Kerry Packer’s doctor, an adman the late billionaire rescued from financial strife, and a former footy powerbroker who pledged to look after the interests of his son: can these people be trusted to act independently of James Packer when their lives have been so intertwined with his clan?
The former New South Wales supreme court judge Patricia Bergin has been exploring this question this week as part of a public inquiry into the fitness of the Packer-backed Crown Resorts empire to hold the licence to operate a new casino on prime Sydney harbourside land at Barangaroo, due to open before the end of the year.
The inquiry was called in response to reports by Nine Entertainment outlets that included allegations of money laundering in Crown’s casinos and criminal involvement in the junket operators that bring international high rollers to gamble in Australia.
But Bergin’s brief covers not just Crown’s dealings with people allegedly linked to the criminal underworld. She is also examining the goings on in its boardroom at its flagship Melbourne casino.
She and her counsel assisting have been grilling the Crown directors the company bills as “independent” about just how independent they actually are.
Evidence before her inquiry of criminal involvement in junkets, widespread management failures, special deals for Packer and a lack of board oversight have revealed Crown’s potential to be an Augean stable.
Answering the independence question will help Bergin decide whether the Herculean task of cleaning it out is achievable or whether it is piled so high with dung that the entire edifice needs to be ripped down.
This will in turn inform her recommendation to the NSW Independent Liquor and Gaming Authority – should Crown be able to keep its licence, with restrictions designed to reduce Packer’s influence and make it run properly, or should the licence just be revoked?
Based on what she has said to witnesses, Bergin has been leaning towards the first option.
But there were already difficulties with this idea – most notably, a clause in the Barangaroo licence requiring the government to compensate Crown for adverse changes to the rules – even before evidence given over the past week-and-a-half makes it a tougher proposition to endorse.
Packer, who owns 36% of Crown, has not been a director of the company since 2018 but evidence before the inquiry shows his spectre still looms large in the Crown boardroom.
The inquiry heard that Packer was receiving secret financial information last year as he prepared to sell some of his stake to the Hong Kong casino operator Melco Resorts, controlled by his friend Lawrence Ho.
The Crown executive Ishan Ratnam also kept him up to date with how things were going in the lucrative – but high-risk – business of VIP gambling and junkets.
New details of the close contact between Crown and Packer emerged on Monday and on Tuesday, when Andrew Demetriou, a former Australian rules footballer who went on to run the whole AFL competition, gave evidence.
Demetriou emailed Packer on 4 April last year, “reminding you that if there’s anything you need don’t hesitate to reach out”.
They discussed the possible sale of Crown to the US operator Wynn Resorts, with Packer saying Crown should accept an offer from the company.
At the end of the email exchange, Demetriou signed off: “As previously said, I remain committed to serving the best interests of Crown and, most importantly, you.”
Counsel assisting Scott Aspinall asked: “Mr Demetriou, how can such a statement be consistent with you claiming to be an independent director of Crown?”
It was “absolutely consistent”, Demetriou replied; it all boiled down to the difference between “more importantly”, which he did not say, and “most importantly”, which he did.
“So you were misleading Mr Packer, were you?” Aspinall asked.
No, Demetriou said.
“I am happy to serve the best interests of Crown and Mr Packer, but I’m absolutely committed – still am – to serving the best interests of Crown, first and foremost.”
He gave evidence after the advertising guru Harold Mitchell, who was grilled about an episode in the early 1990s when Kerry Packer rescued him from financial ruin.
Mitchell was in strife after his investment in the Big Banana theme park. “The other shareholders disappeared into the banana fields and I was left alone, and I wasn’t going to walk away from it,” he told the inquiry.
Packer had given him a “no-strings-attached” loan of $1.9m to get him out of the hole, Mitchell said.
He insisted this in no way compromised his independence as a Crown director.
On Tuesday and Wednesday this week, the inquiry heard from another Crown director with links to Kerry Packer, the billionaire’s former doctor John Horvath.
Horvath said he had been “closely involved in his [Kerry Packer’s] care up until 2003 when I went to the commonwealth as chief medical officer”.
Counsel assisting Naomi Sharp SC asked if it was fair to say he had become friends with Kerry.
“No, I don’t believe so,” Horvath responded. “Caring for someone in a complex situation, there are boundaries.”
He did, however, admit going to James Packer’s second wedding, to Erica Baxter, in 2007, before he joined the board in 2010.
The inquiry also questioned the independence of another Crown director, Antonia Korsanos, but not on the grounds of any relationship with the Packer family. Instead, it was her role as the chief financial officer of one of Crown’s key suppliers, the poker machine manufacturer Aristocrat, that was in the spotlight.
The inquiry has heard that Crown’s rules meant she should not have been categorised as independent but before she was appointed the board changed them so that she could be.
But Korsanos, who is relatively new to the Crown board, was not troubled by the questions of fitness that were put to Demetriou and Mitchell. Both men have clouds over their heads regarding their roles elsewhere in corporate life: Demetriou is facing legal action over payments he received from a training company, Acquire Learning, while the federal court found that Mitchell breached his duties as a director of Tennis Australia during negotiations over a television broadcast deal.
Demetriou also blew up in spectacular fashion in the witness stand, denying that he had been reading from notes despite being played footage of his previous evidence that appeared to show him doing so.
“Oh, Mr Demetriou, why did you do it?” an obviously dismayed Bergin said.
Whatever Bergin decides should be done with Crown’s directors may well be out of date by the time her final report emerges.
Three of them, including Horvath, face re-election at the company’s annual meeting on Thursday and the mood among shareholders is grim.
Whether or not they get the chop will once again depend, in large part, on the views of the Crown boardroom’s invisible man, James Packer.