News State NSW News Crown Resorts directors resign after damning report halts opening of new casino
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Crown Resorts directors resign after damning report halts opening of new casino

Crown Resorts were found to be unsuitable to hold a licence to run the new casino at Barangaroo. Photo: ABC News/James Carmody
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Two Crown Resorts directors have resigned while James Packer will end his relationship with another director barely 24 hours after a scathing report all but detonated the company’s hopes of opening Sydney’s second casino.

Board representatives Guy Jalland and Michael Johnston have resigned with immediate effect, while Crown subsequently announced it would also end the “consultancy” with its third board representative, John Poynton.

The report, which came after a lengthy inquiry commissioned by NSW’s Independent Liquor and Gaming Authority, deemed Crown unsuitable in its current form to hold the licence to operate a new casino at Barangaroo, which has already been built.

Commissioner Patricia Bergin’s report said the company would need to undergo significant cultural changes if it were to hold the licence in the future, and ILGA chair Philip Crawford on Wednesday morning quipped Crown would have to “blow itself up to save itself”.

“I’d be very surprised if there weren’t substantial changes to the Crown board,” he said.

Just minutes after he made that statement in a media conference in Sydney, the company announced Mr Jalland and Mr Johnston had resigned in an ASX statement.

Michael Johnston and Guy Jalland resigned as directors of Crown Resorts. Photo: ABC

When a reporter broke the news to Mr Crawford, he described it as “a promising start”.

“That means somebody is listening to us and that’s really positive,” he said.

‘”That’s a big message to me and the media.”

Mr Johnston and Mr Jalland are also directors of James Packer’s separate company Consolidated Press Holdings, which technically holds Mr Packer’s shares in Crown.

Since taking over as a major shareholder of Crown in 2008, CPH was afforded two nominated directors on Crown’s board.

The inquiry was also told of a special arrangement between the two companies where confidential financial figures from Crown were regularly shared through CPH, notably without the knowledge of shareholders.

The report found it was through this ‘protocol’ that Mr Packer maintained his thought he was in control of Crown.

“The irresistible conclusion from the evidence is that Mr Packer took the view and behaved in a manner consistent with the view that he was still in control of Crown,” it said.

It stated Mr Jalland was an “honest witness” but deemed his future on the board of Crown was likely over, given the arrangement between the two companies had recently ended.

Mr Johnston, a former senior partner with Ernst & Young, actively worked with Mr Packer to develop the VIP gaming business model and apart from the CEO was the only Crown director on the VIP working group.

In the inquiry he accepted there was a risk of infiltration of organised crime into casinos.

The report recommended he “conclude his tour of duty as soon as possible” because his position with both companies meant lines of reporting were blurred, risks were not properly identified and conflicts of potential conflicts were not recognised.

Crown shares were put in a trading halt on the ASX on Tuesday as the report was released, and dropped almost 9 per cent when the market opened this morning.

Mr Crawford praised the media for bringing allegations about Crown to light.

“Ironically, most of the bad behaviour that you see in the film clips about the money laundering, none of it has happened in New South Wales and we don’t want it to start here,” he said.

“That having been said if you thought there is no money laundering happening in this state right at the moment, you’d be dreaming.”

He said he could work with Crown chairwoman Helen Coonan to make the necessary changes.

“Her creditability and as a person for us to deal with has been given the tick of approval by Bergen.”

“The point is whether she gets the support of her shareholders and her board. I hope she certainly does.”

Mr Crawford said he hoped the matter would be resolved by April, when Crown’s liquor licence expire.

Moody’s Investors Service analyst Maadhavi Barber said she expected the changes required to maintain Crown’s Sydney licence would “direct affect” the conditions to retain its Melbourne and Perth gaming licences.

“The findings of the Commissioner’s report are among the more onerous of the potential outcomes Moody’s was considering,” Ms Barber said.

-with agencies