- Inquiry is investigating probity issues at casino giant Crown Resorts
- Commissioner Patricia Bergin will report on whether Crown is fit to keep the licence for its new casino at Sydney’s Barangaroo
- James Packer, who owns 36 per cent of Crown, admitted he sent “shameful” and “disgraceful” emails threatening a businessman looking to make a privatisation offer for the casino group
- Other issues raised at the inquiry include Crown going into business with figures linked organised crime, money laundering at its Melbourne and Perth casinos, and the arrest of 19 staff in China in 2016
Let’s recap today’s hearings so far.
James Packer spent the morning insisting he knew nothing about the risks Crown was taking in China ahead of 19 Crown staff being arrested there in 2016 for illegally promoting gambling.
Packer, who was Crown’s chairman up to August 2015, blamed this on former chief executive Rowen Craigie and chairman Robert Rankin who “let the side down”.
But the inquiry had already heard how Crown insiders loyal to Packer knew about the warning signs, which included that Chinese police had detained and questioned a Crown employee in mid 2015, shortly after the arrest of employees of a South Korean casino, and that Crown’s staff said they lived in “constant fear” of being arrested.
The insiders were Michael Johnston (who worked for Packer’s private company CPH and represented Packer on Crown’s board), the boss of Crown’s VIP division Barry Felstead (who Packer said was “completely loyal” to him); and Packer’s one-time “special assistant” Ishan Ratnam.
“Are you sure it’s true that none of those men told you at the time about the questioning of the staff member in Wuhan, coming so soon after the Korean arrests?” counsel assisting Adam Bell asked.
Packer: I’m sure.
Bell: In the circumstances, is it likely that you were told about those matters but you’ve forgotten?
Packer: No I would have emailed Mr Craigie and Mr Rankin in the first instance and said, ‘what’s happening?’, or asked for an explanation.
The other big take-out was that Packer knew an entity called Great Respect Limited had taken a 20 per cent ownership stake in the Hong Kong casino group Melco by the time he agreed to sell $1.7 billion worth of his Crown shares to Melco in May last year.
Through Great Respect, a family trust, the deal gave an indirect stake in Crown to the Macau casino tycoon Stanley Ho. Crown’s Sydney casino licence says the group must stop Stanley Ho from taking any interest in Crown because of his alleged links to organised crime. It also bans Great Respect.
Why Packer went ahead with the deal anyway, putting the licence for Crown’s new $2.2 billion casino at Barangaroo at risk, is what we expect the inquiry will drill down into after the break.
One interesting element of today’s hearing is that we heard that former Crown Resorts chairman Richard Rankin was cc’d in on those now famous ‘bombshell’ emails between James Packer and businessman Mr X.
As we heard yesterday, Packer sent another businessman, who the inquiry is only referring to as Mr X, threatening emails. Mr X’s company – referred to by the inquiry as Z Co – was in privatisation talks with Packer at the time, but the billionaire casino mogul became frustrated with how the deal was proceeding.
It raises an interesting point on where Rankin is and why he hasn’t been called by the inquiry to give evidence yet. Of course, we heard earlier today that Packer say he feels let down by Rankin and former Crown chief executive Rowen Craigie.
Just before the break, counsel assisting the inquiry Adam Bell, was starting to dig into James Packer’s understanding of the restrictions placed on Crown about investments by Stanley Ho.
Of course, Crown’s deal with Melco is one of the reasons the casino’s group licence is under review and Stanley Ho was a beneficiary of a company with a significant stake in Melco.
Here’s the exchange:
Bell: “The New South Wales government deed was that Crown covenanted to report periodically to the (NSW) Independent Liquor & Gaming Authority concerning ownership interests of Stanley Ho and his associates, similar to what was done with the Pennsylvania Gaming Control Board.
Bell: You were aware that Crown had an agreement at the time with the Pennsylvania Gaming Control Board to prevent Stanley Ho or a Stanley Ho entity from taking an interest in Crown.
Packer: I can’t recall.
Bell: You were aware the time that the NSW government had sensitivities about Stanley Ho or interests associated with Stanley Ho taking and interest in Crown.
And we’ve there’s a break in proceedings for a long-than-expected lunch break so that Commissioner Patricia Bergin can attend to an urgent matter.
We’re not sure what that matter is, but fear not the former Supreme Court of NSW judge and James Packer will all be back at 2.30pm for more questioning.
Packer has just said he knew that, through a complex series of corporate transactions, an entity called Great Respect Limited had taken an approximately 20 per cent stake in Melco International, which is the controlling shareholder of Meclo Resorts.
Great Respect, we have learnt, is a Ho family trust that included the banned Stanley Ho as a beneficiary. That is how Stanley Ho received an indirect interest in Crown when Packer sold some of his shares to Melco in May last year, in possible violation of Crown’s licence.
Crown’s NSW casino licence also bans Great Respect itself from taking an interest in Crown.
The question will now be, if Packer knew Great Respect and Stanley were involved in Melco, why did he put Crown’s Sydney casino licence at risk by selling the shares?
We are now moving into the long history between Crown and the Hong Kong casino group Melco. The two had a joint venture in Macau until 2017.
In May last year Packer packer agreed to sell 19.9 per cent of the shares in Crown to Melco for $1.7 billion. That’s a big issue for the inquiry because by doing so, Packer gave an indirect interest in Crown to Macau casino tycoon Stanley Ho.
Crown’s licence for its new Sydney casino says Crown must prevent Stanley Ho from taking an interest in the company, because of his alleged links to organised crime. So the deal, negotiated by two Crown directors, Michael Johnston and Guy Jalland, may have violated Crown’s licence.
Stanley Ho – the father of Melco’s boss Lawrence Ho – died in May this year aged 98.
We’ve also heard how Crown’s former chairman Robert Rankin put together a proposal when he was still leading the casino group’s board to move James Packer to a new role in early 2016 with a massive $11.85 million salary.
Counsel assisting Adam Bell, SC, asked Packer: “You had no recollection for this proposal for you to be appointed President, Global Strategy at all, is that right?”
Packer responded: “I think you asked if I was aware that it was being developed over December and January and I said I can’t recall. That was a time when I was particularly unwell.”
At the time, Crown was in privatisation discussions with another firm, Hellman & Friedman, either to privatise Crown entirely or to privatise its Australian resorts.
But when that deal unravelled, the inquiry heard leading Crown director and famed adman Harold Mitchell recommended the board vote in favour of a services agreement with Packer and his private investment house Consolidated Press Holdings.
Just before the break, an interesting email was tendered that James Packer sent to Crown executive Ishan Ratnam in 2018 about Crown’s decision to exit its Macau joint venture Crown Melco in 2018.
The email about Crown’s finances included the line: “And that’s before the couple of billion Crown lost being forced to sell out of Macau because of our Australian VIP business behaviour in China.”
Here’s the transcript:
Bell: By this time did you recognise that the arrests in China was the result of certain business behaviour by the VIP business unit in China?
Packer: I didn’t know why they occurred. I speculated.
Bell: Were you linking the decision to sell out of Melco Crown with the China arrests?
Bell: And were you linking the sell out of Melco Crown with the Australian VIP business behaviour in China?
Packer: I was speculating.
Bell: What is it you were suggesting by saying that you were forced to sell out of Macau because of our VIP business behaviour in China?
Packer: Mr Bell, I always presume that something must have gone wrong in China for the arrests to occur. I never had the evidence.
And we’re back and now we’re digging into Crown’s discussions about James Packer’s position at the company ahead of him deciding to step down in 2015.
Packer has gone in and out of various senior board or management positions at Crown over the years to deal with various issues including his mental health issues.
The hearing will resume in 10 minutes.
Source: Thanks smh.com