Crown Resorts board didn’t ask enough questions, says Harold Mitchell

Crown Resorts director Harold Mitchell has acknowledged the casino company’s high-powered board did not ask enough questions of management.

James Packer with Crown Resorts director Andrew Demetriou. Mr Demetriou will face the NSW Crown hearings on Monday. Picture: Aaron Francis

Crown Resorts director Harold Mitchell has acknowledged the casino company’s high-powered board did not ask enough questions of management as a spate of scandals engulfed the James Packer-backed group in recent years, but vehemently rejects questions about their independence.

As Crown’s directors, including the company’s first-ever independent chair Helen Coonan, prepare to front a public inquiry into the company this week, on Friday Mr Mitchell said the long tenure of a number of Crown directors was “appropriate”.

But asked if he agreed that the Crown board was not “inquisitive” or did not ask enough questions of management generally when things went wrong, the former advertising doyen replied: “Looking back, yes, of course. It is silly to deny anything other than that.”

Mr Mitchell, Crown’s second-longest-serving independent director after former federal chief medical officer John Horvath, denied that staying on the board for too long dulled a director’s independence. Mr Mitchell has been a director since 2011.

“I’d be reluctant to write a rule to say if you have been there a long time you’re no longer as independent as you might be or as good as you might be,’’ he said.

“In our case, we well understand the need for succession that is before us … younger people, a balance of gender — that’s a very good thing to do … the chairman is very alive to this fact.”

Former AFL chief Andrew Demetriou, who was appointed chair of Crown Melbourne in January, will be the next independent director to take the stand on Monday.

In January Mr Demetriou toured the site of Crown’s One Queensbridge project in Melbourne with Mr Packer when he made a brief visit to Australia.

He looks set to be interrogated about revelations last week in the inquiry that he provided information directly to the billionaire.

Two pages of emails from December 2018 revealed Mr Demetriou gave Mr Packer his observations on information provided by management at a board meeting.

“As agreed, I promised you I would give you feedback post the board meeting about some of my observations together with explanations from management,’’ he wrote to Mr Packer, before summarising his views in eight bullet points. His email ended with: “These are just my thoughts, James. I will continue to support you and Crown.”

A string of emails presented to the inquiry last week revealed the extent of the information being provided to Mr Packer by Crown executives over the past 2½ years. But Mr Demetriou was the only independent director highlighted in the exchanges.

The degree of control exercised by Mr Packer over Crown has been seized upon by the inquiry commissioner Patricia Bergin as a key factor in the failure of the company’s governance processes.

On Thursday, in an extraordinary acknowledgment at the conclusion of three days of testimony via video link from his $200m super yacht, Mr Packer signalled he was prepared to reduce his ties to Crown.

He also admitted he would be prepared to scrap a deal that has given him access to Crown’s confidential information since he resigned as director in 2018 for mental health reasons.

Ms Bergin, a former NSW Supreme Court judge, could force Mr Packer to sell down his 36 per cent stake in Crown to a passive position if she finds he is not a fit and proper person to be an associate of the licensee company for Crown’s Sydney casino.

Crown could also lose the licence if it fails the same test. The Barangaroo casino is scheduled to open in mid-December, ahead of the expected release of Ms Bergin’s report in February.

The Victorian gaming regulator, the VCGLR, has also issued a notice to Crown requiring it show cause why disciplinary action should not be taken over the failures in its due diligence processes for the supervision and approval of junkets, which have been highlighted in the NSW inquiry.

Crown has 28 days to respond to the notice, which was issued at the start of October, and the regulator has the power to cancel or suspend Crown’s gaming licence or take lesser actions including requiring the company to improve its internal controls.

Ms Coonan is set to outline in her evidence to the inquiry later this week the actions Crown has already taken to ensure its failed internal systems are being fixed, which have included banning any associations with junket operators until June 30 next year.

On Monday Mr Demetriou also looks set to be questioned about his involvement in failed education group Acquire Learning & Careers, which collapsed in 2017.

In May Acquire’s liquidators filed a claim in the Federal Court against Mr Demetriou’s family trust to claw back payments made while he was at Acquire.

Mr Demetriou has long claimed that he was only a member of the Acquire advisory board and not a director, but executives and directors examined in hearings last year gave evidence that he was a key figure at the group.

Mr Demetriou will also be challenged about a newspaper ad released to the ASX last year by the Crown board rejecting serious media allegations against the company, which the inquiry has established contained a number of errors.