Crown Resorts' new chief executive has publicly defended Perth boss Lonnie Bossi’s continued role with the embattled casino giant while acknowledging the “sobering” report delivered in Victoria this morning.
Crown Resorts' new chief executive has publicly defended Perth boss Lonnie Bossi’s continued role with the embattled casino giant while acknowledging the “sobering” report delivered in Victoria this morning.
Crown Resorts chief executive Stephen McCann opened this afternoon’s Perth Casino Royal Commission hearing by addressing the report handed down by the royal commission in Victoria, which found the company’s behaviour to be “illegal, dishonest, unethical and exploitative”, but recommended that it be permitted to continue operating under the oversight of a special manager for the next two years.
The commission found the company had, at great financial cost, embarked on a significant reform program likely to succeed and highlighted the significance of the appointment of a new board and senior executives.
He described the report's findings as “sobering”, but said the company accepted them and would take the steps necessary to improve the organisation and implement the 33 recommendations.
“I knew from the outset that Crown would need to undertake a rigorous transformation of its culture, its risk and compliance regimes and its relationships with regulators,” he told the commission.
“I agreed to join Crown because I believed I could help guide it in that transformation and make a significant difference with my experience having managed a large corporation across multiple jurisdictions.
“The commission found the reasons for Crown’s misconduct included a failure by its board to carry out its responsibilities, and found many board members were indifferent to their legal and moral obligations.
“These findings are very sobering.
“I accept them, and vow to improve the organisation in every area which the Victorian Royal Commission found lacking.”
The remainder of this afternoon’s hearing saw Mr McCann quizzed at length by counsel assisting Patricia Cahill about his prior experience and understanding of the group’s complex structure.
He was also pressed about his confidence in Mr Bossi, who gave evidence at the hearing for the second time just last Friday.
When asked about whether he thought it was appropriate that Mr Bossi continue with the company, Mr McCann, who joined the company in June, told the commission he had complete confidence in Mr Bossi as a very experienced manager of an integrated resort.
“Since my arrival, I have had nothing short of a very transparent, open relationship with Mr Bossi and he keeps me informed of what is going on,” he told the commission.
“I have no reason to doubt his judgement or integrity.”
Despite Mr Bossi having maintained a senior position with the company over a period in which the issues subject to scrutiny in the royal commission were occurring, Mr McCann said Mr Bossi had been open and transparent about his regrets and could not be held solely responsible for the company’s mistakes.
“I do think Mr Bossi is an experienced, capable executive, and I believe we have an open, transparent relationship,” he said.
“In the event that anything emerged that cast doubt on his ability to continue as (Burswood Limited) CEO, whether that be past or future practices, then we would look into that and make an appropriate decision on his role.
“I think Mr Bossi has, in his evidence, and on more than one occasion, admitted to mistakes in the past and regrets.
“What it certainly does justify, is for me to have the appropriate conversations with Mr Bossi.
“I don’t believe it is fair to hold Mr Bossi solely accountable for decisions which he may have had input into, but did not have the authority to make.
“I know from my conversations with him that those decisions were not ones he would have made if he were chief executive at the time.”
On Friday, Mr Bossi told the commission he expected to be removed from the Burswood Limited board, but not for his performance, after having discussions with Mr McCann.
Mr Bossi first joined Crown Melbourne in 1994 before holding multiple roles in compliance, finance, marketing and gaming.
He served as chief operating officer of Crown Perth from 2011 until his appointment as chief executive in December 2020.
Internal audit upgrade
Mr McCann's hearing followed that of newly-appointed head of internal audit at Crown Resorts, Jessica Ottner, who was grilled by Counsel assisting the royal commission Michael Feutrill.
During the commission, Ms Ottner detailed the contents of her plan to overhaul the company’s internal audit process, a plan which received the endorsement of the Burswood Limited board in August.
The plan, coined the ‘Uplift Program’, is set to involve significant increases to the resources of Crown’s internal audit function, with Ms Ottner telling the commission the team had almost doubled in size.
The program will revolve around the recommendations made by Ms Ottner following a review of the company’s previous audit plan and the gaps identified by the Bergin Inquiry.
But despite the inquiry’s findings, Ms Ottner told the commission this morning that there was nothing the former audit team could have done differently.
She did say, however, there had been a focus on compliance, not necessarily whether the system in place was adequately addressing the risks.
She said it would also involve shifting to more of a risk-based auditing approach rather than compliance-based and diversifying the knowledge of the team through the recruitment of people with skills in data and analytics and IT audit.
Ms Ottner told the commission the internal audit team intended to appoint a co-source partner to undertake internal audits of specialist areas, including AML, while she gained comfort in her team’s capability and approach.
The request for tender will be released this Friday.
“I wanted to have time to ensure we have the necessary training and skills, if we don’t already,” she told the commission.
“I want to be able to use an external person to do that.”
Mr Feutrill highlighted the evidence delivered by Rachel Murray, Crown Resorts’ last dedicated internal auditor for Perth.
That evidence indicated that the company’s strategic audit plan for 2017 until 2019 had allocated 950 audit days to Perth, resources not dissimilar to what had been set out in the new internal audit plan.
But Ms Ottner said the new plan had 482 days, 402 of which were allocated specifically to internal audit and 80 for ad hoc matters “to address emerging risk”.
Despite the disparity, Ms Ottner said she was comfortable with the numbers, with her assessment of the previous plan having uncovered it had not appropriately accounted for training days, sick days, and leave entitlements.
She also confirmed she was scheduled to undertake direct training on financial crimes and changes to the company’s AML program via a dedicated trainer later this year.
