Crown shareholders should turf out three directors, super funds advisor says
Shareholders should vote to turf out three Crown Resorts directors at a meeting next Thursday and others on the board should consider resigning, a key advisor to Australian and international super funds says.
The Australian Council of Superannuation Investors (Acsi), the Australian members of which control about $800bn in retirement savings, said an inquiry into Crown currently underway in New South Wales showed governance of the company had failed.
It said shareholders should vote against the re-election of former senior public servant Jane Halton, former chief medical officer John Horvath and Guy Jalland, who is a nominee of Crown’s largest shareholder, James Packer.
Proxy advisor Ownership Matters, which has clients including industry super funds, has also advised voting against the directors. However, rival advisor CGI Glass Lewis is recommending a vote for the trio.
Louise Davidson, the chief executive of Acsi, said investors would be “looking for director accountability for their oversight of governance failures identified during the NSW casino inquiry”.
“These include the board-approved private briefing of shareholders, oversight of anti-money laundering process and the ‘ill-advised’ public response to concerns over Crown’s practices.”
In July, Crown’s entire board signed a full-page advertisement hitting back at reports by Nine media outlets of allegations including money laundering and criminal involvement with junkets operating at the group’s casinos.
The NSW inquiry has heard the advertisement, headlined “Setting the record straight in the face of a deceitful campaign against Crown”, contained incorrect information.
“Beyond the three directors seeking re-election, what we have heard in the inquiry reflects poorly on the board as a whole,” Davidson said.
“A number of long-serving directors should be considering their position in light of what has emerged.”
The commission has heard Crown gave Packer and his private company Consolidated Press Holdings (CPH) daily financial reports even when he was not on the company’s board, including during the period last year when he was negotiating to sell some of his stake in the company to Hong Kong casino group Melco Resorts.
In response to a question from shareholder Stephen Mayne at last year’s AGM as to whether Packer was receiving any such “special treatment” compared with ordinary shareholders, Crown’s CEO, Ken Barton, who was then chief financial officer, said CPH received the information it needed to provide services to Crown under an agreement between the two companies.
However, he did not reveal CPH and Packer also received detailed information under a separate agreement with CPH in its role as a shareholder.
“The confidential board-approved process of providing daily financial reporting to CPH is something we have not seen before in an ASX200 company and we hope that we never see it again,” Davidson said.
Horvath is running again but on Wednesday told the inquiry that he expected to be part of a “board renewal process” and would only remain a director “for a relatively short period”.
The fate of the three directors will depend in large part on whether Packer votes the 36% of the company he owns in order to save them. At last year’s AGM his stake helped keep directors Harold Mitchell and Helen Coonan on the board despite large votes against them.
Voting records show construction industry fund Cbus voted against Mitchell and Coonan while hospitality industry fund Hostplus voted for them.
Both funds voted for the re-election of former AFL boss Andrew Demetriou, who on Tuesday denied to the inquiry that he was reading from notes to give his evidence, despite being played video that appeared to show that he was.
It is understood Hostplus is yet to decide how to vote at this year’s meeting.
In evidence to the inquiry last week, Packer said he expected commissioner Patricia Bergin might recommend capping his shareholding in the company, but did not reveal whether or not he would vote at this year’s AGM. A CPH representative did not respond to Guardian Australia’s inquiry.
Also unclear is the attitude of US fund Blackstone, which owns 10% of the company. A spokeswoman said the fund would not comment on its voting intentions.
John Alexander, who stood down as executive chairman in January but remained on the Crown board, is not running for re-election.
The other directors – Mitchell, Coonan, Demetriou, CPH nominee Michael Johnston, Geoff Dixon, Antonia Korsanos and John Poynton – are not up for re-election this year.