Investors put Crown on notice after inquiry revelations

Minority investors have put Crown Resorts on notice they expect answers about James Packer’s level of influence on the business along with improved legal compliance and possible board changes in light of evidence revealed at a public inquiry into the casino operator.

The NSW Independent Liquor and Gaming Commission’s inquiry into Crown has over the past fortnight examined what role the billionaire major shareholder and officers of his private company Consolidated Press Holdings (CPH) have had in running the ASX-listed Crown.

The Bergin inquiry has revealed the level of influence James Packer has over Crown's management.
The Bergin inquiry has revealed the level of influence James Packer has over Crown’s management. Credit:Joe Armao

That included how CPH executives could have contributed to Crown’s failures in risk management and corporate governance that resulted in the arrest of 19 employees in China 2016; the forging of partnerships with organised crime-linked “junket” tour operators; and a deal to sell a fifth of Crown’s shares to Melco Resorts which may have beached Crown’s Sydney casino licence.

The billionaire Mr Packer, who owns 36 per cent of the shares in Crown, is scheduled to give evidence to the inquiry on Tuesday afternoon. The inquiry, overseen by former NSW supreme court judge Patricia Bergin, will recommend whether Crown should keep its NSW casino licence.

Master and Commander: James Packer, left, and John Alexander in 2017.
Master and Commander: James Packer, left, and John Alexander in 2017. Credit:Getty

Anton Tagliaferro, investment director at Investors Mutual which owns about a million Crown shares, said there were clearly issues raised by the inquiry which “have got to be dealt with”.

“The outcome of this inquiry is there has to be changes at Crown; probably changes at board level, changes obviously in compliance,” he said. “They’ve got to tighten up their probity checking.”

Australian Shareholders Association director Geoff Bowd said the retail investor advocacy group was concerned about governance at Crown in light of the inquiry’s revelations.

“Particularly that which relates to Consolidated Press Holdings’ influence on the Crown Resorts board, specifically pursuing the personal interests of James Packer,” Mr Bowd said. “We are meeting Crown [this week] as a pre-AGM meeting. This will be on the agenda.”

Crown’s annual general meeting is scheduled for October 22.

Mr Tagliaferro said that greater transparency around what company information Crown shares with Mr Packer was also necessary. However, he said the influence of a major shareholder was a risk investors took when they bought into a company with a dominant party on the register.

“One assumes that those influential shareholders probably have more insight into the company than smaller minority shareholders,” he said.

Mr Bowd said that Crown had implemented a major improvement in governance in January by replacing its executive chairman John Alexander with an independent chair, former Liberal senator Helen Coonan, who has been on the board for almost nine years.

“We think that the new CEO Ken Barton was forthright at the inquiry, stating that there had been issues which in hindsight would have been managed differently,” Mr Bowd said.

The ASA will consider the testimony of Guy Jalland – a CPH executive and Crown director – when deciding whether to vote for or against his re-election at its October 22 AGM, Mr Bowd said.

Mr Jalland negotiated a deal in May last year for Mr Packer to sell a 19.9 per cent stake in Crown to Hong Kong’s Melco Resorts, which has jeopardised Crown’s licence for its new casino at Barangaroo.

The sale gave Macau casino pioneer Stanley Ho an indirect interest in Crown, which is a direct violation of a term in Crown’s NSW casino licence banning Mr Ho and a list of associated parties over his alleged organised crime links.

Australian funds management giant Perpetual, which owns 9.3 per cent of the shares in Crown, declined to comment while the inquiry is ongoing.

Business Briefing

Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business

Source: Thanks