Crown Resorts’ largest shareholder, James Packer, overruled the advice of Crown executives by choosing to sell a 19.99% stake in the company to his former Macau business partner, Melco Resorts, last year.
Details of events leading up to Packer’s fateful decision, which proved to be the initial spark for the ongoing inquiry by the NSW Independent Liquor and Gaming Authority into Crown’s suitability to hold a NSW casino license for its AU$2.2 billion Crown Sydney development, formed part of evidence given on Monday by finance director Michael Johnston.
According to The Sydney Morning Herald, Johnston had presented Packer with a range of options in May 2019 regarding the sale of some or all of his shares after the company held initial discussions with US casino giant Wynn Resorts over a potential takeover the previous month.
Instead, Packer sent Johnston a text message on 26 May stating, “Mike, it’s my life and I’m going to overrule you.”
Despite having preferred other options for Packer’s then 46% stake in Crown Resorts, held through his private investment firm Consolidated Press Holdings (CPH), Johnston told the inquiry Monday that he had not considered the sale to Melco to be a threat to its NSW casino license as a result of Melco’s links to Macau gaming tycoon Dr Stanley Ho, nor did he tell other executives – other than Chairman John Alexander – about Packer’s decision.
Under an agreement signed with the NSW regulator in 2014, Crown was barred from having any dealings with Dr Ho or any of multiple companies linked to him. One of those, Lanceford, listed Melco Chairman and CEO Lawrence Ho as director.
“There was no suggestion that Stanley had any interest in Melco Resorts … based on our knowledge from that time, so there was nothing putting me on notice,” Johnston said.
“We thought we took the right advice at the time. With the benefit of hindsight I think that perhaps we should have looked more deeply.”
Johnston said Alexander didn’t sound pleased when he learned of Packer’s plan to offload 19.99% of his Crown shares to Melco, although that may have been due to the fact that Alexander had stood to personally benefit considerably from a full takeover, such as that previously discussed with Wynn Resorts, due to share options.
Wynn pulled out of that deal in April 2019, citing the “premature disclosure of preliminary discussions.”
The latest developments in the inquiry come just days after Crown announced it was suspending all junket play until 30 June 2021 due to questions raised during the inquiry into its relationship with Asian junkets.
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