It was not long ago at all that James Packer, the largest shareholder in Australia’s largest gambling company, Crown Resorts, was one of the lead cheerleaders for China in corporate Australia. Yet since 18 Crown staff -- and at least 10 more from “partner” companies -- were first detained and then, this week, arrested in China (most of them -- one Crown employee, Jenny Jiang Ling, had been set free), Packer has had very little to say about China at all. In fact, Packer has been pretty much invisible after the double-whammy of the break-up of his engagement to US pop singer Mariah Carey and the well-planned and seemingly perfectly executed swoop by China's authorities on Crown staff. Crown’s China crisis -- it’s just the latest in a long and sorry line of Australian “blue chip” companies to have big problems in China, including Foster's, Elders and Rio Tinto -- caused the company’s share price to plunge. It’s been a bad few months for Packer, but really, boo-hoo for one of Australia’s more famous poor little rich boys. But we should feel sorry for its shareholders and staff, because Crown’s current situation is very clear-cut case of appalling board strategy and oversight. It’s no wonder that Packer dodged this year’s annual general meeting, held in Perth. He is no longer chairman of the company -- that’s now long-time investment banker Rob Rankin -- but he is still the company’s biggest shareholder, with his private company, Consolidated Press Holdings (CPH), holding about 48% of its shares. It’s worth noting that it was only at the end of August that CPH sold down 4.8% of its shares, falling below the 50% threshold of majority shareholder for the first time since Crown was spun off from the previous Packer family public company, Publishing and Broadcasting Limited. Like the Murdochs, the Packers have always stacked their public company boards with mates -- but unlike Rupert Murdoch’s boards, which are peppered with international business and political types, the Packers have always taken a very local approach. But with so much of Crown’s business in Asia, it has now proved to be one of Australia’s “how not to” for corporate governance models. The lack of any Asian or gambling industry knowledge on its board has been if not fatal then certainly significantly to the detriment of shareholders and now, Crown staff. Chinese lawyers estimate they could be incarcerated for a further six months. [Crown prince Packer in damage control after Chinese sting on high-rolling exec] Yet Crown made the mistake that so many foreign companies have made since China’s opening-up and reform process began in the 1980s: taking China for granted once they figured out how to tap into its rivers of cash without getting any real understanding of the risks involved in China. Crown’s long-time chief executive Rowen Craigie -- who is also on the board and the board’s risk management committee -- can take a bow. Craigie made the same basic error that Sam Walsh made when he headed Rio’s iron ore division: leaving the locals in charge, with Crown’s vice-president, Jason O’Connor, doing fly-in, fly-out visits, sometimes to collect a plane load of millionaires to take back to Melbourne or Perth. That Chinese authorities waited for O’Connor to be in Shanghai until they swooped tells you all you need to know about how long they had been watching Crown and planning their raid -- and how very unlikely that he or any of his staff will escape a prison sentence. Last year, two Korean casino companies had dozens of staff locked up in China for marketing their services and taking Chinese high-rollers, or whales, to Korea -- yet Crown kept on doing its thing. Joining Craigie on the board’s risk-management committee is its chairman, Geoff Dixon, whose main experience in China was flying two planes a day there when he was chief executive of Qantas, as well as plugging Australia as a tourist destination when he was chairman of Tourism Australia. The last luminary on the Crown board’s risk-management committee is Rowena Danziger, the legendary headmistress of posh Sydney girls school Ascham (Gretel Packer is an alumna). Gambling in China is a grey area -- we know this because Crown doesn’t actually have offices on the mainland. We also know that marketing of gambling activities on the mainland and trips involving 10 or more people to foreign casinos for the purpose of gambling is illegal. In order to facilitate what one has to guess is exactly that, Crown very publicly bought not one or two but three Bombardier jets to ferry the wealthy gamblers known as “whales” to its casinos. That these activities are marked as illegal is spelled out clearly in section 303 of China’s criminal law. Rankin -- who is bright enough and as cunning as they come, both good qualities in a director -- has eschewed a big part of his job: the opportunity to clean up the ageing and largely irrelevant Crown board. He does have something of a conflict of interest, being chief executive of Crown’s largest shareholder, PBL, but why should that stop him from wanting Crown to be better run? Had he done so he might have marked himself out for a long and fine career on Australian boards. Instead, he finds himself presiding over a corporate disaster that is already seriously damaging the lives of its imprisoned staff and their families, and the ordeal has only just begun. And for the record, at the Crown AGM, Rankin told shareholders he was happy with the company’s corporate governance. He has a law degree, so one has to wonder if was paying attention during class. This sort of thing does not happen to well-run companies with good boards who understand the environments in which they are operating. James Packer clearly thought that talking up China, to the extent that Australia should think about changing its security strategy from being US- to China-focused, shows just how out of touch he is; little wonder he is hunkered down in Tel Aviv. And even if Crown survives this crisis  -- which it probably will because, at the end of the day, a casino monopoly in any decent-sized city is a licence to print money -- Rankin needs to do the hard yards of cleaning out his board, and that would involved convincing his biggest shareholder that it needs to be done -- or step aside so someone with bigger cojones will. The chairman’s and indeed entire board’s duty is to all shareholders, not just the rich bloke that gave them their jobs -- and to the company’s staff, too.