For anyone who can remember the 1990s crony capitalism saga behind James Packer finishing up in control of one of the world’s biggest casinos in the Melbourne CBD, developments this week in Sydney are deeply troubling. And just as concerning is the performance of the mainstream media which has turned into a Packer cheer squad as the NSW Parliament collapses in the face of a powerful rent-seeking casino developer.
The Australian Financial Review, our independent national financial paper of record, should be all over the dubious process which has seen the widely-owned Echo Entertainment Group ambushed by a competitor which openly colludes with political parties, makes direct political donations and employs well-connected former politicians to advance its interests.
Yet there is James Packer pictured on page pme today appearing in “The AFR‘s Conversation Series”. The story is headlined “Packer slams O’Neill in casino war” and there further back in the book is a picture of Packer standing with the paper’s companies editor Nabila Ahmed, along with media writer James Chessell and CEO Brett Clegg.
Sadly, The AFR chose to barely cover the Echo Entertainment AGM at Jupiters Casino on the Gold Coast yesterday. It was a torrid affair as new chairman John O’Neill saw both the remuneration report and his re-election challenged from the floor and forced to a poll.
O’Neill, who hired Packer employee Mark Arbib to review the governance arrangements of the Australian Rugby Union, has been largely responsible for the gutting of Echo’s board and senior management ranks at a time when it needs toughness and resolve. He led the Packer-requested coup that forced veteran chairman John Story from the board after a brutal assault complete with numerous national newspaper ads and unleashing Packer fixers such as Alan Jones for a campaign of denigration against Echo’s assets along with certain personnel and shareholders.
Having assumed the Echo chair with the key support of the company’s two voting executive directors, it remains a mystery why O’Neill then negotiated the departure of well-regarded Echo CEO Larry Mullin last month just as the Packer fix for an untendered casino licence with the NSW political duopoly was coming to a head. Even worse, Echo’s toughest director, Brett Paton, resigned last month in a protest against the removal of Mullin.
The sheer chutzpah of lame duck Mullin finding out about yesterday’s O’Farrell announcement halfway through the AGM was clearly designed to humiliate him and the company. And when encouraged on numerous occasions yesterday to demonstrate his toughness and independence, O’Neill produced nothing more than platitudes and generalisations. Little of this made The AFR today, but The Australian published:
Mr O’Neill’s re-election went to a ballot, and later in the day the company filed with the ASX that he had been re-elected, but not before he had been strongly attacked by shareholder activist Stephen Mayne over his attitude to the announcement by Crown that it would be seeking to build a second casino in Sydney, which would compete directly with Echo’s Star.
Mr Mayne said Echo “didn’t seem to be putting up much of a fight” against the Crown proposal and that “this board needs to launch a major rearguard action”.
“The Packers are masters at getting close to government and getting them to do its bidding, and he’s doing it now at our expense,” said Mr Mayne.
“I’m not convinced that John O’Neill is the man, given that Packer wanted him as chairman. Why isn’t he out there fighting harder? The share price is down and our assets are diminishing.”
Mr O’Neill said that Mr Mayne wanted to see “blood on the floor and theatre”, adding: “But we’ll keep going about the business in a way that’s comfortable. We’re not going to be firing off any Scud missiles until we need to.”
Hello, John O’Neill! Both sides of NSW politics are on board for Crown to operate an untendered high roller casino at Barangaroo.
Crown should be launching a full takeover bid for Echo that respects its monopoly licence and pays a premium for control. Instead, Packer is now gloating about using his political connections to undermine Echo’s Sydney casino just because they refused to give a competitor a seat on the board.
Sadly, all we are getting from most of the media is this narrative of Packer being a political genius out-smarting a rival company. Where is the outrage? Who is standing up for proper process and transparency? Who is looking out for Echo’s 120,000 mum and dad investors? And what about the debate on problem gambling when Australians are already the world’s biggest gamblers?
You’d think Sydney in 2012 would be above these Russian-style deals between oligarchs, media interests and politicians. Especially The AFR, which should be maintaining a respectable distance to independently cover the political moves of a controversial casino developer.
*Stephen Mayne is the policy and engagement co-ordinator for the Australian Shareholders’ Association