Crown Resorts Limited, Australia’s largest gaming and entertainment group, is a brand that many, in the gambling industry or not, are familiar with. Having gained its popularity for its luxurious locations, the Crown name has also seen its share of controversies in recent years.
The publicized arrest of its 18 employees back in 2016 widely exposed the company’s ties to organized criminal syndicates which made way for money laundering schemes to occur in its Melbourne and Perth casinos. Its tainted history is now being weighed, deeming Crown possibly unfit to keep its casino license in the country. With the $2 billion Sydney casino scheduled to open next month, many are concerned whether its gaming offerings will see light or eventually be forced to postpone its plans until a verdict is reached.
Australian inquiry questions Crown’s suitability in maintaining gaming license
Holding a 99-year casino license, Crown is now under fire for its previous dealings with Chinese VIP patrons under junket operators broadly linked with organized crime. An Australian regulatory inquiry was launched in August of last year in response to the reported illegal gambling operations. Throughout the 48 days of public hearings that occurred, counsel assisting Adam Bell, SC, told the NSW Independent Liquor and Gaming Authority (ILGA) inquiry on Wednesday that evidence showed that Crown did not meet the criteria of being a suitable licensee.
“One option may be for the authority to suspend the licence, coupled with the conditions (…) that if satisfied would bring suspension to an end, another option is cancelling the license,” Bell revealed at the inquiry.
“The regulatory agreements are detailed and complicated but the overall theme is to give, on the assumption of continued suitability, a degree of regulatory and financial certainty to the various parties,” he added.
Examining its operations, the company evidently failed to prevent money laundering, maintained business partnerships with questionable characters, put its own staff at risk and the sale of company shares by Mr. Packer’s private company Consolidated Press Holdings (CPH) to Melco Resorts last year may have violated the terms and conditions of its NSW casino license. The hearings have further investigated Packer’s negative influence in the company despite having no role aside from being a major shareholder.
“You should recommend to the [casino] authority that it reconsider its approval of Mr. Packer as a close associate of the licensee with regard to his conduct,” Bell said.
“The adverse impact of CPH and Mr. Packer (…) was ultimately harmful to the public interest, which is a primary object of the Casino Control Act to protect.”
Commissioner Patricia Bergin is due to make a final decision on February 1 wherein a conclusion whether Crown should keep its casino license or what changes the operator must adopt for it to become suitable must be reported back to ILGA.
In addition to the ongoing inquiry, the Victorian Commission for Gambling and Liquor Regulation likewise issued Crown a “show cause” notice last month over its businesses with dubious junket operators. A spokeswoman from the VCGLR revealed that it “will take regulatory action if and when appropriate” while closely keeping an eye on the inquiry’s recent developments.
“Victoria’s gambling regulator never calls Crown to account despite new and bigger scandals, year on year. The relationship between the regulator, the government and the casino is far too friendly and the result is crime and corruption,” the Victorian Greens’ acting spokesperson for Integrity, Tim Read noted.
Sydney $2.2 billion project threatened
The Crown Sydney situated in the stylish Barangaroo district is set to open this coming December 14 after four years of construction. The $2.2 billion mega casino was built on the idea of catering mainly to Crown’s VIP clients which is now in question after a series of reported allegations of money laundering and suspicious ties with criminal syndicates. Considering the ultimate decision by Commissioner Bergin will not be handed down until early next year, the casino giant has decided to push ahead with a “soft opening” of its gaming facilities, some restaurants and its 5-star hotel.
Despite the damning evidence exposed during its inquiry, Crown Resorts chairwoman Helen Coonan is strongly geared towards a December opening regardless of the shortage of international patrons. Accounting roughly 7% of the company’s revenues, junket-fueled VIP businesses are reportedly suspended at the Crown resorts until June 30, 2021 while it “undertakes a comprehensive review of its processes.”
“The facility is much more than about gaming, it’s about restaurants, it’s about public access to certain parts, the observation deck, conference centers. Obviously, you don’t open a facility if you don’t think it will be financially viable,” she said.
NSW Premier Gladys Berejiklian is also seeking advice from ILGA on whether the planned opening should proceed while Chris Sidoti, past chairman of the NSW gambling regulator, sees the opening as a “provocative act” saying, “It’s an act of bad faith to proceed with that opening when this inquiry is nearing its end”.
“I would see it as an indicator that there’s been no significant change in the culture (…) a culture of the pursuit of profit at all costs.”, Sidoti noted.
While the situation of Crown may not be at its best for the moment, the decision to open its awaited project still lies on the company’s responsibility to make the call. Gaming operations will be at “full capacity” on its opening night, the company revealed in a previous statement despite the ongoing concerns over its casino license.
Sources of Crown legal trouble
Crown’s legal troubles are a result of years of operations dealt with under a bout of ignorance, lack of accountability and other serious allegations that raise national security concerns. A carefully detailed piece of its Chinese VIP scandal was previously outlined in 60 minutes last year, exposing the ins and outs of its “whales” sourcing activities in China.
While the illegal high roller controversy led to 19 of the company’s staff to be imprisoned, the publicized scandal opened Crown’s world of high profile activities, under the table luxury services, extensive credit lines, dubious money transactions, hefty commissions and bonuses and so on. Aside from its shady VIP businesses, investigations further revealed Crown management’s shortcomings in handling the overall situation and James Packer’s strong influence and hold over the company.
In an attempt to respond to the media’s numerous allegations, Crown has repeatedly denied the claims while listing reasons which supposedly prove its integrity. Sources of its legal trouble however, stem from issues related to a few enumerated below:
• Dubious gaming activities under junket operators
The crackdown by the Chinese government over Crown’s mainland operations resulted in the consequently imprisonment of its 19 employees. Jenny Jiang, the first Crown employee to break her silence, reveals how they were instructed to divide the Chinese gamblers Crown wanted into four categories: minnows, catfish, guppies and whales. She further reveals how staff were permitted to offer luxury gifts, free gambling cash known as “lucky money” and free use of private jets and hotel suites to lure these high rollers to Australia. “High management kept pushing every sales [employee] to meet more customers, get more business,” recalled Jiang.
• Crown management’s failure to address red flags
Investigations further revealed that senior staff failed to raise major concerns with the board keeping some relatively out of the loop. Crown’s risk committee chairman Geoff Dixon highlighted there had been no formal anti-money-laundering training in the 12 years he worked under the operator. In the ongoing inquiry with Commissioner Bergin, Director and current chairwoman Helen Coonan also acknowledged the company’s fault in failing to enforce strict policies which would have combated acts of money-laundering.
• Suspicious bank transactions
With millions of dollars passing through Crown’s subsidiaries, Riverbank and Southbank, every year, previous banks which handled the operator’s accounts in the past years raised concerns over the transactions being carried out. It was revealed in the inquiry that ANZ Bank first raised suspicions which led to its accounts to be closed in 2014. The Commonwealth Bank experienced a similar situation five years later and provided Crown a show-cause notice right before closing its accounts as well.
• Staff at risk
While the junket activities were a steady source of business, the illegal and unlicensed promotion of gambling made by its staff in an unmarked and unlicensed office in China resulted in an ugly backlash for the casino giant. From sourcing clients to extending credit lines in an addition to the assistance they provided, these employees suffered months of imprisonment in the name of the company. The failure to protect its people despite the warnings of an impending crackdown and elevated concerns of the staff, has truly tainted the Crown name for years to come.“You are taking the risk, doing this job. And you don’t know what’ll happen the next day,” Jiang said in a statement.
• Packer’s unwavering influence
Being a major shareholder of Crown Resorts Limited, confidential information was provided to James Packer even after his resignation as a director in 2018. Packer reportedly built “a culture of profit above all else, setting a dubious tone from the top in relation to junkets.” This situation opened the company to “an extraordinary level of influence” by Packer and distorted the governance of Crown, according to counsel assisting Bell. While recommendations of Packer to be banned from being a close associate, the decision to reduce his shareholding and activity involvement in Crown will utterly be determined by next year February.
With Crown in the midst of a series of controversies, the next few months will determine its uncertain future and standing within the Australian gaming scene. Whether the company will be deemed suitable to keep its casino license or not, many changes are expected to come in a pursuit to strongly counter illegal activity and protect overall public interest.