Gaming giant Crown Resorts has hired as its new anti-money laundering adviser a senior law enforcement official who until recently oversaw a laundering investigation into the casino firm’s own high-roller operations.
Crown’s hiring last week of the Australian Criminal Intelligence Commission’s Melbourne operations manager, John Yates, has divided those in law enforcement circles. Critics described the move as posing a significant perceived conflict of interest, but supporters said it would enable Crown to implement vital reforms.
The ACIC, Australia’s peak crime-fighting body, has spent the past three years targeting Suncity, Crown’s key partner and high-roller tour operator. Mr Yates, a respected intelligence investigator, oversaw much of that work.
Damning evidence is being aired daily at a NSW inquiry into Crown’s suitability to hold a casino licence in Sydney which suggests the casino firm’s lax internal controls may have facilitated money laundering by Asian organised crime bosses. Former NSW judge Patricia Bergin, SC, who is leading the inquiry, has described Crown’s anti-money-laundering controls at its Melbourne casino as having “reached debacle levels”.
According to casino industry and law enforcement sources, the hiring of Mr Yates as Crown’s compliance expert suggests the company realises its best chance to retain its NSW gaming licence and avoid regulatory fallout in Melbourne and Perth is to overhaul its internal anti-money-laundering systems.
The NSW inquiry is entering its biggest fortnight, with Ms Bergin summonsing key Crown shareholder James Packer to give evidence, as well as board members including former Liberal minister and current Crown chairman Helen Coonan; directors John Alexander (a former Sydney Morning Herald editor); former AFL boss Andrew Demetriou; and former top public servant Jane Halton.
Last week, Crown chief executive Ken Barton admitted to the inquiry that the ASX-listed gambling giant could have done more to vet its business partners for links to organised crime and prevent money laundering at its casinos in Melbourne and Perth.
Mr Yates is prevented under criminal laws from using any information he gained at the Australian Criminal Intelligence Commission in his new job and The Age and Herald do not suggest he would do so. Several senior former and serving police who have worked with him stressed that he had the expertise and determination to combat money laundering.
But serving and former investigators familiar with Mr Yates’ work also said the appointment posed an obvious perceived conflict of interest. The ACIC has since 2017 been investigating the same money-laundering suspects that Crown has partnered with for years. Mr Yates has been overseeing and participating in those investigations, but he will be unable to share the details of those probes with Crown under the ACIC’s strict non-disclosure regime.
ACIC officials must obtain security clearances to access classified information gained through phone taps, secret hearings and human source cultivation. It used its powers to find intelligence about Suncity’s organised crime links and those of its associates and sub-agents, and their infiltration of Crown.
The ACIC previously designated Suncity – which until recently had its own gaming room at Crown Melbourne – and one of the firm’s owners, Cheng Ting Kong, as high-priority police targets given they posed a grave organised crime risk to national security.
The commission has also contributed to joint investigations with Austrac and Victoria Police into key Crown high-roller partner and crime boss Tom Zhou. Mr Zhou’s relationship with senior Crown staffer Veng Anh has also been been the subject of recent joint agency investigations partly overseen by the ACIC. Mr Ahn has not been charged over any of his dealings with Mr Zhou.
ACIC chief executive Mike Phelan, Mr Yates’ former boss, has been the most outspoken law enforcement official in the country about the casino industry’s facilitation of organised crime. Mr Phelan savaged the industry’s enabling of money laundering in mid-2019 at the same time that Crown was seeking to downplay the problem.
Mr Phelan has also championed major investigations by the ACIC that led to Suncity’s Crown operations being crippled and contributed to the downfall of Mr Zhou, who is now in a Chinese jail. Mr Yates played a key role in the ACIC’s efforts.
The recruitment of law enforcement officials by companies is common given the private sector can pay more than government agencies and ex-officials have specialised knowledge and government contacts.
Crown previously hired former senior Victoria Police officer Craig Walsh as its Melbourne security manager and more recently appointed as a consultant former NSW deputy commissioner Nick Kaldas. Neither Mr Walsh nor Mr Kaldas are accused of having conflicts of interest.
But Mr Yates’ recruitment is different because he has been directly overseeing the ACIC’s investigations into Crown’s high-roller business partners.
“He will have to build a hell of a Chinese wall in his head at Crown to ensure he doesn’t use the secret knowledge he gained at the ACIC,” said a former senior organised crime investigator who worked with Mr Yates and who respects him, and who spoke on condition of anonymity.
Another official said there should be a cooling-off period for officers before they were hired by companies which featured in their recent investigations, and a third said Mr Yates could handle the conflict by compartmentalising the information he learnt about Crown at the ACIC. Given his integrity, he would help the casino fight organised crime, the officials said, also speaking anonymously.
The policing officials also told The Age and the Herald that the evidence to so far emerge at the Bergin inquiry showed Crown paid little more than lip service to money laundering concerns and, when this was exposed in media reports in 2019, misled the public, shareholders and agencies about the extent of its internal failings.
The board is expected to be grilled by the Bergin inquiry about its decision to publish full-page newspaper advertisements attacking an investigation by The Age, the Herald and 60 Minutes that sparked the Bergin inquiry. The content of those advertisements, which were also filed by Crown with the ASX, has been exposed in the inquiry as containing errors and false claims.
Ken Barton, who became Crown’s chief executive in January, assured Ms Bergin in recent hearings that Crown was making changes to its due diligence regime and anti-money-laundering controls to ensure it would not repeat past failures if it is allowed to keep the licence for its new casino in Barangaroo, Sydney.
He said the “relationship between revenue and compliance was out of balance” in some parts of Crown’s business, including Crown’s international VIP division, which had suffered a “lack of leadership” and had mechanisms that put “too much focus on profit”.
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