Finance Finance News The Crown inquiry shows there are dunces aplenty at the top end of town
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The Crown inquiry shows there are dunces aplenty at the top end of town

The goings-on at Crown have shone a light on a society-wide problem. Photo: The New Daily
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Aside from uncovering all manner of failures at multiple levels of Crown Resorts – and underlining what a dud job the Victorian Commission for Gambling and Liquor Regulation has been doing – the NSW Crown casino inquiry has shone another uncomfortable light on the Great and Good who populate boardrooms at the Top End of Town, showing that many of them are not very bright.

Oh, some are highly intelligent and many are well qualified in their own particular fields of endeavour, but an awful lot seem to have little idea of the wider world and even less knowledge of the risks and responsibilities of being a non-executive director (NED).

There is no shortage of prominent folk who stick up their hands when offered what they think is a cushy, nicely remunerated and perhaps prestigious directorship.

A couple of hundred grand for a dozen board meetings a year with lurks and perks often thrown in, how hard can it be? It’s great – until something goes wrong.

That’s when the NEDs discover they didn’t know what was going on in the company they were being paid to keep an eye on for their shareholders and society more broadly.

That’s when they realise they shouldn’t have outsourced trust and governance to management that might have had a different agenda.

That’s when they suspect they were appointed to the board for their name and the prestige they might lend to the company’s image.

That’s when there’s an almighty scramble to cover backsides and salvage damaged reputations.

And if it’s a company with a controlling or particularly influential shareholder, or even one with a chairman used to getting his way in meetings and who decides who is on the board, that’s when the NEDs can realise they were mugs to put their hands up.

 

 

There is nothing new in the board shortcomings being exposed before Bergin SC, though in my opinion it would be reasonable to think NEDs of a casino company would want to be extra cautious, given all the well-known risks and temptations of that industry.

Money laundering? Surely not.

Dubious high roller packages out of China? Never.

Any sort of difficulties in China? Couldn’t imagine it.

The thing about tampering with poker machines? Can’t be true.

Claims by an independent Member of Parliament? Attention seeking.

Newspaper reports? Huh, journalists – you can’t trust ’em.

The Crown AGM saw the start of board “renewal” (quaint euphemism, that). The next crop of Crown NEDs will be more wary – if they still have a casino to run.

But it doesn’t require the extra element of sleaze that hangs around the gambling industry to blow up boardrooms.

As we reported here two years ago, that was another facet of the Hayne Royal Commission – it trashed pretty much the entire Big End of Town, the great and the good who make up the nation’s network of ASX 200 directors, CEOs and CFOs, the chairmen and women who reached the peak of Australian corporate culture – the top of a big five board table – only to be shown to be, at best, incompetent.

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Crown has terminated two agreements with James Packer’s Consolidated Press Holdings. Photo: AAP

They were meant to be the cream of the market crop. Certainly the executives and chairs were paid that way. Having a big five directorship on your CV was about as good as it gets in the NEDs Club.

It should have been a massive wakeup call for all NEDs not to take on a business that they did not really understand, not to simply trust what management fed the board.

In 2017, Tax Commissioner Chris Jordan told a Senate inquiry that it was too easy to be a company director.

He told the inquiry chairman he could make him a company director without the Senator even knowing. A vagrant off the street could be made a company director. In other countries, a three-month check was required.

Mr Jordan was talking about phoenixing, about dodgy companies appointing stooge directors – but every time a company’s governance self destructs, I tend to think his statement could be more broadly applied.