It’s time for Crown to book itself into rehab

Crown Resorts will need to book itself into a long stint in rehab to wean itself off its commercially addictive habits, and distance itself from some of the bad company it has kept in the past.

Its problems run deep, and getting itself clean will require far more than a partial change of guard around the board table.

While chairman Helen Coonan was given a tick in Commissioner Patricia Bergin’s report, it’s noteworthy that when she toured (by phone) her major investors in December, she did so in tandem with the Bergin-discredited chief executive Ken Barton. They billed their ticket as the change agent team.

So one of the biggest surprises on Wednesday is not what Crown said - but what it didn’t say.

Crown chair Helen Coonan and chief executive Ken Barton at Crown’s virtual general meeting.Credit: Crown AGM webcast

Where was the board’s recognition and acceptance that Barton needed to go, and an announcement it had hired headhunters to find his replacement?

Not a word.

If industry chat is to be believed, Crown already has a back-up plan to install the newly appointed board member Nigel Morrison into Barton’s job. He is a former chief executive of SkyCity, but had been chief operating officer at Crown Melbourne for seven years until 2000.

Morrison will need to pass probity checks first, and even if this is fast tracked it could take several months before he is allowed to take the role.

By way of contrast, James Packer clearly already had his finger poised over the announcement button in anticipation of the report’s findings. He fired off a missive on Wednesday announcing that his two CPH executives that sit on the Crown board, Guy Jalland and Michael Johnston, would be leaving.

Packer’s other representative, John Poynton, has resigned from Packer’s consultancy payroll and is declaring himself now to be independent. It remains unclear whether that will fly.

According to Packer, these board changes remove his private company’s involvement with Crown’s board and give it clear air to work with the Independent Liquor & Gaming Authority (ILGA) in the execution of its announced reform agenda and become a ‘model casino operator’.

The move does little more than confirm that Packer already has one foot outside the door.

All the Packer’s men: Guy Jalland (left) and Michael Johnston (right) have resigned as Crown directors.

Yet before Crown can climb onto that ‘model operator’ pedestal, it requires a deep cleansing within its ranks. The culture that allowed it to be blind to the risks of money laundering and the infiltration of organised crime appears embedded in its DNA.

Even with a new, well-regarded cleanskin like Steven Blackburn running the compliance and crime functions in the company it may take Crown years to become regulatorily match-fit to operate a casino in NSW.

Meanwhile, Coonan’s green tick from Bergin has delighted ILGA chairman Philip Crawford. From a practical perspective this works for ILGA because the regulator needs someone in the senior Crown ranks to implement the various recommended changes.

But Crawford also noted that ILGA’s ability to deal with Coonan depends on her having the support of the board and shareholders.

Going by the results of Crown’s most recent annual shareholder meeting, that support is anything but fulsome. The company received a protest vote against its remuneration report and only one director up for re-election, Sarah Halton, would have survived but for the support of Packer’s vote. She joined the board in 2018, so would be held less accountable for the conduct of the company over the period covered by the Commission of Inquiry.

Bergin viewed Coonan as an honest and reliable witness, and just the person to spearhead Crown’s metamorphosis to suitability.

However, it’s hard to ignore the fact that the company she chairs and has been a director of for ten years has been found unsuitable to hold a casino licence in NSW. She is a former politician and a lawyer rather than a seasoned chairman of a publicly listed company (other than Crown).

Macquarie analysis suggests the process to rectify Crown’s risk management, governance and corporate culture may take two years. The bank has downgraded its stock recommendation to neutral to account for the uncertainty now regarding the company’s Victorian and West Australian licences.

Board and management renewal is a time-consuming process for gaming companies, given it can take six to nine months for appointees to achieve probity. The rehab process may take a while.

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