The missing chapters of the inquiry into Crown's Sydney casino bid

One of several people who emerge from the affair without any apparent blemishes on their character is the Crown Casino chairwoman, Helen Coonan, a former Liberal minister for communications, now fated, if the Bergin report is to be followed, with the doleful task of cleaning up the mess left by years of mismanagement by some other directors, senior managers and even by a one-time controlling shareholder James Packer. Coonan, a member of the Crown board for nine years and chairman of directors for the past two, cannot apparently be faulted for not really knowing what was going on. That is because she was being misled, and made the mistake of believing misleading or false things told to her by the chief executive officer, other senior executives, and a number of board managers (often associated with the Packer empire) whose functions and duties had become mixed up when they became actively involved in the business.

Bergin, sitting as the Commissioner of Inquiry under the NSW Casino Control Act, thought it "appropriate to observe" that Ms Coonan's heavy reliance on the now-departed CEO Ken Barton "has unfortunately been misplaced. However that misplaced reliance should not be seen as a flaw in the chairman." No. No. No.

"Ms Coonan has demonstrated the qualities that are necessary to have taken her to the leadership role of Crown, and is exquisitely aware of the depths of the problems within the company of which she is now chairman."

"Ms Coonan accepted the serious corporate failings of Crown and notwithstanding those corporate failings is willing to, as she put it, stay the course. That commitment in the circumstances of the evidence that was exposed ... is no small matter. The burden of reformation will be great."

"The review of the chairman's evidence demonstrates that her character, honesty and integrity has not been and could not be called into question. The [Casino] Authority would be justified in accepting any commitment or undertaking given personally and/or on behalf of Crown that may be proffered by the chairman in respect of the future operations of Crown..."

It's an extraordinary encomium, and a handy reminder to those with any experience of royal commissions, inquiries and other bodies with duties to protect the public interest. Bergin asked whether the Crown Casino management (including through its Melbourne and Perth operations), were fit and proper persons to be entrusted with a licence to operate a casino in Sydney. They were not, for a range of reasons, including inadequate and always somewhat reluctant controls on money laundering by organised crime, association, through junket operators, with Chinese triads and other organised crime figures, including in the illegal export of money from China, and because of a clear breach of an explicit undertaking that the casino would have no links with Stanley Ho, the Hong Kong casino operator.

Perhaps those who drafted the terms of reference guessed that such an outcome was inevitable, given media disclosures, vehemently denied by casino directors, of course, of its slack management and controls. But the powers that be did not want the casino dream to die, of course. No, no. Justice Bergin was also asked to turn her thoughts to how Crown could, with better systems and management, reform itself to the point that it became transformed into a fit and proper person. In making recommendations about this, Bergin, and later the casino control authority, have made it clear who has to go. They include some directors, some managers, and at least the power and control on the board of James Packer. But he cannot sell his shares to any old person, let alone anyone he explicitly promised, as a condition of the original deal, would not be allowed any role in the casino, its profits, or its modes of operation.

But Ms Bergin has not confined herself to saying who should be out. She's also identified those who should be allowed to survive on the board, so that they can rebuild the enterprise. From the commissioner's remit, of course, this is primarily confined to helping the owners open and manage the hideous Barangaroo edifice at Darling Harbour, supposedly (or at least originally supposedly), as a high-stakes resort for large "whales" - filthy rich people, mostly from the Orient, wanting to gamble away large fractions of their wealth.

But, whether directly or through associated entities, Crown already runs casinos in Perth and Melbourne, and the way these have been (and I suspect will in future be) run inevitably affects assessments of its character. All the more so in a situation where it has been shown that controls have been slack, and that management has had a tendency to resist any reforms unless someone is looking.

Luckily, the well-paid, well-equipped and much vaunted independent "cops on the beat" have been singularly unsuccessful in discovering much in the way of managerial malfeasance or incompetence, and they haven't found many crooks allowed into the casinos. Governments, of whatever stripe, loudly speak of such controls when wowsers or others who deplore the extent of gambling immiserating Australia are always apt to talk of how their tough probity controls deny even the possibility of association with crime. Indeed politicians may really want casinos to be squeaky clean, given that they are, or ought to be, very profitable even then. Government is deeply hooked on revenue from gambling taxes, and is little inclined to listen to complaints about the impact of addiction to gambling on Australian families.

From the headlines one could be deducing that James Packer gambled and lost. He had demanded the extremely valuable site from an extremely pliant government, and was given it without any competitive tendering. Successive NSW governments had, indeed, guaranteed a monopoly to a rival casino, Star, but even that was torn up once Packer had the Liberal Party stand and deliver. Packer was getting what he wanted, but always had to satisfy a not terribly hard inquisition that he was a fit and proper person to run it, that he could be relied on to keep out criminals and money launderers, and not form combinations with operators believed to have connections with organised crime.

But the fact is that a reformed Crown board will be sailing full steam ahead to take up the licence from an unresisting NSW government. Packer may no longer be the prime beneficiary (although he will have been allowed to take his profits). The high-rolling whale theory may yet again be demonstrated to be a furphy - as it always is. But there will be enough mugs, mostly locals, willing to blow their money, casually adding to the revenues of the NSW government.

One should not be surprised that some on the board, including Helen Coonan, are found to be of high character and reputation, if, apparently, a bit too dopey to realise what is really going on. It was always thus, especially when the business was intrinsically a bit dodgy - as gambling is. One gets a few of the great and good to sit in the board, certifying almost just by being there that all is on the level. Such a person of unblemished reputation would obviously have nothing to do with anything shady, after all.

Alas, some of the modern great and good do know a thing or two about governance and demanding answers. Another of the Crown directors, also a stayer, is Jane Halton, at least while she is not saving Australia from the pandemic, advising Scott Morrison about putting on the gas, and being on the ANZ bank board.

Ms Halton (at one time in the report called Ms Horton) was a late arrival at the board, but quickly busy in asking questions. Unlike Helen Coonan, she clashed a bit with Bergin, until Bergin warmed to her. Coonan and Bergin are of similar background and culture and know each other's "types" from top to bottom. Bergin was on the NSW Supreme Court until, fairly recently, she became "statutorily senile". After giving good inquisition as counsel assisting at extravaganzas such as the Wood commission into crooked cops, she gave the NSW RSL a well-deserved thrashing for its rotten leadership a few years ago. Coonan was at the bar before going into politics; her husband, Andrew Rogers, is a former NSW Supreme Court judge.

Bergin thought that Coonan, Jane Halton (formerly secretary of the Commonwealth Health Department, and later, of Finance) and another independent director Antonia Korsanos, were the "core of the changing character of the company on which the authority would be justified in relying for honest, open and fair dealing in the future"...

"It was certainly true that Ms Halton and counsel assisting were at odds on more than one occasion. It is also the case that Ms Halton was a touch argumentative," the older woman said condescendingly. "However the clear impression was that she was doing her best to give truthful evidence in difficult circumstances, but failing to adhere to the process of simply answering the question. Ms Halton had a somewhat unfortunate penchant for anticipating questions and providing information that was not quite responsive to the question ... Her self-assessment of speaking too much and thus irritating people was quite disarming.

"Ms Halton presented as a person who is most comfortable with being and feeling in charge of the agenda. ... Ms Halton may have felt rather negative about her experience in the witness box [but] certainly left it with her integrity intact.''

If I were asking if Australian casino managers were fit and proper people, I would begin my inquiries with an analysis of their relationships with government, not with organised crime, so far as that is not the same thing. There's a good chance, indeed, that the former is the more corrupting, the more corrosive of the public interest, and the more a cancer on the lives of thousands of Australian families.

There were more than 600 pages of tight commentary and analysis of power structures and processes in Crown casino in commissioner Bergin's report on whether the operation was being run by fit and proper people. She thought not. But she did not devote a word or a sentence to the way by which James Packer was effectively given Barangaroo by a new Liberal premier, Barry O'Farrell.

Not a word about the stable of former Labor and Liberal Party apparatchiks who moved on to make their fortunes prostituting their inside knowledge and their access to politicians so as to enhance his fortunes, often without even having to mention the fates of politicians who have ever stood in the way of anything a Packer wanted. Only passing reference to the way that members of the Packer family have adopted, then dumped, prominent sports players, television "personalities'' and even journalists over the years. Nor the others making their money by representing other gambling interests, hotels and clubs, the wine and liquor industry. It is a dirty and a shameful business, not in the least better or more honourable because of the supposed regulation of some lobbying, or the fact that perfectly decent people, even former politicians, become advocates for more respectable causes or businesses.

MORE WATERFORD:

The mental health problems, and more recent effective withdrawal from public life of James Packer may deserve him some public sympathy and perhaps some understanding. But in many respects his personality and business history, including a history of abuse and threats to people who stand in his way, are all of a one with the careers of his father and his grandfather, both, in their time, feared and revered as great businessmen. Yet James' father Kerry, seen as a bold entrepreneur, not least with cricket and football, and his sale and re-purchase of Channel Nine, was overrated as a businessman. Had he bought government bonds with what he inherited from his father, Sir Frank, he would have died a richer man. I doubt James will be able to say even that.

The Packers, the Fairfaxes and the Murdochs were never great capitalists operating on free markets. They have always sought shelter from competition, even now from Google and Facebook. Their wealth was built on monopolies, mostly given free by government. Owning newspapers mostly meant that they could dominate markets for advertising, or advertising of a particular sort. But it was the granting of commercial TV licences that took their wealth to new levels. Governments, usually Liberal ones, handed out the licences to the established media players because of fear of their power and influence, real or imagined, over voters. In many cases, as now, favours have been given even before they have been asked. The biggest problem of successive ministers for communications, including Helen Coonan, has been in anticipating the need for changes in the rules so as to accommodate media barons - often a difficult task if the agendas of particular barons clashed. At times over the years, extra monopolies - particularly over gambling - have been conferred, usually without any public quid pro quo for the value of the licences given. Pre-emptive buckles, or a genuine common belief in the particular regulatory environment temporarily being sought (for advantage) by politicians rarely earns long-term loyalty in return: those seeking return favours are asked not what they have done to deserve it, but what they have done lately.

But if the Bergin inquiry had many missing chapters, it also had many missing points. After ploughing to about half-way, the reader might have been forgiven for thinking it an inquiry into whether Crown was well owned, or directed or managed, rather than whether the public interest was served by having them, or anyone else, given a pick-pocketing licence. It has been simply taken as read - via a "trust us" decision by a deeply compromised government - that new players should operate in the market. The question was whether Crown had so far demonstrated the integrity, probity and purity of heart, to be the one. What sunk it most of all was that senior managers - mostly associated with original Packer control - were willing to talk the talk about tough controls to keep things fair and to keep criminals out. But when choices were called for that might have had the effect of making the casino less attractive to big money, criminal or not, managers were reluctant, resistant, and had a tendency to look to the letter, rather than the spirit of the law. In the spirit of just that, managers also tried to hide adverse reports behind claims of legal privilege, having laundered them though the law firms.

The first chapters of the books on government corruption, bribery, jobbery and misuse of public resources, were written on the history of gambling, grog, blackmail and sexual sin. Under the modern regime the potential for graft and improper "earns" is increasing exponentially, as is probably the prospect of post-career employment. No wonder there is so little official interest in making the system more honest. Only public outrage can overwhelm this.