Australian gaming giant Crown Resorts Ltd. has been given the go-ahead to open its new integrated resort in Sydney—without a VIP casino considered the centerpiece of the operation. Meanwhile, Crown is also the subject of a class-action lawsuit filed on behalf of investors who say they were misled and materially damaged by Crown’s alleged breaches of anti-money laundering laws.
According to the Guardian newspaper, the New South Wales government has given billionaire James Packer’s firm the green light for “non-gaming operations” at its new high-roller in Sydney’s Barangaroo section and also granted the company an interim liquor license. But the Independent Liquor and Gaming Authority will wait on the casino license until it has the results of an inquiry into Crown’s “suitability” as a casino operator. Those findings are expected in February 2021.
ILGA Chairman Philip Crawford said the body will “consider any suitability concerns arising from the Bergin inquiry following the handing down of the report due early next year, before making a further decision regarding an extension to the license.” Former judge Patricia Bergin has been investigating Crown’s suitability to hold a gaming license and heard allegations that the company had ignored warning signs of money laundering at its Australian casinos. The Barangaroo property is set to open on December 28.
The class-action lawsuit stems from a plunge in share value last October after financial crimes watchdog AUSTRAC announced it was looking at possible breaches of anti-money laundering (AML) statutes at Crown’s Melbourne casino. Stock prices plunged 8 percent on October 19, wiping out $500 million of Crown’s market value.
Law firm Maurice Blackburn lodged the class-action suit with the Supreme Court of Victoria, alleging that Crown “engaged in misleading or deceptive conduct during the period from 11 December 2014 to 19 October 2020 by representing that it had robust or effective systems for ensuring compliance with its AML obligations, including as they applied to its VIP international business and engagement with overseas junket tour operators, and had not disclosed relevant information to the market.”
In addition, the claim alleges that Crown behaved in a manner that was heedless of the concerns of shareholders. It is asking the court to order the company to buy back shares from affected investors.
At Crown’s annual meeting on October 22, Chairwoman Helen Coonan “unreservedly apologized” for Crown’s “governance and risk management failings.” On November 19, Crown conceded to the New South Wales Casino Inquiry that it was “more probable than not” that criminals had laundered money through two of its bank accounts. According to a release from Blackburn, those concessions followed on evidence given by Crown directors and personnel at the NSW Casino Inquiry including that:
- Crown did not provide AML training to board members or senior executives at least until August or September 2020, and its AML compliance officer for Crown Melbourne until March 2017 did not know she had that role
- Crown did not formally document its procedures for or assessments of junket tour operators with respect to the risk that they posed in terms of associations with money laundering or organized crime; and it continued to deal with such persons even after significant red flags were raised by law enforcement agencies
- Crown’s systems enabled financial transactions to be made by junket tour operators or participants that sat outside CWN’s reporting AML framework, including via its Riverbank and Southbank bank accounts, and by allowing the junket Suncity to manage its own cash desk inside Crown Melbourne from 2014 (at which $5.6 million was found in cash on an occasion in April 2018)
- Crown’s confidential financial forecasts for FY2021 and FY2022 were provided to former director James Packer, and in May 2019 were used in negotiations by Packer’s Consolidated Press Holdings to sell 20 percent of Crown shares to Melco Resorts and Entertainment. Melco was Crown’s former joint venture partner in casinos in Macau and the Philippines and was a company associated with controversial Dr Stanley Ho, banned from taking any beneficial interest in Crown under the terms of Crown’s Sydney casino license.
The new class action follows a separate, on-going class action against Crown launched by Maurice Blackburn in 2017 on behalf of shareholders who purchased Crown shares from February 2015 to October 2016. That class action followed on a fall in the company’s share price on 16 October 2016 after revelations that 19 Crown employees had been detained in China on suspicion of engaging in illegal marketing of its gambling services.
Lead plaintiff Greg Lieberman, a father of four from Sydney, said he invested in Crown believing it was a responsible company with strong governance.
“It’s been very disappointing to learn how badly Crown has behaved. The company held itself out as a good corporate citizen and has let a lot of us down. I didn’t expect to be investing in a cowboy outfit,” Lieberman said.
Maurice Blackburn principal class actions lawyer Miranda Nagy said the firm believes Crown “did not merely mislead and fail to disclose information to the market, it really conducted its affairs in a manner that was deleterious to shareholders’ interests as a whole. We are asking the Court not just to award compensation where appropriate, but also to consider requiring Crown to buy back investors’ shares at a fair value and to implement a proper anti-money laundering training program delivered by an accredited professional, so this conduct never recurs.”
According to the Brisbane Courier Mail, Crown Resorts is facing more regulatory scrutiny after the Victorian Gaming Minister said she was fast-tracking the regular review of its suitability to hold a casino license and appointing a special commissioner to oversee the process.
“This review is needed given the evidence we’ve seen come out of the NSW inquiry,” Melissa Horne was cited as saying in Australian media. “We’re making sure Crown Melbourne conducts its business in a transparent and appropriate manner.” Crown’s suitability to hold its Victoria license was not scheduled for review until 2023. It will start when the commissioner is appointed.
In more less than welcome news for the Aussie casino giant, ABC.net reports that a former Crown employee is suing the company in a fight she has promised to take to the Supreme Court. Jenny Jiang was one of 19 Crown staffers arrested and jailed in China in 2016 for promoting gambling in the country, a violation of Chinese law. Jiang said the Crown board publicly labeled her a “gold-digger” in newspaper ads when she called out the company over its treatment of staff in China.
“Crown operated in China without care to their staff,” Jiang said. “Their actions hurt me and my family. They have not been held accountable. I want justice.”
In related news, AUSTRAC has warned that junket operators have been infiltrated and exploited by “serious and transnational criminal entities.” According to Inside Asian Gaming, Crown has permanently ceased all junket activity at its casinos, dismissed two directors and appointed a new chief compliance and financial crimes officer, Steven Blackburn, to strengthen its internal compliance policies. It has also terminated controversial shareholder agreements with Packer, its largest shareholder. As for the assorted legal filings, Crown has promised to “vigorously defend” the proceedings.
