Crown Resorts chief executive Ken Barton has stepped down and will probably walk away with at least a $3m payout as the beleaguered casino giant takes urgent steps to restore its suitability in the wake of the Bergin report.
But Barton’s departure has forced Crown to return to having an executive chairman for the time being, an arrangement that has been criticised in the past as compromising the independence of the board.
Helen Coonan, the chair of the board, will take on the dual role of chief executive while the casino giant hunts for a new CEO.
“Assuming the role of executive chairman is a decision I have not taken lightly but the board feels it provides leadership stability and certainty at this important time for the business,” she said in a release to the ASX.
Key executives and board members must be approved by the NSW casino regulator and the Victorian regulator as suitable to be close associates of a casino licensee before they can be appointed, which means there are limited options open to Crown.
The clear out of key executives and the board follows a scathing assessment by former supreme court judge Patricia Bergin of Crown’s management and board and their lack of action over money laundering and the involvement of organised crime in junkets used by Crown to bring high rollers to its casinos.
The inquiry heard evidence that Crown had operated accounts outside its anti-money laundering reporting and that bags of cash had been brought to high roller rooms.
When Barton was appointed just over a year ago to replace executive chairman John Alexander, Crown told the market the new arrangement “brings our structure more inline with contemporary governance practices of a non-executive chair and a separate CEO”.
Crown has long been criticised by governance experts for having an executive chairman, who until 2018 was also the company’s largest shareholder, billionaire James Packer.
Boards are meant to serve as an oversight body for executive decisions within a company, and are also meant to represent the interests of all shareholders, not just the majority shareholder.
After Packer’s resignation, John Alexander, a close lieutenant became executive chairman.
But facing the prospect of the NSW inquiry into Crown’s suitability, headed by Patricia Bergin SC, Alexander stepped down as CEO in January 2020 to be replaced by Barton, the longtime chief financial officer of Crown. He also surrendered the chair role to Coonan.
However Alexander remained a director until last year’s annual general meeting and was on the payroll as a consultant until January this year, for which he was paid $3.5m.
Other executive departures have included Barry Felstead, who was chief executive of the Australian resorts, and a key figure in the VIP gaming business, which has come under intense scrutiny during the inquiry. He is understood to have been paid an undisclosed redundancy.
Joshua Prestons the chief legal officer has also resigned.
Last week Coonan announced more board departures including former AFL chief executive Andrew Demetriou and the two directors who had represented Australian Consolidated Press, Guy Jalland and Michael Johnston.
Under his pay deal, detailed in Crown’s 2020 annual report, Barton is entitled to 12 months of pay in lieu of notice. His salary is about $3m.
Crown could only have avoided this payment if it sacked him “for serious breach or misconduct”.
The company will retain him as a consultant to assist Coonan in the handover, but the terms of this deal have yet to be negotiated.
Barton retains options to buy shares in Crown, but these are unlikely to become valuable because the price at which he can buy stock is well above the company’s current share price.
However, options to buy shares in a digital subsidiary may retain some value, which could be negotiated with Crown for an extra cash payment.
The Victorian Commission for Gambling and Liquor Regulation (VCGLR) said it would discontinue its consideration of the suitability of Barton and Demetriou given their resignations.
“However it will continue its investigation regarding Crown Resorts director, Harold Mitchell.
“Any new appointment of directors requires regulatory approval by the VCGLR to determine they are suitable to be an associate of the Melbourne casino operator,” CEO Catherine Myers said.
In November, VCGLR asked Mitchell to explain how he is a suitable person to be an associate of Crown Melbourne.
Meanwhile, WA’s chief casino officer has stood aside after it was revealed he’d maintained social contacts, including regular fishing trips on his boat, with two legal and compliance executives at Crown Perth.
Michael Connolly’s role included granting or refusing licences, and approving key casino staff members.
It’s understood department director general and chair of the Gaming and Wagering Commission, Duncan Ord, only recently became aware of the relationship.
Connolly stood down on Friday after questions were raised by 6PR’s Gareth Parker about the relationships last week.
In a statement Ord said the Crown employees were not part of Crown’s executive or senior level of management, nor did they occupy decision-making positions.
Ord acknowledged the social contact but denied the staff involved were part of Crown’s executive or senior level of management or “occupied a decision making position”.
“Mr Connolly does not refute socialising with employees of Crown Perth, including taking them fishing on his trailer boat,” Ord said.
“The nature of the relationship is one of being friends for an extended period. This friendship, and any potential or perceived conflict has been declared formally and has been discussed and declared to myself and the former director general Barry Sargeant, as well as the Gaming and Wagering Commission, who have noted the declaration of interest in the minutes of meetings.
“In consideration that there should be no perception of a conflict of interest, Mr Connolly is stepping aside from his role as chief casino officer effective immediately.
“Mark Beecroft has now assumed the role to assist the commission with its response to the inquiry report.”