NSW gaming regulator seeks costs from Melco Resorts

By Ethan Anderson Updated
NSW gaming regulator seeks costs from Melco Resorts

The NSW gaming regulator is chasing a Hong Kong-based casino for costs over its role in the Bergin inquiry into James Packer’s Crown Resorts.

The Australian Financial Review reports that the New South Wales Independent Liquor and Gaming Authority has sued Melco in the Supreme Court to force it to cover costs for the 18-month long inquiry, which recruited several top-shelf lawyers for assistance and which was led by Commissioner Patricia Bergin, SC, after they failed to reach an agreement.

“In light of the findings of the Bergin report, ILGA considered it appropriate for Melco and Crown Resorts Limited to provide payment for the costs of the inquiry,” an ILGA spokeswoman said.

“ILGA reached agreement with Crown in May 2021…as an agreement has not been reached with Melco, ILGA initiated proceedings,” she said.

It is understood ILGA is after $3.7 million from Melco, compared with the $12.5 million extracted from Crown because of the inquiry.

A Melco spokesman said the casino group had “sought to work with ILGA in a professional, fair and reasonable manner throughout our engagement with them on this issue”.

“We have previously requested information from ILGA in an effort to reach an amicable resolution.

Melco’s chequered history for Australian regulators

Despite this request, we have not received the information that is necessary for Melco to adequately assess ILGA’s claim.”

Melco’s relationship with Crown formed a key part of the inquiry as it delved into whether Stanley Ho, the father of Melco boss Lawrence Ho, had gained an interest in Crown’s Barangaroo casino on Sydney’s Darling Harbour.

ILGA banned Stanley Ho from acquiring any beneficial stake in Crown with the licence conditions for the casino because of his alleged ties to organised crime.

Still, when Mr Packer sold a 10 per cent shareholding in Crown to Melco in 2019, Stanley Ho owned a fifth of Melco’s parent company via a discretionary trust, a fact the Australian billionaire said he forgot when cross-examined.

Commissioner Bergin, however, found that Crown Resorts did not breach its licence conditions because many directors did not know of the share sale before it was announced and those that did know were not aware of Stanley Ho’s interest.

Melco has since sold its stake in Crown to private equity group Blackstone, which has launched a series of takeover offers for the local casino operator.

Its latest $8.9 billion bid won conditional approval from the Crown board, and should lead to a $3.27 billion windfall for Mr Packer for the 37 per cent stake held in private company Consolidated Press Holdings.

NSW inquiry leads to subsequent royal commission’s in Victoria and WA

While Ms Bergin found the Melco transaction did not breach the licence conditions, she did find that Crown had facilitated money laundering; disregarded the welfare of its China-based staff before they were arrested in 2016; and partnered with junket operators linked to organised crime triads.

She said then-chief executive Ken Barton was “no match for what is needed at the helm” of a casino.

Ultimately, she said Crown was unfit to hold a casino licence.

This sparked a mass exodus from the company’s executive ranks and board, and similar inquiries in Victoria and Western Australia precipitating further upheaval.

Crown Resorts escaped having the licence for its Melbourne casino cancelled, but will face unprecedented scrutiny over its operations via a government-appointed “special manager” embedded in the boardroom.

The Victorian royal commission found Crown’s behaviour “disgraceful” and that it was unfit to operate the business and had engaged in “variously illegal, dishonest, unethical and exploitative” activities.

The West Australian inquiry is continuing and is due to deliver its final report on March 4.

CPH’s lawyers told the West Australian inquiry that a shareholding cap on Mr Packer would be “wholly inappropriate” and “some form of punishment” for Crown Resorts.

ILGA’s action against Melco is listed for hearing on February 11.

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