Crown Resorts Senior Management Act Dumb On Gambling Failings

The senior management of Australian casino operator Crown Resorts continues to show that they either were surprisingly ignorant of their VIP gambling enforcement obligations or simply didn’t care.

This week, the New South Wales Independent Liquor & Gaming Authority (ILGA) investigation into the suitability of Crown to hold a state gaming licence has revealed even more humiliating revelations. It was the turn of Crown ‘s former CEO / chair and current manager, John Alexander, to squirm under the spotlight on Thursday.

Pressed on whether he had seen news reports in 2015 describing China’s crackdown on foreign casinos seeking to draw mainland gamblers, Alexander said he was unable to remember reading them. Told that other Crown execs, including one member of the board, were aware of the dangers that eventually led to the arrest of 19 Crown employees by China, Alexander argued that this was “a failure to flow information upwards.

China allows foreign resort operators to persuade mainland residents to promote non-gaming facilities, but any talk of gambling is strictly off limits. But Crown continued to actively market its gaming operations to mainland high-rollers, “deliberately spitting” (in the words of a former joint venture partner) on the Chinese authorities.

Alexander also argued that Crown management was unaware of asking Chinese workers to tell local authorities that they were just visiting China, not working. Alexander also said that until after the arrests, he did not investigate the legal advice obtained by Crown and said that former managing director Rowan Craigie had told the board that “we were working lawfully in China.”

Last year, following public allegations that Crown was turning a blind eye to money laundering at the junket-led VIP rooms of Crown Melbourne, the company bought advertising in local newspapers condemning the “deceitful campaign” against it. On Friday, Alexander acknowledged that some of the arguments made in the Crown ad were incorrect.

Those statements included Crown claiming to have “robust processes” to vet its partners in the junket. Alexander said Barry Felstead, who supervised Crown’s VIP activities, was one of the execs who vetted these statements for precision. When questioned whether this was essentially asking Felstead to investigate himself, Alexander disagreed.

Asked about revelations that a ‘cash desk’ at Crown Melbourne was run by the Suncity Community junket, Alexander said he did not remember being told about the AU$5.6 m in cash found in a cupboard in the VIP room of Suncity, which was AU$5.5 m more than Suncity was legally allowed to have on hand.

Alexander again asserted ignorance in an email in which Crown enforcement officer Joshua Preston mentioned the cash, acknowledging that the email should have been forwarded to the risk management committee of Crown. Alexander conceded that this made the implication that Crown had turned a blind eye to money laundering “more difficult” to refute.

Last week, until mid-2021, Crown suspended junket operations at its casinos, and Alexander reported Friday that the company was on “a journey of improvement.” ILGA Commissioner Patricia Bergin reported that Alexander’s optimistic views were “at a loss,” thinking that if Crown could assert ignorance of illegality at its locations,” what chance did the regulator have? The role of the ILGA was to decide if Crown is in a position to hold a gaming licence for its AU$2b Crown Sydney property scheduled to open this December.

Speculation has it that Crown will avoid its licence’s outright revocation, but will face tighter limits on its ability to run Crown Sydney gambling. The largest shareholder of Crown, James Packer, whose attempts to sell 20 percent of Crown to his former JV partner Lawrence Ho triggered the investigation, is scheduled to testify next Tuesday via video connexion (6).