We’re back from break and James Packer is about to resume giving evidence to the inquiry into Crown Resorts.
We’ve taken a five minute break before we enter the home stretch of today’s hearing. We’ll be running after 4pm because the inquiry took a two-hour lunch break.
James Packer has just been taken to emails between him and Melco boss Lawrence Ho where Packer and Ho were discussing future plans for their respective gaming companies.
Counsel assisting the inquiry Adam Bell then uncovers a big bit of business news — that Crown and Melco considered a full merger in 2019.
Here’s the exchange:
Bell: When do you first recall talking to Mr Ho about the acquisition of Crown shares.
Packer: I think after the 23rd of April.
Bell: What was the substance of that conversation,
Packer: The substance of that conversation, Lawrence briefly touched on a full merger of Melco and Crown but quickly changed that position because it didn’t work for him or for me. … Lawrence was interested in doing something with Crown , if we could make it work.
Packer adds: Lawrence and I never discussed price.
Bell now asks Packer a series of questions leading to the important point of whether Packer continued to act as though he was in charge of Crown even after he left the company’s board in 2018 (but continued to own 46 per cent of its shares) by telling executives what to do.
Bell: You said that your intention in making these requests was to act in the best interests of Crown Resorts.
Bell: And when you were the chairman of Crown Resorts you made request of the senior executive that you expected them to carry out?
Bell: And in the period after [you left the board] you made requests to the executives of Crown Resort that you expected them to carry out, didn’t you?
Packer: I expected them to listen to me and push back if they disagreed.
Bell: And they never did, at least in the examples we’ve looked at, did they?
Packer: I can’t recall Mr Bell.
Bell: You were acting as though you were still a director of Crown Resorts, weren’t you?
Packer: I was under the impression I could communicate the way I was communicating.
Bell: And that’s how you choose to answer my question is it?
Packer: Yes Mr Bell.
Counsel assisting is taking James Packer though some emails he sent to senior executives at Crown Resorts while he was just a shareholder at the company. And there’s more allegations he pressured staff at Crown to hit his targets.
This included asking for a downside earnings case and conservative forecasts.
“I think all of you have had your heads in the sand this year, we never make our plans and I’m sick of it. Make sure for your own sake we achieve the FY plan,” Packer’s email says.
Bell then asks Packer: You were making threats to the senior executives to Crown Resorts, weren’t you?
Packer shoots back: No , I was frustrated, I was frustrated because I had been saying for the good part of the financial year that the executives were being too optimistic.
He then adds: I might have just been being dramatic.
Bell then asks if it was correct that Crown executives followed his instructions during this period.
“Well they didn’t hit their budgets,” Packer responds.
Counsel assisting the inquiry Adam Bell, SC, is now asking James Packer about the influence he continued to wield at Crown even after stepping off the company’s board in 2018, and asks if he was “regularly providing instructions to senior executives”.
“Not to the best of my recollection,” says Packer.
So Bell takes him to a series of emails in May last year, demanding Crown’s then CFO (now CEO) Ken Barton send him updated Crown financial forecasts “that he believed in”, and for then executive chairman John Alexander to check the numbers.
Bell then he presents November 2018 emails Packer sent to Alexander castigating him for going “on a world trip looking at restaurants”. Packer then gives Alexander his blessing to “go hard” on a cost cutting drive.
Bell: This was a significant management decision Mr Alexander was proposing… and you’re telling him he had your blessing. You expected Mr Alexander to act on what you said and implement those cost cutting measures.
Packer: I expected Mr Alexander to act on what he said and what I agreed with.
Bell: You were giving your blessing to implement cost cutting measures?
Commissioner Patricia Bergin then points out that Packer’s emails show the cost cutting plan was his idea that Mr Alexander agreed to.
“That’s correct, Madam Commissioner,” Packer says.
James Packer has just been taken from an email by Crown director Andrew Demetriou to the casino mogul in late 2018. The inquiry heard the email was sent by the former AFL boss shortly after a Crown board meeting in December that year.
Counsel assisting the inquiry, Adam Bell, SC, says the email shows Demetriou telling Packer: “I promised you I’d give you feedback post the board meeting of some of my observation observations together with explanations from management.”
Packer agrees that what the email reads.
Bell adds: And he then proceeds to provide you with information about his observations, observations of information which have been provided by management.
Again, Packer agrees that’s what Demetriou says in the email.
Bell: And he then proceeds to tell you what he said to the board.
Bell then says Demetriou’s email ends: “These are just my thoughts James I’ll continue to support you and Crown.”
Demetriou now joins a list of executives and directors passing confidential information about Crown’s activities to its largest shareholder despite Packer not at that time holding an executive or board position.
Packer has just been taken to the agreement signed between him and Crown after he stepped off the board in 2018 to share secret information about Crown’s finances with its largest shareholder. This is quite an unusual governance practice for an ASX-listed company.
Here’s the exchange between the mogul and counsel assisting the inquiry Adam Bell, SC.
Bell: You understood I take it that a purpose of this agreement was to establish a process. Crown resorts to provide confidential information to you. Notwithstanding that you will no longer a director of crown resorts, or CPH (Consolidated Press Holdings)?
Packer: Yes, Mr Bell…
Bell: After the protocol was entered into you were receiving information from Crown Resorts?
Packer: Yes, Mr Bell.
Bell: And the executives who were mainly providing confidential information to you under the protocol were Mr Barton, Mr Felstead and Mr Alexander?
Packer: Yes, Mr Bell.
Bell: And you received updates practically on a daily basis from this time onwards?
Packer: Yes, Mr Bell.
We’re back, and straight into the long history of NSW’s gambling regulator making it very clear to Crown (and Packer when he was its chairman or a director) how sensitive it is about Stanley Ho.
Back in 2013 when Crown was buying shares in the owner of rival casino The Star Sydney, Crown got approval from the Independent Liquor and Gaming Authority to increase its shareholding above 10 per cent. To do so, it agreed to “monitor and report periodically … ownership interests of and commercial dealings with Stanley Ho and his associates”.
Packer says he recalls this from the time.
Counsel assisting Adam Bell, SC, then takes Packer to a set of 2013 Crown board minutes, when directors discussed the new licence and key legal documents for Crown’s own casino at Sydney’s Barangaroo. That included a clause in the licence titled “Prevention of association with Stanley Ho”.
Bell asks Packer if he was aware of the clause, which bans Crown from dealing with Stanley Ho, three of his children and the family trust Great Respect.
“That’s correct at the time,” Packer replies.
Since we’re about to dig into the Melco transaction and how it possibly breached Crown’s Sydney casino licence, it’s worth taking a look at exactly who Stanley Ho was and why it is such a big deal that he received an interest in Crown.
Here’s the background. Ho, who died in May this year aged 98, pretty much built Macau into the world’s largest casino market, transforming the sleepy peninsula from the 1960s onwards into a gambling mecca bigger than Las Vegas.
But he was long accused of being connected to Chinese criminal triads, which meant regulators around the world did not want him involved in their casinos.
Way back in 1987, the New South Wales government threw out a bid by a consortium associated with Ho to operate a casino in Sydney, after the NSW Police Board determined the consortium was associated with five triad gangs, was dangerous, and was involved in “unsavoury practices” in Macau.
In 2009 the New Jersey Casino Control Commission published a report into Ho’s daughter Pansy Ho, who was trying to set up a joint venture with MGM in Macau. The report found that Stanley Ho’s casinos “facilitated the involvement of organised crime”, by relinquishing control of VIP rooms to triad-linked third parties.
“STDM [Stanley’s company, Sociedade de Turismo e Diversões de Macau] created a lawless space that allowed organised crime to gain a foothold in the Macau gaming industry,” the report said. It said Stanley Ho was an unsuitable person because of his “continued business ties to persons associated with organised crime”.
Stanley always denied these allegations and he was never convicted of a criminal offence. Meanwhile his son Lawrence Ho, who runs Melco, has long stressed his independence from his father.
But as we have learnt, Stanley owned a stake in Melco through a family trust called Great Respect Limited. That gave him a piece of Crown when Packer agreed to sell 19.9 per cent of the company to Melco last year – a violation of Crown’s NSW casino licence. That’s how we got to where we are today, with Crown’s Sydney casino on the line.
Keen students of James Packer have of course picked up a copy of journalist Damon Kitney’s biography of the casino mogul, The Price of Fortune, even if the billionaire himself told the inquiry yesterday he had only skim-read the book.
The book doesn’t delve into Packer’s relationship with Stanley Ho much, but there’s a lot about Ho’s son Lawrence Ho, including that the pair still call each other “brother”.
“Of all the partnerships I’ve had, it was this one I’m the most proud,” Packer says in the book.
“Lawrence never broke his word, he never did anything to harm me, and was a twenty out of ten partner.”