Crown Resorts chair Jane Halton ’struggling’ with push to make offshoots independent

Crown Resort interim chairman Jane Halton says she is struggling with some recommendations of a recent royal commission into the casino group.

Senior figures for Crown Resorts are struggling to understand how a new corporate governance regime would work. Picture: AFP

Crown Resorts interim chairman Jane Halton says she is struggling with the practicality of key recommendations put forward by the Victorian royal commission that found the James Packer-backed group unsuitable to operate its Melbourne casino.

Last Tuesday the Victorian government released the commission’s final report, which found Crown’s “disgraceful” conduct made it unsuitable to operate its flagship property and recommended a host of ways the government could prevent future corporate governance breakdowns at the casino.

As well as recommending Crown be placed on probation for two years under the oversight of a state-appointed special manager, the commission's head – Raymond Finkelstein – suggested Crown Melbourne’s subsidiary board have a majority of independent directors without links to the parent company.

Giving evidence to a separate Western Australia royal commission into the group’s Perth casino, Ms Halton – who will shortly step aside for permanent chair Ziggy Switkowski – said she struggled to see how a wholly owned subsidiary could function with a majority independent board.

“I struggle with how that would work in the context of something that’s a subsidiary,” Ms Halton said.

“Where I have seen subsidiaries subject not just to different Commonwealth or state jurisdictions, but to different country jurisdictions, subsidiaries in that context have … 50 per cent independent directors and 50 per cent who are part of or connected to the parent.

“I think that works well.”

Ms Halton’s opinion on the independent director recommendation is shared by other members of the Crown Resorts board.

Last Friday new Crown Resorts director and Crown Perth chairman Bruce Carter told the Perth commission that “Commissioner Finkelstein’s findings are problematic”.

“If I’m an investor into Crown or a banker into Crown and I then invest into a subsidiary that I can’t control, and that subsidiary goes rogue on me, I expect to be criticised,” Mr Carter said.

“I‘m not saying it can’t work; I’m just saying with my corporate experience, I don’t think it will work. But if that’s what is put before us, that’s what we’ll have to deal with.”

The opinions of Ms Halton and Mr Carter add further doubt to whether all of Mr Finkelstein’s 33 recommendations will become enshrined in law as he intended.

Interim Crown Resorts chair Jane Halton giving evidence to Western Australia's Royal Commission into the group’s Perth casino.

Crown’s major shareholder James Packer told the Perth commission last week his lawyers were contesting the timeline of a recommended mandatory reduction of his 37 per cent stake in the company.

The Victorian government has said it supports Mr Finkelstein’s findings “in principle,” but has only moved to legislate recommendations primarily relating to the appointment of the special manager.

Ms Halton said Crown would consult the government over its intentions, as she found another recommendation that Crown Melbourne have an independent management team that “do not report to, or take instructions from” anyone but its subsidiary board “potentially quite problematic”.

“My expectation is that trying to work through what some of these actually mean is one of the things that will have to occur,” she said.

“It sounds – on the face of it – to me like a completely freestanding business, or it could on one reading mean that, and I think that’s potentially quite problematic.”

The Perth commission has also taken an interest in the extent of Crown’s control over its Western Australian subsidiaries, collectively known as Burswood.

Counsel assisting the commission has attempted to mount the argument that it is not in the interest of Western Australia if the only casino in the state be operated by a company with competing assets.

Ms Halton the Crown Resorts board was drafting a new charter for the Burswood board that would clearly define its role, and it was open to expanding it to encompass additional independent directors.

“I don’t support the running or the management of Burswood anywhere other than Burswood, and I need to be clear about that,” she said.

Later, Ms Halton told the commission Crown would be open to reintroducing commission-based international patron play in WA if the attitude of regulators changed, following a move to ban the practice alongside “junkets” in the state earlier this year over money laundering risks.

She also promised that higher-ups still at the company who may have known about past controversies - like the underpayment of Victorian gaming tax - “will receive a higher level of scrutiny” going forward.

“If they do not do the right thing, there won’t be very much sympathy for them,” she said.

Separately on Friday Crown Resorts announced a mandatory vaccination policy for all staff and visitors at its properties.

The policy applies immediately in Sydney and Melbourne and will come into force at Crown Perth before January 31, in line with West Australian health directions.