As it happened: James Packer says Crown and Melco mulled full merger, admits Stanley Ho link

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For James Packer and governance fans, we will be back tomorrow to hear more evidence from the billionaire mogul from 10am.

But before he left the witness box for the day, counsel for Crown, Neil Young, QC, took the commission to a 2006 report by the Victorian Commission for Gambling and Liquor Regulation into Crown and Melco’s relationship.

It paints a different picture of the relationship between banned investor Stanley Ho and his son, Lawrence.

Young says: « The finding was that further rigorous investigation determined that Dr Ho does not have any ongoing influence over Melco or the new chair of Melco, Mr Lawrence Ho. »

Counsel assisting Adam Bell, SC, spent the last few minutes of Wednesday’s hearing looking into the share sale deal between James Packer and Lawrence Ho’s Melco breaking up in April 2019.

Bell asks Packer why he agreed to terminate the second half of the share sale deal, despite there being no obligation to do so. By doing so, Packer gave up a contractual right worth over $90 million, based on the change in the Crown share price since the agreement was struck.

« I can’t recall, » Packer says. « I recall Mr Ho saying that he didn’t want to proceed or things were too difficult or something like that. »

Commissioner Bergin asks if Packer and Lawrence discussed his banned father Stanley’s interest in Melco, which by that point had become public and a major a problem for Crown.

Counsel assisting Adam Bell, SC, is now asking James Packer why he agreed to sell part of his stake to Melco given the restrictions on any investment by Stanley Ho, a beneficiary of a significant shareholder in Melco.

But Packer is initially reluctant to say he didn’t pay regard to the restrictions, instead saying he forgot that those restrictions applied.

Bell: You didn’t think about the regulatory agreements Crown had with the NSW regulator at the time of this transaction?

Packer: I believe that would have been found in the legal preparation for the transaction… I left it to my legal team, and I gave it no thought, I had forgotten.

Bell: You say you had forgotten but isn’t the truth that you didn’t think of it at all.

Packer: Dr (Stanley) Ho was in a very sickened stake, I regarded Melco resorts, to his credit, as Lawrence’s company.

Bell: You didn’t turn your mind at this time to the fact there were regulatory agreements with the nsw regulator intended to prevent Stanley Ho or a Stanley Ho entity taking an interest in Crown?

And then a little later, Bell asks Packer whether he paused to consider whether the Melco sale could cause harm to Crown.

We’ve taken a five minute break before we enter the home stretch of today’s hearing. We’ll be running after 4pm because the inquiry took a two-hour lunch break.

James Packer has just been taken to emails between him and Melco boss Lawrence Ho where Packer and Ho were discussing future plans for their respective gaming companies.

Counsel assisting the inquiry Adam Bell then uncovers a big bit of business news — that Crown and Melco considered a full merger in 2019.

Bell: When do you first recall talking to Mr Ho about the acquisition of Crown shares.

Packer: The substance of that conversation, Lawrence briefly touched on a full merger of Melco and Crown but quickly changed that position because it didn’t work for him or for me. … Lawrence was interested in doing something with Crown , if we could make it work.

Bell now asks Packer a series of questions leading to the important point of whether Packer continued to act as though he was in charge of Crown even after he left the company’s board in 2018 (but continued to own 46 per cent of its shares) by telling executives what to do.

Bell: You said that your intention in making these requests was to act in the best interests of Crown Resorts.

Packer: Yes. Bell: And when you were the chairman of Crown Resorts you made request of the senior executive that you expected them to carry out?

Packer: Yes. Bell: And in the period after [you left the board] you made requests to the executives of Crown Resort that you expected them to carry out, didn’t you?Packer: I expected them to listen to me and push back if they disagreed.

Bell: And they never did, at least in the examples we’ve looked at, did they? Packer: I can’t recall Mr Bell.Bell: You were acting as though you were still a director of Crown Resorts, weren’t you?Packer: I was under the impression I could communicate the way I was communicating. Bell: And that’s how you choose to answer my question is it?Packer: Yes Mr Bell.

Counsel assisting is taking James Packer though some emails he sent to senior executives at Crown Resorts while he was just a shareholder at the company. And there’s more allegations he pressured staff at Crown to hit his targets.

« I think all of you have had your heads in the sand this year, we never make our plans and I’m sick of it. Make sure for your own sake we achieve the FY plan, » Packer’s email says.

Bell then asks Packer: You were making threats to the senior executives to Crown Resorts, weren’t you?

Packer shoots back: No , I was frustrated, I was frustrated because I had been saying for the good part of the financial year that the executives were being too optimistic.

Bell then asks if it was correct that Crown executives followed his instructions during this period.

Counsel assisting the inquiry Adam Bell, SC, is now asking James Packer about the influence he continued to wield at Crown even after stepping off the company’s board in 2018, and asks if he was « regularly providing instructions to senior executives ».

So Bell takes him to a series of emails in May last year, demanding Crown’s then CFO (now CEO) Ken Barton send him updated Crown financial forecasts « that he believed in », and for then executive chairman John Alexander to check the numbers.

Bell then he presents November 2018 emails Packer sent to Alexander castigating him for going « on a world trip looking at restaurants ». Packer then gives Alexander his blessing to « go hard » on a cost cutting drive.

Bell: This was a significant management decision Mr Alexander was proposing… and you’re telling him he had your blessing. You expected Mr Alexander to act on what you said and implement those cost cutting measures.Packer: I expected Mr Alexander to act on what he said and what I agreed with. Bell: You were giving your blessing to implement cost cutting measures? Packer: Correct.

Commissioner Patricia Bergin then points out that Packer’s emails show the cost cutting plan was his idea that Mr Alexander agreed to.

James Packer has just been taken from an email by Crown director Andrew Demetriou to the casino mogul in late 2018. The inquiry heard the email was sent by the former AFL boss shortly after a Crown board meeting in December that year.

Counsel assisting the inquiry, Adam Bell, SC, says the email shows Demetriou telling Packer: « I promised you I’d give you feedback post the board meeting of some of my observation observations together with explanations from management. »

Bell adds: And he then proceeds to provide you with information about his observations, observations of information which have been provided by management.

Bell then says Demetriou’s email ends: « These are just my thoughts James I’ll continue to support you and Crown. »

Demetriou now joins a list of executives and directors passing confidential information about Crown’s activities to its largest shareholder despite Packer not at that time holding an executive or board position.

Source: https://www.theage.com.au/business/companies/crown-inquiry-live-updates-james-packer-faces-second-day-of-questioning-over-casino-scandals-20201007-p562p3.html

James Packer

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