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Michael Johnston, a director of both Crown Resorts and CPH Holdings, signed off CPH’s controversial $1.67 billion share sale to Melco, raising questions about how potential conflicts are managed and whether he should have informed the casino group.

The share sale is now the subject of a wide-ranging regulatory investigation including whether the casino operator’s failure to notify the authorities about the ownership change breached its licence conditions.

Mr Johnston’s signature on the May 30 share sale documents raises questions about his duties as a  director of Crown Resorts, which is required to report a change in the state of affairs under the Casino Control Act.

via apinews.org

Crown and CPH Holdings director Michael Johnston (right) signed the share sale agreement for CPH’s deal with Melco.  Getty

CPH  has only one other director, Guy Jalland, since James Packer resigned in 2018. Mr Jalland is also a Crown director. He  didn’t sign any documents released to the exchange but has been reported as one of the longer-term brokers of the share sale, which was done in-house and without external advisers.

Typically, representatives of a major shareholder on a company board would have a standing notification of a conflict of interest in relation to commercial issues.

Adam Bell, counsel assisting the NSW casino inquiry, said in his opening submission on Tuesday that Crown has argued that it was not informed of Mr Packer’s share sale “until after it had been executed, and in any event it was not within the power of Crown Resorts to prevent the execution of that agreement”.


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Mr Bell said the deal for Lawrence Ho’s Melco International group to buy a 19.9 per cent stake in Crown from CPH may have breached a condition of the gaming group’s licensing agreement for its Barangaroo casino – a position that underlines the conflict between the interests of CPH and Crown in the deal.

The 2014 VIP Gaming Management Agreement which governs the Crown Barangaroo casino licence lists 59 companies and individuals regarded as associates of Lawrence Ho’s father, the controversial Stanley Ho.

All of those listed are banned from holding shares in Crown, directly or indirectly. The list includes Great Respect Ltd, a British Virgin Islands company, which holds 20.44 per cent of Melco International and comprises the largest bloc in the 54 per cent of Melco controlled by Lawrence Ho.

A Crown Resorts spokesperson decined to comment on how its directors managed the potential conflicts.

“Out of respect for the ILGA [Independent Liquor and Gaming Authority]  inquiry and its processes, Crown does not intend to comment at this time.”

The first of the NSW hearings will provide an overview of the vulnerability of casinos to money laundering and susceptibility of junkets operations to organised crime.

The second and third hearings will consider the permissibility of the share-transfer to Mr Ho and media allegations of criminal behaviour at Crown’s Melbourne casino, respectively.

The last two hearings will consider the probity of Crown’s close associates, and the adequacy of existing gambling regulations.

Jemima Whyte writes on business, specialising in companies, capital markets and innovation. Jemima has reported on business for The Australian Financial Review for more than 13 years. Email Jemima at [email protected]

Jemima Whyte

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