Crown argues for closely supervised trial run for Barangaroo casino

Crown says it should be allowed a Barangaroo trial run to help settle its suitability for a licence, but stopped short of diluting James Packer’s power.

The Barangaroo site of Crown’s Sydney casino. Picture: Richard Dobson

Crown Resorts says it should be allowed to operate the Sydney Barangaroo casino even if needed to make changes before being considered “suitable” by the NSW gaming regulator.

The gaming group said it was willing to have permanent government inspectors on the gaming floor to meet that end.

On Thursday commissioner of the NSW Independent Liquor and Gaming Authority‘s inquiry into Crown’s suitability to operate the casino Patricia Bergin asked Crown’s counsel Neil Young QC what would happen to the casino if her findings required a “conversion” period of unsuitability to suitability.

“Many of the matters the authority may wish to be satisfied about are going to be matters that require a working test,” Mr Young said. The working test could mean allowing the casino to run closely-supervised for two months and then making an assessment, he said. This would not require the commencement of the entire operation to be postponed, he said.

On Wednesday the ILGA postponed the opening of the $2.2bn facility until at least February, when the findings of the inquiry are due to be handed down.

Crown proposed a limited opening of one floor of the casino with permanent inspectors present to supervise money laundering risks on the floor, but this offer was knocked back by ILGA, who will only accept the opening of non-gaming areas of the facility from next month.

Mr Young also outlined other changes already underway, including a management restructure that separated the anti-money-laundering and chief legal officer roles, a review of short term incentive outcomes, cash deposit limits, and cultural practices. The success of those measures could be the subject of undertakings and tests, he said.

Packer’s power not limited

But Crown’s concessions stopped short of measure suggested by counsel assisting last week, including limiting key shareholder James Packer‘s voting power to just 10 per cent (36.7 per cent) and restricting the number of nominee directors on the company board to one. All agreements allowing the sharing of information with CPH would cease under the suggested measures.

Two weeks ago counsel assisting the inquiry submitted Mr Packer had a “deleterious” impact on Crown’s corporate governance.

Currently three of the 10 directors on the Crown board are nominees of CPH. One of them, Guy Jalland, would have been voted off the board at the most recent AGM if Mr Packer was restricted to exercising just 10 per cent of his voting power.

Crown‘s counsel Neil Young QC said there was no need for these measures as the company had recently cancelled two agreements that allowed confidential information to be shared with CPH and James Packer.

“As I have submitted, Crown‘s relationship with CPH has been pulled back so that the position is the stock-standard relationship between the company and its major shareholder,” he said.

Mr Young said the board was already going through a renewal and denied Mr Packer had ever used his voting power inappropriately.

CEO actions questioned

Ms Bergin asked Mr Young why the actions of CEO Ken Barton shouldn’t influence her findings on the company’s suitability, saying she was troubled by a difference in Mr Barton‘s fourth and fifth statements regarding communications from ANZ in 2015 – when he was CFO – regarding suspicious activity in the bank accounts of Crown subsidiaries Southbank and Riverbank Investments.

In his fourth statement Mr Barton said there were no failures or issues identified by ANZ, but then reversed that position in that fifth statement.

Mr Young said that Mr Barton did follow up on the email with a phone call, and in this context made a “misapprehension” about the seriousness of the email. But Ms Bergin said the fact that upon reflection five years later he still did not recognise the seriousness of the email was concerning. Ms Bergin also asked what she should think about Crown director and AFL boss Andrew Demetriou bringing notes into the witness box without declaring them, and then lying about the extent to which he relied on them.

“We would submit this commissioner, that you should not base any adverse view of Mr Demetriou on those matters, and you should take into account the difficult circumstances in which people in Melbourne have been operating,” Mr Young said, blaming the legal team for not flagging the problem.

Mr Young also said that Crown director Jane Halton’s “lengthy” answers to the inquiry do not reflect on her credibility and that fellow director Harold Mitchell’s recent fine for breaching his duties as a director of Tennis Australia in a “narrow” way does not “impugn” him in the context of his role at Crown.

Mr Young concluded his submissions by stressing Crown has “acknowledged mistakes and failings,” but should be found suitable on the basis of the efforts being made to ensure they do not happen again.