Crown fails to have inquiry delayed

By Mia Chapman Updated
Fitch hands down latest Crown Resorts rating update

Crown Resorts’ attempts to delay a public grilling over the arrest of its staff in China has failed.

The Sydney Morning Herald reports that Crown argued the arrest of 19 of its staff in China would prejudice a class action lawsuit over the incident, while it is before the New South Wales Independent Liquor and Gaming Authority’s inquiry into whether the group is fit to hold a licence for its new $2.4 billion casino in Barangaroo.

The arrests and charges in 2016 are for promoting gambling in China, which prompted Crown’s share price to dive almost 14 per cent, wiping more than $1.3 billion from the company’s market value.

Shareholders have launched a class action claiming Crown did not tell them about the risks it was taking in China, where gambling is illegal, and seeking compensation for the amount they lost.

The NSW inquiry, with the same powers as a royal commission, sought witness statements submitted as evidence to the class action and called Crown’s former chief executive Rowen Craigie and its current boss Barry Felstead to give evidence about the incident next week.

Crown wanted the inquiry to be delayed or held in private.

Its lawyer argued that preparing for the inquiry as well as class action hearings in November would “impose a significant personal burden” on the witnesses which “may be oppressive” and “may be quite dangerous to their wellbeing”, according to a written discission released by the inquiry.

Neil Young, QC, appearing for Crown, said witnesses giving evidence twice in a short space of time and undergoing repeat cross-examination could prejudice Crown in the class action.

Going ahead with the public hearings could result in “untold damage” to Crown and possibly “amount to an interference with the administration of justice in the Federal Court.”

He raised the issue of Crown’s former head of VIP operations, Jason O’Connor, whose 10 months in a Chinese jail was “particularly harrowing.”

In dismissing Crown’s application, Commissioner Patricia Bergin SC, said it was not uncommon for Commissions of Inquiry or Royal Commissions and civil criminal or regulatory proceedings to run concurrently, while finding argument about the burden on witnesses “really not an issue.”

“The environment of a witness box is not a place of comfort,” she said.

The inquiry will resume public hearings on Monday, with Mr Craigie and Mr Felstead due to appear over the course of the week.

Crown Resorts’ inquiry heats up

Crown Resorts’ new casino and hotel in Sydney will open its doors early next year.

The Sydney Morning Herald reports that while the 275 metre building, set to become the tallest in Sydney, is an achievement of structural and political engineering, as James Packer’s “gift to Sydney”, another carefully constructed façade has been cracked over the past two weeks.

An unprecedented probity inquiry with the same powers of a royal commission has laid bare the facts of Crown’s business dealings with figures linked to organised crime, and its failure to stop its Melbourne and Perth casinos from being used to launder dirty cash.

During four and a half days of evidence given via video link, Crown’s chief legal officer and top anti-money laundering officer Joshua Preston gave evidence that the casino ignored repeated red flags about how it operated and who it went into business with.

The New South Wales Independent Liquor and Gaming Authority launched the inquiry in the wake of a damaging exposed published a year ago by The Sydney Morning Herald, The Age and 60 Minutes.

Crown and its board responded furiously to the reports, publishing a full-page ad in rival newspapers calling it a “deceitful campaign” containing “unsubstantiated allegations…and outright falsehoods.”

That response, also sent to investors via an ASX release, could come back to bite Crown and its board, which is loaded with corporate heavyweights including Jane Halton, Harold Mitchell and its now chairman Helen Coonan.

Crown newspaper advertisement in the spotlight

Time and again Commissioner Patricia Bergin, and her counsels assisting returned to the advertisement and used it to test Crown’s credibility as they decide whether it is a suitable holder of Sydney’s second casino licence.

“I suppose when you go on the front foot…it is necessary to make sure that [your opponent’s] Achilles heel is exposed before you do it, isn’t it?” the former NSW Supreme Court judge Bergin proposed after one bruising examination.

The inquiry heard Crown was warned as far back as 2016 in two due diligence reports that its biggest junket partner, Alvin Chau and his Suncity operation, appeared to be a former member of the 14K Triad in Macau and that the US government considered him to have criminal links.

Junkets bring hyper-wealthy Chinese gamblers to overseas casinos, given them credit to get around strict controls on moving cash out of China, and then collect their debts when they return home.

The system brings in hundreds of millions of dollars for casinos like Crown every year, but is also vulnerable to being used to clean and move dirty money.

Despite the warnings, Crown gave Chau a private gaming room at its Melbourne casino, which counsel assisting Naomi Sharp, after showing a video of Suncity staff exchanging an Aldi cooler bag full of cash for casino chips, said was an “island of immunity” from Crown’s anti-money laundering controls and reporting obligations.

Crown eventually closed Suncity’s exchange desk after it discovered $5.6 million of cash stored in a cupboard in March 2018.

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