Reaction was swift and negative to a letter sent by a Crown Resorts lawyer to Melissa Horne, minister for Consumer Affairs, Gaming and Liquor Regulation for the Australian state of Victoria.
Parts of the redacted letter, released to the public last week, warned of “severe consequences” for the company, its employees and the local economy if the government revokes Crown’s gaming license.
In February, regulators in New South Wales (NSW) denied Crown’s gaming license in Sydney based on the Bergin Report, which uncovered evidence of money laundering and organized crime at Crown casinos in Victoria and Western Australia and indifference to responsible gaming and staff safety. The Bergin Report triggered the hearings into Crown’s operations in Victoria and Western Australia (WA). Now those licenses also hang in the balance.
In the July 2 letter, attorney Leon Zwier told Horne that almost 12,000 jobs were at stake and that it was “not in the public interest for Crown to fall.” The letter further stated that Crown would breach $700 million in lending covenants if it loses its license, a move that “will impact Crown’s shareholders, employees, unions, trade creditors, patrons, the hotel precinct and the Melbourne tourism industry.”
Zwier’s letter also said a default could “provide potential overseas suitors an opportunity to take advantage of the situation.” That was a reference to at least two takeover bids, one from Blackstone Group and one from Oaktree Capital, and a merger proposition from the Star Entertainment Group, Australia’s second largest gaming firm, reported AGB Nippon.
Royal Commissioner Ray Finkelstein said the letter, in “plain English,” was Crown’s way to “make sure that the commission doesn’t make a particular finding.”
Finkelstein is due to hand down his findings by mid-October; Victorian Premier Daniel Andrews has said he’s prepared to rip up Crown’s contract to run the casino.
In a more conciliatory vein, Zwier’s letter continued, “The board of Crown acknowledges that the commissioner may make adverse finding against Crown’s current executives and employees. The board of Crown will give serious consideration to terminating the services of any executives or employees against whom material adverse findings are made by the Commissioner, as soon as practicable having regard to its continuing obligations as a licensee and a public company.”
But the commission also heard that Crown’s former chief executive, Ken Barton, is being paid $1.5 million in consultant fees, despite being forced out after the NSW inquiry. Barton was one of the highest-profile resignations in the wake of the damning NSW inquiry into Crown Resorts.
Reuters reports that Helen Coonan, acting chair of Crown Resorts since January 2020, told Victorian commissioners that she faced a “resistant” approach by the company to a public inquiry, and was “overruled” by the board regarding a cultural overhaul.
According to Asia Gaming Brief, analysts from J.P. Morgan believe the company will be able to retain its licenses in both Victoria and WA, but with conditions. Analyst Don Carducci said past royal commissions in other industries such as banking and financial services resulted in a restructuring of certain fees and an “aggressive enforcement culture” adopted by regulators.
The royal commission in Victoria is also looking at illegal tax deductions by Crown, as well as its seemingly fast-and-loose approach to regulation.
In WA, commissioners are focused more on the regulatory framework in relation to casino and casino gaming and Crown’s corporate social responsibility, reported AGB.
