Saint Helen’s wheel of fortune: Coonan faces challenge to prove she’s up to Crown job

There are understandably questions among investors about the former Howard government minister’s ability to run a business as complex as Crown.

Crown Resorts chair Helen Coonan and departing CEO Ken Barton last year. Picture: David Geraghty.

Helen Coonan on Friday embarked on her first ever analyst and investor roadshow in charge of a sharemarket-listed company, undaunted by the massive task in front of her.

There are understandably questions among investors about the former Howard government minister’s ability to run a business as complex as Crown, now with operations across three states, and why she is being paid $2.5m for the privilege.

Even if it is only for the short term.

Especially given the loss of key executives and directors from the business in recent months and the deep staff morale issues within Crown in the wake of the fallout from the Bergin inquiry.

Many observers also continue to be bemused by her new “Saint Helen” status, given Coonan has been on the Crown board since December 2011 while massive governance and risk-management failures took place that were exposed by the bombshell Bergin report.

She is a previous chairman of the company’s audit and governance committee.

But Crown’s big institutional investors, her fellow directors and NSW gaming regulator chairman Philip Crawford now have no choice but to back the company’s new executive chairman to deliver the reforms to make Crown suitable to retain its Sydney ­licence and to fight off fresh inquiries in Western Australia and Victoria.

Whether he likes it or not, Crown’s 37 per cent shareholder James Packer, fresh from missing a second dividend payment in succession from Crown after its latest interim results, also knows it is Coonan who holds the key to extracting some additional value from his investment.

For that reason, it looks like he will be patient enough to hang onto his shares, for the moment at least.

The start of Coonan’s investor roadshow on Friday ended the most tumultuous fortnight in Crown’s history, a day after the gaming giant reported a half-year net loss of $120.9m.

Four directors — John Horvath, Andrew Demetriou, Guy ­Jalland and Michael Johnston — have left the board.

Two others — Harold Mitchell and John Poynton — are under pressure from Crawford to follow.

Poynton’s ties to Packer have put his independence in question. It is believed Poynton asked Packer many months ago to be excused from a consulting agreement he had with the billionaire’s private company, Consolidated Press Holdings. But it was only severed last week. His previous ties to the Packer family are now coming back to haunt him.

Poynton declared this week he was “not a Packer acolyte” and was ready and willing to discuss the independence issue with Crawford, who has seemingly developed a penchant over the past week for putting words in Coonan’s mouth.

On Thursday, he told Sydney radio that he and Coonan believed Mitchell “needs to move on”. He said the same about company secretary Mary Manos on Monday.

While Manos resigned on Thursday morning, Coonan wasn’t so sure on the Mitchell issue three hours later in a media briefing, despite Crown’s biggest institutional investor, Perpetual, calling for him to step down.

“Changing directors on a ­casino board … is not a matter of just picking out a name, it is a complex process of probity and other approvals,” Coonan said.

“It’s a bit unrealistic to be throwing people [out] left right and centre because of the need to have carefully managed changes on the board.”

For the moment, Mitchell looks set to remain on the board, continuing his work as head of Crown’s remuneration committee with search firm Korn Ferry to find new directors.

Despite the pressure that continues to come from Crawford for Mitchell to resign, the former advertising king has privately vowed it is only Crown’s investors who can remove him, and he is eyeing the October annual meeting for a more graceful departure.

Whether shareholders, supported by Crown’s other remaining directors and even Packer — if it comes to a vote at an extraordinary general meeting — let him last that long remains to be seen.

Four big-name Crown executives — Manos, CEO Ken Barton, Australian Resorts boss Barry Felstead and chief legal officer Joshua Preston — have also quit in the past three months.

Barton might have gone much earlier if Coonan’s polite request at a board meeting late last year that he consider his position had been heeded.

But the numbers-savvy Barton, Crown’s former long-serving chief financial officer who boasts impeccable connections with the top bankers in the country, was resolved to see through the reform program that he started when he took over the CEO role in January last year.

For a time, Barton had the same resolve last week despite the Bergin report describing him as “unimpressive” and noting the NSW Independent Liquor and Gaming Authority “would be justified in concluding that it cannot have any confidence in dealing” with him.

Significantly, after Barton made a rush of additional statements to the inquiry in its closing weeks dealing with belated investigations into allegations that money laundering took place in Crown’s casinos, the Bergin report lamented that he would “not make appropriate admissions unless and until he is pressed to do so”.

While Barton knew he could not remain CEO given the findings against him, it is understood he did suggest to Coonan on February 10 that he could remain in a transitional role to help drive the reforms they had started together.

Apparently he believed it was fundamentally important to retain someone in the executive team who continued to drive Crown’s reformation, even if he had his critics who thought he lacked the “human touch” in his management. His critics called his thinking deluded.

With her typically collaborative and supportive demeanour, Coonan didn’t reject the idea outright. But a day later she knew there was no way Barton could stay.

Discussions then quickly turned to the terms of Barton’s employment contract and an exit strategy.

While director Andrew Dem­etriou was able to resign in an instant on the evening of February 11, the legalities and contractual ­arrangements surrounding the CEO’s departure were more ­complex.

After feverish discussions over the weekend, Barton’s formal resignation and Coonan’s elevation to the role of executive chairman was able to be announced to the ASX before the market opened on Monday morning.

Friends of Barton, who declined to comment when contacted by The Weekend Australian, say he believes he has become the fall guy for Crown’s multiple failings in its anti-money-laundering policies.

They say he has taken the hit for some of the big strategic errors of Crown’s lawyers Minter Ellison and the company’s deep cultural failings on the money-laundering issue.

Rival lawyers Allens are now working with Crown, while ­Arnold Bloch Leibler’s “Mr Fix-it” Leon Zwier is advising Coonan.

While Barton will be forever tainted by the inquiry, there can be no doubt he put Crown on the path to reform last year amid the chaos inside the company caused by the COVID-19 pandemic and the Bergin inquiry.

The appointment of the company’s first ever chief people and culture officer is about to be ­announced, following the recent hiring of former NAB executive Steve Blackburn as the new chief compliance and financial crimes officer.

Crown’s investors have welcomed the appointment of Blackburn, said to be “one of the best in the business”.

As the Bergin report put it: “Great hope has been expressed for Crown’s better future under his leadership in this area.” He starts his role in 10 days.

Crown’s AML team has now grown to 10 as part of the rollout of a new hi-tech program using the Sentinel AML software that will be monitored closely by regulators.

Crown has also started compiling Unusual Activity Reports and is working with consulting firms Promontory, Grant Thornton and Initialism on its AML issues.

Barton pulled together a $1bn debt package with Crown’s banks in a matter of weeks in March and April last year to get the company through a funding crisis following the overnight closure of its casinos as the pandemic took hold.

He will now remain at Crown until the end of the month after making fresh introductions to banks and ratings agencies for chief financial officer Alan McGregor.

While Crown has proposed changes to its risk management structures and retained external advisers to improve its corporate culture, the Bergin report expressed specific and serious concern about the company’s setting of risk appetite.

“There is the necessity to jettison the overuse of ‘management speak’. Some of the proposed mechanisms for defining the Crown board’s appetite for its tolerance for risk events are impenetrable,” it said.

“The fact that the Crown board had not at the date of the conclusion of the public hearings of this inquiry on November 20, 2020, proffered evidence that it had ­attended to these problems is a real and deep impediment to the proper management and proposed cultural changes of the ­organisation.”

While Coonan stressed on Thursday that Crown was setting a “cracking pace” on its long reform agenda, just two of the 17 reform actions it has pledged to undertake have so far been completed.

The fact that Crown is also facing a fresh inquiry in Western Australia, a licence review in Victoria and an investigation by financial crimes regulator Austrac also looks set to stretch its internal ­resources further at the worst possible time.

That is before further moves by class action lawyers and any ­potential actions by the corporate regulator, which is keeping its counsel as it works through the Bergin report with a fine-tooth comb.

The best Coonan can do is go full-speed to make the changes to ensure Crown can be found suitable to retain its Sydney licence to head off any major fallout from those inquiries.

She, Crown’s embattled staff and investors, and Packer will be praying that NSW gaming regulator chair Crawford will be proved correct after declaring this week that the casino group’s reformation could be achieved “within months, not years”.