What I’ve heard at this inquiry has been a shock to me: James Packer

James Packer admitted he gave no thought to the NSW ban on Crown dealing with companies related to Stanley Ho before he sold a strategic holding.

James Packer on his second day of testifying before the Crown casino inquiry.

James Packer has admitted he gave no thought to the NSW gambling regulator‘s ban on Crown Resorts dealing with any companies related to the late Hong Kong casino magnate Stanley Ho before he sold a strategic shareholding in the Australian casino giant last year.

Mr Packer’s private company agreed to sell a 19.9 per cent shareholding in Crown last May to Hong Kong billionaire Lawrence Ho’s Melco Resorts group, in which Mr Ho’s father Stanley held an interest, but Mr Packer revealed on Wednesday that he had “forgotten” the prohibition.

“I left it to my legal team and I gave it no thought,’’ he said in his second day of giving evidence before a public inquiry by the NSW independent Liquor and Gaming Authority (ILGA) called to investigate whether Crown had breached the terms of its Sydney casino licence by agreeing to the share sale.

“I had regarded Melco Resorts as Lawrence’s company, not Stanley’s,” Mr Packer said.

Key lieutenants and executives of his private company Consolidated Press Holdings last week claimed they also made the same assumption but admitted they didn’t check on the issue before proceeding with the sale.

A negative finding by ILGA that Crown was in breach could see tough conditions placed on the licence for its Barangaroo Casino, which is due to open in mid-December, or in a worst case scenario it could even be scrapped.

Giving video evidence for a second day from his luxury $200m yacht, Mr Packer also said he accepted he was partly to blame for the risk management failures at Crown that led to the sensational arrest of its staff in China in October 2016.

But he also blamed the affair, which he said forced Crown to sell out of its Macau casino joint venture with Melco, on then Crown chairman Robert Rankin and chief executive Rowen Craigie

“I believe Mr Rankin and Mr Craigie let the side down,’’ he said.

While he disputed the arrests were caused by a profit-obsessed corporate culture at Crown that drove an aggressive push to make big sales in China despite news of a Chinese government crackdown on casino promotion, he could not provide another explanation. “A lot of the things that I‘ve seen or heard in this inquiry have been a total shock to me,” he said, describing himself as ”incredibly upset” by the corporate culture the inquiry has exposed.

He agreed the fact the Crown board was not told the company‘s staff in China were expressing fears for their safety was a failure of the risk management processes.

The inquiry commissioner, former NSW Supreme Court judge Patricia Bergin, has already suggested that damning evidence presented to the inquiry about Crown’s risk management, compliance and governance failures could impact its Sydney licence conditions.

She has also expressed concern about the degree of control exercised by Mr Packer over Crown after he left the board in March 2018 citing mental health issues, which has been highlighted in a string of emails presented to the inquiry.

A secret agreement struck later that year between Crown and CPH allowed the billionaire to be provided with confidential information about Crown.

Counsel assisting Adam Bell on Wednesday asked Mr Packer whether he continued to act as though he was in charge of Crown — he then held a shareholding of 46 per cent in the company — by telling executives what to do.

“I expected them to listen to me and push back if they disagreed,’’ Mr Packer replied.

Mr Bell then asked Mr Packer if he was acting as though he was still a director of Crown.

“I was under the impression I could communicate the way I was communicating,’’ he replied.

Commissioner Bergin was also critical of Mr Packer’s response to why he proceeded with the share sale to Melco Resorts after he had earlier in the day agreed he was aware of the regulatory requirements. “Well, it‘s obvious that you didn’t think about it because otherwise you would have done something about it,” she said.

British Virgin Islands company Great Respect Limited, with links to Stanley Ho, is on the secret “banned” list contained in the licence agreement for Crown’s Sydney casino.

Great Respect is Melco International’s largest shareholder, which in turn holds a 20 per cent interest in Melco Resorts, which bought the Crown shares.

Melco only proceeded with the purchase of a 9.9 per cent stake in Crown and the second tranche of the sale was put on hold pending regulatory approvals and the findings of the ILGA inquiry.

But in February last year Melco sold its 9.9 per Crown shareholding to US private equity giant Blackstone Group.

Mr Packer said he agreed to terminate the second half of the share sale deal, despite there being no obligation to do so, because: “I would never hold Lawrence to something he didn’t want to do.”

He recalled Mr Ho saying “COVID was a once in a 100 year threat to his casino business. He also wanted to concentrate his efforts on bidding for a licence in Japan.”

Mr Packer earlier revealed Crown and Melco considered a full merger in 2019 but the plan didn’t suit both parties after US casino giant Wynn Resorts abandoned a $10bn bid for Crown due to the concern of the Macau gaming regulator.

The deal would have seen Mr Packer emerge with a passive shareholding in Wynn and no board seat.