Legal team tell royal commission James Packer’s influence on Crown Resorts ‘extinct’

James Packer’s legal team has made a final plea to the royal commission into Crown Resorts’ Perth casino in a bid to avoid the introduction of a cap on shareholdings.

The Crown resorts complex at Burswood. Picture: Tony McDonough

James Packer’s legal team has made a final plea to the royal commission into Crown Resorts’ Perth casino in a bid to avoid the introduction of a cap on shareholdings that could scuttle Blackstone’s $8.9bn takeover bid.

Noel Hutley SC, representing Mr Packer and his family business Consolidated Press Holdings, used his closing submission to the West Australian inquiry to argue against restrictions that would limit the amount any one group is able to hold in the company or its casinos.

Mr Hutley argued such measures would be inappropriate and would hurt Crown’s ability to raise capital. He said Mr Packer’s influence over the company and its casinos – something that has been scrutinised by royal commissions in WA, Victoria and NSW – was over for good.

“That influence has ceased permanently,” Mr Hutley said. “It is extinct, not merely dormant.”

It had emerged during the inquiry that Mr Packer had not attended a single board meeting of Crown’s WA arm, Burswood Ltd, for three years despite being the chairman of the subsidiary.

Money laundering through the casino continued through that period, and both Mr Packer – in his testimony last year – and Mr Hutley on Wednesday agreed that the billionaire’s absence did not meet corporate governance standards.

While the influence of Mr Packer over the casino and its operations has also been a matter of scrutiny by the royal commission, Mr Hutley said Mr Packer’s exit from the group meant his role should not be considered in the commission’s final findings.

“Not only are we irrelevant … there is no reasonable prospect we could ever become relevant,” Mr Hutley said.

Mr Packer stands to pocket $3.3bn from the sale of his Crown stake as part of the proposed $8.9bn acquisition of the group by American private equity giant Blackstone. That offer is conditional on Blackstone receiving final approval from Vic, NSW and WA casino regulators.

The WA inquiry is due to hand its findings to the state government in just over a month, and any recommendation from the commission regarding ownership caps could complicate the Blackstone deal. Despite Mr Packer’s potential windfall from the Blackstone sale, Mr Hutley was critical of the recommendation from Victoria’s separate royal commission for Mr Packer and CPH to reduce its stake to 5 per cent by September 2024. That, he said, was “fundamentally flawed”.

James Packer appears before the Perth Casino Royal Commission last October.

“We say that there is no evidence that equity ownership levels created any of Crown’s issues and nor should it be thought that capping equity levels provides a solution to those issues,” he said.

“Secondly, there is no evidence before this commission and there was no evidence before the Victorian royal commission or before the NSW inquiry that CPH’s mere shareholding had influenced Crown’s culture or was preventing Crown from embedding cultural change.”

Earlier this week, Crown’s lawyer Kanaga Dharmananda SC said the commission should judge the company on its present position rather than its past actions.

He said Crown had “the competence, commitment and resources” in place to deliver the reforms needed to prevent a repeat of the past. “It is not about perfection because there would be few institutions, religious or otherwise, that would pass muster under a standard of perfection,” he said. “The assessment must be holistic and not atomistic.

“Crown has a very different and improved corporate culture and risk management today.”

Blackstone’s $8.9bn bid is not the first approach the group has made to Crown. But the $13.10 per share offer places the bid at above the current price of $12.27.

Despite this, equities analysts have become increasingly sceptical that another compelling offer will emerge. “With Crown Resorts in agreement on value whether we see a competing bid is yet to be seen, however a Star Entertainment transaction would likely be heavily script focused and synergy driven like back in May 2021 (when there was a merger offer),” wrote the analysts at Macquarie to clients earlier this week.

“Other suitors would likely face a drawn-out probity process. In an unlikely scenario whereby Blackstone abandons the offer, Crown Resorts could trade closer to ($10 per share),” they wrote.

The WA royal commission had been tasked with deciding whether Crown was suitable to operate gaming in the state, among other things.

CPH owns a 37 per cent stake in the business and has said it was “encouraged” by Blackstone bid.

In an earlier note, equity analysts at JP Morgan said the higher bid from Blackstone – and the support it received from the Crown board – was significant because it removed doubt about whether the company was willing to engage. It also alleviated the risk that the private equity firm’s due diligence would reveal more negative information about the company, they wrote in January.