Why is James Packer fronting an inquiry over Crown’s behaviour?

A year ago Crown insisted it was sinless over money laundering, association with criminals and arrests in China. So why is the scion of one of Australia’s richest families facing a grilling in an inquiry? And what is at stake for Crown’s casinos?

James Packer will take the stand on Tuesday afternoon at a NSW inquiry into Crown casino almost 30 years after the nation’s press watched, giddy with anticipation, when his father, Kerry, was hauled before a Senate inquiry for a grilling on media ownership.

Back then, Kerry delivered a lesson in power to the senators, uttering the infamous line, “If anybody in this country doesn’t minimise their tax they want their head read,” because, “as a government I can tell you you’re not spending it that well”.

Now journalists, politicians and watchers of one of Australia’s greatest corporate dynasties will get the chance to see the younger Packer front up – digitally from his super-yacht moored in the South Pacific – to answer questions about the behaviour of the company he used to run, casino giant Crown Resorts.

So why is the scion of one of Australia’s richest families facing this grilling? What’s this inquiry all about? And what is at stake for Crown’s casinos?

James Packer will appear before the NSW inquiry this week.
James Packer will appear before the NSW inquiry this week.

What’s been going on at Crown?

Crown has been in crisis since June last year when The Age, The Sydney Morning Herald and 60 Minutes dropped a series of bombshell reports revealing how it went into business with figures linked to Asian organised crime gangs known as Triads, allowed itself to be used to launder drug money, and put its staff at risk of arrest in China.


The NSW Independent Liquor and Gaming Authority (ILGA) launched an inquiry with the same powers as a royal commission to investigate those revelations, alongside a controversial deal Packer struck in May last year to sell one-fifth of Crown to another casino group, Melco Resorts.

The inquiry has been running public hearings, on and off, since February and has called experts, directors and board members of the company.

How high are the stakes?

Very high. Commissioner Patricia Bergin will report back to ILGA on whether or not Crown should keep the licence for its new casino at Barangaroo, which it plans to open in December.

Sydneysiders will have noticed the $2.2 billion hotel, luxury apartment and casino tower rise from the harbour banks over the past four years, and it’s now the city’s tallest building.

The worst case scenario for Crown is it loses its licence, or the government imposes new conditions on the licence restricting how it does business, and the use of that huge building is thrown into doubt.

Crown's Barangaroo building, which is nearing completion.
Crown’s Barangaroo building, which is nearing completion.Credit:Wolter Peeters

What are junkets and what’s the problem?

Crown’s financial growth engine in recent years has been its international “VIP” business, built around ultra-wealthy Chinese high rollers. These VIPs can turn over tens of millions of dollars in a single visit to the ASX-listed group’s casinos in Melbourne and Perth – and, all going well for the company, soon Sydney.

A “junket,” or “junket operator” is a group that organises trips overseas to bring these high rollers to gamble. But they do much more as well. Gambling and promoting gambling is illegal in China, and so is taking large amounts of cash out of the country. So junkets also lend them money to gamble and then collect their debts once they return home.

Crown’s junket partnerships were highly lucrative for a time. But last year’s media exposé revealed how some of Crown’s biggest junkets had close links to powerful organised crime syndicates. The inquiry has learnt that Crown can’t say it didn’t know – it was warned about its junkets’ criminal links in internal due diligence reports dating back to 2014, but it kept doing business with them anyway.

Why is money laundering an issue?

Criminals are attracted to casinos because they can disguise the proceeds of crime as legitimate income. Drug traffickers can swap dirty cash for gambling chips and then have the casino deposit their “winnings” into a bank account, making drug money appear to be the proceeds from a lucky night at the baccarat table.


It’s highly illegal, and the inquiry has shown how Crown repeatedly failed to stop this from happening.

Some of the most damning evidence relates to two shell companies Crown set up called Southbank Investments and Riverbank Investments, which it used to open bank accounts into which patrons could deposit money.

Roy Moo, right, on surveillance footage piling cash onto the counter at Crown casino in Melbourne. This recording was presented in court.
Roy Moo, right, on surveillance footage piling cash onto the counter at Crown casino in Melbourne. This recording was presented in court.

This masthead revealed last year that drug traffickers used these accounts to launder dirty cash, which caught the eye of law enforcement agencies. The inquiry has uncovered that several major banks also raised concerns after they identified a string of large cash deposits into the accounts which had all the hallmarks of money laundering.

ANZ shut the accounts in 2014 because they were so concerned, but Crown simply opened new accounts, which operated the same way, with the Commonwealth Bank. CBA shut down the accounts last year after detecting the same suspicious activity.

When this masthead first wrote about the Southbank and Riverbank accounts, Crown told us that transactions through them were “subject to all of our usual reporting obligations, including our obligations under AML/CTF [anti-money-laundering and counter-terrorism financing] legislation.”

But under questioning at the inquiry, Crown chief executive Ken Barton agreed that statement was “entirely incorrect” because Crown did not register the shell companies as “reporting entities” with the anti-money laundering watchdog AUSTRAC, even after AUSTRAC queried Crown about them.


The inquiry has also examined evidence of money laundering inside the private gaming room at Crown Melbourne operated by one of Crown’s most important junket partners, Suncity, which is run by the accused former 14K triad member Alvin Chau.

Counsel assisting the inquiry Naomi Sharp, SC, said this room operated as an “island of immunity” from anti-money laundering controls and video footage showed large bundles of cash being handed over in the room from a blue cooler bag.

Crown told the inquiry it once discovered $5.6 million in cash stored in a cupboard there which sent “money-laundering alarms ringing”.

Despite that, Crown kept working with Suncity up to early this year, until the COVID-19 pandemic closed Australia’s borders. It has not ruled out working with Suncity in the future.

What about the China arrests?

In October 2016, Chinese police arrested 19 Crown staff members and charged them with illegally promoting gambling in the country. Sixteen of them spent nine to 10 months in jail. The scandal caused Crown’s share price to plummet, triggered its exit from an Asian joint venture and sparked a shareholder class action that is underway seeking hundreds of millions of dollars.


If Crown knowingly broke Chinese laws, or was reckless or indifferent about that fact, that won’t give the NSW government much confidence it can keep its Sydney casino clean.

Fresh evidence presented to the inquiry has been damning. Senior executives in the VIP team and one Crown director (Packer’s lieutenant Michael Johnston) decided not to tell Crown’s CEO and board that the Chinese government launched a crackdown on foreign casinos in early 2015.

The executives also failed to alert senior management when Chinese police detained a Crown employee in mid-2015 and accused him of organising gambling tours, in what was a clear sign of escalating risks that could have prompted Crown to take more precautions or pull its staff out of the country.

Emails sent to senior Crown executives described its staff as “living in constant fear” of being arrested in China.

Former Crown Resorts employee Jenny Jiang being arrested in China in 2016.
Former Crown Resorts employee Jenny Jiang being arrested in China in 2016.Credit:60 Minutes

Didn’t James Packer sell his shares?

In May last year, James Packer agreed to sell a 19.9 per cent stake in Crown – almost half his shares in the company – to the Hong Kong casino group Melco Resorts for $1.7 billion. Melco’s boss is Lawrence Ho. But Crown’s NSW casino licence says the company must prevent Macau casino kingpin Stanley Ho, Lawrence’s father, from taking a stake in the company because of his alleged organised crime links.

However, that’s exactly what happened when Packer handed over the first parcel of shares, because Melco’s largest shareholder, the inquiry has learnt, is a Ho family trust of which Stanley (who died in May this year) was a beneficiary.

To make matters more complicated, the sale of Packer’s shares was negotiated and signed off by two of his trusted advisers, Michael Johnston and Guy Jalland, who also sit on Crown’s board of directors.

They have both told the inquiry they did not warn Crown the potentially licence-breaching deal was in the works because they did not believe Stanley Ho was involved in Melco, even though that fact was on the public record.

Lawrence Ho.
Lawrence Ho.

So where does Packer sit in all this?

There have long been questions about who calls the shots at Crown and whether it’s run in the interests of all shareholders or just its largest one, James Packer.

Packer stood down from Crown’s board in March 2018 amid a battle with mental illness, but the inquiry has shown how he has continued to wield significant influence from behind the scenes.

Eight months after his departure he was castigating then executive chairman John Alexander for going “on a world trip looking at restaurants” and asking whether “we” needed to “immediately implement travel bans for our executives”.

The question of James Packer's influence has long hung over Crown. James Packer (centre), with (clockwise from top left) Ken Barton, Guy Jalland, Michael Johnston, and John Alexander.
The question of James Packer’s influence has long hung over Crown. James Packer (centre), with (clockwise from top left) Ken Barton, Guy Jalland, Michael Johnston, and John Alexander.

Ken Barton (who was Crown’s finance boss and is now CEO) was sending almost daily earnings updates to Packer and detailed profit forecasts when the billionaire demanded them – information that was not given to other shareholders. When asked at last year’s AGM if Packer was in receipt of special information, Barton spoke about a services agreement with Packer’s private company, Consolidated Press Holdings, but did not directly address the question.

The flow of confidential information to Packer led to one of the inquiry’s more explosive suggestions: that his deal to sell a fifth of Crown to Melco might amount to insider trading. (Packer’s executives who signed off on the deal have denied this because any information was not materially different to what market analysts had forecast and no regulatory action has been taken to explore the issue).

Meanwhile the inquiry has shown how executives from Packer’s private company CPH were embedded deep into Crown, advising on everything from vetting the casino’s junkets for criminal links, overseeing the disastrous China strategy, and advising how to respond to last year’s media storm.

The inquiry could find Packer to be unfit to be a “close associate” of the Sydney casino and forced to sell down his shareholding in Crown.

What about Crown’s full-page ad?
Last year Crown’s board of directors aggressively attacked the reports in The Age, The Herald and 60 Minutes, putting full page ads in News Corp papers calling it a “deceitful campaign” made up of “unsubstantiated allegations, exaggerations, unsupported connections and outright falsehoods”.

But Crown has now admitted it was actually the company’s own response, including an ASX release, that contained falsehoods. There was a basic error about who owned the Suncity junket, and its claim that it no longer worked with any other junkets detailed in the report was also wrong.

Crown’s claim that it based its China operations on “legal and government relations advice” was undermined by evidence that the VIP team never shared the legal advice it was getting from Chinese lawyers with Crown’s legal team, which had to scrambled to obtain copies after the October 2016 arrests.

John Alexander, Crown’s executive chairman at the time, said he would not repeat the claim that Crown had a “robust process for vetting junket operators” in light of the inquiry’s evidence. Another director, John Poynton, said he felt “let down” by the advice from management before he and the rest of Crown’s board signed the statement.

The attack ad could come back to bite Crown’s high-profile board. The inquiry has returned to it time and again and appears to be using it as a test of their competence and credibility.

Ken Barton.
Ken Barton.

Has Crown owned up to its failures?

Crown’s CEO Ken Barton, who took on the top job in January, has told the inquiry that in the past parts of the business had the “wrong balance” between “profit and compliance”, and has said it will strengthen its due diligence and anti-money laundering programs.

But Commissioner Bergin appears sceptical about the company’s claim to be on a “journey of continuous improvement”, especially when it has not yet implemented its new anti-money laundering program and insists it will open the Sydney casino in mid-December.

“To say that the company is on a journey of improvement is, one would hope, heartening to some but I don’t know what it means,” Bergin said on October 2. “I really am at a loss at the moment to understand what it means.”

Patricia Bergin.
Patricia Bergin.

What will be the ramifications?

Commissioner Bergin will report back to ILGA by February 1 next year on whether Crown is a suitable casino licence holder. If it’s not, she will suggest what if anything has to be done to make it suitable.

That could be ordering Crown to no longer work with junkets, remove certain key executives from their roles, or impose any other conditions on Crown’s licence.

A major complication, however, is that the deal Crown signed with the NSW government in 2014 to open Sydney’s second casino entitles the company to claim compensation worth ten times the financial impact of “any action” the government takes that changes, or has the effect of changing, its licence.

The inquiry’s findings should reverberate south to Victoria, given that Crown’s malfeasance happened under the watch of the state government and its regulator, the Victorian Commission for Gaming and Liquor Regulation. The Victorian government ordered an “urgent review” into the media revelations but, more than year later, that appears to have gone nowhere.

Last year’s reports also triggered an Australian Commission for Law Enforcement Integrity inquiry which found Home Affairs gave preferential visa to Crown’s VIP customers, including VIPs previously refused entry to Australia on character grounds.

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