Crown future depends on reform

The City of Sydney and the integrity of the casino that should operate on the spectacular Barangaroo site ultimately will be the winners from the scathing report to the Independent Liquor & Gaming Authority review, released on Tuesday. The 768-page report by former NSW Supreme Court judge Patricia Bergin was blunt. Crown Resorts was ­unsuitable to hold a gaming ­licence, it said. That finding will force the company and its largest shareholder, billionaire James Packer, to prove it should be allowed to operate the $2.2bn casino. The detailed forensic report has done a good job in affirming the integrity of the gaming industry. It paves the way for Crown and any other operator to get their business in order in terms of ownership, leadership and governance. Doing so would be essential preparation for running an international tourist attraction befitting a city such as Sydney with public confidence.

Ms Bergin left the door open for Crown to right the wrongs of its past to retain its Sydney licence. But she made it clear the company would need a sweeping overhaul, starting with its board and corporate culture, if it was to succeed. “The burden of reformation will be great,” Ms Bergin wrote. Much, it appears, will depend on Crown chairwoman Helen Coonan, a former Howard government minister. Ms Coonan’s “character, honesty and integrity (have) not been and could not be called into question”, the report says. She “accepted the serious corporate failings of Crown and notwithstanding those corporate failings is willing to, as she put it, stay the course”.

Former Crown chairman John Alexander, in contrast, “led Crown to disastrous consequences”, Ms Bergin wrote. Mr Alexander’s loyalty to the Packer family left him “either blind to the reality or lacking in candour” in confronting serious problems ­such as the “infiltration of criminal elements”. Crown chief executive Ken Barton was deemed so “unimpressive” that the ILGA “would be justified in concluding that it cannot have any confidence in dealing” with him. Ms Bergin described Mr Packer, who holds a 37 per cent stake in Crown, as a “deeply flawed” close associate of the company. His position as a major shareholder will be considered by the ILGA.

The report established that Crown was exposed to the risk, which was realised, of criminals using its bank accounts for money laundering. Crown’s risk management and corporate governance were compromised and the risks to the safety of staff working in China were not appreciated. Looking to the future, Ms Bergin wrote that if “Crown is to survive this turmoil” and reform itself, “there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation”.

Mr Packer was out on the front foot on Wednesday. In a statement, his private company, Consolidated Press Holdings, announced that two of his three nominee directors — Guy Jalland and Michael Johnston — would be resigning from the Crown board with immediate effect. “CPH and Mr Packer now believe it is crucial that Crown chairman Helen Coonan and the Crown board have the opportunity to meet with ILGA to progress Crown’s announced reform agenda,” the statement said.

Mr Packer’s third nominee, non-executive director John Poynton, terminated his consultancy agreement with CPH, a move that Crown says has severed CPH’s involvement with its board.

The Bergin report could have far-reaching consequences. The report and Crown’s responses are being examined closely by gaming regulators in Melbourne and Perth, where the company operates major casinos. It employs more than 5500 people in Perth and more than 10,000 in Melbourne, where it is Victoria’s biggest private sector employer. In December, the Victorian Commission for Gaming and Liquor Regulation brought forward its review into Crown’s entertainment complex by three years, citing the revelations around the Bergin inquiry, including evidence of money laundering. On Wednesday, West Australian Racing and Gaming Minister Paul Papalia instructed the State Solicitor to review the Bergin report’s “deeply concerning” findings as soon as possible. Austrac is formally investigating Crown for potential breaches of anti-money-laundering laws at its Melbourne casino.

Crown’s Barangaroo gaming floor could open as early as April, even with Mr Packer as a major shareholder, NSW Independent Liquor & Gaming Authority chairman Philip Crawford said. The idea that Crown “needs to blow itself up to save itself” he said, was “probably pretty close to the mark”.