Western Australia’s gaming department admits it failed to address conflicts of interest while overseeing operations at Crown Perth. A royal commission in the state is investigating if its hands-off approach contributed to money laundering and problem gambling at the casino in Burswood.
The casino is regulated by the Gaming and Wagering Commission (GWC), described by the Western Australian as “a part-time, seven member board that meets monthly.” GWC lawyer Paul Evans said its members received “very limited remuneration” and relied for direction on the Department of Local Government, Sport and Cultural Industries (DLGSCI).
At the time the probe began, the state had no permanent casino officer, though departmental executive Jennifer Shelton was to be appointed to the role. Moreover, the commission has heard evidence that the state’s former chief casino officer went on regular fishing trips with two Crown employees. Commissioners will deliver their final report on the problem next month.
The review in WA continues as U.S.-based private equity giant the Blackstone Group continues in its bid to take over Crown Resorts. In mid-January, the company made an increased offer that values the Australian casino operator at almost AU$9 billion (US$6.5 billion).
Crown has received a revised non-binding proposal from Blackstone to acquire all of its shares at a price of AU$13.10 cash per share, increased from its previous offer price of AU$12.50.
Meanwhile, counsel for the DLGSCI outlined a revisions of the GWC and department processes that includes requirements to disclose personal relationships with Crown staff and to register gifts and other perks.
Fiona Seaward said the department is examining its code of conduct and “has accepted … that its historical management of conflicts of interest was not of the standard expected of a modern public sector organization involved in regulation. The department has taken a number of steps to address this issue.”
In testimony last year, Crown’s controlling shareholder, billionaire James Packer, told commissioners there were “many oversights” during his time overseeing Perth operations between 2004 and 2016.
Despite those oversights, a lawyer for Packer says that forcing him to sell down his shares is unfair. Victorian Royal Commissioner Ray Finkelstein recommended last year that Packer’s company, Consolidated Press Holdings (CPH), reduce its 37 percent holding in Crown to 5 percent by September 2024.
“CPH abused its position as a dominant shareholder,” said Finkelstein. “It has temporarily given up its power to control, or exercise control over, the Crown Resorts board.”
Packer attorney Noel Hutley said, “The basis of the recommendation from Commissioner Finkelstein was flawed, and fundamentally flawed. The recommendation could only be justified as some form of punishment which is wholly inappropriate.
“There was no finding in either the Victorian Royal Commission or the NSW Inquiry to the effect that CPH’s mere shareholding influenced Crown’s culture.
“To impose a shareholding cap is to restrict a prospective shareholder’s ability to buy shares and to restrict the company to which the cap applies to raise capital freely.
“No evidence has been provided, so there has been no consideration of the economic effect that might have, let alone how a sell-down might work and the adverse effect any sell-down might have on price.”
Last year, Packer acknowledged that things “should have been done differently” at Crown Perth, but claims he was unaware of money laundering activity there. Packer also said he was willing to take his medicine and would not resist a call to reduce his ownership stake.
Crown has been under fire for money laundering and other regulatory breaches in the Australian states where it does business. Royal commissions in New South Wales and Victoria found the company unfit to hold licenses, but gave it time to make amends. Crown is a major employer in all three states.
Hutley also said Packer’s influence on Crown is now “extinct.”
