Feeling the heat, Packer sets up contingency plan for Crown stake

James Packer is believed to have already set up a blind trust to hold his 36 per cent stake in Crown to deal with the eventuality that he is found to be unfit to be a close associate of the Barangaroo casino, according to industry sources.

The beneficiaries of a blind trust have no knowledge of the trust’s holdings and no right to intervene in their handling.

There is almost certainly some writing on the wall for Packer and the future of his majority stake in the Crown, which holds gaming licences in Victoria and Western Australia and is planning to open in Sydney’s Barangaroo next month.

James Packer giving evidence to the inquiry earlier this month.
James Packer giving evidence to the inquiry earlier this month.

The inquiry has now heard recommendations to the inquiry that Crown is unfit to hold a licence on two grounds – its partnerships with junket operators linked to organised crime and failures to protect its China staff who were arrested in 2016.


Counsel assisting Naomi Sharp, SC, blamed Packer during his time as Crown chairman for setting in train a strategy of enlisting junkets to bring rich Chinese gamblers to Australia and had set a “dubious” tone of putting profits before all else.

Packer understands he needs to distance himself from Crown. Last week the company removed the controlling shareholder protocol agreement that allowed Packer unfettered access to all of Crown’s finances and operations.

It would have been a significant step had it been undertaken a year ago. It now feels like too little, too late. It is up to Commissioner Patricia Bergin to decide whether it’s a meaningful move or just recognition that this bizarre and previously secret agreement should never have been put in place.

The various attempts by Packer over the past few years provide clear evidence he is a happy seller of Crown – but at a price. With the Crown share price wallowing around $8.80 and no certainty on whether it can retain its NSW casino licence now would be a bad time to sell.

In evidence to the inquiry Packer acknowledged that he anticipated shareholder could be imposed and that his hand-picked directors could need to be replaced by more independent directors.

On day two of final submissions, counsel assisting Adam Bell took direct aim at Packer and the “shameful” and “disgraceful” threatening emails he sent to a private equity executive, Ben Gray. It was on the basis of these emails that Bell recommended Packer was not fit to be a close associate of the operator of a casino licence.

The emails have not been made public but we know they were sufficiently intimidating that Gray considered employing private security for his protection. As these emails remain under wraps we cannot know the complete extent of the abuse and whether it may warrant criminal investigation by police.

Packer blamed his behaviour on his bipolar disorder but Bell pointed out that no medical evidence had been presented to the inquiry to support Packer’s claim of ill-health at the time.

The recommendation that he is unfit to be a close associate goes to whether he is a person of good repute having regard to character honesty and integrity under the NSW gambling legislation.

In the previous day’s hearing when Bell had submitted that Crown was not a suitable person to hold a casino licence he spoke of the “deleterious impact on the governance of Crown Resorts caused by its dominant shareholder, CPH and ultimately Mr Packer”.

Packer’s loyal lieutenant and head of his private company, Michael Johnston’s, reputation also took a beating during final submissions, as Bell suggested some of his evidence “reflected adversely on his credit”.

If it is ultimately found Packer was a de facto director of Crown he could be held liable for breaches of directors’ duties.

As such it comes as no surprise that Packer is looking to get his affairs in order and in a position to deal with whatever recommendations will be made by the commission to the NSW gaming regulator.

The final submissions from counsel assisting also contended that Packer had acted as a de facto director of Crown after he had stood down from its board. This exposed Crown to a potential breach of a clause in its agreements with the NSW government that stipulated the late Stanley Ho could have no financial interest in Crown.

Packer’s deal to sell 10 per cent of Crown to Melco was transacted without the knowledge of Crown’s independent directors.

His influence over the management and operations of Crown has been widely examined during the inquiry – including numerous instances of demands made by Packer on the running of the company and requests for intimate financial detail from executives.

If it is ultimately found Packer was a de facto director of Crown it raises the question of whether he could be investigated for breaches of directors’ duties.

Having returned to his mega yacht apparently sailing the Pacific, it’s a fair bet that Packer is happy to be at least physically distanced from the inquiry being conducted in Sydney.

For him, Tahiti really does look nice.

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Source: Thanks smh.com