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Hong Kong gambling giant Melco Resorts has abandoned plans to double its stake in James Packer's Crown Casino chain. Melco blames the collapse of the $880 million investment on the fallout from the coronavirus crisis. The company announced it was also reviewing all non-core investments because of the severe drop in tourism in Asia. Image: News Corp Australia

James Packer testified over two days at the Crown casino inquiry.Source:Supplied

Crown Resorts is unfit to hold a gaming licence for its newly-built casino in Sydney, in part due to the “harmful” influence of reclusive billionaire James Packer, an inquiry has heard.

The Independent Liquor and Gaming Authority has been probing explosive 2019 media reports about the company to determine whether it should be allowed to operate the $2 billion-plus Barangaroo development slated for completion next month.

The reports included leaked footage of huge amounts of cash moving through a room at Crown Melbourne dedicated to Suncity, Macau’s largest operator of high roller “junkets”.

Various Crown executives have in their testimony rejected the suggestion the gambling giant turned “a blind eye” to money laundering.

Counsel assisting Adam Bell focused on the influence of Mr Packer on Crown and the “controlling shareholder protocol” entered into in October 2018 as he delivered his closing submissions to the inquiry on Wednesday.

The Barangaroo development is almost complete, but the inquiry findings won’t be known until February. Picture: NCA NewsWire/Steven SaphoreSource:News Corp Australia

Mr Packer stepped down as a director of the company in March that year, citing mental health reasons, but still had the biggest stake in Crown through his private investment firm Consolidated Press Holdings even after inking a deal to sell a 19.9 per cent interest to Hong Kong casino giant Melco.

Melco is linked to a businessman who allegedly had underworld connections, the late Stanley Ho, but Crown’s agreements with the NSW regulator require the company to prevent such people or their associates from becoming a shareholder.

Melco only ended up buying 10 per cent, dumping its plans to buy the second tranche in February this year, then offloaded its interest to US private equity giant Blackstone in April.

The inquiry has previously heard Mr Packer was insistent the Melco deal go through, while the controlling shareholder protocol meant he got special treatment, including access to Crown documents and selective briefings.

Mr Bell also focused in his closing address on the arrest of 19 Crown staff in China in 2016.

He said the company had heard warnings about the risk of arbitrary detention as China cracked down on the industry, and employees said they were living in “constant fear of getting tapped on the shoulder”.

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Mr Packer gave evidence to the inquiry, saying his memory had been affected by medication for bipolar disorder. Picture: Sourced https://www.nswcasinoinquiry.com/submissions-hearingsSource:Supplied

“The influence of Mr Packer in the period after the controlling shareholder protocol was entered into is both directly relevant to whether the Melco transaction gave rise to a breach of any regulatory agreements and is more generally incidentally relevant to the overall question of suitability,” Mr Bell said on Wednesday.

“A common theme relating to the China arrests and the Melco transaction, in our submission, is the deleterious impact on the good governance of Crown Resorts caused by its dominant shareholder CPH and ultimately Mr Packer.

“It is submitted that the impact of that influence put Crown Resorts in breach of its regulatory agreements with the authority.

“The adverse impact of CPH in compromising proper reporting lines at Crown Resorts was a factor leading to the China arrests.

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“In those instances, the adverse impact of CPH and Mr Packer, we submit, was ultimately harmful to the public interest.

“In summary, we submit that the evidence presented to this inquiry demonstrates that the licensee is not a suitable person to continue to give effect to the licence.”

The inquiry heard Mr Packer was the driving force behind Crown’s high roller business.Source:Getty Images

Commissioner Patricia Bergin previously remarked at the inquiry that it appeared “on one view of it, as though Mr Packer was running the VIP side of things effectively or very interested in it”.

Financial crimes regulator AUSTRAC is also investigating potential noncompliance by Crown with anti-money laundering laws.

Last month, Crown chair Helen Coonan was asked if the slated opening date for the Barangaroo casino of December 14 was appropriate given the inquiry will hand down its findings on February 1.

She replied the NSW government had set a development milestone date of February 14.

“So whether or not we open, with the greatest of respect, is not entirely Crown’s decision,” Ms Coonan said.