Packer “deeply concerned” about staffers
In a case that’s made headlines around the world, the Beijing government last week detained 18 employees of Australian casino company Crown Resorts.
The employees, including Executive Vice President Jason O’Connor, were based in China and made it their business to lure big-spending high rollers to Crown properties Down Under.
Despite a two-year crackdown on corruption in gaming by the Mainland Chinese government and explicit warnings to foreign operators that marketing to Chinese customers inside China is illegal, the Crown employees apparently continued to ply their trade.
According to the New York Times, O’Connor and his team wooed VIP gamblers with promises of private jets, generous lines of credit, easy visas and other special perks if they visited Crown properties in their Australian homeland. The Chinese have a massive appetite for gambling, but the cultural pastime is forbidden everywhere in China except the special administrative region of Macau.
The detentions have aroused concern in Australia; an op-ed piece in the Australian said that, “no Australian business is ever really secure in China.”
Prime Minister Malcolm Turnbull expressed concern about the detainees on a radio program. “When Australians get into trouble overseas, we always provide consular support. That is precisely what is happening there now.”
And billionaire James Packer, the major shareholder of Crown Resorts, issued a statement saying he is “deeply concerned for the welfare of those Crown employees detained in China. Crown will do whatever it can to support our employees and their families at this difficult time. Our number one priority is to be able to make contact and to ensure they are all safe.
“I have sought regular updates on this issue and have asked Crown to do everything possible to contact our employees and to support their families, as we await further details from Chinese authorities,” added Packer. “I am respectful that these detentions have occurred in another country and are therefore subject to their sovereign rules and investigative processes.”
Professor Xu Yaotong of the Chinese Academy of Governance was surprised by the detentions. “In the past, it was rare for foreigners to be ensnared in such crackdowns,” he told the Times. “But China is treating its own citizens and foreign citizens the same. If foreigners break laws in China, we can’t just do nothing and let them go.”
Little information has been forthcoming about the detainees, pending charges against them or other details. Jeff Sikkema’s wife Jiang Ling, an administrative manager at Crown’s Shanghai office, was one of those taken into custody. Sikkema said a squadron of six police officers arrived at the couple’s home and questioned Jiang for three hours before transporting her to a police station.
“If she worked for the Medellín Cartel it might be understandable,” he said. “But she works for Crown, a legitimate business. She has done nothing wrong, committed no criminal act and is now being held incommunicado in a holding cell. I am livid and powerless.”
The Chicago Tribune suggested the detentions may be intended as “a warning to foreign casinos” but has also shaken the industry in Macau. “We expect the direct VIP and premium mass market will dive over the next several months,” said Ben Lee, managing partner at Asian gaming consultancy IGamiX.
Shares of Crown fell almost 14 percent on news of the detentions, but rose 1.7 percent by the close of trading the following day.
“It is almost a certainty that Macau will see shorter-term operational pressures,” said Daiwa Capital Markets Hong Kong Ltd. analyst Jamie Soo. “It is uncertain how long the impact will last as it remains to be seen what steps China will take.”
Bloomberg News reports that in 2015, Chinese authorities warned Crown Resorts to stop marketing to high rollers. If that wasn’t enough, Crown witnessed an example of the consequences of breaking the law when China arrested employees of Korea casino operators Paradise Co. and Grand Korea Leisure Co.
A source told Bloomberg that after the warning was issued, Crown’s senior executives made shorter business trips to China, a practice that was noted by the Beijing government during a months-long investigation of the firm. That probe was reportedly dubbed “Duanlian,” or “to break the chain,” the source said. A spokeswoman for Crown in Melbourne declined to confirm the information.
The UK Guardian reported last week that Crown officials have met with Chinese authorities to try to learn the fate of those taken into custody. Board members were “provided with an update on the arrangements, which were being made to make contact with the detained employees and to support their families during this difficult time,” said a statement from the firm.
Sikkema told the Wall Street Journal that he asked police for a way to contact his wife. “They said, ‘Don’t worry, if we need to get a hold of you, we’ll contact you.’ It was a bit ominous. They took her phone, laptop, iPad and a couple of hard drives.”
But Grant Govertsen, a Macau-based analyst at Union Gaming, said these arrests “happen all the time, several times a year with the Koreans, and it’s been going on like that for years.” He said that the detention of the Australians “could represent a sea change, but it could also be business as usual.”
