James Packer told to sell down his 37 per cent stake in Crown Resorts to just 5 per cent

The billionaire’s ‘ubiquitous influence’ led to a pack of managers with steadfast devotion to his interest even after his resignation, the report details.

Billionaire James Packer has been told to sell down his shares in Crown Resorts from 37 per cent to at least 5 per cent. Picture: Scott Barbour/Getty Images

The Finkelstein report has effectively ordered James Packer to sell down his shares in Crown Resorts from 37 per cent to at least 5 per cent.

The report — which found that Packer had “exercised a powerful influence over Crown Resorts … which led to the creation of a team of loyal directors and senior managers” — also makes recommendations to head off any potential influence on the Crown board or senior management.

It recommends the Victorian Casino Control Act be amended to ensure that the majority of the Crown board are independent directors.

It also wants the act to be amended to specifically protect casino staff from “taking instructions from any person or group of persons other than the board.”

The report notes that Packer had a “ubiquitous and powerful influence” over Crown, backing the conclusion of the report in February by former NSW Supreme Court judge Patricia Bergin, that the Packer influence “encouraged Crown to put profit ahead of other motives for action.”

The report finds that concern over the potential for Packer to continue to influence the company once undertakings given to NSW regulators expire in October 2024, is one of the reasons that the company is not suitable to hold a casino licence in Melbourne.

The report notes that Mr Packer and his CPH Group are currently no longer “associates of Crown Melbourne” following undertakings given by Packer to NSW gaming regulators not to try to influence the company.

But it argues that these undertakings will expire in October 2024, raising the possibility of Packer again becoming an associate of the company and resuming his former influence over the business.

Finkelstein says this is the reason behind his recommendation that Packer be forced to sell down his holdings from 37 per cent to 5 per cent.

“In that event, neither Mr Packer nor the CPH Group, will become an associate of Crown Melbourne after their undertakings to (the NSW gaming regulator) have expired.”

The Finkelstein report notes evidence given to the Bergin inquiry in NSW that James Packer was responsible for much of the success of the Crown business.

But he points out that Packer’s “ubiquitous and powerful influence led to the creation of a team of loyal directors and senior managers (who were) steadfast in their devotion to assist Mr Packer achieve his business pursuits.”

“Mr Packer retained significant control over Crown affairs, even after his resignation as chairman (in August 2015) and as a director (in March 2018),” Finkelstein notes.

Finkelstein said in his moves to influence the board of Crown and its senior management, Packer “acted in a manner that a dominant shareholder often can – to further its own commercial interest.”

It quotes the Bergin report saying that it was “second nature for Mr Packer to require information from Crown to ensure that he could make judgments about Crown Melbourne’s financial position on a daily basis and to make demands on those who were managing that financial position.”

“Mr Packer was involved in many very important decisions affecting the operations of Crown Resorts and its employees and officers, even when he was no longer a director of Crown Resorts,” the Bergin inquiry says.

“This was more than a major shareholder proffering advice or views about Crown Resorts’ operation. It involved him ‘managing and manoeuvring’ all significant decisions on Crown Resorts.”

The report says that Packer’s influence over the company played a “key part” in “Crown’s pursuit of profit at all costs” approach to running its company.

The report says Crown Melbourne took a “risk based approach to legal and moral obligations (which focused more on the chance of getting caught than on the need for compliance with the law and adherence to ethical standards and community expectations.”

The comments in the report come as Mr Packer is due to give evidence to the Western Australian Royal Commission by video on Friday.

Packer gave evidence to the Bergin inquiry but was not asked to appear before the Finkelstein Royal Commission.