Regnan report slams Crown for lack of expertise
The Beijing government confirmed last week it will prosecute three employees of Australian casino operator Crown Resorts. The three allegedly violated strict Chinese regulations that forbid the promotion of gaming, Chinese Foreign Ministry spokesman Geng Shuang said at a press briefing.
Casino gaming is illegal in Mainland China, and so is marketing the games to groups of more than 10 Chinese citizens. Anyone who “runs a gambling house or makes gambling his profession” can face up to three years in prison, according to Chinese law. The three arrested staffers, all Australian, face “at least the next six months” in custody, Bloomberg News reported. The news outlet added that a fourth Australian who does not directly work for Crown could also be under arrest. Those under arrest will not be officially charged until the case goes to prosecutors.
The gaming industry, which covets patronage by Chinese high rollers, has traditionally sidestepped the ban by selling destination packages to gaming resorts in Australia and elsewhere, according to the Associated Press.
Jason O’Connor, head of Crown’s VIP International team, is the highest ranking Crown employee among the arrestees. He was visiting China from the company headquarters in Melbourne when he and the others were detained in October. The other Australians under arrest have been identified as Australians Jerry Xuan and Pan Dan. One Chinese employee, Jenny Jiang, has been released; the fate of 15 other Chinese Crown employees who have been detained is unknown, the AP reported.
Australian Foreign Minister Julie Bishop said Australia’s consular staff visited all three arrestees in Shanghai. “They are in good health, they are all represented by lawyers and we were able to provide advice and support and messages from their families,” Bishop told Sky News television. “It is a very difficult circumstance, but we will continue to provide whatever advice and support that we are able,” she added.
The arrests are a stark reminder of the Chinese stance against the marketing of casinos trips on the mainland. “In the old days, people would insist to me that the only risk was deportation. This is no longer the case,” gaming lawyer Richard Huang told Bloomberg. “Foreigners can expect to be treated exactly like Chinese nationals.
“The key message from the Chinese government is that it will take the policy on the gaming industry more seriously,” said Huang. “The law has always been there to forbid gambling marketing. Now the government is vigorously enforcing the regulation.”
Matthew Ng, a former inmate who spent four years in a Chinese prison, told the Australian Financial Review that O’Connor, now in Shanghai’s main detention center, will have a tough time of it.
“The first 24 to 48 hours are the worst,” said Ng. “I was constantly awake for the first two days; I didn’t sleep at all. Trust me, you don’t want to be there.”
In more bad news for Crown, the website AdelaideNow.com reports that a study of the company compiled “for many of Australia’s largest stock market investors” has “slammed” the firm’s board of directors, corporate governance and risk management capabilities and said it needs “substantial improvement.”
The Regnan report said Crown’s board “lacks operational experience in gaming and in Asia. Regnan maintains concerns over the absence of a lead independent director, lack of specific industry skills among independent directors and over commitment issues for some directors which could reduce director capacity to effectively discharge their duties.”
Crown shares took a 10 percent dive in October when the staffers were detained in China.
“The arrests raise the question about the extent to which the China-based staff—who were incentivized through a commission-based system—operated illegally to lure lucrative high-rollers,” the Regnan report said. Crown’s three-person risk management committee is headed by former Qantas chief Geoff Dixon along with Crown CEO Rowen Craigie and Rowena Danziger, described by AdelaideNow.com as “the aging former headmistress of Ascham, Gretel Packer’s exclusive Sydney high school.” Gretel Packer is the sister of Crown magnate James Packer, who owns 48 percent of the company.
“Regnan notes that both independent members of the Risk Management Committee do not have deep operational experience in Asia, potentially reducing effectiveness of oversight,” the report said. According to Crown’s own annual report, only three of 11 directors had any experience in executive management or risk management, the website reported.
