It began as the most Sydney of stories.
James Packer, billionaire scion, lunching with Barry O’Farrell, then premier of New South Wales. The meeting was brokered by and held in the home of powerful radio shock jock Alan Jones, overlooking Sydney Harbour.
It was February 2012 and the trio had met to discuss Packer’s vision for the steel and glass behemoth he wanted to build on a harbourfront wasteland at Barangaroo.
Soon, Kerry Packer’s son would get almost everything he wanted, a circumstance to which he was accustomed professionally, if not personally.
But this week, almost nine years later to the day, an 18-month inquiry led by former Supreme Court justice Patricia Bergin, sparked by accusations of illegal activity, issued its findings on Packer’s Sydney casino.
Sensationally, Bergin advised that the magnate’s company, Crown, was not fit to hold its restricted high-end casino licence in NSW.
Yet the $2.2 billion Barangaroo casino has already been built. Everything is in place to open its doors – except the licence to do so.
The Bergin report describes Crown’s ambitions – filtered through Packer himself – as breathtaking. The company’s willingness to accept responsibility for the attendant obligations of such hubris, meanwhile, was severely lacking.
Over almost 800 pages, the report details a culture of “corporate arrogance” and “unjustified belief” in Crown’s powers of good governance, despite evidence of money being laundered through its casinos, a reliance on the junket operators who ferried high rollers into them, and despite links to organised crime that should’ve been obvious.
Much of the substantiated evidence in the Bergin inquiry came from Crown’s Melbourne operations, where the company employs some 16,500 people – making it the largest private sector employer in the state.
Chris Sidoti, former chair of the NSW Independent Liquor and Gaming Authority (ILGA), says it’s inconceivable the casino giant could be allowed to continue operating in Melbourne and Perth.
In his time at the ILGA, Sidoti was tasked with approving Packer and Crown for its Sydney licence.
“I fail to see how it is possible for Crown to be allowed to continue to operate in two jurisdictions when the most comprehensive examination of a casino operator in Australia in 20 years has produced such a damning report,” he says.
“I don’t see how they cannot be suspended pending a full investigation by those authorities [in Victoria and Western Australia], bearing in mind particularly that all of the material examined by the NSW inquiry related to the activities of Crown in Victoria. They are not even operating in this state [NSW].”
In her report, Bergin stated that if three members of Crown’s board – former AFL boss Andrew Demetriou, Crown’s chief executive Ken Barton and Packer right-hand man Michael Johnston – remain in their roles, “the [NSW liquor and gaming] Authority would be justified in entertaining very serious doubts that Crown could be converted into a suitable person under the Casino Control Act”.
Johnston fell on his sword on Wednesday, along with fellow Crown director Guy Jalland. On Thursday, non-executive director John Poynton told Crown that his consultancy with Packer’s investment vehicle CPH – the largest single shareholder in Crown – had been terminated.
After this, Crown advised the sharemarket that “CPH is no longer separately represented on the Crown board”.
Late on Thursday evening, Demetriou also resigned from the board.
The quick ejection of at least some sacrificial directors serves to illustrate a running theme of criticism from the Bergin report: there was a belief within Crown that erasing particular programs, bank accounts or policies was the same as treating the fundamental rot.
“However, it is one thing to accept that problems exist, and serious failures have occurred when confronted with such an irresistible conclusion in a witness box,” the report read. “It is quite another to be alert to the prospect of the existence of a problem or serious failure, to uncover it, to confront it and/or be ready to avoid it without it having to be presented in the forum of an Inquiry such as this. It is this latter capacity that has been missing from Crown’s armoury.”
A senior figure familiar with the operation of Crown for many years told The Saturday Paper that many members of the gambling giant’s board treated their role like a “sinecure”.
“They were prepared to lend their names and in some cases their legitimacy … on the basis that they wouldn’t receive a hell of a lot of information and not very much would be asked of them,” the insider says.
“It was operating as a private arm of the Packer family, basically. Kerry always operated that way, but Crown was no longer like that. Crown was a public company listed on the stock exchange.”
Bergin’s recommendation to strip Crown of its NSW licence is made all the more shocking when taken in the context of a decade-long undermining of the NSW ILGA.
Chris Sidoti says this erosion was what ultimately led to his resignation as chair of the authority in January 2016, with two years left on his contract.
Once a standalone body, the ILGA’s predecessor, the Casino Control Authority, lost the ability to employ its own staff in 2006 and was abolished altogether in July 2008. It was subsumed into a broader regulatory institution that covered all gaming, liquor and licensing.
In 2009, the requirement from the original 1995 Casino Control Act that all promoters and representatives, otherwise known as junkets, be approved by the regulator was removed.
“The previous clause provided that a person must not act as a promoter without the Casino Control Authority’s approval. This clause did not appear in the revised 2009 Regulation,” the Bergin report says.
In 2014, explosive reports appeared on the ABC’s Four Corners and then in Nine newspapers linking casino junkets to money laundering and organised crime. Yet more legislative concessions were made.
In early 2016, specialist casino inspectors were made redundant and, shortly after, their 24-hour presence at Sydney’s Star City casino was replaced with random checks from non-specialist government staff.
About the same time, new legislation came into force that subjected the authority – which by then existed in name only – to directions from the NSW gaming minister.
“Certainly, the liquor and poker machines lobby were very strongly supporting the changes that would make these matters [of regulation] political rather than quasi-judicial and evidence-based because they had more influence that way,” Sidoti tells The Saturday Paper.
None of the changes technically benefited Packer or his gambling interests – Barangaroo was in development but Crown did not yet operate anywhere in NSW. What really mattered to Packer was the easy ride he received through NSW’s planning laws.
Days after that first meeting at Alan Jones’s home, concept plans for a six-star, 350-room hotel and gaming rooms at Barangaroo were released to the media, met with breathless reporting by some sections.
On August 10, Packer again met with Premier O’Farrell, who “advised him of a new three-stage framework for infrastructure development that the government had put in place in January 2009, known as an unsolicited proposal process”.
“The Premier advised Crown to use the process for the Barangaroo project,” according to the Bergin report.
One week later, the Coalition government “updated” this process to remove a requirement for an “independent evaluation as to whether a project should be allowed to avoid a tender process”.
Although there were subsequent conditions and agreements on revenue sharing with the state government – a minimum of $1 billion over three years – everything that came after this point was essentially a fait accompli.
“This is giving somebody a licence to print money in a highly restricted environment,” Sidoti says. “The unsolicited proposal process gave one operator an absolutely privileged run in getting its own way … and it simply should not have happened that way.”
Although none of the report’s central findings spell the end of Crown’s aspirations in NSW, the backlash is building fast.
Independent federal MP Andrew Wilkie says the report clearly shows Crown is unfit to “operate any casino in Australia” and is calling for its licences in Melbourne and Perth to be suspended.
“We now see that for many years there has been an almost complete failure with Crown of the oversight and the regulatory bodies … every agency from the VCGLR [Victorian Commission for Gambling and Liquor Regulation] to Victoria Police and AUSTRAC,” he tells The Saturday Paper.
“The kindest thing we can say is it’s incompetence. Then from there it goes downhill through wilful ignorance to the possibility of them being complicit.”
On February 4, Wilkie and gambling reform advocate Tim Costello wrote to Victoria’s chief police commissioner, Shane Patton, requesting a formal investigation of alleged money laundering within Crown Melbourne.
Wilkie had already written to VicPol’s former boss Graham Ashton in November 2019, asking if leaked CCTV footage of money being unloaded from a cool bag in Crown Melbourne’s high-roller room would be investigated. He still has received no response.
In the wake of the Bergin report, WA has sought urgent legal advice, while Victoria has brought forward its cycle of five-yearly reviews into the casino to this year. Premier Daniel Andrews said he and his government “are not stubborn about this” when asked whether the findings would prompt action.
In NSW, Premier Gladys Berejiklian told radio station 2GB that “all bets are off” for Crown, while the current chair of the state’s regulator, Philip Crawford, told reporters on Wednesday that Crown may have to “blow itself up” to save the licence.
Chris Sidoti recalls his first run-in with Crown, back in February 2012, after Packer’s company sought to purchase a stake of more than 10 per cent in its rival, Echo.
“We actually sent investigating staff to the US, Macau, Singapore and the Philippines to conduct inquiries to look at how Crown was operating,” Sidoti says.
“In retrospect, I wish we did have a full inquiry. We found no evidence of these [illegal] things happening. But the sense that comes out of the report very strongly is that [Crown had] a culture that could be summarised as maximise the profits at all costs.
“Damn the torpedoes, full speed ahead.”
This article was first published in the print edition of The Saturday Paper on February 13, 2021 as "James and the giant breach".
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