Packer and the Sydney Casino

Part of the ABC Four Corners programme 7/4/1997 transcript

In January this year, Kerry Packer did a deal – to take control of Sydney’s casino. It was the kind of corporate coup that has made his Australia’s richest man. The deal leaves 85% of the Casino’s management contracts and 10% of its shares in the hands of the Packer’s family majority owned public company PBL. Combined with its stake in Melbourne’s Crown Casino, Packer’s companies become the single biggest shareholder in Australia’s booming casino business.

It was only in 1994 that Packer lost the tender to build and run Sydney’s new casino. The story of how he won back the casino is a fascinating and revealing study in how Packer does business. For three years, his company waged a relentless corporate campaign, using all of its legal and financial muscle. As we will see, its secret weapon was the Packer camp’s political connections with the labor party in New South Wales.

Bob Carr (NSW Opposition Leader 1988-1995) "in August 19994: I haven’t got confidence in the Casino Control Authority, I don’t think they’ve performed their job in anything other than, it seems, a rather shoddy fashion."

At the center of the story is New South Wales Premier Bob Carr. His role reveals the trouble that politicians can have separating Kerry Packer’s interests from their own. Questions about Mr Carr’s involvement have been asked as far away as Louisiana in the United States.

Captain Ronnie Jones (Louisiana State Police): "I am not surprised by anything that happens politically when it comes to casino gambling. So sometimes, while politicians may not do something blatantly illegal, it certainly begs whether or not it is ethical, whether it is proper, whether it is right."

The long saga of the Sydney casino began back in 1985 when Neville Wran Labor Government was in power. The Labor party under Wran had thrown its support behind Packer during his fight with the cricket establishment to set up his rebel World Series game.

Kerry Packer (old footage): "All that is going to happen is that if you want to see the best players in the world, you are going to have to come to the (super tests ?), because they won’t be available to play for their countries, because the countries have barred them."

It was the start of an alliance between Packer and the Labor Party that would endure for two decades.

Senator Chris Schacht (Opposition Communications Spokesman): "He and his organisation know how to play the political game, know how to lobby, know how to have influence and whenever there is something going that is in their interest, they, the Packer organisation, is pretty adept at making sure politicians of all sides know what the Packer interest is."

Bob Hawke (then Prime Minister of Australia) 11 June 1987: "It is ladies and gentlemen, a real pleasure for me as Prime Minister to be here and sit next to a person whom I am please, as Prime Minister of this country, to count as a close personal friend and to measure as a very great Australian, Kerry Packer."

Packer’s political pool has been the key to turning his father’s print media company into a giant entertainment empire. It was built on businesses that rely on Government license, primarily TV, telecommunications and gaming. The alliance with the Labor party made for a lucrative decade. Key policy decisions by the Federal Government helped transform his Nine Network into the leader in Australian TV, taking the Packer product into every home in the country.

Tom Burton (journalist and former government adviser): "There was a joke within the Cabinet that Graham Richardson was called the Minister for Channel Nine. And Between him and Peter Baron who was Bob Hawke’s former senior adviser, they were very effective lobbyists. I remember quite clearly one day getting this piece of paper delivered from the Prime Minister’s office, Bob Hawke’s office, and we were told this is what Mr Hawke’s wants, well, and at the top of the page was a facsimile and it was from TCN9."

Two senior Labor figures would later join Packer’s payroll. Peter Baron who had been Bob Hawke’s political adviser, and Graham Richardson the one-time communications Minister. Their role is to ensure on-going access for Packer to the inner sanctum of the Labor party both in Canberra and in New South Wales. Peter Baron would later play a key role in the political intrigue surrounding the Sydney casino.

Gambling is an old personal passion of Kerry Packer and Las Vegas is a favourite haunt. So when Packer decided to bid for his own casino in Sydney, he looked to Las Vegas to find himself a partner. His choice was "Circus Circus" which boasts of being the world’s biggest gaming company.

Circus Circus runs 18 casinos in the United States, including five of the biggest in Las Vegas. These are vast entertainment complexes designed to keep the entire family spending money for days at a time. Circus Circus teamed up with Packer in a consortium that looked hard to beat. Debbie Hawkins ran the American end of the bid.

Debbie Hawkins (Former Vice-President Circus Circus): "Mr Packer knew the terrain. He had an incredibly professional group for us to work with. And just having that whole support team in place and people who knew the country, and the politics, and the taste, particularly with him having the TV station, and the magazines and the marketing potential, and the understanding of the market was huge."

Packer put his son James in charge of the casino bid and he pursued it in true Packer style. In 1993, the younger Packer rang a Minister in the then Liberal government and said, and I quote, "the old man told me to ring… this is the message. If we don’t win the casino, you guys are fucked."

Packer and Circus Circus looked like winners. They seemed to dwarf the other bidder, the much smaller Las Vegas operator Showboat who had teamed up with the Australian building firm Leighton Holdings to form a consortium called Sydney Harbor Casino Limited.

Chris Cullen (Casino Control Authority) on 6 May 1994: "And the preferred applicant for the Sydney Casino license is Sydney Harbor Casino Pty Limited."

The announcement in May 1994 was a huge blow to the Packer team. Showboat and Leighton had won. Not only did Packer hold little sway with the then Liberal State Government, he’s simply been outbid.

Debbie Hawkins : "We were… yeah, it was devastating."

Reporter: "How do you think he felt about losing in his own home town?"

Debbie Hawkins : "From an ego standpoint he would be, you know, he would be angry. If I were him I would have. Here is your home turf, you’ve helped bring something wonderful to the city and then you don’t get the opportunity. And I am sure he was terribly frustrated."

The Packer camp was furious about losing the casino. Kerry Packer and his son James put in irate phone calls to government ministers complaining in vigorous language about the decision. According to one former minister, the Packers became violent opponents of the then Liberal government from then on. It was clear they weren’t about to accept this defeat.

It was the start of a long campaign of private investigations and public attack.

James Packer (Managing Director, PBL) 1 September 1994: "Let’s not be insulting. Of course we would love to build the Sydney casino and of course we would love to operate it. But it is not our fault if the probity of the Leighton Showboat consortium comes under question."

In the course of this campaign, the Packers would once again be thankful for their old connections with the ALP.

James Packer: "Bob Carr was the person who announced his doubts about the Showboat group."

Bob Carr 12 August 1994: "The challenge is for John Faye is to say he is 100% satisfied with the process undertaken by the Casino Control Authority."

It was Labor’s leader, Bob Carr, who would land the most damaging blow, with an attack intended to destroy Showboat’s bid

Bob Carr: "You have someone described in material in America as part of the Mafia, an associate of Showboat"

Mr Carr and the Packer camp denied they were working together but Four Corners has discovered some very close connections between them.

Showboat political troubles in Australia began in the American State of Louisiana and the city of New Orleans. New Orleans is a town of many charms that lure visitors by the millions. Among its attraction are the old river boats fitted out as casinos that ply the Mississippi.

The river boat gambling industry was pioneered in Louisiana by Showboat. In 1993 it applies to operate a river boat called Star Casino in partnership with a local businessman called Louie Roussel. Routine investigations were done by the Louisiana police.

Captain Ronnie Jones: "As a primary licensing authority for river boats at that time in Louisiana, the State police had the responsibility for compiling a background report on all applicants for licenses in this State."

In the course of their investigation, the Louisiana Police came across some information that concerned them about Showboat local partner Louie Roussel.

Louie Roussel (Star Casino) 15 August 1994: "Mr Sagrello was a friend of Mr Marcello, he was the (?) at the restaurant that I frequent he…"

Roussell’s family companies had done some questionable deals and had links with members of the local Mafia family. Rousell vigorously denied any wrong-doing.

Louie Roussel: "No I have never had any links with the mafia."

While the Louisiana Police had reservations, the evidence didn’t justify banning Roussell from gaming. And showboat itself was clean. So the police report found both parties suitable as casino operators and Star Casino was approved.

The police report which included highly sensitive information like confidential bank records was locked away in the files room where it should have stayed.

Captain Ronnie Jones: "Those things should be very confidential. They should not be released to anybody except the people making the decison as to whether or not this individual or group of individuals is suitable to be licensed in this state. For whatever reason, those documents got out and they should not have gotten out."

Reporter:" How seriously was that viewed here?"

Captain Ronnie Jones: "I think it is extremely serious. I mean, we are the custodians of the records, we are the people who were support to keep those things, which are considered confidential, confidential. And that didn’t happen."

In August 1994, the confidential report prepared by the Louisiana Police suddenly surfaced in Australia. It was released amid much publicity by the then Opposition Leader Bob Carr who claimed it raised major concerns about Showboat’s fitness to operate the Sydney Casino. Mr Carr’s action led to a public inquiry at which more damaging allegations about Showboat’s supposed Mafia links were made by both the Labor Party and the Packer camp. At the time, Mr Carr strenuously denied suggestions that he was doing Packer’s bidding, claiming that his staff had obtain the report from publicly available sources. But the Louisiana police tells a different story.

Reporter: "Was that material publicly available?"

Captain Ronnie Jones: "No it’s not. He may have some information in there which is publicly available but some of the information in those documents should not be in his hands. He may not be responsible as the person who took it from our file, but somebody took some of those documents from our file and made copies. And they should not have had access to those things".

The Louisiana Police was so disturbed about the release of their report, they mounted an investigation. They wrote to the New South Wales Casino Control Authority to express serious concern and request assistance in their inquiries into how the report had got out.

Bob Carr 12 August 1994: "It is material that we, with our limited resources, were able to get. It is material that the Casino Control Authority either wasn’t able to get or if it got it, didn’t (perter ?) it"

Despite requests from the Authority, Mr Carr would never reveal where he got the report, except to deny he got it from the Packer camp. The Packer organisation in turn deny it was feeding material to Mr Carr.

Brian Powers (Chairman, PBL) 1 September 1994: "Mr Carr is running an independent inquiry. We have not been feeding him information or vice versa."

Captain Ronnie Jones: "I don’t know enough about how the documents ended up in Australia, but it bothers me that a politician can have something to which he is not entitled and can tell the authorities in your home country and state where he obtained those documents. I think he has an obligation as a public official to do that. He should be forthright with it."

Mr Carr was also less than forthright with the full details of the report. While he vigorously pushed the Mafia link, he failed to mention that both Roussell and Showboat had been cleared by the Louisiana Police.

Neither the Australian nor the US authorities have ever been able to identify exactly who got hold of the Louisiana Police report, although there is no doubt it was illegally obtained. But Four Corners has new information that indicates the Labor Party and the Packer camp were working hand in hand.

At the height of the casino controversy, the Labor party’s most senior adviser on gaming went on Kerry Packer’s payroll. His task: to dig up dirt on Showboat. The adviser was Charles Shields, a prominent figure in Bob Carr’s Labor opposition and later his government.

Reporter: "Charles, I just need to ask you some questions about the job you did for Kerry Packer…"

As we will see, Charles Shields prefers not to talk about his role. But his political and professional CV makes for fascinating reading.

Shields studied Law at the university of New South Wales. In the 1980’s, he worked as a private investigator specialising in corporate intelligence.

An active and well connected member of the Labor Party, Shields was appointed in 1986 by the then Labor government to head the Casino Control Division of the Treasury Department.

He left in 1988 when the Liberals were elected and went to work as a private consultant in the gaming industry. His clients included the poker machines maker Aristocrat, Jupiters Casino in Queensland and the Seagulls Club in Northern New South Wales.

In 1995 when Bob Carr’s Labor government was returned, Charles Shields was made Chief of Staff to the new Gaming Minister Richard Face. It was a reward for seven years of unpaid work for the Labor Party. From 1988 while Labor was in opposition, Shields had advised the party on gaming issues. He wrote Labor’s gaming policy. He also helped out with political investigations. Shields worked closely with an old friend from Law school, Bruce Hawker, Bob Carr’s Chief of Staff. His role was acknowledged when Richard Face told Parliament "Charles Shields has assisted me in a voluntary capacity for a number of years". Shields visited Las Vegas with Face while he was shadow gaming minister in 1992.

In October 1994. Charles Shields made another trip to the United States. It was five months before the election that would return Labor to power. The debate over the casino was raging. Shields was the Labor Party’s main adviser on gaming but at the same time, he was on Kerry Packer’s payroll. Shields’ destination was New Orleans, followed by Los Angeles, New Jersey and New York. His brief was to find new dirt on Showboat. Shields spent two weeks in the United States. He gathered new media reports, interviewed journalists and gaming experts, and located witnesses with evidence against Showboat. Mission accomplished, he headed home.

On his return to Australia, Shields reported back to Peter Baron at Packer headquarters in Sydney. They met several times. Shields was paid $15,000 for his two weeks work. We still don’t know who obtained the Louisiana Police report. The timing of its release suggests it wasn’t Shields. We are told that the Packer organisation had also hired a private investigator who made a separate trip to the United States.

When we caught up with Charles Shields, he declined to talk about his role.

Reporter: "Can you tell me how you came to work with Kerry Packer? Can you tell me who paid for that job Charles? Did you discuss that with the Labor Party at the time?"

We know that Charles Shields was in contact with the Labor Party and Bob Carr’s office, around the same time of his meeting with Peter Baron. We also know that Baron played a central role in events around this time. On the morning before Mr Carr released the Louisiana Police document, at the Packer headquarters Peter Baron was briefing journalists on its contents.

Four Corners has a written record of one of Baron’s conversations. Here, an actor is speaking baron’s words:

Actor: "I’m (beep) if I know how they could have licensed this mob. How is it that they haven’t found out any of this stuff. Roussell’s old man was in bed with Carlos Marcello and the Mafia."

Baron’s comments suggest he had gained detailed knowledge of all material damaging to Showboat.

Actor: "I mean, I’ve had it for a while and I have been wondering what to do with it."

His remarks also suggest that Baron or someone other in the Packer organisation were working so closely with Bob Carr’s office they knew in advance of the release of the report.

Actor: "Look, I heard Bob Carr is probably going to come out and hold a press conference this afternoon with some of this stuff."

Voice at the other end of the phone: "What the Mafia connections?"

Actor: "Yes but don’t ring him and ask him about it or mention my name. This is all off the record…"

Our calls to Peter Baron to discuss the casino saga were not returned.

The Labor Party’s attacks on the former Liberal government over the casino issue helped ensure Bob Carr’s victory at the New South Wales State election in March 1995.

Bob Carr: "With great humility I can report to my party today: mission accomplished."

Charles Shields who joined the celebrations on election night was rewarded for his work by being appointed Chief of Staff to gaming minister Richard Face, a post he held until late last year.

The Packers kept the pressure on Showboat with a legal challenge that lasted more than two years, costing millions of dollars and going all the way to the High Court. Packer finally lost the case just last week but Showboat had long since stopped fighting. In January it announced it was selling out to Kerry Packer’s PBL.

Debbie Hawkins: "I don’t think I ever want to be on the other team. I always took great comfort I was on his team because he is an imposing character when he wants to be. And I don’t think he gives up. And probably the fact that he has come around and bought the casino was a great example of that. Because he wanted to do this and he didn’t get it one way so now he’s come around and done it another."

Premier Bob Carr refused to be interviewed for this programme. So the question of the Louisiana Police on his role remain unanswered.

Reporter: "What was your view on how this material was handled politically in Australia?"

Captain Ronnie Jones: "Certainly inappropriate. Certainly from the business standpoint, blatantly unethical. But one thing I have determined in dealing with gaming interest in the state for a number of years, money is at the root of everything."

The day after gaining control of the Sydney casino Packer used his old political contacts to seek special tax breaks in New South Wales for international gamblers. A move that would have made the Sydney casino the most attractive for international high rollers in Australia.

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New South Wales Premier Bob Carr when questioned in State Parliament about his involvement with Packer over the Sydney Casino and the documents sourced from the Louisiana police files the day after the Four Corners programme used this quote as a rebuttal challenging the Liberal party to reveal the name of the minister who received the call. James Packer has steadfastly refused to answer media questions regarding this claim.