James Packer and Crown Resorts could find themselves in hot water over insider trading. An inquiry into Crown Resorts’ suitability to hold a Sydney casino licence is in full swing. It heard evidence Packer received secret financial forecasts before he sold $1.76 billion worth of Crown shares.
This practice is not only illegal but could have serious consequences for Crown’s yet-to-open casino in Barangaroo.
Crown’s chief executive, Ken Barton, explained to the inquiry panel what actually happened. Packer contacted Barton on May 3, 2019 to urgently request financial forecasts for Crown through to 2022.
Barton confirmed Michael Johnston, a Crown director and executive at Packer’s Consolidated Press Holdings (CPH) company, followed the request two days later. Johnston suggested Barton should increase the revenue projections in the report, the inquiry heard. Johnson wanted increased revenue assumptions for VIP and high roller gamblers.
CPH announced it was selling $1.76 billion worth of shares to Melco Resorts on May 30, 2019. This represents 19.9% of CPH’s stake in Crown Resorts.
Barton gave the inquiry evidence Crown’s directors were blissfully unaware of the deal until the night before it became public knowledge. He agreed he would have followed shareholder protocol had he known of the upcoming deal. Barton said he can’t remember if he made inflated forecasts in the financial report.
Inquiry Started Because Of Packer’s Share Sale
The inquiry into Crown’s suitability for a casino licence only came about because of Packer’s sale.
Packer planned to sell 19.9% of his Crown stock to Melco Resorts for $1.76 billion. Melco paid $880 million for half the shares but matters quickly turned sour. Melco was due to purchase the remaining 50% on September 30 but pulled out of the deal. The company has since sold its Crown Resorts shares to investment group Blackstone.
Crown signed a legally binding document in preparation for obtaining its Sydney casino licence. One specific clause banned Crown from any business dealings with Stanley Ho and a whole hose of companies and people connected him. Laurence Ho is Melco Resorts’ CEO is Laurence Ho, and the late Stanley Ho’s son.
Laurence Ho wasn’t named as a person Crown couldn’t deal with, but his involvement in another company triggered the inquiry. He was named as a director on the list of banned companies. He has since left that post.
The share deal sparked the New South Wales Independent Liquor and Gaming Authority into action. They are investigating if Packer’s share deal breached the Casino Control Act.
This inquiry and its findings are likely to have consequences for Crown’s Melbourne and Perth licenses. This is because the actions being investigated mostly took place in those two cities.
September 25 is the date set for Packer to give evidence at the inquiry.
Who Is James Packer?
James Packer is a 53-year-old billionaire who was the richest Australian in 2006 and 2007. His personal wealth weighed in at $4.94 billion in April 2019.
Packer is the son of the late Kerry Packer AC, a media mogul. He inherited Consolidated Press Holdings Limited, the Packer family company, and investments in Crown Resorts. Packer is, at time of writing, the biggest Crown Resorts shareholder.
Many of Packer’s early investments reaped dividends, but not so much in recent times. He has suffered from health and mental health problems in the past. Those issues saw Packer resigned from all of his business roles.
Packer is known for living a life of luxury and has several massive, lavish properties. He spent $200 million on a Benetti yacht. It should have cost $120 million but construction costs soared during the four-year building process.
He has been married twice and has three children, and once dated A-list celebrity Mariah Carey.
It will be interesting to see what Packer has to say for himself at the inquiry. Barton’s earlier statements seem to put Packer in very hot water with the authorities.