Given the damning evidence aired by Victoria’s Royal Commission into Crown Melbourne, a counselor in the probe says the casino giant is unfit to conduct gaming in the state.
In final submissions to commissioners on July 20, Adrian Finanzio SC said Crown repeatedly breached the covenants of Victoria’s Casino Control Act, and should be barred from conducting business there, at least temporarily.
The commission was convened following a similar investigation in New South Wales; the so-called Bergin Report, released in February, detailed evidence that Crown turned a blind eye to money laundering at its casinos in Melbourne, Victoria and Perth, Western Australia, among other regulatory lapses. As a result, Crown was denied a license to conduct gaming in NSW, and its lavish VIP casino in Sydney remains closed.
Finanzio said evidence presented during two months of hearings showed Crown should have its gaming license suspended or even revoked due to systemic issues around money laundering controls, responsible gambling procedures, employee safety and a general disregard for compliance, reported Inside Asian Gaming. The company also owes as much as $480 million in unpaid taxes.
Even Crown Resorts Executive Chairwoman Helen Coonan, once viewed as a reformer who would steer the company toward a new culture of compliance and integrity, is now being slammed for lax oversight, along with Crown Melbourne CEO Xavier Walsh.
Finanzio said Crown’s record of misconduct includes “systemic and repeated failings as an AML/CTF reporting entity, a provider of responsible gaming, a casino that guards against organized crime influences at the casino, a taxpayer, an employer who failed to prioritize employee safety and a regulated entity who was more concerned with the risk of getting caught than compliance.” The seemingly deliberate failures have caused a “loss of confidence and trust” in the company by regulators, state officials and the public.
All these issues “weigh heavily in favor of a finding that public interest be better served by not having this licensee.” He blasted Australia’s leading casino company, saying, “There was at all times in our submission a systemic failure in Crown’s approach, placing it in continuous breach of its code.”
Its lack of responsible gaming policies or lax enforcement of same “have had a significant impact on the community,” he continued. “The evidence revealed that gambling at the casino has resulted in financial hardship, criminal activity, forced prostitution and in some cases even suicide. They together underscore, along with the legislative requirement to do this properly, the importance of the issue.”
On anti-money laundering measures, Finanzio said, Crown “failed woefully” to address the risk and guard against the criminal activity. Even now, it is ill-equipped to combat money laundering “at a level that is to be expected of the operator of a casino as sophisticated as Crown. It is, according to its own evidence, at only an early stage of maturity.
“The Casino Control Act expects of the licensee that it won’t behave like the accused in a criminal trial, standing behind the onus of proof and taking every point to avoid conviction,” he said.
“The whole purpose of the suitability test of character, honesty and integrity is that it is expected that the onus will shift to the licensee who will behave like a fit and proper person, who will own up to misdeeds, to proactively seek to address matters of concern.
“A licensee of good repute does not make the untenable argument but instead concedes ground. A licensee of good repute does not resist requests reasonably made or changes sought to be introduced for good reason. They appreciate the reasonableness of the request or the necessity for change, even if the request or the change causes them inconvenience.
“The opposite has been on display over the last two years and … examples of ‘Old Crown’ behavior has been on display in recent times,” Finanzio continued, referencing the “Old Crown” phrase coined by Crown to distance itself from its past misdeeds.
“On balance,” Finanzio concluded, “it would be open to the commission to find that it is not in the public interest for Crown to retain the license.”
Coonan, a former NSW senator who was installed as executive chair to create the all-new “Crown 2,” came in for her fair share of criticism. Finanzio said simply, “If Crown is to retain its license, it would be open to the commissioner to make a finding that Ms. Coonan is not a suitable associate of Crown Melbourne.” Of CEO Walsh, he said, “In the time since he’s been thrust into positions of greater authority he has, with respect, not risen to the occasion in a way which can give any confidence that he has the necessary qualities to be a suitable associate of Crown.”
Last week, NSW Sky News Business Editor Ross Greenwood agreed that if Coonan remains as chair of Crown, it would be a “devastating blow” for the gaming group.
In other news, the Sydney Morning Herald reported that Crown Resorts “secretly engaged” Victorian Labor powerbroker and former federal senator Stephen Conroy as a consultant to help keep its Melbourne casino license; the Melbourne property contributes about 70 percent of its earnings. Uncertainty over the license has left Crown in financial limbo and wiped billions from its market value. And on Friday, the Star Entertainment Group walked away from its proposed $12 billion merger with the company.
The Australian Financial Review said the move could be “a tactical retreat” by Star, and may be followed by another play “for pieces of the James Packer-backed group or the whole company once the Victorian and West Australian royal commissions end.” The Star ditched its merger plans due to fears that Crown’s value could further plummet in the wake of the inquiries.
Crown did itself no favors earlier this month when it sent a letter to the Victorian minister for gaming and liquor regulation essentially saying the company was too big to fail. A Crown attorney warned MP Melissa Horne that, deprived of its license to operate, Crown risked defaulting on some $700 million of debt and would have to put more than 12,00 people out of work.
The note sparked criticism in Australia that Crown was trying to influence the outcome of the inquiry.
In the financial year ending June, 2020, the company reported total revenue of AU$2.2 billion. Out of that main floor gaming revenue accounted for $1.23 billion and VIP revenue was $398.2 million. Gaming revenue in the full period was down about 27 percent and 26 percent due in part to the Covid-19 pandemic.
The presiding judge now has until October to make the weighty decision as to whether to strip Australia’s largest operator of its license.
In the aftermath, some analysts quoted in local media said that if the license was lost they expected a domino effect, with a separate inquiry in Western Australia also likely to reach the same conclusion.
Asia Gaming Brief cited analysts who say the company may need to transform itself into a pure hotel and entertainment play and allow a third party to manage its gaming operations.
