Under-fire director Harold Mitchell to lead the search for new Crown board members

Crown director Harold Mitchell is leading the search for new board members at the casino giant despite the ad-man himself being under intense pressure to resign amid questions about his independence from major shareholder James Packer.

Three directors and Crown’s chief executive Ken Barton have left the James Packer-backed group since former Supreme Court judge Patricia Bergin last week found that it was unfit to hold a licence for its new Sydney casino, based on damning evidence it had facilitated money laundering and had been infiltrated by organised crime at its Melbourne and Perth casinos.

Harold Mitchell giving evidence during the Bergin Inquiry last year.
Harold Mitchell giving evidence during the Bergin Inquiry last year.

But long-standing Crown director Harold Mitchell has resisted calls from investors and the head of NSW’s gambling regulator to join the exodus. The famed ad man intends to stay with Crown at least until its annual general meeting in October, according to several sources close to the company who requested anonymity to discuss confidential matters.

Mr Mitchell is said to view his position as different to Crown CEO Ken Barton and directors Michael Johnston and Andrew Demetriou – who resigned following heavy criticism in final report – in that Commissioner Bergin only found he should reconsider his position, after he was found in the Federal Court to have breached his directors duties at Tennis Australia. In a high profile court case last year, a Federal Court judge threw out the majority of claims levelled against Mr Mitchell by the corporate regulator, but found he breached his duties as a director of Tennis Australia at a low level.

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Crown’s newly minted executive chairman Helen Coonan has not commented on Mr Mitchell’s future but is showing tacit support by having him lead Crown’s search for new directors, through his position as chair of Crown’s People, Remuneration and Nomination Committee.

The committee recommends new directors to the board, which are then voted on by shareholders, and also oversees pay and bonuses for Crown directors and executives, which will now include Ms Coonan following her appointment as executive chairman.

The future of Crown’s Sydney casino (pictured) is under a cloud and it now faces a possible review of its  United Kingdom casinos.
The future of Crown’s Sydney casino (pictured) is under a cloud and it now faces a possible review of its
United Kingdom casinos.
Credit:Nick Moir

Ms Coonan has also joined the nominations committee following the departure of director Michael Johnston, who resigned last week. The committee’s third member is Kerry Packer’s former physician John Horvath, who is set to also leave the board after shareholders hit him with a significant protest vote at last year’s AGM.

Crown classifies Mr Mitchell as an independent director but counsel assisting the Bergin Inquiry quizzed him about his independence in light of a $1.9 million interest-free loan Kerry Packer gave him in the early 1990s.

Mr Mitchell told the inquiry that the loan saved him from bankruptcy after his investment in the Queensland tourist attraction “The Big Banana” went pear-shaped, but denied that affected how he dealt with the media mogoul’s son, James Packer, who owns 37 per cent of Crown.

Proxy advisers will meanwhile cease classifying Mr Mitchell as independent having ticked over 10 years on the board this month.

Mr Mitchell has also defended his position to the Victorian Commission for Gambling and Liquor Regulation (VCGLR), after it demanded he justify his position after the finding last year he breached his duties as a director of Tennis Australia.

The VCGLR’s CEO Catherine Myers said late on Monday that she would make a decision on whether to ban him from involvement with Crown Melbourne by the end of February.

NSW Independent Liquor and Gaming Authority chair Philip Crawford has said that Mr Mitchell should move on, while investors are also pushing for anyone tarnished by the report to exit.

“That’s a matter I’ll be talking to Helen Coonan about when we speak in the next couple of days,” Mr Crawford said on Tuesday.

Crown will also be under pressure from the Victorian Commission for Gambling and Liquor Regulation to find more directors based in Victoria who can keep a close eye on its flagship Melbourne casino, following Mr Demertiou’s exit.

However Crown is also constrained with how quickly it can appoint fresh blood to the board by the need to have them receive probity checks by regulators in Victoria, NSW, Western Australia and the UK, which normally takes around six months.

It comes as the fallout from the damning Bergin Inquiry findings threatens to engulf Crown’s casinos in the United Kingdom, after that market’s regulator said it would carefully consider the report which last week deemed Crown unfit to operate its new Sydney casino.

“In general, any action against operators overseas is carefully considered along with any action we may need to take as a result,” a spokesman for the UK’s Gambling Commission said in a statement to The Sydney Morning Herald and The Age.

Crown owns and operates Crown Aspinalls, a high-end casino in one of London’s wealthiest neighbourhoods, Mayfair, also holds a 50 per cent equity interest in the Aspers Group, which operates four casinos in Newcastle, Stratford, Milton Keynes and Northampton.

While Crown’s UK casino operations account for only a small portion of the company’s earnings any investigation by that regulator would be a further blow for the Australian company.

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Source: Thanks smh.com