Harold Mitchell under presssure to resign from Crown shareholders and regulators

Former advertising baron Harold Mitchell is set to become the next battleground for Crown, as big shareholders and regulators push for him to go.

Harold Mitchell was in the news in 2020 over ASIC’s legal action against him relating to broadcast deals done by channel Seven and Tennis Australia. Picture: Stefan Postles

The position of former advertising baron Harold Mitchell is set to become the next battleground for Crown Resorts, as institutional shareholders and regulators push for him to step down following the departure of chief executive Ken Barton and the appointment of Helen Coonan as executive chairman.

The Australian understands Mr Mitchell is determined to stand firm in his position and will refuse to bow to pressure from NSW gaming regulator chairman Philip Crawford or Ms Coonan for him to step down, arguing it is only shareholders who can legally remove a director.

But it is understood Crown’s biggest institutional investor Perpetual is not supportive of him staying on the board, while 2 per cent shareholder Investors Mutual also suggested he should leave “sooner rather than later”.

“I really think it depends on the decisions of the chairman,” Investors Mutual principal Anton Tagliaferro told The Australian on Mr Mitchell’s fate.

“But anybody tainted by the findings of the commissioners report should leave sooner rather than later.”

Mr Crawford reiterated on Monday that it was his preference Mr Mitchell resigned.

Investors Mutual’s Anton Tagliaferro. Picture: Ryan Osland

“It is appropriate that he leaves. Helen Coonan understands that position pretty clearly. No doubt there will be discussions going over that issue for the next little while,’’ he said.

The Bergin report recommended Mr Mitchell, who has been on the Crown board for over a decade, step down if a civil penalty or declaration was made against him in relation to the “minor breaches” he was found to have made as director of Tennis Australia.

Last Thursday the head of the Victorian Commision for Gaming and Liquor Regulation Catherine Myers said there was an ongoing VCGLR investigation into Mr Mitchell, who had been asked to explain how he was a suitable person to be an associate of Crown Melbourne.

On Monday she added: “We have received Mr Mitchell’s response and it’s currently being considered, with references made in the Bergin Inquiry report to Mr Mitchell also being of relevance. A decision in this matter is anticipated before the end of the month.”

As foreshadowed by The Australian, Mr Barton’s formal resignation was delayed last week as he negotiated his exit package and transition arrangements for Ms Coonan to take over as executive chairman before both changes were announced to the Australian Securities Exchange on Monday.

In a statement to the ASX the company said Mr Barton would receive entitlements agreed to under his employment contract and would continue to assist Ms Coonan “in coming weeks” to ensure a smooth transition.

Mr Barton said he was confident the business was on the right track to restore its reputation.

Ms Coonan’s remuneration package, which is speculated to be as much as $3m per year, is set to be approved by the Crown remuneration committee and board later this week ahead of the company’s annual results.

Helen Coonan will take over as Crown’s executive chair. Picture: Robert Edwards

The results will be delivered by Ms Coonan with assistance from CFO Alan McGregor.

Her new role was welcomed by Anton Tagliaferro.

“Yes, we are very supportive of her. She has come through the inquiry looking good and stability is what the company needs to regain its licence,’’ he said.

Crown shares closed 8 cents, or 0.8 per cent higher at $9.97.

Confirmation of Ms Coonan’s appointment came as Western Australia’s most senior casino regulator stood aside after it was revealed he had engaged in regular social activities such as fishing trips with members of Crown’s legal and compliance team.

Department of Local Government, Sport and Cultural Industries deputy director general Michael Connolly — who also fills the legislatively-enshrined role of the state’s chief casino officer — stood aside following a series of questions from radio station 6PR.

He has been replaced by department insider Mark Beecroft, who will assist the WA government’s response to the Bergin report once it has been assessed by the state solicitor.

Ms Coonan moved immediately to launch an investigation into the events surrounding Mr Connolly’s decision.

“While we believe all necessary disclosures have been made by our employees, Crown Resorts has asked for an independent external review. In managing potential conflicts of interest, Crown recognises how issues are perceived is of critical importance. We will report our findings to the Department of Local Government, Sport and Cultural Industries,’’ a Crown spokeswoman said.

The Director of the department Duncan Ord said Mr Connolly and the Crown staff had been friends for an extended period. “This friendship, and any potential or perceived conflict has been declared formally and has been discussed and declared to myself and the former Director General Barry Sargeant. As well as the Gaming and Wagering Commission, who have noted the Declaration of interest in the minutes of meetings,’’ he said.

Meanwhile Mr Crawford on Monday called on James Packer’s private company, Consolidated Press Holdings, to come up with ideas on the future of its 37 per cent shareholding in Crown in the wake of criticism of its influence on the gaming company in the Bergin report.

“If they want to sit on the register, I want to hear on what basis they think that is appropriate and whether they have any suggestions before I give it serious thought,” he said.

The Bergin report recommended that shareholdings in casino companies be limited to 10 per cent but did not specifically spell out the terms of Mr Packer selling down his shareholding in the company.

Mr Crawford said ILGA’s concern was the degree of influence that Mr Packer would have over Crown going forward rather than the exact amount of his shareholding in the company.

“Influence is the key word. They need to address that. I need to see if they want to address that in good faith and how they are planning to do so, so I can think about it,’’ he said.

He said it would be preferable if CPH came up with some ideas about the future of Packer’s stake rather than ILGA seeking to impose a solution on them.

Chair of the NSW Independent Liquor & Gaming Authority, Philip Crawford, speaks to media at a press conference. Picture: David Swift

“It is always good if they come up with ideas rather than me imposing things. A regulator likes to work with its constituents, not having to litigate with them. They are commercial people,” he said referring to Packer’s private company.

“We hope and trust they will come up with some ideas.”

Mr Crawford said he “did not want to be uncommercial and interfere in the market if (he didn’t) have to.”

“If he (Packer) could sell his shares, I don’t want to put constraints on him.

“On the other hand, I don’t want to limit his voting rights because that gives disproportional control to minority shareholders.”

Mr Crawford said there had been no application so far from Crown shareholder Blackstone to increase its shareholding beyond the current 9.9 per cent.

Blackstone bought the 9.9 per cent stake in Crown last year from Macau casino owner Melco which was a former joint venture partner with the Australian gaming company in Macau.

Mr Crawford said discussions had begun between ILGA and the NSW Government on the recommended changes to the law around regulation of casinos in the state in the Bergin report.

But he expected it could take some weeks before any specific firm proposals for change materialised.

“The (NSW) government is pretty keen to give the regulator the wider powers as recommended (by the Bergin report),” he said.

“Just what it looks like and how it can best be achieved is a matter being discussed at the moment. Everyone is showing a lot of good faith and wanting to work quickly. There is a healthy dialogue happening. (But) it will take the best part of four or six weeks to get some clarity around it.”