Victorian royal commission into Crown Melbourne over money laundering scandal commences

The man leading the probe into whether Crown should retain a gaming licence is concerned the casino giant’s promised reforms may be ‘half-hearted’.

Victoria has begun its royal commission into Crown Resorts to determine if it should retain the gaming licence for its Melbourne casino, with the former Federal Court judge overseeing it expressing concern the company’s moves to redeem itself may be “half hearted”.

Commissioner Ray Finkelstein on Wednesday opened the probe into the James Packer-backed casino giant to find out if the state’s largest single site employer was fit to operate a gaming venue.

The Victorian investigation was sparked by damning findings from a NSW Independent Liquor and Gaming Authority (ILGA) inquiry, which found Crown was not suitable to hold a gaming licence for its new $2.2bn Barangaroo casino in Sydney.

Commissioner Patricia Bergin, who led the NSW probe, concluded evidence showed Crown turned a blind eye to money laundering at its Melbourne and Perth venues, used aggressive marketing tactics in China that threatened the safety of staff and partnered with Asian junket tour operators with known links to organised crime.

Ms Bergin also noted in her findings Crown’s corporate “arrogance” was a driving factor in its failings.

Commissioner Raymond Finkelstein is heading the probe into Crown Resorts. Picture: James Ross/AAP

Mr Finkelstein noted Crown viewed the NSW findings as a “little equivocal” and open to interpretation.

“Crown companies do not accept in terms the findings made by Commissioner Bergin,” he said in his opening address.

“This disagreement may not be material – the aspect to the findings in which objections seem to be taken goes to the deliberateness or wilfulness of the conduct concerned.

“On the other hand, the Crown companies do accept that it was open to Commissioner Bergin to conclude that Crown Resorts was not a suitable person to be an associate of Crown Sydney.”

Crown’s stance is its “substantial reform program” to regain its Sydney gaming licence will render it suitable to keep its existing gaming licence in Victoria.

“I am concerned that unless the seriousness of the conduct is recognised, any steps to be taken to remedy the position might only be half-hearted,” Mr Finkelstein said.

A NSW report found Crown was not suitable to hold a gaming licence for its Sydney casino. Picture: Dylan Coker/NCA NewsWire

Victoria’s royal commission into the nation’s largest casino operator will focus on four central concerns.

Firstly, whether money laundering occurred at its Southbank venue; secondly, if the casino breached legislation or regulation standards, and thirdly, if Crown breached any contractual obligations under agreements with the state.

Mr Finkelstein also flagged Crown’s licence would rest on how the company dealt with gambling addiction within its venue.

The commission heard gaming generated about 12 per cent of the Victorian government’s tax revenue.

Counsel assisting Adrian Finanzio said in his opening statement the ILGA report highlighted behaviour and practices at Crown’s Melbourne casino that did not inspire public confidence in the company’s operations.

Crown Melbourne is Victoria’s largest single site employer. Picture: Luis Ascui/NCA NewsWire

“Given the seriousness of the matters raised and the findings of the Bergin inquiry, it will be necessary to test the veracity, effectiveness and adequacy of the measures which Crowns says have been taken to address the principal conclusions,” Mr Finanzio said.

“But that is only part of the inquiry. The importance of this task cannot be understated.

“What caused the Crown group to stray so far from its aspirations and the expectations of the community?”

Media reports in 2019 showed apparent money-laundering activity at Crown Melbourne’s Suncity gaming room – leaked video footage of large wads of cash being exchanged for gambling chips – and sparked the NSW probe.

The investigation heard last-minute admissions from the company that a form of money laundering known as “cuckoo smurfing” could be seen in the bank accounts of its subsidiaries.

Macau-based Suncity was Crown’s major junket operator, luring high roller gamblers to Australia, and had known links to Asian triad gangs.

James Packer fronted the NSW inquiry via video link from his luxury mega-yacht in the Pacific Ocean.

Mr Packer’s influence over the Crown board and senior management was also scrutinised by ILGA, which came to the conclusion the reclusive billionaire should have no relationship with the gaming company due to prior poor behaviour.

That related to threatening emails he sent a businessman in 2015, conduct he admitted while testifying was “shameful” and “disgraceful”.

The controlling shareholder protocol agreement between Crown and Mr Packer’s private company Consolidated Press Holdings, under which he got special briefings that other investors were not privy to, was severed last year.

He has the biggest stake in Crown of 36 per cent, and the NSW inquiry was told that he was the driving force behind the push to secure more junkets. Mr Packer has since indicated he will step back to being a passive shareholder.

The commission’s findings are expected to be handed down on August 1.

Crown, which this week announced it had received an unsolicited $8bn takeover offer from New York-based private equity giant Blackstone, will also face a royal commission in Western Australia in light of the NSW findings.

The Melbourne and Perth probes are drilling down further into the evidence explored in NSW.