Crown Resorts is expected to open portions of its luxury resort in Sydney next month as planned, but not the gaming floor, after New South Wales regulators prevailed on the company to hold off until an inquiry into alleged money laundering and other misdeeds by the gaming giant completes its work and submits its findings in February.
The state’s Independent Liquor and Gaming Authority stopped short of an outright order, but Chairman Philip Crawford said the agency was “not comfortable” with gaming taking place at the A$2.2 billion (US$1.6 billion) Crown Sydney complex on Darling Harbour and was prepared to back that up by withholding various approvals necessary for its operation.
A special commission chaired by former Supreme Court Judge Patricia Bergin has been investigating Crown since early in the year in response to a series of explosive reports in Australia’s national media accusing the company of routinely flouting its compliance and due diligence obligations. The most damaging of the accusations was that Crown partnered with junkets with reputed criminal ties to run a lucrative VIP business at its flagship Crown Melbourne casino that was rife with money laundering and other violations.
Executives and directors of the company repeatedly denied any knowing involvement in money laundering during weeks of testimony before the commission last month, but it appears that’s been blown sky high after an attorney for the company acknowledged in testimony last Tuesday, just as the commission was wrapping up its work, that money laundering “likely” occurred through bank accounts Crown had set up to receive millions of dollars of deposits from high rollers.
“We had no notice that was being done,” Crawford said last Wednesday. “I don’t think the Bergin inquiry or counsel assisting were aware of it, and it’s come at the 11th hour, literally𑁋apparently 11 o’clock last night.”
The ILGA promptly served notice on Crown that it found the admission “extremely concerning” and that “Any gaming activity at the casino before the inquiry’s findings are released in February 2021 and considered by the authority would pose unacceptable risks on the community against the public interest.”
Shortly after, Crown released a statement of its own in which the company said it had “determined that gaming operations at Crown Sydney will not commence in December 2020” and would instead “continue to focus on opening the non-gaming operations at Crown Sydney, in consultation with ILGA.”
This could include property’s 350-room hotel and a variety dining, entertainment and MICE attractions.
The viability of the casino, whenever it opens, is another matter since it was designed with the VIP trade in mind, imported mostly from China, in which junkets serve as crucial middlemen𑁋recruiting players, arranging their travel and accommodations and enabling them to maneuver around China’s strict currency controls.
Crown says it has suspended all junket activity in response to the investigation and will no longer deal with junkets at all unless they are vetted first by regulators in the states where it operates: in Victoria, in Western Australia, home of the company’s Crown Perth casino, and, latterly, in New South Wales.
How that will work in practice remains to be seen. In Crown’s home state of Victoria, where the Commission for Gambling and Liquor Regulation is also investigating the company’s internal controls, or lack thereof, there is no mechanism for licensing junkets. A spokeswoman said such a regime would likely require legislation and would be a matter for the state’s Department of Justice and Community Safety to consider.
Likewise, in New South Wales, an ILGA spokesman said it was “not possible for ILGA or Liquor & Gaming NSW to licence junkets under existing laws and regulations.”
He said also that the agency has not received any proposals from Crown in this regard.
What is more likely is that the issue will await the Bergin commission’s recommendations in February. These are expected to be sweeping and severe and could include a requirement that former Crown Chairman James Packer divest all or part of his controlling 36 percent of the company’s ASX-listed shares.
Packer resigned as chairman in 2017 and relinquished his seat on the board of directors the following year. But, as the commission learned, his influence on decision-making has remained all-powerful and is blamed in part for promoting a corporate culture in which regulatory compliance and due diligence took a back seat to profits.
