Posted on: February 10, 2021, 11:04h.
Last updated on: February 10, 2021, 11:34h.
Two James Packer loyalists have resigned from the Crown Resorts board in the wake of a damning report that leaves the Australian casino giant fighting for its gaming license in New South Wales.
Michael Johnston and Guy Jalland represented Crown’s biggest shareholder, Packer, on the board. Both handed in their notice on Wednesday morning.
Twenty-four hours earlier, Crown had been deemed unsuitable for licensing by former NSW Supreme Court judge Patricia Bergin, who chaired a year-long public inquiry into its operations.
Her decision is not legally binding and must be ratified by the NSW gaming regulator, ILGA. But it puts Crown’s $1.7 billion casino in Sydney’s Barangaroo district at risk.
‘Poor Corporate Culture’
Bergin concluded that “poor corporate governance, deficient risk-management structures and processes, and a poor corporate culture,” prevailed at Crown.
She also found that the company was “facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction, and pursuing commercial relationships with individuals” connected to organized crime.
Johnston and Jalland are also key officials at Packer’s private investment company, Consolidated Press Holdings (CPH).
Bergin singled out Packer and CPH for criticism, suggesting the billionaire acted like a “de factor director” after stepping down from the board. Packer’s “dysfunctional influence” on the company had been “disastrous,” she added.
Meanwhile, of the two CPH officials, Johnston was criticized by Bergin for several failings, including Crown’s VIP strategy and junket review process. Crown failed to adequately vet the Asian junket operators with which it did business. This allowed it to be infiltrated by organized crime and money launderers, according to the report.
‘Blow Yourself Up’
Bergin said sweeping changes would be needed before the company could once again be considered for licensing. These are expected to include the resignation of CEO Ken Barton, whom Bergin declared to be “no match for what is needed at the helm of a casino licensee.”
Bergin also recommended that equity caps of 10 percent be placed on the company, which would mean Packer would be forced to divest himself of the majority of his 37 percent stake.
ILGA chairman Philip Crawford said Tuesday Crown would have to “blow itself up” to save itself.
The Crown Sydney property opened in December minus casino operations. The company was initially granted a license for the project in 2013, but this was revoked pending the result of the Bergin inquiry.
The project has always been controversial. Located on the Barangaroo waterfront, it’s Sydney’s highest building, at 890 feet. Critics say there was a lack of public consultation about a project that would become so transformative to the city’s skyline.
It has been dubbed “Packer’s Pecker” by those who consider it a phallic blot on the landscape.