Moves are afoot to limit potential compensation claims for hundreds of millions of dollars by Crown Resorts if the New South Wales regulator imposes conditions on its casino licence.
A private member’s bill to be introduced by the independent state MP Justin Field on Wednesday aims to override agreements entered into by former premier Mike Baird in 2014 which require NSW taxpayers to compensate Crown by up to 10.5 times the negative financial impact caused by any new conditions imposed on the licence.
The agreements created a “totally unacceptable” situation, Field said.
“The agreement between Crown and the government suggests any action taken as a result of this inquiry to prevent organised crime and money laundering at a future Barangaroo casino could trigger a compensation claim by Crown. That’s outrageous.
“The parliament and the regulator should never have had its ability to regulate in the public interest undermined as a result of a commercial agreement.”
On Wednesday morning the Independent Liquor and Gaming Commission heard submissions from lawyers for James Packer and his private company, Consolidated Press Holdings, which holds a 36% interest in Crown.
The commission can revoke the licence if it finds Crown unsuitable, but could also impose conditions, such as limiting the company’s dealings with junkets who recruit high rollers, or forcing Packer to sell down his holdings. That could come at an enormous cost to NSW taxpayers.
Last week counsel assisting the inquiry made closing submissions that Crown was no longer suitable to hold a high roller casino licence and that Packer and CPH were not suitable to be a “close associate” of the licencee.
Crown is yet to make its final submissions. it may offer further changes and conditions on the licence that would make it suitable.
On Wednesday morning counsel for Packer and CPH, Noel Hutley SC, rejected the recommendation that Packer was no longer suitable to be a close associate, and that he had been acting as a de facto director of the casino giant, despite leaving the board in 2018.
One of the main reasons for finding Packer unsuitable to be a close associate was an incident in 2015 in which Packer made threats via email to the head of a private equity firm, which CPH wanted to support a move to take Crown private.
In evidence Packer agreed this was “shameful” and “disgraceful” and not appropriate behaviour by a director of a public company. But he said he had untreated bipolar disorder at the time.
Hutley said his client had been in the grip of “a profound psychiatric illness”.
“We would expect the commission to show compassion and understanding,” he said. “There is no evidence to suggest that any such conduct would be repeated.”
The inquiry heard more about Packer’s illness in a confidential session.
Packer resigned in 2016 and after a brief return as a director ceased any formal positions with Crown in 2018.
But counsel assisting said he continued to have a profound impact on the management of Crown to the extent that he was acting as a de facto director.
Hutley said this characterisation was wrong in law and on the facts.
He said the services agreement with Consolidated Press Holdings and the major shareholder protocol, which dealt with the company’s interactions with Packer, had conferred benefits on Crown and had been entered into willingly by Crown.
He said it was done so that Crown could continue to get Packer’s advice and expertise on the casino business.
“It was done for profit maximising reasons. It’s entirely rational,” he said.
Hutley said emails that showed Packer was regularly kept up to date on the company’s finances, and took an active interest in the financial and management affairs of the company, were “wholly appropriate”.
“There is no suggestions that any harm came to the company during this period as a result of Mr Packer’s advice. Not a shred,” Hutley said.
“None of this should bear adversely on his suitability. They were sensible and right views to express.”
The hearing continues.