For almost a century the Packer family has wielded extraordinary influence in Australia due to its extensive media and business empires.

The power was shown when James Packer fought political opposition to build a second casino on Sydney Harbour, a glass encrusted tower he hopes will become a symbol of the city.

But as the A$2.2bn casino and luxury hotel prepares to open its doors in December, the family’s dynasty risks being tarnished by a government inquiry considering whether to approve the licence to run the new project.

Several weeks of public hearings at the inquiry have generated strong criticism of the corporate culture and governance at Crown Resorts, the ASX-listed gaming group in which Mr Packer owns a 36 per cent stake. They are also shining a light on the 53-year-old casino mogul’s struggles with mental health.

Mr Packer’s faltering testimony at times stands in stark contrast to the robust exchanges between his late father Kerry Packer and MPs during parliamentary hearings on his media interests in 1991.

“This [inquiry] has been a terribly painful and terribly shocking experience for the board, as it has been for me. I won’t be going on the board again,” Mr Packer told the New South Wales Independent Liquor and Gaming Authority inquiry, via video link from his super yacht earlier this month.

In one exchange with counsel assisting the inquiry Mr Packer admitted sending threatening emails to a prominent banker during talks on a 2015 plan to take Crown private. Mr Packer said he was surprised the individual reported being fearful for his safety but noted that his own conduct was “disgraceful”, adding that he was being treated for bipolar disorder at the time.

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The Crown inquiry, which is headed by Patricia Bergin, a former judge, is investigating whether Crown engaged in money laundering, breached gambling laws or partnered with junket operators with links to drug traffickers, money launderers, human traffickers and organised crime groups. It was set up last year following media reports that organised crime gangs laundered money at the company’s Melbourne casino.

The inquiry heard allegations about large amounts of cash deposits made at Crown’s Melbourne casino in VIP rooms run by junket operators with links to Chinese triad gangs. Any such deposits made outside the casino’s standard “cage cashier operations” raise risks of money laundering, as they can avoid registering the identity of patrons and the scale of deposits.

“This has reached debacle levels, it’s extraordinarily troubling,” Ms Bergin told Crown’s chief executive Ken Barton when he said he was unaware of the allegations until footage of cooler bags stuffed with cash being handed over in the VIP rooms was aired by Australia’s Nine media network. Directors told the inquiry they were not informed of concerns about money laundering and only had limited training on the issue.

The inquiry risks eroding confidence in Crown, which due to a strict Covid-19 lockdown in Melbourne is relying on government handouts to pay thousands of employees. The board faces a possible shareholder revolt at its annual meeting on Thursday when three directors are up for re-election. And regulators are stepping up their scrutiny of the group.

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On Monday, Australia’s financial crimes agency, Austrac, confirmed it had begun a formal investigation into money laundering — a cause for concern for shareholders given it recently fined Westpac a record A$1.3bn for breaching money laundering laws.

Elizabeth Sheedy, professor of applied finance at Macquarie University, said the hearings revealed a lack of adequate oversight and independence displayed by directors on the Crown board. “Based on what has been revealed so far, there is a significant risk that Crown will lose its licence to operate in the gorgeous new harbourside Sydney casino,” she said.

Mr Packer appears to grasp the seriousness of the threat to Crown, which represents the bulk of the fortune he inherited from his father. During his evidence to the inquiry he suggested the inquiry may put a cap on the amount of shares he could own in the company — a move that would force him to sell down his stake and reduce his influence over Crown.

The alternative — recommending Crown is stripped of its licence to operate in Sydney — would impose a major financial blow to the company and shareholders.

jamie.smyth@ft.com

Via Financial Times