Victoria’s gaming regulator has issued Melbourne’s Crown Casino with a notice to show cause why the gambling company should not be disciplined over its dealings with high-roller tour operators linked to Asian organised crime groups.
But the Victorian Commission for Gambling and Liquor Regulation only sent the notice at the start of October, 14 months after the Victorian government had demanded an “urgent” review, and as public hearings by the NSW regulator were laying bare Crown’s lax approach to combating organised crime and money laundering.
While the NSW Independent Liquor and Gaming Authority is assessing whether Crown is a “fit and proper” company to operate a casino in Sydney, the Victorian regulator is only considered likely to fine the company or order it to “strengthen controls”.
The show-cause notice means the Victorian regulator has finished its investigation, which was ordered in August last year in response to revelations by The Age, The Sydney Morning Herald and 60 Minutes about Crown’s dealings with crime-affiliated high-roller “junket” operators linked to money laundering and sex trafficking.
On Friday, the regulator said it had “issued a notice to Crown requiring it show cause why disciplinary action should not be taken for failing to ensure that controls regarding junket participants were implemented by Crown … particularly in relation to Crown’s due diligence in the supervision and approval of junket participants”.
“The VCGLR’s investigation also considered how internal controls at Crown could be strengthened to better ensure that the management and operation of the casino remains free from criminal influence or exploitation,” the regulator’s statement said.
“VCGLR has commenced work to strengthen controls, particularly regarding the probity of junket participants at the casino, and improvements are expected to be in place by the end of the year.”
Under Victoria’s Casino Control Act 1991, Crown has 14 days to respond, and the regulator has the power to cancel or suspend Crown’s gaming licence, to issue a fine “not exceeding” $1 million, or issue a “letter of censure” and demand corrective action. However, strong action such as questioning the Crown Resorts’ licence to run the casino is deemed highly unlikely by those familiar with the operations of the regulator.
In the 2018-19 financial year, Crown paid tax to the state of Victoria of $238 million.
The Victorian regulator also said it was closely monitoring the NSW inquiry into Crown’s suitability to hold a licence for its Barangaroo casino project in Sydney.
Crown’s chief executive officer Ken Barton has told the NSW inquiry the company had the “wrong balance” between profit and compliance, and casino mogul James Packer admitted over three days in the witness box this week that some of his actions had been “shameful” and “disgraceful”.
In evidence on Friday, Crown Resorts director Harold Mitchell said the company should never have dealt with high rollers with criminal records and he hoped never to hear the word “junket” again.
Mr Mitchell, who has been a Crown director since 2011, was questioned about his knowledge of Crown’s dealings with junket operators and high rollers with links to organised crime gangs and the group’s troubles in China that led to the arrests of 19 Crown staff in 2016.
Mr Mitchell, who counted media mogul Kerry Packer as a close business associate, defended his decision to remain on the board of Crown after a ruling earlier this year that he breached his duties as a director of Tennis Australia when he passed information in late 2012 to a third party, Bruce McWilliam at Seven Network, describing his infringement as “minor”.
Mr Mitchell also defended his independence as a Crown director after it emerged he received a $1.9 million interest-free loan from Kerry Packer during the early 1990s recession that saved him from bankruptcy, saying Mr Packer was a kind man who helped many people.
Mr Mitchell was taken to reports on the criminal activities of one high roller Crown dealt with, Qiyun Zhou, and shown photos of Crown executive Barry Felstead with his arm around Mr Zhou. He was also taken to emails that showed Crown staff in China had been threatened with violence if they stopped advancing credit to Mr Zhou.
Mr Mitchell said these concerns were never reported to the board.
Mr Mitchell was also adamant that Crown staff should have never engaged with such dubious figures.
“What we’re talking about should not have happened.”
Mr Mitchell said, as a member of the board, he was not specifically aware of the details of junket operators and, up until recently, he only had a vague understanding of what they did. Asked by counsel assisting the inquiry Scott Aspinall: “Are you aware now what a junket is?”
Mr Mitchell responded: “I think for some time I heard the word, and I hope that I never hear it again.”
He also told the inquiry that Crown’s board did not review the bank accounts of two shell companies set up by the casino operator to make it easier for high rollers looking to gamble in Australia to avoid raising red flags with Chinese authorities cracking down on capital being taken out of the country.
Mr Mitchell’s appearance followed James Packer’s evidence to the inquiry about his influence over the group and its strategies.
Mr Packer delivered bombshell after bombshell during that evidence, including admitting he sent a threatening email to a private equity executive looking to privatise Crown. Mr Packer also revealed he accepted the inquiry might cap his stake in Crown, which currently sits at 36 per cent.
Mr Packer also disclosed he was the driving force behind the company’s strategy to partner with junket operators and that he was aware of “rumours” about organised crime using such operators to launder money.
Mr Mitchell said that he did not give much thought to a question at Crown’s annual general meeting last year about what private company information Crown shared with James Packer.
The inquiry has questioned whether current Crown chief executive Ken Barton misled shareholders by not disclosing the regular flow of information to its major shareholder.
“There probably should have been more information [in the answer], he said. “[But] I don’t think it was misleading in any way.”
Mr Mitchell said the shareholder who asked the question, shareholder activist Stephen Mayne, took up 90 per cent of the hour-long question and answer session and that his question “might have just passed over the top of me”.
“I might not have paid as much attention to the exact words and exact answer given he was asking, and always does, so many questions,” Mr Mitchell said.
The inquiry continues on Monday.
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