Crown Resorts Not Fit To Operate Sydney Property

An independent investigation suggested that Crown Resorts is not fit to operate the $2.2 billion Crown Sydney Hotel Resort, but a number of recommendations could offer some potential for future progress, both with regard to the region’s casino ecosystem and the company more specifically.

Leading the enquiry

Commissioned by the Independent Liquor and Gaming Authority to meet to consider the findings of the report, the inquiry was led by former Supreme Court Judge Patricia Bergin.

Crown’s almost 800-page critique of feasibility follows allegations raised by Australia’s Nine Network, the Sydney Morning Herald, The Age and other media outlets that Crown, or its agents, affiliates or subsidiaries, engaged in money laundering; violated gambling laws; and partnered with junket operators with links to drug traffickers, money launderers, human traffickers, and organized crime.

Serious issues

The investigation highlights very serious issues that have been revealed in Crown’s operations in other jurisdictions, with the group boasting casinos in Melbourne and Perth, citing poor corporate governance, poor structures and processes for risk management, and a poor corporate culture.

Board revision

It is recommended that the company’s board be revised, with doubts raised about three criticised directors in the report, Ken Barton, Michael Johnston and Andrew Demetriou.

Evaluating the company’s eligibility for the Barangaroo Casino, Bergin explained: “The very serious problems of the infiltration of Crown’s subsidiaries’ accounts by organised criminals should send a shiver down the spine not only of any casino regulator but also the community generally.

“The fact that it went on for so many years in the operations of an otherwise commercially respected publicly listed company whilst it was engaging with the peak body responsible for AML/CTF enforcement demonstrates beyond any doubt the need for the establishment of a well-resourced and very powerful casino regulator in New South Wales.”

Adding: “Any applicant for a casino license with the attributes of Crown’s stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to triads and organised crime groups would not be confident of a positive outcome. 

“It is obvious that such attributes would render an applicant quite unsuitable to hold a casino license in New South Wales.”

Amendment of Casino Control Act

It is recommended that the Casino Control Act be amended to prohibit casino operators from dealing with operators of Junket in New South Wales

The creation of an Independent Casino Commission, an independent, dedicated, stand-alone, specialist casino regulator with the necessary framework to address the existing and emerging risks to gaming and casinos, is also supported.

In addition, one of the numerous recommendations detailed in the report is that, without the prior approval of the ICC, a person may not acquire, hold or transfer an interest of 10 percent or more in a licensee of a casino in New South Wales or any holding company of a licensee. This could force James Packer, the major shareholder, to reduce his 36 percent stake.

Crown, which stopped ASX trading before the report was published, states that it “will work with the New South Wales Independent Liquor and Gaming Authority in relation to the findings and recommendations of the inquiry report as contemplated by the regulatory agreements between Crown, ILGA and the state of New South Wales.”