Crown Resorts’ former executive chairman John Alexander has told a public inquiry the casino giant suffered a failure of risk management before 19 employees were arrested and jailed for breaking Chinese gambling laws but could not explain what went wrong.
The long-standing Packer family operative told the NSW Independent Liquor and Gaming Authority inquiry on Thursday that important warnings about Crown’s operations in China were not elevated to the group’s board ahead of the arrests in October 2016.
“I can’t explain how it occurred,” Mr Alexander told the probity inquiry. “It’s clearly just a failure for the information to flow upwards. I can’t explain why the information was not passed on.”
Mr Alexander was Crown’s deputy chairman from 2007 to 2017 and then its executive chairman until January this year when he stood down following a series of reports by The Sydney Morning Herald, The Age and 60 Minutes about Crown’s relationships with organised crime-linked “junket” operators and the risks it exposed its staff to in China. He remains a director of the company.
Giving mostly yes/no answers, Mr Alexander agreed with counsel assisting the inquiry Adam Bell there had been failures in Crown’s risk management process that meant a series of red flags about the dangers to its China staff were ignored.
They included that the Chinese government announced a crackdown on foreign casinos luring its citizens abroad in early 2015; a Crown executive telling the head of Crown’s international VIP business in an email that staff in China were “living in constant fear” of being arrested; and that Chinese police detained and questioned a Crown staff member in Wuhan on suspicion of illegally arranging overseas gambling tours.
Mr Bell asked Mr Alexander whether the fact Michael Johnston, a Crown director and representative of major shareholder James Packer, knew a Crown staff member had been questioned but did not share that with the rest of the board “suggests a corporate governance problem”.
“Yes,” Mr Alexander replied.
The inquiry, which was sparked by last year’s media reports, is considering whether Crown should be able to keep the licence for its new casino at Sydney’s Barangaroo, which is due to open in December.
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