Last week, the Australian Transaction Reports and Analysis Centre (AUSTRAC) served Crown Resorts’ casinos in Melbourne and Perth with a statement of claim, kicking off civil penalty proceedings in federal court.
According to Bloomberg, the financial watchdog agency cited “innumerable,” systemic breaches of anti-money laundering and anti-terrorism funding laws—hundreds of discrete instances—including letting customers use shoeboxes stuffed with cash to gamble.
The proceedings followed an investigation of Crown that began in October 2020. For the past year, Crown has been on a nonstop apology tour, trying to hold onto its licenses to operate in Victoria, Western Australia (WA) and New South Wales. In NSW, Crown was deemed unsuitable to operate its casino in Sydney, but was given a chance to make things right. The gaming giant has since cleaned house, replacing its executive suite and board of directors, and agreeing to slash majority shareholder James Packer’s stake from 37 percent to 5 percent over three years.
A spokeswoman said the company “has developed a comprehensive remediation plan which is intended to position Crown as a leader in the industry in its approach to governance, compliance, responsible gaming and the management of financial crime risk. Crown recognizes the importance of complying with its financial crime obligations and has overhauled its approach to managing financial crime risk.”
Nevertheless, Crown faces serious repercussions for “not looking too hard” into its profitable but controversial use of junkets. Counsel Penny Neskovcin told the Victorian royal commission that Crown Melbourne reaped more than $900 million through its junket operations between 2017 and 2019.
Crown knew the junkets could expose it to money laundering and organized crime, Neskovcin said, but did nothing until a “light was shone on it” by the release of the Bergin Report, the NSW inquiry. Meanwhile, a separate inquiry into Crown Perth was told the WA gaming regulator chose not to pursue allegations of money laundering after the company’s “persuasive” former legal boss told them it was a media witch hunt.
Meanwhile, the Sydney Morning Herald reports that if Crown faces mega-fines like those imposed on CBA and Westpac—$700 million and $1.3 billion respectively—it could trigger an escape clause for U.S. private equity firm Blackstone, which has spent a year in a takeover bid, and is closer than ever with an offer of AU$8.9 billion. According to the Herald, Blackstone has a “get-out-of-jail-free card condition attached to its offer, which kicks in if a material adverse event occurs in Crown.”
Blackstone has considerable experience buying, overhauling and selling casinos across Las Vegas, Europe and Latin America. Casino industry analyst Ben Lee, of IGamiX, said Blackstone has “no interest in running casinos long-term. So they will slash and burn, they will cut costs and make it very lean, fix it up, and then sell it off.”
Chris Tynan, Blackstone Australia’s senior managing director and head of real estate, said in a recent statement that Crown plays a “pivotal role in Australia’s economy through job creation, investment and as a tourism destination for locals and visitors alike.
“We are excited to bring our local expertise and global hospitality and gaming experience to contribute to Australia’s post-pandemic recovery and position Crown for future growth,” he said.
