Even when the rich and powerful fall out, the house – their wealth – always wins. Michael Sainsbury examines the latest goings on surrounding Sydney’s Crown Casino.
The grubby nexus between Australian business, politics and the mainstream media has been laid bare in a leaked series of explosive emails from James Packer to senior Nine Entertainment executives, journalists and chairman Peter Costello.
The emails alleged that Costello was paid as a secret Crown lobbyist in 2011 for a year, a claim he denies.
Packer said that Costello’s role was to bring Packer “closer” to then Victorian gaming minister Michael O’Brien, his friend and former staffer. The job was undertaken while Costello was on the board of Future Fund and not disclosed on the national lobbyist register. He was elevated to Future Fund chair in 2014 and remains in the position which would also seem at odds with his role at Nine.
Costello is also chairman of ECG FInancial, a lobbying company he founded with former staffer David Gazard and Jonathan Epstein in 2012.
“To ensure that Crown Melbourne and Crown Perth remain among Australia’s most visited tourist destinations, we will continue to work closely with governments at all levels, as well as our other stakeholders,” Packer wrote in Crown’s 2012 Annual Report.
In the emails Packer, who presided over money laundering when chairman and a board member at Crown, said that Costello should “resign from all public positions.”
A career change for politicians
At the time of Costello’s engagement, Packer also employed ALP national secretary Karl Bitar and would also employ former Labor senator Mark Arbib in 2012.
During 2012, possibly within the time of Costello’s engagement, Packer added former Howard government communications minister Helen Coonan to the Crown board. Coonan would later rise to become Crown chairman, helping to execute the sale of the company in 2021 to US private equity firm Blackstone, which would reap Packer $3.3 billion.
Wendy Bacon outlined in 2012 just how many influential people were on “Team Packer“.
Nine has tried to hose down the claims, admitting that Costello worked as “an adviser” to Packer’s private company Consolidated Press Holdings in 2011. Packer’s emails claimed that the arrangement was with CPH because Costello did not want the Crown board to know about the engagement.
“Peter Costello did NOT lobby for CPH, he was an adviser to them on other business matters for a year in 2011 he has never been a registered lobbyist because he isn’t a lobbyist,” a spokesperson for Nine said.
Failed fight against pokies
During 2011 the Gillard Labor government was backing independent MP Andrew Wilkie’s attempts at slashing the numbers of poker machines, the largest cause of problem gambling in Australia. But there was pushback from the states, which rely on revenue from the machines.
On May 21, 2011, O’Brien had this to say to Fran Kelly on ABC: “The federal government are going into an area where they have had no constitutional responsibility in the past and it’s borne out of the deal where Prime Minister Gillard needed to secure Andrew Wilkie’s vote. It’s more about propping up the federal Labor government than it is about helping problem gamblers.’’
Still, O’Brien has denied meeting Costello, and would in 2013 propose a poker machine levy that would hit Packer’s business hard. The dispute between the Victorian and Packer was resolved “with Packer committing to make unconditional additional one-off payments of $500 million, plus up to $200 million in further revenue-linked payments in exchange for a 17-year licence extension to 2050, a cut in high-roller tax payments, and a modest expansion of pokies and table games,” according to Crikey founder Stephen Mayne.
Costello has positioned himself as anti-gambling and his brother, Tim, a Uniting Church minister, is one of Australia’s leading anti-gambling advocates and heads the Australian Gambling Reform Group. He had this to say in The Saturday Paper in May 2021: “We know that Crown had captured the regulator and both sides of politics in Victoria and we may well see that is the case in Western Australia.”
The emails were leaked to The Australian and recipients included Nine publishing MD James Chessell, Today presenter Karl Stefanovic, SMH columnist Peter FitzSimons and investment banker Matthew Grounds.
Packer’s business adviser
It’s hardly surprising that Grounds was included in the email chain. The former UBS Australia chief has long been Packer’s chief business adviser and the architect of his deals to sell Nine to private equity group CVC as well as developing Packer’s casino interests in Australia and offshore. As federal treasurer in 2006, Costello signed off on CVC’s $5.5 billion 75% stake in PBL Media then controlled by Packer.
Grounds is now co-executive chairman of boutique investment bank Barranjoey which well understands the business/politics nexus, including former Coalition minister Kelly O’Dwyer on its board.
Packer has been notoriously dismissive of journalists. Questions from the media were rarely permitted at the annual general meetings at Crown or Packer’s previous publicly listed company Publishing and Broadcasting Limited which once owned Nine. But Chessell was one of a coterie of Packer’s media confidants who also include Australian Financial Review gossip columnist Joe Aston and his biographer, The Australian’s Damon Kitney.
His close connection to Lachlan Murdoch, engagement of former Fairfax editor-in-chief John Alexander as something of a consigliere at PBL and Crown over the years, and close connections to executives at both media groups, have seen him get handled with kid gloves over decades since the disastrous One.Tel investment he made in concert with Murdoch.
Journalists at Fairfax, even before it was bought by Nine, have told of serial issues getting stories critical of Packer and in particular his Sydney casino project, Barangaroo into The Sydney Morning Herald.
Critical reporting of Packer and his interests has largely been left to independent media including Crikey, New Matilda, The Saturday Paper, this publication and others.
Two years after his Crown lobbying gig, Costello would join the board of Nine when PBL Media was refloated, taking the chair in 2016. In 2018, Nine swallowed up Fairfax, publisher of the SMH and The Age. Since then, a multitude of observers including former staff have noted the group’s coverage of the Coalition became much more favourable. Costello has certainly appears to absorbed the lessons he learnt from Packer in and out of government about the nexus between business, politics and the media with Nine’s controversial hosting of a Liberal Party fund-raiser in September 2019.
Packer appears to have fallen out with Chessell after the publication of the landmark 2019 ”Crown Unmasked” story by investigative reporter Nick McKenzie that triggered inquiries in Victoria, NSW and Western Australia that would lead to the suspension of Crown’s licence in NSW and ultimately to the sale of Crown by Packer.
In his emails Packer said: “I am staggered that your morale [sic] compass point so far from true north. I have nothing but contempt for you James.”
The response from Nine
Chessell responded in an internal staff message on Monday. “I never heard a word from Peter Costello about Crown Unmasked before, during or after publication/broadcast. I received another dozen emails from Packer last night. In the past he has copied in executives from competitors such as Seven and News. I hope he genuinely does make peace with Crown Unmasked and I wish him all the best. As Executive Editor I backed Crown Unmasked to the hilt, pushed for it to be a co-pro with 60 Minutes and backed our robust defence of those stories when Crown launched an (ultimately failed) PR campaign (supported by News Corp) to discredit us. Working with Nick, Batch, Kirsty and Grace was a highlight. No other newsrooms would have had the courage to run Crown Unmasked. Certainly not The Australian.”
In his emails Packer also described Crown Unmasked as “a great story”. He said that McKenzie “definitely knew more about what was really happening at Crown than I did”.
In fact, the entire Barangaroo project appears designed to enable money to be shifted around anonymously.
At the Australian Press Club on August 11, financial crime expert Nathan Lynch author of The Lucky Laundry which lays out the dirty money in Australian business, sketched out how this is done.
National Press Club: The Lucky Laundry @Canberra Writers Festival
Lynch said that one of the techniques to get around the anti-money laundering rules was getting high rollers to put their his money through the accommodation business, which is unregulated because it is property.
And so you hire a penthouse for the week for a million dollars. And then lo and behold, you get comped a million dollars worth of chips when you turn up. So that was all unreported and was kind of to get around the fact that you’re not allowed to gamble in Australia with the Chinese UnionPay cards.
This created a workaround, but unfortunately for Crown, it was also a work around the Anti Money Laundering and Counter Terrorism Finance Act.
In Barangaroo Tower itself, when the units were sold, there was no requirement to do any checks.
The lucky country
“Because hey, it’s the lucky country,” Lynch said. “So the people that came in and bought those units, imagine who they could be, no one knows. They still don’t know. And there is an elevator in that building that takes you from your private apartment down to the gambling floor.
“So they’ve got no visibility in who owns those apartments, but it was literally built as a [money] laundry facility where you buy your apartment, you bring your cash in, jump in the elevator down to the wash house, job done, 4 or 5%. Thank you.”
Finally it’s worth noting at the time of Costello’s engagement by Crown executive chairman James Packer, the other board members of the group were John Alexander (executive deputy chairman), Benjamin Brazil, Chris Corrigan Independent, Rowen Craigie (CEO), Rowena Danziger, Geoff Dixon, John Horvath Ashok Jacob (then CPH chief) Michael Johnston and Harold Mitchell. Richard Turner resigned in 2011 and Coonan was added to the board in 2012, shortly after resigning from parliament.
Did any of them know? The Crown board under Packer was hardly known for its transparency or corporate governance, being largely a board of mates (of James and his father Kerry’s) but one has to think that deputy and close adviser Alexander, Craigie and Jacob, did at the very least.
Packer has been reported as wanting to move back to Australia and begin “Act 3” in his business career. If some of the free publicity he has been receiving from Kitney and others is any indication, he will be employing his old tricks. Old dogs and all that.
Michael Sainsbury is a former China correspondent who has lived and worked across North, Southeast and South Asia for 11 years. Now based in regional Australia, he has more than 25 years’ experience writing about business, politics and human rights in Australia and the Indo-Pacific. He has worked for News Corp, Fairfax, Nikkei and a range of independent media outlets and has won multiple awards in Australia and Asia for his reporting. He is a fierce believer in the importance of independent media.