James Packer fronts WA royal commission into Crown Resorts

Dialling in from Argentina, billionaire James Packer says there were ‘many things that should have been done differently’ at Crown.

James Packer appears before the Perth Casino Royal Commission on Friday.

James Packer says he is not sure whether he will move into his new $60m apartment at One Barangaroo after battling inquiries across three states into his casino empire and being forced to sell down his shareholding in Crown Resorts.

Mr Packer fronted Western Australia’s royal commission into Crown Resorts - his first public appearance in more than a year - on Friday, this time dialling in from Argentina rather than on the super yacht he used for his appearances at NSW’s explosive Bergin inquiry.

Counsel assisting the WA commission Patricia Cahill SC asked what “practical steps” Mr Packer would take to ensure he does not contravene undertakings his Consolidated Press Holdings gave to WA’s gaming regulators that it won’t seek to interfere with Crown Resorts.

This included how he would managing living in his new apartment spread over two levels inside Sydney’s latest landmark that also houses Crown’s new $2bn casino complex and executive offices.

Ms Cahill’s question followed the NSW Bergin inquiry and then the Victorian royal commission criticising his influence over the company, which included arrangements in which directors shared confidential information with Mr Packer..

“So you have plans to occupy that apartment yourself?” Ms Cahill said. Mr Packer replied: “I’m not sure”.

“Do you think that if you do occupy that apartment there’ll be any practical steps you need to take to ensure that you abide by your undertakings?” Ms Cahill asked.

Mr Packer said he did not think he had to take extra steps. “But if the commission disagrees, then I’m happy to look at it”.

Ms Cahill also asked Mr Packer how he handle his relationships with friends and former colleagues who are still at Crown. Mr Packer, seated by himself in a cream painted room with a wooden cabinet in the background, said he had not had any contact with friends or former colleagues still at Crown.

Adopting a calm and considered tone, Mr Packer acknowledged there were “many oversights” during his time overseeing Crown Perth, from not appointing a director with financial crimes or money laundering experience to his lack of attendance at board meetings from 2013 to 2016, despite being chair.

But, the reclusive billionaire, said it was “completely wrong” to say that he was “disengaged and disinterested in any aspect of Crown Perth’s operations other than its financial performance”.

“There is no doubt I should have attended or resigned,” Mr Packer said.

“I do not accept that I did not stay on top of what was happening at Crown Burswood’.

The WA commission is examining whether Crown is suitable to operate the Burswood casino, following the Bergin inquiry finding last year that the company was not suitable to run its new Sydney casino at Barangaroo and Victoria’s royal commission this week making a similar finding about its flagship Melbourne complex.

At the start of the hearing, which began at 6:30am Perth time, Mr Packer said he wanted Crown Perth to be a good corporate citizen and outlined the relationship between Crown Burswood’s board and parent company Crown Resorts.

DIALLING IN FROM BEUNOS AIRES

Mr Packer – a former chairman of Crown and its largest individual shareholder – connected via video link to the Perth royal commission from his Ellerstina ranch in Argentina, stating that it was 8:35pm from his location when the commission made its first break at 7:35am, Perth time.

“Let me thank the commissioners for getting up so early,” Mr Packer said humbly.

Mr Packer listed the superyacht he used to appear at the Bergin Inquiry for sale last month, with an asking price of more than $280m.

He became chair of Burswood limited — the subsidiary that controls the Perth casino — when it was acquired by the Packer family’s PBL company in 2004. Crown was created when PBL split its media assets from its gaming assets.

Mr Packer told the commission that the role of the chair was to ensure the company was “in compliance with its regulatory obligations” and admitted he made a mistake in not appointing someone with financial crimes or anti money laundering experience to the Crown Perth board.

“Looking back, there are many oversights and things that should have been done differently,” he said.

Ms Cahill replied: “well, that was a big oversight wasn’t it?”

“Because one of the things you knew about the operation of casinos was that they carried a risk of being used to facilitate money laundering.”

MONEY LAUNDERING RISKS

Mr Packer said he did not believe that Crown Perth was engaged in money laundering at the time but acknowledged it was a risk.

Ms Cahill has asked Mr Packer if Crown might have picked up on the risk of money laundering in company accounts if he was a more attentive chair of Crown Perth, rather than failing to attend board meetings between 2013 and 2016.

She was referring to ANZ closing bank accounts linked to Crown subsidiary Riverbank investments over 2014 over money laundering risks.

The accounts could be used by patrons to repay gambling debts, but evidence at the Begin Inquiry revealed patterns of money laundering behaviour.

“You‘d have to accept that if you actually weren’t there on the job for three years, that would have adversely affected the culture and the prospects that such matters would be reported,” Ms Cahill said

“Possibly,” Mr Packer replied, prompting Ms Cahill to ask: “Because you weren‘t keeping an eye on things”.

Mr Packer shot back:. “I think I was keeping an eye on things...I accepted that I should have resigned or attended, I accept that completely”.

“I do not accept that I did not stay on top of what was happening at Burswood.”

Mr Packer also said it was “completely inconsistent” to spend $1bn developing Crown Perth and ”doing that so you can put yourself in a position where you‘re more at risk from illegal elements”.

“I love Western Australia. I love Western Australians and I wanted Crown to do a really good job on transforming Burswood.”

HIGH-ROLLER STRATEGY DEFENDED

Mr Packer also defended Crown Resort group‘s pursuit of VIP high rollers through junket partnerships, despite the money laundering risks, saying every state government the group operated wanted it to increase its VIP business.

It was these junkets, mainly from Macau, that had operators with links to criminal gangs, leading to Crown- as revealed in the Bergin inquiry - to have facilitated money laundering an other organised crime via its casinos.

Mr Packer said he was aware of the potential risks of junkets, but he believed they could be managed.

“I was aware of many rumours about many things, but Crown had also been operating in Macau from 2004 to 2016 and we had no problem with the Macanese regulators on that front,” he said.

“My response is I believe that risk could be managed, I believe that every state we operated in - Western Australia, Victoria or New South Wales - wanted crown to increase its VIP business.”

NO OBJECTIONS TO SELLING SHAREHOLDING

Mr Packer said he does not object to the Victorian royal commission's recommendation that he sell down his 37 per cent stake in Crown to below 5 per cent by September 2024.

Commissioner Ray Finkelstein made the recommendation in his final report released Tuesday, saying Mr Packer's "harmful" influence on Crown meant his shareholding must be cut.

"I don't object to that requirement," Mr Packer said, although he indicated his lawyers may have an issue with the September 2024 timeframe.

He said his sister Gretel Packer, who is a beneficiary of some of the CPH companies, would also need to agree to the sale.

INSIDE CROWN PERTH’S BOARDROOM

Earlier he outlined how the board supervised the management of the casino.

“It was an iterative process. Management would put forward budgets, would put forward capital proposals, would put forward things of that nature. After a while after being on the board you would get a sense of whether the people that were putting forward those arguments were likely to deliver on what they proposing,” he said.

In response to questions about corporate governance experience on Crown Burswood’s board, Mr Packer said the company’s former chief executive Rowen Craigie had the sufficient expertise, without naming any other directors.

“Why do you say that,” Ms Cahill said.

Mr Packer replied: “if you know Rowen, you’d know that he was very compliance driven and was on top of the detail”.

Mr 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 said the Burswood board had “primary” oversight of Crown Perth, but said the parent company board was involved in capex decisions.

“It was in conjunction with the crown resorts board because capital for development was allocated by Crown Resorts because Burswood didn’t have the capital independently,” Mr Packer said.

He later added that Crown Resorts had involvement in “development purposes” and picking management, including former Crown Perth CEO turn CEO of all Crown Resorts Australian hotels, Barry Felstead.

“The Crown board would have been involved in management, personnel positions, Mr Packer said.

“To make Barry the chief executive would have come from the Crown Melbourne board.”

BERGIN REVISITED

Mr Packer last appeared publicly to give evidence to NSW‘s Bergin Inquiry into Crown’s Barangaroo casino last year via video link from his yacht in the French Pacific.

Commissioner Bergin ultimately revoked Crown’s NSW casino licence over the group’s poor corporate governance and likely facilitation of money laundering through its VIP high rolling “junket” partners.

She attributed the group’s “profits-first” mentally in part to the influence of Mr Packer’s “powerful personality” and his control of the board through the nominee directors of his holding company, Consolidated Press Holdings. (CPH).

It was also revealed that after stepping down from the Crown board in 2018 due to mental health reasons, Mr Packer received confidential financial information about Crown ahead of other shareholders through a now-scrapped controlling shareholder protocol.

Ms Bergin’s opinion of Mr Packer was also coloured by the revelation he sent serious threats to a prominent private equity figure during a Crown take-private discussion in 2015, that led the executive fearing for his safety.

Mr Packer attributed the incident to his bipolar disorder.

The NSW gaming regulator responded to the Bergin Inquiry by placing restrictions on Mr Packer’s ability to use his approximately 37 per cent shareholding to influence the board or appoint nominee directors – severing his connection over the company his family built up in the 1990s.

The NSW government has also promised to introduce Ms Bergin’s recommended 10 per cent shareholding cap without approval for casino operators, which would necessitate Mr Packer to sell down his significant stake.

But Mr Packer may have to sell down well below 10 per cent.

A Victorian royal commission into Crown earlier this week recommended that Mr Packer be made to sell his approximately 37 per cent stake in the business below 5 per cent when restrictions on his shareholding expire in 2024 – even though he did not appear before the commission.

“The size of the CPH holding of Crown, coupled with the ubiquitous and powerful influence of Mr Packer, led to the creation of a team of loyal directors and senior managers … even after his resignation as chairman of the board and as a director,” the commission’s head Raymond Finkelstein wrote.

“The damage caused to Crown Melbourne’s reputation will not be repaired until CPH is removed from its position of dominance.”

Mr Packer became chair of Burswood limited — the subsidiary that controls the casino — when it was acquired by the Packer family’s PBL company in 2004.

Crown was created when PBL split its media assets from its gaming assets.

In his statement, Mr Packer said he saw the role of Burswood chair as leading the development of Burswood.

“Um I really meant the strategy of redeveloping the resort,” he clarified.