Crown to pay shareholders $125m after class action settlement

Crown Resorts has agreed to pay disgruntled shareholders $125 million as part of a settlement that arose from the arrest of Crown staff in China in 2016.

The Australian Financial Review reports that the long-running class action has come to an end, with “a significant portion” of the payout to come from insurers.

While the Federal Court is yet to approve the settlement amount, Justice Bernard Murphy said it was a “large amount” so sign-off was likely.

The action accused Crown Resorts of misleading shareholders and failing to warn them of the risk posed by China-based staff promoting its high-roller program despite warnings from Beijing of a crackdown on foreign gambling advertising.

Crown’s share price plummeted in 2016 after Chinese authorities arrested 19 staff members for luring mainland citizens overseas to gamble.

Multiple inquiries have since found a group of Crown’s directors should have acted on warnings that staff were at risk before the arrests.

The settlement did not include an admission of liability, however.

Crown makes a “commercial decision” to settlement long-running lawsuit

Crown Resorts told the ASX its board had made the “commercial decision” to settle the case as it was “in the best interests of Crown and its shareholders”.

“Crown expects to recover a significant portion of the settlement amount from its insurers but cannot at this stage be certain about the outcome of negotiations with insurers, or the outcome of any necessary formal steps for recovery it may need to take,” it said.

The case was already delayed multiple times and there were several adjournments in 2020 due to COVID-19.

Multiple other inquiries into the events and Crown’s litigation against the arrested employees to stop them from giving evidence before Justice Murphy also delayed the hearing.

“It’s a large amount. One would think it’s the sort of amount that would be approved,” the judge said of the settlement.

“I can’t know that, I haven’t even done the numbers that are associated with the two experts and worked out what they mean. But you’d be surprised if it wasn’t approved.”

Justice Murphy said the work he had done on the case meant it could be better for another judge to hear the approval application.

He congratulated both Maurice Blackburn, which brought the action on behalf of the shareholders and Crown Resorts for “bringing this long-running and complex case to an end” and said he was pleased to be in a courtroom with lawyers present.

The $125 million is inclusive of costs and interest.

Crown Perth culture review raises numerous concerns

Crown Resorts’ Perth casino has undergone a culture review that has discovered a large number of staff feel they could be penalised for raising concerns to management.

The review has underpinned some of the ongoing cultural issues plaguing the under fire casino operator.

The review will likely raise the concern of Crown’s board and new chief executive officer Steve McCann, who are attempting to spearhead a cultural overhaul of the group.

A major of surveyed Perth employees said they believed Crown’s directors do not “consistently behave in accordance with Crown’s values.”

The observations come in an expert report on a recent cultural review of Crown undertaken by Deloitte that was prepared for the Perth casino royal commission.

The commission is examining whether Crown is suitable to operate its casino in Perth.