From the top down: Why Crown Resorts finds it hard to change

Commissioner Patricia Bergin’s key observations of the gaming giant are beginning to ring true.

Commissioner Patricia Bergin’s key observations of the gaming giant are beginning to ring true. Picture: Supplied

As Crown Resorts digests more than 760 pages of Patricia Bergin SC’s report, already one of her key observations of the gaming giant is beginning to ring true.

Ms Bergin said there was a big difference in accepting significant cultural and governance problems exposed during a public inquiry and having the “open-mindedness to detect the problems for oneself and remedy them”.

But even when Ms Bergin gave Crown a strong hint about one of the first steps it could take to remedy its troubles, it appeared to ­either not have that open-mindedness to detect the flaw or the will — at least a day after the release of the scathing report — to take the necessary action.

That flaw is chief executive Ken Barton, who Ms Bergin said maintained a “totally inexplicable” approach towards money-laundering risks and the NSW Independent Liquor and Gaming Authority would be “justified” in declaring it had no confidence in him as chief executive.

“Mr Barton has demonstrated that he is no match for what is needed at the helm of a casino licensee or a close associate of the licensee. His problems will not be cured by the appointment of ­people expert in the field who report to him.”

Crown could be forced to sell its $2.2bn casino complex at Barangaroo if it can’t transform itself to become a company that would be suitable to hold a casino licence in NSW. Making matters worse for Crown if it cannot redeem its suitability is the Victorian regulator bringing forward its review of Crown’s flagship Melbourne casino by three years and West Australian regulators increasing scrutiny of its Perth operations.

But Mr Barton was clinging to his role on Wednesday despite Crown facing an existential crisis, at least under its current management and structure.

Crown issued two ASX announcements, with neither mentioning Mr Barton. The two announcements related to major shareholder James Packer’s move to quickly start adopting Ms Bergin’s recommendations, with two of his three nominees directors, Guy Jalland and Michael Johnston, stepping down.

Meanwhile, Mr Packer’s third nominee, non-executive director Jack Poynton, terminated his consultancy agreement with Consolidated Press Holdings, a move which Crown said has severed CPH’s involvement with its board.

Most chief executives say the buck stops with them. After all, Rowen Craigie resigned as chief executive in 2017 following the ­arrests of 19 Crown staff in China in late 2016, and attracting criticism from Mr Packer.

“Mr Packer’s view that Mr Craigie was also to blame for the China arrests was a factor in Mr Craigie’s decision to leave Crown around the same time,” Ms Bergin said in her report.

But following Mr Craigie’s ­resignation, Crown’s problems spiralled into “disastrous consequences”, with Ms Bergin highlighting significant cultural and governance flaws under the next two chief executives, John Alexander and Mr Barton.

Ms Bergin’s strong criticism of the leadership of Mr Alexander and Mr Barton reveal the scale of the challenge Crown now faces in convincing regulators it is a ­suitable company to hold a casino licence.

“Mr Alexander was in the most powerful positions in Crown during the period February 1, 2017 to January 2020 as chairman of the board and chief executive,” Ms Bergin’s report says.

“Although he inherited the disastrous aftermath of the China arrests and had to work through the process after Mr Packer resigned from the board in March 2018 due to ill health, Mr Alexander’s stewardship led Crown to disastrous consequences.

“This included processes that exposed its directors to conflicts of interest and remote management by Mr Packer and a failure to protect Crown’s casino licensees from the infiltration of criminal elements through, at the very least, its lack of robust junket approval processes and a lack of proper oversight and monitoring of risks to money laundering in its subsidiaries’ bank accounts.

“Mr Alexander’s perception of his relationship with Mr Packer was either blind to the reality or lacking in candour. Mr Alexander was fulfilling two roles and it is apparent that he could not or would not see the reality of being managed remotely by Mr Packer.”

Ms Bergin said Mr Alexander gave “no thought” to continuing to disclose confidential board information with Mr Packer after Mr Packer resigned from Crown’s board in March 2018. “It would appear that Mr Alexander gave no thought to the propriety of such a process or whether it was in the interests of Crown that the result of confidential discussions with independent directors should be communicated to Mr Packer.”

Ms Bergin also criticised Mr Alexander’s predecessor, Robert Rankin.

“The elusive Mr Rankin’s reign as chairman was clearly lacklustre. Although Mr Packer understood that Mr Rankin was a ‘specialist’ in matters relating to operations in China, he was sadly disappointed to find that Mr Rankin did not have such skills or if he had them did not apply them to Crown’s operations in China.

“It should be said that Mr Rankin has not responded to these criticisms. That is not because he has not been afforded the opportunity but rather has declined it.”

And things haven’t got better under Mr Barton’s leadership, according to Ms Bergin.

“The authority would be justified in concluding that it cannot have any confidence in dealing with Mr Barton as a director of the licensee or Crown.

“Mr Barton effectively pleaded ignorance of the anti-money laundering landscape until apparently making himself more aware of it in 2019-2020. Such a plea is also devastating for Crown. What Mr Barton should have done in 2014, as he finally recognised six years later, was to conduct a proper review of the Southbank and Riverbank bank statements and protect Crown and the casino licensees from the exploitation by organised criminal groups.”

In contrast, Ms Bergin backed Crown chair Helen Coonan, saying the Independent Liquor and Gaming Authority would be “justified in accepting any commitment or undertaking given personally and/or on behalf of Crown”.

“Ms Coonan accepted the serious corporate failings of Crown and notwithstanding those corporate failings is willing to, as she put it, stay the course. That commitment in the circumstances of the evidence that was exposed during the course of this inquiry is no small matter.

“The burden of reformation will be great.”

And on day one of that reformation, Ms Bergin words are clearly not an overstatement.