The billionaire businessman James Packer should no longer be considered suitable to be a close associate of casino operator Crown Resorts, the inquiry into Crown’s New South Wales licence has been told.
The counsel assisting the inquiry, Adam Bell SC, has begun making closing submissions to an inquiry by the Independent Liquor and Gaming Authority, which could potentially lead to Crown losing its licence.
Crown is due to open its six-star resort and casino at Barangaroo on 14 December but the NSW premier, Gladys Berejiklian, said on Thursday she was willing to block the opening if that was the proper course of action.
“I will get advice from the ILGA as to whether that should proceed in December and I am willing to take a decision not to if that’s the advice,” she said.
Bell submitted that Packer was no longer suitable because he said Packer had admitted that threats he made by email to Mr X, an executive at a private equity firm, in 2018 were “ disgraceful”, “shameful” and inappropriate for a director of a public company.
He said no medical evidence had been presented to suggest that the intemperate email was due to Packer’s bipolar disorder, as Packer suggested in the witness box.
Mr X is believed to be Ben Gray at TPG. At the time Packer was seeking $1.5bn to enable him to take Crown private, but TPG was offering only $400m.
The details of the threat were not disclosed but the inquiry heard that Mr X was put in fear of his life.
Bell said the presiding commissioner, Patricia Bergin SC, should “reconsider his approval as a close associate of the licensee”.
Such a finding would require Packer to sell down his 36% shareholding to 10% or lower and force him to sever his active involvement in the casino group that he founded two decades ago.
Bell has also submitted that Packer was acting as a de facto director as defined in the Commonwealth Corporations Act, which if accepted by Bergin could lead to several other implications for Crown.
Bell said a secret controlling shareholder protocol, under which Packer continued to receive information about Crown’s operations even after he left the board, opened the company to an extraordinary level of influence by Packer.
Information was regularly provided to Packer by the then financial officer Ken Barton, by key executives in the VIP business Barry Felstead and Ishan Ratnam, by the executive chairman John Alexander, and by directors Guy Jalland, Michael Johnston and Andrew Demitriou, who regularly briefed him on what happened at board meetings.
“This was rather extraordinary for a person who had already departed the board,” Bell said.
He also said that Packer was regularly issuing instructions, though Packer in his evidence had characterised these as requests.
Bell pointed to emails from Packer in which he demanded that the 2020 financial year forecasts be sent to him in Aspen, and others where he demanded that he be given “forecasts he could believe in”.
In another email exchange with the executive chairman, Alexander pleaded he “needed authority over everything” in order to control Crown’s costs. Alexander was proposing salary cuts, but was told “not to upset Barry [Felstead] and Ken [Barton]”, two executives very loyal to Packer.
If Bergin agrees Packer is a de facto director this could have significant ramifications for findings on the governance of Crown, and potentially for Packer and others in relation to directors’ duties.
Bell has submitted that Crown can be imputed to have had actual knowledge of the transaction Packer and his private company, Consolidated Press Holdings, negotiated with Melco Resorts to sell its 19.99% interest in Crown because of the knowledge that some directors – Packer, Johnston and Jalland – had of the deal prior to its announcement.
The Independent Liquor and Gaming Authority was not informed of the Melco transaction prior to it being signed. One of the issues is whether Crown has breached a special clause in its licence, which prevented interests associated with Stanley Ho having an interest in the casino licence.
The clause was inserted by the NSW government because of concerns about the late Stanley Ho’s connections to organised crime.
One of the shareholders in Melco is Great Respect, a family trust company, which had links to Stanley Ho and his family and which was in the list of Ho associates.
The inquiry is hearing counsel assisting’s submissions on allegations that Crown turned a blind eye to money laundering and did business with junkets linked to organised crime.
Counsel for Crown, Packer and CPH are expected to dispute a number of the submissions made by Bell.
Casino licences in NSW are regulated by the independent ILGA. It would need to either suspend Crown’s licence or order that it not open to prevent the scheduled December opening. The authority could also require special legislation if Crown is intent on opening.
