Australia casino boss Packer flags Crown selldown after "painful" claims
By Byron Kaye
SYDNEY (Reuters) - Australian casino magnate James Packer said Thursday he may have to cut his stake in his company in order for it to retain its license and said he would be accused of being accused after the "terribly shocking experience" never join the board again criminals.
The reclusive billionaire also recognized the company he founded, one-third of which is owned by Crown Resorts Ltd <CWN.AX>. He published false statements distancing himself from "junket" tour operators who brought in players, mostly from China, according to media reports as having links to organized crime.
The comments came during a government investigation into whether Crown could keep its license to operate casinos just two months before the company is due to open a 75-story casino tower in Sydney.
Since the arrest of employees chasing customers in China, where gambling is banned, Crown has given up its offshore interests and left the casinos in Melbourne and Perth. The future is tied to the Sydney resort, which was built for A $ 2.2 billion (US $ 1.6 billion).
Packer no longer has an operational role at Crown after leaving its board of directors and selling some of its stake - including a stake in Melco Resorts & Entertainment Ltd <MLCO.O> after "forgetting" the Hong Kong company dated Australian gambling market was excluded.
When asked on his third day of testimony how Crown might remedy the situation, the retired judge who oversaw the investigation called "Dysfunction" said, "Holdings may be a cause for reflection."
The second largest shareholders after Packer hold around 10%.
"I think you would accept that some serious changes need to be made, would you agree?" asked Patricia Bergin.
"Absolutely," replied Packer.
During the hearings, executives downplayed Crown's trust in junket players known as VIPs. About two weeks ago, the company released a filing that found VIPs represented only 7% of pre-tax profit for the past five years. This included an anti-gambling campaign by the Chinese government.
Still, Packer agreed that the Sydney project was conceived as a way to capitalize on the influx of Chinese tourists. Crown has already had a stake in Melco, which benefited from the same custom in Macau, the only Chinese area where gambling is legal.
"I thought that the Chinese tourism market in Australia would continue to grow in double digits ... and I was clearly wrong," he said.
Crown had forecast that a third of its profits in Sydney would come from VIPs, but "it is highly doubtful that we will get anywhere near our original numbers," he said without giving a timeframe.
Most tourists to Australia come from China, official data shows, although the numbers were accompanied by a deterioration in diplomatic relations before Australia closed its borders to prevent the novel coronavirus from spreading.
Of its two operating Australian casinos, Crown reported an 80% decline in annual earnings through June, including payments for government aid, largely due to border closings.
The lawyer who interviewed Packer, Naomi Sharp, told the investigation that Crown had placed full-page newspaper ads to counter allegations in media reports. The advertisements said Crown's only junket was Suncity Group Holdings Ltd <1383.HK>, which is listed on the Hong Kong Stock Exchange. However, according to Sharp, the company used at least four junkets - none of which were related to the Hong Kong company.
"I agree," Packer replied.
Suncity did not respond to a Reuters request for comment. The company said it had no business in Australia, industry media reported.
Packer also agreed, "in hindsight," that portions of the advertisement were false, including claims that Crown had a robust verification system for junk operators.
"That was a terribly painful and terribly shocking experience for the board, just as it was for me. I'm not going to get on the board again," said Packer.
($ 1 = 1.4027 Australian dollars)
(Reporting by Byron Kaye; Editing by Christopher Cushing)
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