Crown Resorts Unsuitable for Sydney Casino License, Inquiry Report Concludes

The final verdict

A New South Wales (NSW) inquiry has found Australia-based casino operator Crown Resorts unsuitable to hold a Sydney casino license. As a result, the company will not be able to open its AU$2.2bn (US$1.7bn) Barangaroo casino project unless it makes sweeping changes.

The 751-page document followed a year-long investigation into the operator

The NSW Independent Liquor and Gaming Authority (ILGA) published its full report on Tuesday, written by head of the inquiry Patricia Bergin. The 751-page document followed a year-long investigation into the operator.

In the final report, Bergin outlined a number of reasons for the inquiry’s decision to reject Crown’s license. This included evidence of money laundering at Crown casinos, its operations in China which led to staff arrests in 2016, and links to junket operators with ties to organized crime.

Despite this, Bergin said the company could eventually earn a license if it made some changes. The report advised Crown Resorts to work with the ILGA to create a remediation action plan, or to permit consensual conditions on a license.

Background on the inquiry

The NSW inquiry began in January 2020 after Melco International purchased a 19.99% stake in Crown. Adam Bell SC, the counsel assisting the inquiry, claimed Crown had breached its license by failing to inform authorities of the sale.

Sydney licensing conditions forbade Crown Resorts from any association with Stanley Ho

New Jersey casino regulators had previously linked Stanley Ho, father of current Melco CEO Lawrence Ho, to organized crime gangs. The inquiry said Sydney licensing conditions forbade Crown Resorts from any association with Stanley Ho or Melco as a result.

Once Melco sold its last remaining shares in Crown in April 2020, the investigation shifted towards other allegations made against the operator, such as money laundering and ties to organized crime gangs known as triads.

Triads are organized crime syndicates traditionally based in mainland China, Taiwan, Hong Kong, or Macau. Usually run by families, the groups make money through illicit means, such as drug smuggling, human trafficking, or illegal gambling.

Reasons for Bergin’s ruling

Although the inquiry began due to the sale of Crown shares to Melco, the ultimate report did not find this to be in breach of the casino operator’s NSW license. Instead, Bergin focused on other areas in which Crown had demonstrated its unsuitability.

The inquiry centered heavily on Crown’s links to money laundering and junket operators with triad ties. This was partly based on information provided by three whistleblowers in 2019, who claimed Crown’s Melbourne casino facilitated the cleaning of millions of dollars of illicit funds. Leaked footage from inside the casino supported the whistleblowers’ claims.

In December last year, Thai police arrested a high-ranking member of a triad who reportedly laundered drug money through Crown’s Melbourne casino. Lee Chung Chak, a member of notorious Asian organized crime group ‘The Company’, cleaned illicit funds via a VIP account owned by a junket operator, according to court records. Lee is currently fighting extradition to Australia.

Bergin also noted the arrest of Crown Resorts employees in China as another reason for the ultimate license denial. In 2016, Shanghai police arrested 19 Crown staff members for promoting gambling in the country. The inquiry’s report found Crown guilty of “exposing staff to the risk of detention.”

Crown must change its ways

As part of her ruling, Bergin made clear that Crown must go through a number of changes to earn its Sydney license. She noted the operator’s decision to cease all junket activity in November 2020 as a positive change, but said license approval would require enhanced controls to prevent money laundering in casinos.

Bergin described James Packer as “deeply flawed”

Bergin also criticized members of Crown’s management team, including CEO Ken Barton and board members Michael Johnston and Andrew Demetrious. She expressed doubt that Crown could be “converted into a suitable person” while the three men remained in their positions.

As for Crown’s major shareholder, Bergin described James Packer as “deeply flawed” but left consideration over his suitability up to the ILGA. The former executive chairman of the company was present during a virtual inquiry hearing last October that questioned Packer’s involvement in the matter.

The ILGA will consider the report at a special board meeting on February 17. Crown’s Barangaroo property opened in December, offering restaurants, bar service, and hotel accommodation, but no casino.

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