Aussie gaming giant Crown Resorts, recently denied a gaming license in New South Wales (NSW), may be facing similar troubles in other states where it does business.
The Bergin Report, a lengthy probe conducted over 18 months in NSW, was released February 9. It determined that fast-and-loose business practices led to money laundering at Crown casinos in Melbourne and Perth. Investigators were disturbed by the 2016 arrests of Crown staffers who illegally promoted Crown casinos in mainland China; according to the Australian Financial Review, prior to the arrests Crown was informed that Beijing was preparing to crack down on the activity, but didn’t heed the warning. As a result, 19 employees were jailed in Shanghai, some for longer than six months. The report also examined alleged ties by Crown’s junket partners to Asian crime syndicates.
Due to the findings, Crown was deemed unfit to operate its new VIP casino, based at a multibillion-dollar resort complex in Sydney’s Barangaroo section. The hotel and some restaurants were permitted to open as planned in December. And former Supreme Court Judge Patricia Bergin, who headed up the investigative team, said that, with sweeping changes in culture, corporate practices and leadership, Crown could earn the right to open the casino too, perhaps as early as May.
Inevitably, Crown’s troubles in NSW have other states questioning the firm’s suitability. The Bergin Report found that a shell company called Riverbank was used to launder hundreds of millions of dollars at Crown Perth in Western Australia (WA). Now gaming regulators there are planning an investigation of their own, and have asked Premier Mark McGowan to establish an independent inquiry into Crown’s probity.
According to MSN, WA’s Gaming and Wagering Authority (GWA) held an emergency meeting after the release of the Bergin Report, then issued a statement acknowledging “the seriousness of the findings.” The GWA asked for an independent inquiry directed by Paul Papalia, minister for Racing, Gaming and Liquor.
The inquiry would look at the suitability of Crown Perth to hold WA’s only casino gaming license; the integrity of “close associates”: Crown’s response to its current problems; and the effectiveness of the GWC and local government in discharging its duties around compliance.
Of all the states where Crown does business, only Victoria has not yet called for a closer look at Crown’s business activities, though a third probe may be looming.
Meanwhile, back in NSW, executive heads continue to roll. According to the Australian New Daily newspaper, NSW’s Independent Liquor and Gaming Authority Chairman Philip Crawford said Crown Resorts Director Andrew Demetriou had to go if the company wanted to hold a license for the Barangaroo casino in the future.
Demetriou, chairman of Crown Melbourne and a member of the company’s Risk Management Committee since 2018, had no formal anti-money laundering training before joining the board. He resigned from the board, but under protest, calling comments directed against him “unfair and unjust.”
“I have always been a team player and supported the greater good,” said Demetriou. “I will therefore step down from the Crown Resorts board to give Crown the best possible chance of becoming suitable to the NSW regulator.”
Two other directors, Michael Johnston and Guy Jalland also resigned, and Crown has ended a “consultancy” with a third board representative, John Poynton.
Last Monday, as expected, CEO Ken Barton also left the company. Barton had been with the company for more than 10 years, previously as chief financial officer. According to the BBC, he was “in charge of two accounts embroiled in money laundering claims”; Bergin said he had demonstrated a “breathtaking lack of care” and was not an acceptable chief executive.
“He is no match for what is needed at the helm of a casino licensee,” the judge wrote in her report.
Executive Chairwoman Helen Coonan says Crown is already taking “significant steps to improve our governance, compliance and culture” and promised “root and branch” change.
Western Australia’s Chief Casino Officer is also out of a job. Michael Connolly, deputy director general of the Department of Local Government, Sport and Cultural Industries in WA, reportedly was too cozy with Crown Resorts employees, according to DLGSC Director General Duncan Ord. Connolly stepped down rather than be fired, though there is no direct evidence of improprieties on his part.
Nathan Bell, a portfolio manager at Investsmart, which owns Crown shares, told the Reuters news agency, “The company has no choice but to clean house.
“Crown’s management and board will be cleaned out, otherwise it risks bigger issues with its non-NSW casinos. Once a penance is paid, the company will get back to business.”
