NSW casino inquiry reveals emails between James Packer, former Crown chairman John Alexander

Crown Resorts has been lashed by NSW’s Commissioner after extraordinary revelations on its internal communications.

Crown director John Alexander gives testimony at the NSW casino inquiry.

The James Packer-backed Crown Resorts has received its strongest warning that damning evidence presented to a public inquiry about risk management and governance failures at the casino company could impact the licence conditions for its Barangaroo casino.

Former Supreme Court judge Patricia Bergin, who is heading an inquiry into Crown’s suitability to retain its Sydney licence by the NSW Independent Liquor and Gaming Authority, said she was “at a loss” to understand if reforms currently being undertaken by Crown to improve its processes meant the company was on a “journey of improvement.”

“The last thing that any applicant for a new casino licence would want is a history as Ms Sharp [counsel assisting Naomi Sharp] has just recounted,’’ Ms Bergin told former Crown executive chairman John Alexander after Ms Sharp had detailed a range of failures by Crown to properly vet its junket partners and deal with the risk of money laundering in its casinos.

Mr Alexander repeatedly said he had not been informed by his management team about a range of damning issues and said he accepted personal responsibility for Crown’s poor culture of risk and compliance.

It was announced in the company’s annual report released last month that he would stand down at the end of the company’s annual meeting on October 22.

“If you don’t know, what chance has the regulator got,’’ Ms Bergin said.

“To say that the company is on a ‘journey of improvement’ is heartening to some but I don’t know what it means. I really am at a loss at the moment to understand what it means.”

Ms Bergin can recommend Crown’s licence for its Barangaroo casino be revoked or that it be subject to restrictions, which could extend to Crown’s directors or even its major shareholder James Packer.

She asked Mr Alexander if Crown’s problems extended back to “the nature of the company and how it developed” given the strong control over the company held by the Packer family.

She suggested to Mr Alexander that “those who have been in the company at level below you have reported to Mr Packer or felt they could do the things they were doing because of the past history.”

Mr Alexander replied: “A lot of the individuals have been inside the company for a long time,” before noting some executives may not have adjusted over time to the changes in regulatory frameworks governing Crown.

“The old way of doing things was not necessarily acceptable,’’ he said.

But Mr Alexander defended the extent of the information provided to Mr Packer in recent years, amid extraordinary detail provided to the inquiry about their communications and denied the billionaire continued to control Crown’s executives after he stood down from its board in 2018.

In one Mr Packer emailed Mr Alexander, criticising him for taking a world trip to look at restaurants, noting Crown had “trading questions to answer”, needed “all hands on deck” and needed a cost cutting plan, including limiting executive travel.

But Mr Alexander said he told Mr Packer it wasn’t a world trip and that he was closing out two important restaurant deals. He also complained about what he called a “scoreboard attendant culture at Crown and precious little proactivity”.

“I meant that there was in my view ready acceptance of outcomes and results and not enough reaction to those results when they fell short,’’ Mr Alexander said when asked to explain the comment, noting he was broadly referring to the management of the resorts division.

Mr Alexander also denied he or the company turned a blind eye to its anti-money laundering (AML) duties, but evidence was presented that he did not take action when informed in an email in May 2018 that $5.6m in cash was being kept in a closet at a special room at Crown Melbourne for controversial Hong Kong-based junket operator Suncity.

“This should have gone to the (board’s) risk committee, yes,’’ he said.

Mr Alexander also acknowledged the language used in a full-page advertisement in August last year signed by all of Crown’s directors refuting media allegations claiming Crown’s junket partners had links to organised crime and were involved in money laundering “could be refined”.

An email he sent to Mr Packer on July 29 last year described the allegations as “nonsense”.

“I could have chosen my language better,’’ he said when presented with the email.

But he said the board still disagreed with the “core conclusions” of the allegations made against the company.

“There are elements in some of the allegation after subsequent investigation have some currency … but the core conclusions are still something we disagree with.”

It was also revealed on Friday that Mr Alexander had been told in April last year by the chief executive of Wynn Resorts, Matthew Maddox, that the real reason Wynn abandoned a $10bn takeover bid for Crown was due to the concern of regulators.

“There was a suggestion that once the news of the potential plot leaked, several of the regulators were against such a transaction. At this stage I did not think there was a way forward,’’ Mr Alexander said, noting Mr Maddox told him the Macau Gaming regulator was of greatest concern.

Mr Alexander was also questioned about not being informed in May last year that Mr Packer’s CPH was selling a 19.9 per cent shareholding in Crown to Lawrence Ho’s Melco Resorts Group, which impacted Crown’s VIP gaming management agreement for its Sydney casino.

Under the terms of the agreement Crown is barred from having any association with a company linked to Mr Ho’s father Stanley, who long had alleged associations with organised crime.

It has been revealed at the inquiry that a company associated with Stanley Ho was part of Melco Resorts corporate structure at the time of Mr Packer’s share sale.

“No, I wasn’t surprised by the fact nobody told me. I was relieved nobody told me … It would have put Crown in an interesting disclosure position, he said.

“If we had known about the transaction I would have recommended we ceased all information flows (to CPH) to protect Crown, given a transaction was imminent. I wasn’t annoyed or upset I didn’t know about the transaction.”

He also said he believed nobody involved — even Lawrence Ho — was aware about Stanley Ho’s interests in Melco Resorts.

“I don’t think anybody was aware. Obviously there were some oversights from the Melco end as well about the VIP management agreement because their legal counsel was intimately aware of that as well,’’ he said.

“I can’t speak on behalf of Lawrence but obviously he was relying on other people’s advice.”

In an email to Mr Alexander the day after the deal was signed on May 31, Crown Company Secretary Mary Manos told Mr Alexander she was “sure the NSW regulator would want to take a fresh look at the (VIP gaming management) agreement.”

Ms Manos also told Mr Alexander that Crown’s independent directors wanted to meet urgently and separately from CPH to understand potential ramifications of the Melco share sale deal.

Mr Alexander denied any directors were “irritated about the sale” when a four-hour board meeting took place on June 12 and Crown’s independent directors were briefed on the sale by CPH executives and Crown directors Michael Johnston and Guy Jalland.

“It wasn’t a long conversation. They spoke to the reasons behind the sale. Also that Mr Packer was very keen to maintain his investment in Crown,’’ he said.

“It was very cordial and they (the directors) seemed satisfied with the answers.”

This was despite him emailing Mr Packer later the same day after the meeting saying “the independent directors have calmed down after your share sale”.

Asked what he meant in the email, Mr Alexander said he was referring to fact the independent directors had said they wanted to meet as quickly as possible after the share sale.

“One read of that is that there was some degree of disquiet. (But) it was a very cordial, pleasant conversation.”