A director of Crown Resorts and of billionaire James Packer’s private investment company admits he should have investigated whether a controversial Macau tycoon was involved in a significant purchase of the casino company’s stock.

Michael Johnston, a longtime lieutenant of Mr Packer, sits on the board of Crown Resorts and of Mr Packer’s investment company CPH Crown Holdings.

Mr Johnston signed the CPH’s May 2019 agreement to sell 19.9 per cent of Crown Resorts stock to Melco Resorts. Crown Resorts has said it was not aware of the deal before it was struck.

Melco, which operates casinos in China, is controlled by Lawrence Ho. His late father Stanley Ho had been banned from owning casinos in NSW because of his alleged organised crime links.

A probity inquiry run by the state’s gaming regulator is looking at whether the agreement breached the licence the NSW government issued to a Crown-owned company to run a new high-roller casino at Sydney’s Barangaroo.

The inquiry is also investigating who will become a close associate of the casino licence holder and whether they are suitable.

Inquiry commissioner Patricia Bergin pressed Mr Johnston on Monday about whether he knew the state government had a “deep concern” that Stanley Ho not “get a foothold” in Crown Resorts, given its ownership of the company that had been issued a licence to run the Barangaroo casino.

Mr Johnston agreed he knew of the government’s concern.

“In those circumstances, I suggest you ought to have informed Crown Resorts of the proposed transaction so it could investigate whether this transaction would put it in breach of regulatory agreements,” counsel assisting the inquiry Adam Bell SC said.

Mr Johnston demurred that he “had no understanding” that Stanley Ho was involved with the transaction.

When Ms Bergin suggested he had failed to check whether Mr Ho was involved, Mr Johnston said he had “no reason” to believe he would be.

“With the benefit of hindsight, I think that perhaps we should have looked more deeply,” he later admitted.

Mr Packer is scheduled to face the inquiry later this week.

Ms Bergin’s report is expected in early 2021.

-AAP