Two directors linked to the Packer family's Consolidated Press Holdings (CPH) have resigned from Crown Resorts (ASX: CWN) following yesterday's explosive inquiry report into alleged criminal activity at the group's casinos.
A year-long inquiry led by the Honourable Patricia Bergin SC concluded Crown was "quite unsuitable" to be granted a casino licence in NSW, with recommendations including a board overhaul, cultural change at the company and an exhaustive audit aimed at ruling out any possible criminal ties.
After coming out of a trading halt and having its shares fall by around 5 per cent in early trading, Crown announced its directors Guy Jalland and Michael Johnston had resigned.
This afternoon the company announced another non-executive director, John Poynton, would no longer be a nominee of CPH on the board as a consultancy arrangement he had with the Packer-owned business had terminated.
CPH owns an estimated 37 per cent of Crown Resorts, with Jalland as its CEO and Johnston as its finance director.
In October last year Crown announced the termination of two agreements with CPH, including a controlling shareholder protocol allowing confidential information to be shared by Crown to CPH and James Packer, as well as a services agreement with key CPH executives.
At the time of writing CWN shares are down 3.15 per cent at $9.83 each.
The Bergin Inquiry commissioned by the NSW Independent Liquor & Gaming Authority (ILGA) noted that based on findings, the ILGA would be "justified in entertaining very serious doubts" about granting Crown a licence if Johnston - or non-executive director Andrew Demetriou and CEO Kenneth Barton - remained as directors.
Bergin pointed to three "stark realities" that came out of media reporting of Crown including staff arrests in China, and alleged money laundering and hosting junkets.
Another issue was an attempted acquisition of a 20 per cent stake in the company from Hong Kong-based Melco Resorts & Entertainment, headed by James Packer's former business partner Lawrence Ho - the son of Macau casino magnate Stanley Ho.
Because of links to the Triads organised crime syndicate, association with Stanley Ho is prohibited anti-crime licensing conditions for Crown's Barangaroo property in Sydney, where the inquiry's contents have likely further delayed any possible casino opening.
In the report, Bergin explained each director understood as at 2019 that Crown had given an undertaking to to the NSW Government and the ILGA that it would not allow the late Stanley Ho to acquire a direct, indirect or beneficial interest in the company.
"At the time of the Melco Transaction it is apparent that none of the directors with knowledge of the transaction prior to it being signed brought this Undertaking to mind," Bergin said.
She alleged Johnston and Jalland "did not appreciate that at the very least enquiry should have been made to ensure that the late Mr Stanley Ho did not have an interest in Melco to which CPH Crown Holdings was to transfer its shares in Crown".
"Amazingly, Mr Packer, as the former Chairman and director of Crown, who negotiated and secured the grant of the licence to the Barangaroo Casino did not turn his mind to the prospect that the late Mr Ho may have had an interest in Melco; or the need to ensure that some investigation was completed so that the Undertaking that had been given to the NSW Government and the Authority was honoured," she said.
"As it turned out the late Mr Ho's associated entity, Great Respect, had an interest in Melco and he thereby obtained an indirect interest in Crown.
"The fact that Melco sold its shares and since April 2020 is no longer a shareholder and the fact that Mr Stanley Ho is now deceased, does not mean that it was unnecessary to explore these matters further."
Correction: An earlier version of this article incorrectly stated John Poynton had resigned, when in fact his status as a CPH nominee on the board had finished due to the termination of a consultancy agreement.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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