Jeepers, it’s not often that a corporate AGM exchange is replayed at a judicial inquiry and then the CEO of a public company admits he gave a misleading answer. That’s what happened at the NSW inquiry into Crown Resorts yesterday.
Nine’s Patrick Hatch reported the exchanges in today’s papers, quoting commissioner Patricia Bergin getting stuck into Crown Resorts CEO Ken Barton for his response to a question I asked during the company’s October 2019 AGM regarding the level of selective briefings that controlling shareholder James Packer was being provided.
2019 saw a very frustrating AGM for Crown, where then-executive chairman John Alexander was in denial about everything, refusing to admit Crown had done anything wrong in regards to mismanaging money laundering risks, despite an avalanche of allegations unveiled by Nick McKenzie on 60 Minutes and in the Nine papers a few months earlier.
Alexander had long been a Packer loyalist and fixer. Like his boss, he usually took a minimalist approach when it came to public disclosure and dealings with the press.
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But Packer was no longer on the Crown board, so I asked this question:
I’m suggesting that you’re not communicating very well with your shareholders. What’s the protocol with how we’re communicating with Mr Packer? And he’s just a shareholder. He’s a big one, but he’s just a shareholder … So is he getting access to company documents? Is he getting selectively briefed? Can he ring up and ask for a briefing on a scandal? So does he get special treatment? Does he get access to information? Or is he treated like me and he’s looking at the ASX announcements for Crown’s response to front page after front page of allegations?
The directors stayed silent and CEO Barton quickly stepped up and replied as follows:
If I could answer your question in the context of Crown’s relationship with [Packer’s private company] CPH, which is probably slightly broader than the question you asked. And you’ll be aware, from our accounts and disclosures, that for an extended period of time, we’ve had an arrangement with CPH where they provide a range of services to Crown. Valuable services around our management, around our strategy. In order for them to fulfil those services we provide information to CPH. So that information is provided to them to enable them to prepare those services, and that’s been disclosed for many years now in our accounts.
What Barton failed to say was that Packer was getting daily briefings. Commissioner Bergin took particular exception to this, excoriating Barton in the following terms as reported today:
‘So couldn’t you just tell him in truth: “I’m briefing Mr Packer on a daily basis”?’ Commissioner Patricia Bergin asked.
Mr Barton agreed that would have been ‘a more complete answer’.
‘It would have been a true one, wouldn’t it?’ an exasperated Commissioner Bergin asked.
‘It would have been the true answer, yes, Commissioner,’ Mr Barton said. ‘In hindsight, I could have easily answered the question to say that Mr Packer also gets information’.
After asking questions at almost 500 AGMs since 1998, this is the first time a judge has taken someone to task for the incomplete way a question was answered.
The story that is emerging here is of a cowboy company still controlled by Packer even though he is not on the board.
The independent directors purported to take control when Alexander was removed as executive chairman last year, replaced by Helen Coonan in the chair role and Barton as CEO.
However, all of the directors have still been voted onto the board by Packer himself. Packer is giving evidence next week via video link and then it will be up to commissioner Bergin to make some recommendations about Crown’s suitability to run the high roller casino it is building at Barangaroo in Sydney.
From what we’ve heard so far, I hope commissioner Bergin recommends that Packer be restricted in his control over the company, in order to show some accountability for all the dubious practices which have been uncovered.
The most effective way to do this would be forcing him to sell down to below 15% and then requiring significant board changes. Given that Packer has been trying to sell down over the past couple of years anyway, maybe he should just get ahead of the curve and get it done.