NSW Premier Gladys Berejiklian says Crown casino opening may be delayed
NSW Premier can’t rule out pushing back casino opening after inquiry deals major blow to licence hopes.
NSW Premier Gladys Berejiklian said she couldn’t rule out delaying the opening of Crown Resorts’ flagship Barangaroo casino after a state inquiry heard that the company is an unsuitable licensee due to cultural failures emerging in part to James Packer’s influence.
On Wednesday NSW Independent Liquor and Gaming Authority’s inquiry into Crown began oral submissions after months of taking evidence, hearing Crown should not operate Barangaroo.
“We submit the evidence presented to this inquiry demonstrates that the licensee is not a suitable person to continue to give effect to the licence and that Crown Resorts is not a suitable person to be a close associate of the licensee,” counsel assisting Adam Bell told Commissioner Patricia Bergin.
Hearing the news at a press conference, Ms Berejiklian said that she could not rule out delaying the opening of the Barangaroo casino, which is still set to go ahead on December 14 despite the inquiry raising numerous governance concerns, prompting a “show cause” from the Victorian gaming regulator and encouraging an Austrac investigation of Crown. “My reaction if that‘s the case is I will be seeking urgent and immediate advice on what to do,” Ms Berejiklian said.
“I think at the end of the day we need to do what‘s in the best interests in the citizens of our state.”
Mr Bell told the inquiry that Mr Packer’s shareholding in the company had a “deleterious impact” on the “corporate governance of Crown” with the influence of his holding company CPH compromising the reporting lines which ultimately led to the arrest of Crown staff in China.
One of the ways Mr Packer did this was through his support of a Mr Bell said that Mr Packer’s support of a “VIP working group” within Crown prior to 2016.
Mr Bell said that the group set the direction and the strategy of Crown’s international business outside of normal management structures and risk management systems, which led to the arrest of 19 Crown staff in China for illegally promoting gambling.
“In 2013, quite possibly at Mr Packer’s instigation but certainly with his approval, the VIP working group or CPH working group, was established,” Mr Bell told the inquiry, adding that the group “was comprised of VIP international executives and senior CPH personnel” including current director and CPH executive Michael Johnston, retiring Australian resorts CEO Barry Felstead and former VIP executive Michael Chen.
The VIP working group met monthly with CPH executives providing advice on how to grow the VIP business and further access the Chinese market.
“Most significantly Mr Felstead said that the VIP working group was working separately from the official reporting structure into the Crown Resorts’ CEO, Mr (Rowen) Craigie,” Mr Bell said.
“He also accepted that on occasion he provided more information about the international business to the VIP working group than to the Crown Resorts senior CEO meeting group.
“We submit that you should find that Mr Packer was central to the genesis and objectives of the VIP working group notwithstanding that Mr Packer himself was not an attendee.”
The inquiry heard how Mr Felstead, being aware of numerous risks to the staff in China, failed to escalate the risks outside of the VIP working group, while Michael Johnston failed to inform his fellow directors.
“The one member of the board who was aware of all of the escalating risk factors and who chose not to share it with the rest of the board was Mr Johnston,” Mr Bell said.
“We submit that it should be found that Mr Johnston must have appreciated that there was a risk of arrest, detention and conviction.”
Packer evidence in doubt
Giving evidence at the inquiry last month, Mr Packer he claimed he was not aware of the full risk to the staff in China and said he would have moved them out of the country had he known.
But on Wednesday Mr Bell questioned Mr Packer’s ignorance, noting that Mr Johnston and Felstead – two men Mr Packer described as loyal – were fully aware of the China risks.
Ms Bergin suggested the failure to share the information could have been a fear of sharing bad news with Mr Packer; a “powerful personality.”
“Perhaps it was the case that Mr Packer‘s powerful personality meant that managers at Crown Resorts didn’t want to bring bad news to his attention,” Mr Bell replied.
“It‘s either that or the evidence of Mr Packer can’t be accepted.”
Although Mr Bell said a “significant cause of the risk management and government failures” came about due to the dominance of CPH and the “insertion by Mr Packer of informal reporting lines to Mr Johnston and his VIP working group”, he said a broader cultural deficiency existed at the company which made it unsuitable.
“The board of Crown resorts has admitted extensive risk management failures, corporate governance failures, cultural failures and ethical failures leading to the China arrests,” he said.
“Although the China arrests occurred four years ago, as I mentioned, the poor response by the board to the media allegations indicate the cultural issues giving rise to unsuitability are not really historical.”
The inquiry will continue on Thursday.
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