRAC launched a formal investigation over Crown’s potential failure to comply with money laundering regulations.
Part of Ms Bergin’s remit under the inquiry’s terms of reference was to examine the “efficacy of the primary objects” of NSW’s Casino Control Act.
By the end of the inquiry Ms Bergin had formed the view that NSW’s hands-off “co-regulatory” model was insufficient in forcing compliance, clearly favouring a more “prescriptive model” used in other jurisdictions like Singapore.
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Coonan is well connected in LNP and husband is a former NSW judge. Not that those connections should guarantee propriety in behaviour.
Appointing Uncle Andy as a director seems to be a value-destroying move for a company.
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Quite the converse: those connections practically guarantee she has, can, and probably will, get away with inappropriate behaviour.
As I posted, connections do not guarantee propriety in behaviour, rather protection from action!
Not so sure. If things are considered serious enough, and further action is taken, authorities such as ASIC, ACCC or whoever would probably have the ability to hand penalties out to boards/directors which could include bans from sitting on boards anywhere.
Will be interesting to see how the shareholders take this, and if any action is taken
just checked the AFL website to see if there was anything on the former CEO’s latest ‘achievement’ but sadly nothing.
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Maybe Ed stood down because a board position is opening up, he certainly praised Andy at his presser…
Ed: “Positives: I never injected anyone, either.”
I expect Uncle Andy to come out with: “I never directed anyone”
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If Vlad did say that he wouldn’t be lying from what I’ve heard. Very happy to take the cash from doing the least amount of work possible.
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Heard Andy on SEN this morning talking about Eddie. He gave a good performance.
I do not understand why referencing written material is wrong at any inquiry or even in Court. I have seen Police refer to their notes all the time in Court.
Do you have experience in this @bigallan or @Shelton10 ?
You can ask to look at notes to assist your recollection. AD looked without asking, to define a term, then denied five times he had looked, then later admitted he had.
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There are rules around what kind of notes are permitted in court. Only your statement and any contemporaneous notes are permitted and you need to ask permission to refer to them.
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Police are not talking to personal experience they are recounting the views of others. Very different to the chairperson of a company reading from a script regarding the culture.
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Don’t know about this one, but in some circumstances, if reading from a document, the document has to be tendered in evidence and available to all relevant parties.
- this happens in Plt Q time a lot.
In this case, in denying he was reading from a document, he was trying to convey the impression that he was full on with the rules and applying them in practice
- when he had probably not read them until they were brought to his attention shortly before his witness appearance.
- the great pretender at it again, but out of his depth this time.
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@Up_up is right. First, to use notes you need permission from the judge, and Demetriou didn’t have it. Second, notes are to refresh memory about factual events; Demetriou was using them to answer a question about what he understood proper governance to entail. The judge wanted to know what he understood about the term, not what some definition he’d copied down from somewhere said.
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Moreover before you may refer to your notes whilst giving evidence there’s usually an expectation that you’ve exhausted your ability to recollect from memory. Cops used to spend inordinate amounts of time trying to memorise their statements before Court.
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Vlad would be out of his intellectual depth at the shallow end of the kiddies pool.
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