Victorian Royal commission hears of management disconnect at Crown

Crown Resorts executive chair Helen Coonan did not follow up concerns it potentially underpaid taxes of more than $270m.

Helen Coonan fronts the Victorian royal commission on Thursday.

Doubt has been cast on Crown’s ability to transform and keep the licence for its flagship Melbourne casino after it emerged that executive chair Helen Coonan did not follow up concerns it potentially underpaid taxes of more than $270m, while the group has been accused of seeking to interfere with the Victorian royal commission, revealing the “old Crown” is still plaguing the company.

Concerns the company is yet to overcome poor communication between management and the board were laid bare when Ms Coonan gave evidence to the commission on its penultimate day of public hearings.

Her testimony also revealed she was “overruled” several times by former fellow directors and the company’s lawyers when she urged the company to adopt a less defensive tone during the NSW Bergin inquiry last year and when dealing with the media.

But concerns about Crown’s communication policies were raised as late as March this year, putting the spotlight on the company’s suitability to hold its Melbourne licence.

Ms Coonan admitted she did not follow up on concerns from Crown Melbourne chief executive Xavier Walsh that the company had potentially underpaid hundreds of millions of dollars in taxes to the Victorian government.

But she said Mr Walsh did not provide her with the full details at the time they spoke in March, and she didn’t inquire further because he led her to believe the problem had been “cured” and referred it to Crown’s lawyers instead. “He didn’t mention an underpayment at all, let alone the amount,” Ms Coonan said.

“I can’t do everything … day by day, follow every direction to every person in the business.

“With great respect, I think I took the right action.”

Despite saying the tax underpayment was “not front of mind”, Ms Coonan said the James Packer-backed company was well on the way to transforming itself and was suitable to hold a casino licence. Mindful of blaming individual executives, including Mr Walsh, she said that the company’s failings, which included previously reported instances of money laundering at its Melbourne Casino and the tax underpayment were in the past and symptomatic of the “old Crown” linked to Mr Packer — despite Mr Packer himself asking Ms Coonan to join Crown’s board in 2011.

Crown Resorts executive chair Helen Coonan appears at the royal commission in Melbourne via video link. Picture: NCA NewsWire / David Crosling

Ms Coonan adopted a conciliatory tone at the commission, saying she welcomed the scrutiny, and attempted to allay commissioner Ray Finkelstein’s concerns that Crown Resorts was centralising its operations away from Melbourne — a potential breach of its agreement with the state government — saying the company’s new $2.4bn casino at Barangaroo would not become its flagship.

But counsel assisting the royal commission Adrian Finanzio said companies should not rely on expensive royal commissions to clean up their act.

“We’re glad to be of help to Crown. I’m saying that sarcastically,” Mr Finanzio said.

Mr Finanzio attempted to prove vestiges of the ‘‘old Crown’’ remained, revealing that the company recently wrote a letter to Victorian Gaming Minister Melissa Horne, stating it “was not in the public interest” for the commission to rule it could no longer operate its Southbank casino.

Commissioner Raymond Finkelstein said the heavily redacted letter appeared to have “one stated rather than unstated purpose, which is to avoid a particular finding that the commission might make”.

“I wouldn’t ever read it as an attempt to interfere with what I might do … But on a plain reading, the way you could achieve the objective of this letter and guarantee what you didn’t want (to) happen wouldn’t happen is to stop the commission altogether,” he said.

Ms Coonan said the company was only trying to alert the government to the “catastrophic ­consequences” that an adverse ruling could have.

“I don’t respectfully agree with that because, for example, if there would be the finding that was contemplated here … there are quite catastrophic circumstances and implications that have implications for the government and presumably they may be able to do something about it,” she said.

Ms Coonan was vaulted to the top job at Crown Resorts after the NSW Bergin inquiry ruled the company unsuitable to operate its $2.2bn Sydney Barangaroo casino. Her reform program has led the NSW gaming regulator to declare the company may become suitable before year’s end.

She said her knowledge of Crown’s past wrongdoings was limited by management who “withheld or channelled” information “in a different direction”, revealing a gulf between the board and senior leadership.

Ms Coonan added that her past attempts at reform had also been blocked by directors loyal to Mr Packer, including a move to oust former CEO Ken Barton as the Bergin inquiry drew to a close.

“The board did not support me in that. Ms (Jane) Halton did, and Mr (John) Horvath, but no one else.”

Ms Coonan rounded out her appearance by renewing her pledge to the Bergin inquiry to “stay the course” on Crown’s reform efforts.

She said she hoped she could achieve her goal of reforming the company before stepping aside from the top job at the company’s annual meeting in October.

“I have only ever put myself forward on an interim basis to stabilise the company and get it into a position where it is on the road to suitability in NSW,” she said.

The commission will reconvene tomorrow to hear evidence from its own independent experts, tasked with evaluating Crown’s culture and money laundering controls. It will report to the Victorian government by October 15.

Separately on Thursday, the Victorian Commission for Gaming and Liquor Regulation (VCGLR) announced it will conduct an independent investigation after five former inspectors made allegations the regulator allowed criminal activity to flourish at Crown’s Melbourne casino.

Commission chair Ross Kennedy said the investigation would be conducted by “eminent QC” Dr Ian Freckelton and start immediately. “The VCGLR intends to make the outcomes of Dr Freckelton’s investigation public,” the commission said.