Casino inquiry: Crown Resorts ‘blurred lines on reporting’

Inquiry commissioner Patricia Bergin has challenged James Packer’s private company for blurring reporting lines within Crown Resorts.

The planned opening of Crown’s Sydney casino next month will be considered by a special ILGA meeting next week.

The commissioner heading a public inquiry into the James Packer-backed Crown Resorts has challenged Mr Packer’s private company for blurring reporting lines within the casino giant, which probably contributed to the arrest of its staff in China.

Addressing the NSW Independent Liquor and Gaming Authority’s inquiry into Crown’s suitability to operate its Sydney casino on Thursday, counsel for Mr Packer’s Consolidated Press Holdings, Noel Hutley, said the failures in risk management that led to the China arrests were the fault of Crown management, not CPH.

Nineteen Crown staff in China were arrested in October 2016 and jailed.

Mr Hutley dismissed the assertion that Mr Packer’s creation of a special VIP working group led to risks to Crown’s staff in China not being reported to the CEO and board.

The group was focused on increasing the patronage of Chinese high-rollers to Crown’s Melbourne casino.

“Whatever failures there are, and you may well find there were very significant failures in reporting, one of the things it (the group) did not do was undermine those reporting structures,” Mr Hutley said.

“These structures failed without any assistance from the VIP working group. They just failed.”

But inquiry commissioner Patricia Bergin said it was a “fact” that the existence of the group did confuse clear lines of reporting.

“For whatever reason there were structures in place that seemed to, not intentionally, but seemed to blur the lines for the more junior people in the group,” she said.

She noted CPH executive and Crown director Michael Johnston’s was involved in the group because Mr Packer thought he had “particular skills” that might enhance the efficiency of the VIP business.

“The very existence of the VIP structure … was a problem that contributed to a lot of information not getting to where it should have gone,’’ she said.

The inquiry was told last week that Mr Packer and CPH‘s “deleterious” influence over Crown made the company unsuitable to retain the licence for the Sydney casino, whose planned opening next month will be considered by a special ILGA meeting next week.

Mr Johnston, CPH’s finance boss, has also been under fire at the inquiry on a number of fronts, including that he failed to report growing risks to the staff in China, shared with him by Hong Kong-based VIP executive Michael Chen, to then CEO Rowen Cragie or the wider Crown board.

But Mr Hutley maintained that Mr Johnston’s role in the VIP Working Group was limited and there was no evidence that any of the CPH parties “encouraged the pursuit of financial outcomes while disregarding non-financial risk”.

He also said that Mr Johnston received repeated assurances about the legality of Crown’s activities in China from other executives. Mr Hutley claimed an email Mr Johnston received in 2015 alerting him to the questioning of a Crown staff member by Chinese police was not reported to the Crown board or its risk committee as his contextual knowledge of the situation was limited.

“There is no basis for a finding that Mr Johnston knew of a risk of arrest or detention on the Crown group staff in China. It’s easy to suggest the warning signs were obvious in hindsight,” Mr Hutley said. But Ms Bergin said it was “odd” that Mr Johnston did not appreciate the importance of the email as he was made aware that Korean casino staff in China were arrested in the weeks beforehand.

CPH will continue its submissions to the inquiry on Friday to address assertions that Mr Packer set a “dubious tone from the top”.

Crown shares closed 24c lower at $9.51.