A CONFIDENTIAL report on James Packer’s Crown Resorts for many of Australia’s largest stock market investors has slammed the casino operator’s board of directors, corporate governance and risk management capabilities.

The report from Regnan — a research company set up by the Federal government-owned Australian Superannuation Corporation and investment giant BT — gave Crown a fail mark of two out of five for the quality of its 11-member board and corporate governance it said “needs substantial improvement.”

Mr Packer owns about 48 per cent of Crown through his private company Consolidated Press Holdings after selling 4.8 per cent of his stake in August 2016.

The Regnan report, published earlier this month and obtained by News Corp Australia, said Crown’s board “lacks operational experience in gaming and in Asia. Regnan maintains concerns over the absence of a lead independent director, lack of specific industry skills among independent directors and over commitment issues for some directors which could reduce director capacity to effectively discharge their duties”.

Shares in Crown have not recovered from the 10 per cent slump they suffered in October when 18 staff — including vice president of its VIP division Jason O’Connor and two other Australians, Jerry Xuan and Pan Dan — were detained in China in what observers believe was a carefully planned sting.

Crown has been accused of illegally marketing gambling services to China’s mega-wealthy.

“The arrests raise the question about the extent to which (Crown’s) China-based staff — who were incentivised through a commission based system — operated illegally to lure lucrative high-rollers,” the Regnan report said.

Crown shares were trading at $12.75 ahead of the arrest becoming public, slumping to $11.15 in the first day’s trading after the news. They closed at $10.74 on November 17, up 2c. They have been trading lower due to concern about the company’s plans for the VIP only Barangaroo casino in Sydney and a luxury hotel in Perth for VIPs.

Regnan said: “Following the arrests, a database of Crown’s customers was submitted to the police. A reduction in the number of VIP high-rollers from mainland China could impact Crown’s earnings.”

News understands Regnan first sounded its warning to investors in January this year before updating its report on November 8 following the arrest of the Crown employees.

While one Chinese staffer Jenny Jiang, has been released, the other 17 are set to learn this weekend if they will be charged with offences.

Crown’s three-person risk management committee is led by former Qantas chief Geoff Dixon. Its two other members are Crown chief executive Rowen Craigie and Rowena Danziger, the ageing former headmistress of Ascham, Gretel Packer’s exclusive Sydney high school.

“Regnan notes that both independent members of the Risk Management Committee do not have deep operational experience in Asia, potentially reducing effectiveness of oversight,” the report said.

According to the latest Crown’s own latest annual report only three of its 11 directors had any experience in executive management or risk management.

Crown has been contacted for comment. DFAT has been contacted for any updates.