Ray Finkelstein’s verdicts on Crown’s leaders and how James Packer treated now former directors
Ray Finkelstein has delivered verdicts on some of Crown’s old and new leaders and the shadow cast by its biggest shareholder.
The head of Victoria’s Royal Commission into Crown Resorts has lashed out the company’s biggest shareholder James Packer and the shadow of influence he cast over the group’s board as he finds it is no longer suitable to hold Victoria’s only casino licence
In his final report, Commissioner Ray Finkelstein highlighted how Mr Packer commanded loyalty among the company’s former directors, including former AFL chief executive Andrew Demetriou and advertising veteran Harold Mitchell.
Mr Finkelstein found Crown’s board “failed to carry out its responsibilities to ensure that the organisation satisfied its legal and regulatory obligations” and “many senior executives involved in the misconduct were indifferent to their ethical, moral and sometimes legal obligations”.
But he said the influence of Mr Packer and his Consolidated Press Holdings loomed large, confirming the NSW Bergin inquiry finding that it “encouraged Crown to put profit ahead of other motives for action’’.
As a result Mr Finkelstein that Mr Packer be forced to sell down his 37 per cent stake in Crown to 5 per cent within three years.
“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. Those directors and managers were committed and steadfast in their devotion to assisting Mr Packer achieve his business pursuits,” Mr Finkelstein said.
ANDREW DEMETRIOU
In particular, he highlighted Mr Demetriou’s relationship with Mr Packer, saying the former AFL supremo “regularly shared confidential Crown information with Mr Packer, including providing summaries of Crown board meetings”.
“The extent of Mr Demetriou’s dedication to Mr Packer is illustrated in an email sent from Mr Demetriou to Mr Packer in April 2019, in which Mr Demetriou said: ‘As previously said, I remain committed to serving the best interests of Crown and, most importantly, you”.
“When questioned how his relationship with Mr Packer — and the above statement — were consistent with his obligations as an independent director, Mr Demetriou distanced himself from the statement, and indicated that the best interests of Crown were first and foremost.
“When pressed, however, Mr Demetriou conceded that a reasonable bystander would question whether he was truly independent based on his statement to Mr Packer.”
Mr Demetriou resigned from Crown’s board in February following the release of the Bergin report.
“Mr Demetriou’s relationship with the Packer family resulted from a meeting between Mr Demetriou and Mr Kerry Packer (Mr James Packer’s father) before Mr Kerry Packer’s Death,” Mr Finkelstein said.
“Mr Demetriou was then introduced to Mr James Packer, who approached him directly with a request to join the Crown board in 2012 (which Mr Demetriou refused) and again in January 2015.
Mr Demetriou then ascended to the role of chairman of Crown Melbourne in January, 2020 before resigning 13 months later.
HAROLD MITCHELL
Mr Finkelstein also singled out Mr Mitchell’s relationship with Mr Packer, despite the Bergin inquiry unearthing no “direct evidence” of influence.
“There was, however, evidence of a large loan provided by Mr Kerry Packer to Mr Mitchell. Mr Mitchell denied that he had been influenced in his decision-making.”
KEN BARTON
Mr Finkelstein also highlighted evidence of Crown’s former chief executive and long-term chief financial officer, Ken Barton, sharing “confidential information”.
“Mr Packer conceded that, in November 2018, he instructed Mr Barton to prepare specific information and reports for him,” Mr Finkelstein said.
“Mr Barton provided financial reports to Mr Packer on an almost daily basis. Mr Barton acknowledged that, after Mr Packer’s resignation from Crown and CPH, Mr Packer gave him instructions regarding the information he required.”
HELEN COONAN and XAVIER WALSH
But Mr Finkelstein did not offer an opinion on Crown’s former chair Helen Coonan, who resigned in August, nor did he give a view on former Crown Melbourne chief executive Xavier Walsh.
This was despite Ms Coonan joining Crown Resorts as a non-executive director in 2011 before ascending to the position of chairman and then executive chairman in the aftermath of the NSW Bergin Inquiry after receiving the support of Commissioner Patricia Bergin and NSW Independent Liquor and Gaming Authority Chair Philip Crawford.
But her reputation was damaged in the Victorian commission when counsel assisting recommended a finding of unsuitability over he alleged failure to act on the many deficiencies of Crown as a director and not properly ensuring a gaming tax underpayment issue – which one executive estimated topped $200m – was disclosed to the commission.
“Neither Ms Coonan nor Mr Walsh will hold office by the time the Commission hands down its Report. Accordingly, it is not appropriate for the Commission to consider the position of these officers,” Mr Finkelstein said.
However, he did highlight an exchange between the pair over Crown’s tax underpayment.
“Mr Walsh gave the following evidence about the meeting. He said he raised with Ms Coonan what he described as a ‘legacy issue’, being the ‘tax issue’. Apparently, he did not go into any detail with Ms Coonan regarding the nature of the ‘legacy issue’,” Mr Finkelstein said.
“Mr Walsh was to ‘pull the information together’ and give it to the lawyers for advice and disclosure. Mr Walsh said that Ms Coonan was ‘definitely going to consider the matter.”
But Ms Coonan gave conflicting evidence.
“Ms Coonan agreed that she had directed Mr Walsh to ‘pull the information together’ and give it to Crown’s lawyers. However, Ms Coonan disagreed that she was to consider the issue,” Mr Finkelstein said.
“Nothing turns on the differing recollections. The conversation between the two on this topic was not long. It is not surprising that their recollections of what was said differs in some respects. In the end, Mr Walsh’s recollection is likely to be more accurate, it being supported by his notation.
“This is not to suggest that Ms Coonan’s account is inaccurate. It is simply an instance of a short conversation about which recollections differ. Perhaps it could be said that Ms Coonan should have followed up the issue to discover what it was about, as it related to a potential underpayment of casino tax, an obviously important matter. On the other hand, Mr Walsh described it, incorrectly as it turned out, as a ‘legacy issue’, implying that it only related to the past.”
ZIGGY SWITKOWSKI
Mr Finkelstein reserved his view on Ms Coonan’s successor Ziggy Switkowski, given regulatory approvals for appointment were still pending.
“Given the recency of his appointment and the fact that it remains subject to approvals,
the Commission has not considered the suitability of Dr Switkowski as an associate. ”For the rest of Crown’s directors and executives, Mr Finkelstein said he was confident they had the expertise and moral compass to turn the group around.
STEVE MCCANN
He praised Crown’s new chief executive Steve McCann, describing him as a “competent leader” who has quickly educated himself to the demands of running a highly-regulated casino.
The Former Lendlease boss took on the challenge of helping steer Crown towards suitability amid the fallout of the NSW Bergin Inquiry and made a short but memorable appearance at the commission when he became emotional describing the impact Crown’s troubles has had on rank and file staff members.
“Mr McCann is a competent leader well able to run a large and complex organisation,” Mr Finkelstein said.
“While at Lendlease he presided over significant changes, including improvements to safety, regulatory compliance and culture. It is clear that Mr McCann has carefully reflected on the challenges Crown faces, and the challenges he will face in his role. He recognises that Crown Melbourne’s employees are ‘looking for direction … [and] leadership’ and considers this his responsibility.
“Mr McCann has no experience dealing with a regulator but has been educating himself about the regulator’s role. Recently he has been involved in discussions with the regulator, particularly about Crown Melbourne’s need to be open and transparent.”
Mr McCann has overseen a recruitment campaign to fulfil the company’s depleted ranks and has negotiated new deals with Crown’s bankers to ensure a finding of unsuitability from the Victorian commission would not cause Crown to default on its debt. Mr McCann has promised to move to Melbourne to satisfy the once-ignored requirements that the boss of the casino live in Victoria.
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