Australian casino operator Crown Resorts is facing questions over the wisdom of opening its new Crown Sydney property while the fate of its gaming license is up in the air.
Patricia Bergin, commissioner of the New South Wales Independent Liquor & Gaming Authority (ILGA) inquiry into Crown’s suitability to hold a state gaming license, suggested Thursday that it was “inappropriate” for Crown to be proceeding with plans to open its AU$2b Sydney casino in December.
Bergin made the suggestion while questioning Crown director Jane Halton, who chairs the company’s risk management and compliance committees, regarding testimony from other Crown principals who exposed the company’s disinterest in compliance, particularly when it came to junket operators steering high-rolling Chinese gamblers to Crown Melbourne.
The inquiry won’t deliver its final report until February, and Bergin wondered if Halton had given any thought as to “the propriety or good sense” of opening a casino whose gaming licensee is undergoing a suitability hearing. Halton said she was unaware of any discussions within Crown regarding a potential delay to the December 14 opening of Crown Sydney.
Halton also said she felt that Crown’s former chairman John Alexander “pressured” her into signing her name to a full-page newspaper ad that accused media outlets of waging a “deceitful campaign” by reporting on Crown’s apparent disinterest in clamping down on money laundering at Crown Melbourne’s VIP rooms.
Some of the claims made in these ads, including how many junkets Crown did business with, were later exposed as inaccurate. Halton told the inquiry that she wouldn’t sign such a statement again.
Halton claimed that she’d pushed back against another Crown director’s attempts to use “completely inflammatory” language in targeting a former Crown staffer who turned whistleblower after being detained by Chinese authorities in 2016 for illegally promoting gambling to customers on the Chinese mainland.
Halton claimed that she still had confidence in Crown CEO Ken Barton, despite questioning his “judgment” regarding some Crown financial accounts through which alleged money laundering occurred. However, Halton said she’d lost confidence in senior Crown execs Barry Felstead and Joshua Preston following testimony regarding their roles in Crown’s questionable compliance commitments.
Earlier this week, director John Horvath claimed the revelations of Crown’s compliance failures came as a “complete shock” and “were not consistent with my understanding of how we conducted our business.” Adopting the ‘see no evil’ stance taken by other Crown execs, Horvath said he too had failed to look into the two financial accounts through much of the alleged chicanery concerned.
But unlike Halton, Horvath stood by the claims made in Crown’s newspaper ads, despite acknowledging that he’d only completed anti-money laundering training “about two weeks ago,” having previously considered briefings to the board sufficient to keep directors apprised of what was going on.
After an initial day of testimony in which he was caught consulting notes on corporate governance, independent director Andrew Demetriou was confronted Tuesday with an email in which he told Crown’s largest shareholder James Packer that he remained “committed to serving the best interests of Crown, and most importantly, you.”
Other Crown execs have been taken to task by the inquiry for providing Packer with internal financial data despite Packer having stepped down from the board and relinquishing any executive role with the company years ago.
Pressed by the inquiry as to the propriety of an independent director – whose role is to safeguard the interests of minority shareholders – pledging fealty to its largest shareholder, Demetriou said he “wouldn’t read much” into his email claims and that he hadn’t actually said Packer’s interests were more important than Crown’s.
On Thursday, the Australian Council of Superannuation Investors (ACSI), whose members hold around 7% of Crown’s shares, issued a statement calling on shareholders to reject re-election bids by Halton, Horvath and fellow director Guy Jalland – a Packer nominee – when votes are held on October 22.
ACSI CEO Louise Davidson said there needed to be “accountability” for the “oversight of governance failures” identified by the inquiry. Davidson added that the revelations “reflect poorly on the board as a whole” and suggested that “a number” of other directors “should be considering their positions.”