Inside Asian Gaming

INSIDE ASIAN GAMING | June 2012 10 Cover Story Echo also sought the surrender by ABC of all relevant documents and a guarantee it would not use them in future stories. Those documents also were subpoenaed by the ILGA’s investigation. The timing isn’t the only intriguing part of all this. It appears the NSW government, directly or indirectly, may be playing a role in furthering Mr Packer’s ambitions. ILGA’s inquiry revealed that one of Mr Vaikunta’s alleged victims was at the time the girlfriend of Peter Grimshaw, communications director for Liberal Party Premier Barry O’Farrell. Mr Grimshaw had beenmedia and government relations director at The Star at the time the alleged harassment occurred. His girlfriend, a human resources director, subsequently was sacked by The Star, allegedly for leaking confidential information about the casino. If it wasn’t some form of not-so-subtle sabotage it certainly looked like it. Echo, believing a conspiracy was afoot, decided to come forward with some leaks of its own. One of them was that Mr Grimshaw, during his tenure at The Star, had contacted a member of the O’Farrell government about the harassment charges. That was Norm Lipson, media adviser to Hospitality Minister George Souris. The news prompted the ILGA to expand the scope of its inquiry, which now was concerned with the question of whether individuals both in government and out had attempted to influence its review of The Star’s license. Echo then released to the newspapers a series of text messages showing that Mr Grimshaw and his girlfriend had discussed ways to get rid of Mr Vaikunta, and that Mr Grimshaw had discussed but hadn’t acted upon a plan to call members of the Echo board about the casino’s investigation of Mr Vaikunta, and that Mr Grimshaw had discussed contacting board members posing as the woman’s husband, which wasn’t acted on either. On the second day of the ILGA inquiry, Echo’s lawyer confronted Mr Grimshaw with three more of his texts. The first, dating back to August 2010, read: “I just told Barry what a [expletive deleted] Sid is. He said we might all have to give Star a wake-up call when I leave.” The other two, dating to November 2010, read in part: “ Barry just texted me. Just asked me if I was out yet. I think they are going to smash Star. ” Under cross-examination, Mr Grimshaw disavowed any memory of the texts. He resigned from the government later that day. The Stakes The ILGA and Ms Furness concluded their investigation at the end of May with a finding that The Star and its management had done nothing wrong, that there was no substance to any of the allegations, and that the company’s internal investigation, which had upheld the charges against Mr Vaikunta, had been conducted “promptly, properly and thoroughly”. Nor was evidence found that anyone inside government or out had tried to influence its review of The Star license. The authority, however, has ordered The Star to explain why it didn’t inform it sooner that it had taken action against Mr Vaikunta, suspending him back in December, according to news reports. The casino had until 21st June to respond. Mr O’Farrell, who has come under fire over the Grimshaw revelations, refused to disassociate himself from the actions of his former aide. No doubt he doesn’t appreciate the embarrassment Echo has caused him. He remains a professed fan of James Packer, whom he’s praised as a “shrewd and successful businessman.” “I don’t own shares except in a local community bank,”he recently told SMH , undeterred byMr Packer’s pending application for approval to increase his stake in Echo, “[but] the fact is I’m sure shareholders are impressed with the success that Crown’s had in recent times.” Which must be galling, under the circumstances, to a company that has invested almost $900 million in your largest city, and Echo let its displeasure be known. The company “does not believe it is appropriate to be commenting on a matter that is currently under consideration by the independent regulator,” a spokesman said. “Shrewd and successful” Mr Packer may be, but his investments, mostly in gaming, have left his empire about A$2 billion lighter than when he took over. Most were questionable bets on Las Vegas, most made between May and December 2007 at a time when America’s sub-prime mortgage disaster was well under way and the global financial crisis was darkening the horizon: • A US$242 million investment in Station Casinos, the largest suburban operator in Las Vegas, which filed for US Bankruptcy Court protection under a mountain of debt in 2009. • A US$172 million investment in Harrah’s, now Caesars Entertainment, subsequently written off as a loss. • Fountainebleau Resort Las Vegas, in which Crown holds a 19.6% equity interest bought for A$333 million, another loss. Only partially completed, the project ran out of funding and wound up in bankruptcy in 2009. The unfinished 68-story hulk was sold to Carl Icahn for US$156 million. • OthersMr Packer was lucky to escape fromcheap, like the US$22.5 million he sank into the abortive Crown Las Vegas, a resort that was supposed to include the second-tallest skyscraper in the world. • And his US$420 million, 24.5% stake in Cannery Casino Resorts, which operates three gaming halls in the Las Vegas suburbs and a racino in the city of Pittsburgh in western Pennsylvania. He originally wanted the entire company and was going to pay US$1.75 billion for it. In the UK, Crown owns 50% of Aspers, an operating company consisting of four small casinos in Newcastle, Northampton, Stratford and Swansea, the last one reported to be hurting badly and on the High-rolling—The Star’s swanky newMarquee Nightclub