Crown Resorts settles $125m China class action

Crown Resorts’ has attempted to close the book on its controversial corporate history by settling a class action over the arrest of staff members in China in 2016.

The Crown Casino in Southbank in Melbourne. (Photo by Darrian Traynor/Getty Images)

Crown Resorts’ new board has taken another step to close the book on its controversial corporate history by settling a four-year old shareholder class action over the arrest of staff members in China in 2016.

Early on Friday Crown announced it had settled the Maurice Blackburn-led shareholder suit for $125m inclusive of interests and costs, moments before it was finally set to go to trial.

The settlement also came just days after a Victorian royal commission found Crown unsuitable to run its Melbourne casino — but gave it two years to reform itself under the watchful eye of a state-appointed special manager.

In a statement Crown said the settlement of the proceeding is without the admission of liability and subject to Federal Court approval — but added insurers might cover the cost

“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 class action was brought against Crown Resorts in the Federal Court by Maurice Blackburn in December 2017, a year after 19 Crown staff in China for allegedly illegally promoting gambling to Chinese citizens.
It accused Crown of failing to warn shareholders of the risks to the company in continuing to promote VIP gambling tours for Chinese high rollers, as a well-publicised crackdown was launched on foreign gambling promotion by the Chinese government around that time.

It also claimed that Crown enacted a range of techniques to avoid the Chinese authorities, like removing company logos from its private jets.

Maurice Blackburn claims this led to shareholder losses, as the Crown Resorts share price plunged 14 per cent after the company confirmed the arrests on October 17, 2016.

The trial was delayed by Covid-19 and Crown‘s attempts to stop ex-employees from giving evidence by invoking confidentiality clauses.

But Crown’s defensive posture towards the arrests changed after NSW Bergin’s Inquiry revealed that several key players at the group were aware there was a legal risk to their staff last year.

The evidence contributed to Crown temporarily losing its casino licence in NSW, the exodus of many executives and directors with links to the international VIP business, and the formation of royal commissions into the company in WA and Victoria.

A report into the arrests led by the Victorian gaming regulator earlier this year attributed the arrests to poor risk management and corporate governance structures.

Crown said the company‘s newly formed board made the choice to settle.

“Crown’s Board of Directors determined that the agreement to settle the Proceeding was a commercial decision made in the best interests of Crown and its shareholders,” it said.

Maurice Blackburn is running a second class action against Crown over alleged anti money laundering failures in the Victorian Supreme Court.

Crown shares closed down 1.5 per cent on Friday, at $9.96.

Originally published as Crown Resorts settles $125m China class action