Billionaire media heir James Packer, who holds a majority share of Australia’s Crown Resorts, has acknowledged that things “should have been done differently” at Crown Perth during his time overseeing the casino, but claims he was unaware of money laundering activity there.
Packer is also willing to take his medicine; he acknowledged in testimony before a Western Australia (WA) royal commission that he will not resist a call to reduce his ownership stake, now at 37 percent, to as little as 5 percent.
The commission was called to look into allegations of criminal activity across Crown’s gaming empire, which includes casinos in Perth, WA and Melbourne, Victoria. Separate probes were held in Victoria and New South Wales (NSW), where Crown developed its newest casino on the Sydney waterfront. That casino was not permitted to open due to the results of the investigation.
According to the Australian New Daily, Packer’s willingness to divest “signals an effective end to the Packer business empire in Australia.” In remote testimony, Packer admitted he should have resigned his post as executive chairman long before March 2018, when he finally stepped aside, pleading mental health problems.
“Looking back, there are many oversights, things that should have been done differently,” he said under questioning. “I did not believe at that point in time that Crown Perth was engaged in money laundering.”
Packer has been trying to sell Crown shares for more than a year after a series of media reports exposed allegations of criminal activity. Activist shareholder Stephen Mayne said he “should really just get on with it and sell out to institutional investors as soon as possible.”
The Victorian royal commission stopped short of recommending Crown lose its Melbourne casino license, instead suggesting it operate under a special manager for two years while it overhauls its operation. NSW investigators also agreed to give Crown a chance to prove its integrity and eventually open the Sydney casino, in the city’s Barangaroo neighborhood.
Mayne suggested that Packer “just sell on the market and extract an undertaking from the Crown board that they’ll never sue him for damages that he’s caused.”
Charles Livingstone, an associate professor at Monash University, said there is no guarantee Victoria will implement royal commission advice that each stake in Crown be limited to no more than 5 percent. He added that Crown is at risk of forfeiting its Melbourne license, which would quash interest from any potential investors.
“You would have to be very confident in the current management to assume everything is going to be hunky-dory,” Livingstone said. “I’m sure they’re better people than their predecessors … but at the end of the day there’s still an element of risk in that.”
Livingstone said that if Crown gets through the next two years and reclaims its license, “people might start sniffing around” for the casino.
“One of the obvious candidates was Star Entertainment, but they … have their own money laundering investigation now,” he said.
It all began when news media including the Age and the Sydney Morning Herald launched an investigation into Crown’s operations, and accused the company of turning a blind eye to organized crime, including dealing with junket operators with links to organized crime and sending 19 employees to promote the casinos in China, in violation of Chinese law. In 2016, those employees were arrested and spent months in a Shanghai detention center before being released and deported.
According to Reuters, the NSW inquiry found that Packer had an undue influence over the company’s board despite holding no official role. Due to the turmoil, Crown has replaced its chairman, CEO and most directors and managers in the past year.
The company recently settled a shareholder class action suit in which it was accused it of failing to disclose risks of doing business in China.
