While Mr Packer, who owns 36 per cent of the company, has given no indication of how he will vote, he said in evidence last week he expected changes to the board would be required to make Crown a fit company to hold a casino licence.
Crown’s corporate governance has been under fire in recent weeks following evidence at a NSW Independent Liquor and Gaming Authority probity inquiry about the casino group’s secret deal to pass on sensitive financial information to its largest shareholder James Packer. The inquiry has also grilled independent directors including Harold Mitchell and Andrew Demetriou, who both had their independence from Mr Packer called into question.
“Investors will be looking for director accountability for their oversight of governance failures identified during the NSW casino inquiry,” ACSI chief executive Louise Davidson said. “These include the board-approved private briefing of shareholders, oversight of anti-money laundering process and the ‘ill-advised’ public response to concerns over Crown’s practices.”
Ms Davidson said the entire board of Crown must be held accountable. “Beyond the three directors seeking re-election, what we have heard in the inquiry reflects poorly on the board as a whole. A number of long-serving directors should be considering their position in light of what has emerged,” she said.
The probity inquiry was sparked by a series of reports by The Age, The Sydney Morning Herald and 60 Minutes that revealed Crown had gone into business with junket operators that have links to organised crime in Asia and its failure to stop money laundering at its Melbourne and Perth casinos.
Crown initially took out newspaper advertisements claiming the reports were sensational and included errors, but Mr Packer and other Crown figures have since conceded the ads misled investors.
Ms Davidson was particularly critical of the secret protocol signed by the board to pass on information to James Packer’s private investment vehicle Consolidated Press Holdings (CPH) that was not shared with other directors.
“The confidential board-approved process of providing daily financial reporting to CPH is something we have not seen before in an ASX200 company and we hope that we never see it again.”
Prominent advisory group Ownership Matters, which advises industry funds as well as other institutional investors on governance, has also recommended Crown shareholders vote down the re-elections. Two other advisory houses, ISS and CGI Glass Lewis, have recommended shareholders support the directors.
ACSI’s members own about 7 per cent of the shares in Crown. Australian fund manager Perpetual, which owns about 9 per cent, has declined to comment while the inquiry is ongoing. American private equity firm Blackstone, which owns almost 10 per cent and has recently applied for regulatory approval to increase its stake, declined to comment.
Professor Horvath told the inquiry on Wednesday there had been failings in how Crown handled its junket partnerships, its anti-money laundering regime and in corporate governance.
Professor Horvath has been on the board as an independent director for 10 years and is also the chair of Crown Melbourne’s compliance committee, which is responsible for ensuring it meets its legal obligations with the Victorian gambling regulator.
“In hindsight, some of the material that has come out of the inquiry suggests there have been things that we did not attend to,” Professor Horvath said when asked about the failings missed by his compliance committee.
Professor Horvath also said he was not aware of the widely accepted fact that many junkets operating out of Macau had links to organised crime. “How did you miss that?” counsel assisting Naomi Sharp, SC asked. “It was not something I read,” Professor Horvath replied.
Business reporter at The Age and Sydney Morning Herald.
Sarah Danckert is a business reporter.
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