(Bloomberg) --

The landmark waterfront tower soaring high above Sydney’s glistening harbor was meant to be the unmistakable legacy of one of Australia’s most storied dynasties. Instead, the $1.5 billion casino and hotel is opening just as billionaire James Packer’s control of his gaming empire fades.

The twisting skyscraper, which is the city’s tallest building, is hostage to an anti-money laundering probe that’s embroiled Crown Resorts Ltd. -- the company that for years has been synonymous with its largest shareholder, Packer.

The public inquiry, which is determining whether Crown is even fit to run the casino, has exposed broad dysfunction and governance failings that may force the 53-year-old billionaire to further distance himself from his biggest asset.

Facing an investor backlash at Thursday’s annual meeting, the casino operator this week ended a controversial agreement that gave Packer confidential information about the company’s performance not available to ordinary shareholders. His influence over the board also took a blow, with the departure of longtime loyalist John Alexander, and the resignation of Crown’s deputy chairman, John Horvath, a former physician to Packer’s late father.

“There needs to be an injection of new perspectives,” Chairman Helen Coonan told shareholders Thursday.

“You’d hope this is a watershed moment for Packer’s involvement with Crown and its governance,” said Warren Staples, a senior lecturer in management at RMIT University in Melbourne who specializes in ethics and governance. “I don’t know if it’s the last rites of Packer, but it’s a potential loss of control.”

Packer didn’t reply to a request for comment, sent through his private investment company, about the extent of his control over Crown, and his future association with the company.

Media Dynasty

Packer was born into a media dynasty that started amassing wealth in the early 1900s through newspapers and publishing. His father Kerry swelled the family fortune through investments in commercial television, and built a domestic media empire that vied for influence and power with Rupert Murdoch.

Within three years of Kerry’s death in 2005, James Packer sold most of the family’s broadcasting and publishing stakes, as well as its cattle ranches, for more than $5 billion and funneled much of it into the casino industry. He was Crown’s chairman from 2007 to 2015.

The company’s Sydney resort, on a stretch of redeveloped foreshore called Barangaroo, is due to open in December and features more than 80 luxury apartments above a six-star hotel and casino.

The intensely private Packer, who now rarely spends time in Australia, described the personal importance of the venture in the 2018 biography, “The Price of Fortune: The Untold Story of Being James Packer,” for which he gave extended interviews to author Damon Kitney.

“It’s a Packer family legacy,” Packer said in the book. “Crown Sydney is going to be there for a long time. The license is for 100 years and I’m hoping it will be there for a long time after that.”

In direct competition with Sydney’s existing casino, which is just a few hundred meters across the water and owned by Star Entertainment Group Ltd., Crown aims to draw wealthy gamblers from China and other Asian nations to its members-only tables.

Crown’s Woes

That strategy suffered a blow in 2016, when Chinese authorities rounded up Crown staff on the mainland and a court later convicted 19 current and former employees of illegally promoting gambling.

In mid-2019, a string of media reports alleged that criminal gangs laundered cash at Crown’s casinos, and that the company used Asian junket operators with links to drug traffickers. Those reports triggered the ongoing inquiry in Sydney that has laid bare Crown’s shortcomings.

Late last month, Chief Executive Officer Ken Barton testified that Crown hadn’t yet analyzed the accounts that were allegedly used by money launderers. Barton said he was also unaware for years that a major junket operator had a cash desk at Crown’s Melbourne casino, even though the setup posed a money-laundering risk.

Earlier this week as Coonan gave evidence, Patricia Bergin, the retired judge heading the inquiry, asked whether it was reasonable to conclude that Crown had “facilitated money laundering” by a “conglomerate of ineptitude, lack of attention and failing to intervene.”

“Yes,” Coonan replied.

‘Terribly Painful’

In his own testimony, delivered via video link from his yacht, Packer indicated it was inevitable that the close influence he has over Crown would be diluted. When asked how Crown might be restructured, he suggested placing caps on shareholdings.

Then he said: “This has been a terribly painful and terribly shocking experience for the board, as it has been for me. I think the board will be more independent than it was in the past.”

Despite his passion for the Sydney casino venture, Packer has been winding back his involvement with Crown and in 2018 announced he would step back from all commitments due to poor mental health.

His attempt last year to exit Crown entirely through a A$10 billion ($7 billion) takeover by Wynn Resorts Ltd. fell apart. In February this year, Melco Resorts & Entertainment Ltd. scrapped a deal to buy 20% of Crown from Packer, stopping at just half that amount.

Packer still owns about 36% of Crown -- worth about A$2 billion -- through his private investment company, Consolidated Press Holdings.

Crown stock is down 29% this year -- a casualty of the coronavirus pandemic that’s triggered lockdowns and closed Australia’s borders. It’s also been hit by the revelations from Bergin’s inquiry and the announcement this week that the financial-crimes regulator is separately investigating a potential breach of anti-money laundering and counter-terrorism financing rules at Crown.

It’s too early to expect the company’s Sydney license to be in jeopardy, Bryan Raymond, a Citigroup Inc. analyst, said in a report this week.

Still, Bergin has been tasked with assessing if Crown is suitable to run the new casino, and what changes the company would need to make if it has fallen short. If she follows Packer’s own advice and recommends ownership limits, he might be forced to sell Crown shares and largely decouple himself from the company.

©2020 Bloomberg L.P.