Do politicians make good public company chairs?
We’ll find out after 10am tomorrow when former Howard government Helen Coonan chairs her first Crown Resorts annual general meeting (AGM) since taking over as the “independent” chair in January following a coup against James Packer’s hand-picked executive chairman John Alexander.
Alexander clearly had to go, and will exit the board tomorrow after being paid almost $100 million by various Packer-controlled organisations since 1998.
As the allegations via independent MP Andrew Wilkie, and then Nine’s investigative reporter Nick McKenzie, piled up against Crown, Alexander led the charge in denying everything, even after the NSW and federal governments had ordered public inquiries.
Coonan told the inquiry headed by former judge Patricia Bergin yesterday that the independent directors decided shortly after the 2019 AGM that they needed to step up.
A quick read of the AGM transcript will demonstrate why, as it matched the tone of this now notorious full-page newspaper advertisement lodged with the ASX in July last year after 60 Minutes went to air with a devastating 50-minute story that has had 4.6 million views on YouTube.
Coonan presents herself as the cleanskin independent who can fix the situation, but there are multiple problems with this, including her nine-year tenure on the board, her age (she turns 73 next week), and her ridiculous workload chairing six organisations while also running her Coonan consulting business.
Frankly, Crown’s newest director, former Aristocrat chief financial officer Toni Korsanos, is the only incumbent independent director who should survive, with the possible exception of Jane “children overboard” Halton.
However, both signed the notorious denialist newspaper ad.
Given the incompetence demonstrated by the directors from being uninformed, asleep at the wheel and then in denial, the next chair of Crown is probably not currently on the board and will need to be promptly recruited. It would need to be someone of the stature of Woolworths chair Gordon Cairns or CBA chair Catherine Livingstone.
Chief executive Ken Barton, after just nine months in the job, carries far too much baggage from his nine-year stint as chief financial officer after joining Crown from Boral in 2011.
Tomorrow’s AGM (watch here from 10am) will be the last day in which Packer formally controls Crown Resorts.
He’ll do this by voting his 36.8% stake in favour of his hand-picked board candidates — Guy Jalland, Professor John Horvath and Halton — saving them from defeat at the hands of furious institutional investors.
Packer saved his friend Harold Mitchell at last year’s AGM when 53% of the independent shareholders voted to remove him. Coonan also attracted a 45.13% protest vote last year before Packer’s 36.8% stake lifted her final vote to 72.8%. There also would have been a remuneration strike last year but for Packer’s controlling stake.
The shareholders will be angrier this year, particularly after the share price crashed almost 10% on Monday after Crown advised the ASX that AUSTRAC has commenced enforcement action against it over money-laundering breaches. Why it took AUSTRAC so long is quite puzzling.
Since Packer sold a 10% parcel in Crown to his great mate Lawrence Ho for $880 million or $13 a share last year, the stock has plunged almost 40%, slashing the market capitalisation to about $6 billion and the value of Packer’s residual 36.8% stake to $2.2 billion.
Investors are pricing in an AUSTRAC fine of up to $500 million based on past experience: AUSTRAC hit Westpac with a $1.3 billion fine; CBA $700 million; Tabcorp about $100 million.
Throw in 47 excruciating days of public hearings at the Bergin inquiry called by the NSW Independent Liquor and Gaming Authority, plus a show cause notice last week from Victoria’s normally meek gambling regulator, and Crown has a very big and expensive regulatory hole to climb out of.
The China-focused VIP business will potentially never be the same because, at its core, it relies on slack money-laundering laws, commercial arrangements with Triad associates and easy visa processing to attract billions in hot money out of China.
Given it was Packer who drove this strategy, including partnering with the notorious Ho family in Macau, the most likely outcome of the Bergin inquiry is that he will have his voting interest in Crown cut to as little as 10%, mirroring a provision in the constitution of rival casino company Star Entertainment.
As for Coonan, is it really appropriate for a retired NSW-based Liberal politician to chair Crown when it is ultimately the Liberal government in NSW that will decide Crown’s fate — particularly if the gambling regulator recommends legislative reform on the back of Bergin’s recommendations?
When Coonan was Howard’s communications minister she relaxed the media foreign ownership laws after the 2004 election which allowed Packer to enjoy his biggest pay day with the $5.5 billion sale of PBL Media to foreign private equity firm CVC.
Given this history of profitable favours, it was smelly that she was announced as a Crown director just days after retiring from the Senate in 2011. Coonan told Bergin yesterday she was introduced to Packer by a third party at the time.
It really is time that Australia introduced US-style laws that impose a cooling-off period before politicians can work for people they’ve helped in government.