Lawyers representing James Packer say the billionaire’s private company cannot be blamed for the arrest of 19 Crown Resorts employees in China four years ago, and that senior executives at the casino giant including one who ended up in jail were ultimately responsible for the disaster.
The NSW Independent Liquor and Gaming Authority inquiry into Crown has heard arguments that Mr Packer’s Consolidated Press Holding (CPH), which owns 36 per cent of Crown, was partly responsible for the arrests by distorting reporting lines within the company, which caused it to overlook red flags its staff were in danger.
Counsels assisting the inquiry have submitted this happened because Mr Packer established a “working group” with executives from Crown’s international VIP team and CPH executive and Crown board representative Michael Johnston, who received some vital information that never made it to Crown’s CEO, risk management committee or to other board members.
But CPH’s lawyer Noel Hutley SC told the inquiry on Thursday it was unfair to say Mr Johnston was complicit in the risk management failure that led to the arrests when Crown’s VIP team executives Barry Felstead, Jason O’Connor, Michael Chen and its former CEO Rowen Craigie also failed to escalate important information through the board.
“There has obviously been a breakdown in reporting, quite clearly,” Mr Hutley said.
“[But] these structures failed without any assistance from the VIP working group – they just failed.”
Commissioner Patricia Bergin challenged Mr Hutley on this point, saying that Mr Felstead thought he had escalated warning signs by telling Mr Johnston, and it was a “fact” that the working group seemed to “blur the lines” for executives.
“The failures to report by Mr Chen and Mr Felstead… go wildly beyond anything that Mr Felstead communicated to Mr Johnston,” Mr Hutley responded. “Therefore it’s a false assumption that it was an alternative reporting structure.”
Counsels assisting have said that Mr Packer and CPH’s “deleterious” influence over Crown is one of the key reasons the company should be found unfit to keep the licence for its new Sydney casino, which is set to open next month.
Mr Felstead, Crown’s long-standing Australian Resorts CEO, is leaving the company after a disastrous appearance at the inquiry, while Mr O’Connor spent 10 months in a Shanghai jail for gambling crimes after he got caught up in the arrests. He is now working on the opening of Crown Sydney.
Counsels assisting have highlighted that Mr Johnston was the only Crown director who was told that Chinese police questioned an employee on suspicion of organising illegal gambling tours in mid-2015, just weeks after employees of a South Korean casinos had been arrested.
Commissioner Bergin said it was “very strange” that Mr Johnston did not share this with the rest of the Crown board. Several Crown board members have said they would have pulled its staff out of China had they know about the warning signs.
But Mr Hutley said that while the police interview was a significant warning sign, Mr Johnston could not have understood its importance in the same way that Mr Felstead and Mr O’Connor could have.
“It was in that context… that Mr Johnston did not appreciate the seriousness of the event nor that it represented a potential escalation of risk,” Mr Hutley said.
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