Crown Resorts board cleanout underway, says chairman Helen Coonan

Crown Resorts chairman unveils a raft of governance and personnel changes at the James Packer-backed casino giant as it fights to retain the licence for its new Sydney precinct.

Crown director Helen Coonan appearing at the NSW Independent Liquor and Gaming Commission inquiry. Picture Supplied

Crown Resorts chairman Helen Coonan has unveiled a raft of governance and personnel changes at the James Packer-backed casino giant as it fights to retain the licence for its new Sydney precinct, after weeks of damning revelations about its failed governance and risk management practices and the pervasive influence of Mr Packer over the company.

The former federal minister on Friday told a public inquiry by the NSW Independent Liquor and Gaming Authority into Crown’s suitability to hold the Sydney licence that she had already started discussions with some long-serving directors about their retirement plans and she was reviewing the concept of “independence” on the board.

“I think we need to go through a very fulsome exercise of looking at the right framework for independence. That includes longevity through independence of thought and ability to bring skills to bear on the board,” she said.

“I’ve commenced conversation with some directors relating to an orderly process for them to leave the board and to get on some more independent directors.”

Her comments come after Mr Packer said last week that he expected the Crown board would be more independent in the future and revealed he would be prepared to wind back his control of the company.

“I think that is a fair reflection of the way we need to go forward. Mr Packer’s insights in that respect are right,’’ Ms Coonan said.  “I do think that we need to have a careful and considered view about succession and board renewal, board refreshment.”

It was revealed at the inquiry this week that Crown director Andrew Demetriou sent an email to Mr Packer in April 2019 regarding a possible takeover of Crown by the Wynn Resorts casino group, which read: “I remain committed to serving the best interests of Crown and, most importantly, you.”

Mr Demetriou had also told Mr Packer a year earlier that Crown was too focused on legal and regulatory compliance and not enough on growing revenue, and promised to provide him with insights on management after a board meeting.

All of the Crown directors who have appeared at the inquiry have also noted their lack of rigorous training in anti-money laundering (AML) procedures, while some have highlighted the lack of induction training upon joining the board.

Ms Coonan said all of the board had recently completed a questionnaire and that she had assembled a skills matrix to improve on-boarding for new directors and other training.

“I personally have a good understanding of AML and I think that is something every director needs to have,’’ she said.

She also revealed Crown had completely changed the structure of its board papers, which would lead to much more detailed minutes, which has been an issue at the inquiry.

The revelation of the board shake-up came after Ms Coonan revealed that Crown’s Australian Resorts CEO Barry Felstead would leave the company by the end of the year.

On Thursday Crown director Jane Halton told the inquiry she no longer had confidence in Mr Felstead and Crown’s legal boss Joshua Preston, after the inquiry had highlighted their extensive involvement in Crown’s risk management and governance failures.

The 2017 Lexus Ball for Telethon at Crown Perth. Barry Felstead & James Packer. Picture: Matt Jelonek.

“Mr Felstead was getting very near to wishing to retire. I think recent events have escalated his desire to do that and he’ll part with the company around the end of the year,’’ Ms Coonan said.

Former Crown executive chairman John Alexander has also been another casualty of the inquiry, taking responsibility for risk management failures at the company. He is not seeking re-election at next week’s annual general meeting.

Other Crown directors up for re-election at the meeting — Ms Halton, deputy chairman John Horvath and Guy Jalland, the CEO of James Packer’s private company Consolidated Press Holdings — are facing a significant investor backlash.

However Ms Coonan strongly backed controversial Crown director Michael Johnston remaining on the board, despite evidence presented to the inquiry that he failed to inform the board of risks to Crown’s staff in China before 19 were arrested in October 2016.

Mr Johnston, the financial controller of Mr Packer’s private company, has also been criticised by inquiry head Patrica Bergin for “wearing too many hats” at Crown and for not declaring conflicts of interests between his obligations to Mr Packer and to Crown.

Ms Bergin has expressed concern about the degree of control exercised by Mr Packer over Crown, given that CPH holds a shareholding of only 36 per cent in Crown following last year’s sale of shares to Melco Resorts, which were subsequently sold to private equity giant Blackstone.

Mr Johnston has also been criticised for providing confidential information about Crown’s profit forecasts to Melco before Mr Packer sold his shares to the Hong Kong group last May.

Crown Sydney. Supplied imag

Ms Coonan echoed the comments of Crown director Harold Mitchell last Friday that Mr Johnston and CPH would no longer be providing management services to Crown under an existing services agreement between the two companies.

Crown has also provided confidential information to Mr Packer under the terms of a controversial and until recently confidential controlling shareholder protocol (CSP), since he left the board in March 2018.

Ms Coonan said information flows under both agreements had been halted and that the CSP had been reviewed by law firm Minter Ellison in June after she was concerned about too many “ad hoc” exchanges taking place.

She described Mr Johnston as a “very fine, dedicated and diligent board director” who was “wearing a lot of hats”.

“I plan to relieve him of some of his hats,’’ she said.

On Friday morning Ms Coonan was also questioned about her knowledge of the risk to Crown staff in China prior to the arrests.

Despite numerous Crown executives being aware of the Chinese government’s growing hostility towards foreign gambling promoters, the issue was never raised at board level and Ms Coonan said it demonstrated a failure of risk management and company culture.

But she said the company had not reviewed the governance failures that led to the scandal because it might weaken its defence in a shareholder class action, which was launched in the wake of the share price plunge that followed the arrests.

She also noted there was a review of the affair by the Victorian Gaming Regulator still to be completed, as well as the findings of the NSW inquiry itself.

“There’s not been a bottom-up, forensic pulling apart of it,’’ she replied when Ms Bergin asked “why would it matter” if Crown’s legal case might be compromised.

“Having not done it at the time, here is a good case for a review to see if there is anything we have missed,” Ms Coonan said.