Things are just going from bad to worse at Crown Resorts Ltd (ASX: CWN) as the fallout over the New South Wales Independent Liquor and Gaming Authority (ILGA)’s inquiry into the gaming giant continues to spread.
Crown had a week to forget last week when the ILGA handed down its inquiry report, which found that Crown is “not suitable” to operate its new casino in Sydney’s Barangaroo precinct.
The commissioner of the inquiry, former Supreme Court justice Patricia Begin, said the following in the report:
Any applicant for a casino licence with the attributes of Crown’s stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organised crime groups would not be confident of a positive outcome… The Licensee is not suitable to continue to give effect to the Barangaroo Licence and that Crown is not suitable to be a close associate of the Licensee…
If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation.
Crown shakes things up
It appears Crown has taken this damning report to heart. This morning, the company released an announcement to the ASX before market open in response. In this announcement, the company informed investors that its chief executive officer and managing director Ken Barton would be stepping down from his roles “with immediate effect”.
Fellow director Helen Coonan will be stepping up to the executive chair role. She will also lead the company as the board begins a search for Barton’s replacement.
Coonan stated the following on her new role, and what the future holds for Crown:
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. The Board is determined to maintain the momentum as Crown takes significant steps to improve our governance, compliance and culture.
The Crown share price has responded to this announcement with muted approval. Crown shares are up 0.51% at the time of writing to $9.94.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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