As it happened: Crown found not suitable to hold Barangaroo casino licence

If you’re just joining us now, here is what you need to know. Today the NSW government tabled the long-awaited report of the Bergin inquiry into Sydney’s second casino licence, which is held by the James Packer-backed Crown Resorts.

Crown opened its new $2.2 billion complex in Barangaroo in late December, but without the gaming rooms that underpinned the project.

James Packer giving evidence at the NSW casino inquiry in October.

Commissioner Patricia Bergin, a former NSW Supreme Court judge, was appointed to inquire into the Barangaroo licence in August 2019. Today, she found:

• A Crown Resorts subsidiary, Crown Sydney Gaming, was not a “suitable person” to hold the casino licence, and Crown Resorts was not a “suitable person” to be a close associate of the licensee.
• Commissioner Bergin said the finding of Crown’s unsuitability stemmed from evidence of money laundering at its Melbourne and Perth casinos, the arrest of 19 staff in China in 2016 and its partnerships with “junket” tour operators linked to organised crime.
• However, she said the companies could engage in a process of “conversion to suitability”. This would include a major shakeup of the Crown Resorts board and “a full and wide-ranging forensic audit of all of their accounts” to ensure they are not being used for money-laundering.
• Crown Resorts chief executive Ken Barton came under fire, along with directors Andrew Demetriou and Michael Johnston. Commissioner Bergin said it was unlikely Crown or its subsidiary company could become suitable persons while they remained as directors.

Importantly, Commissioner Bergin did not make a recommendation that Crown be stripped of its licence or that James Packer be forced to sell his controlling 36 per cent stake in Crown Resorts.

However, she did suggest the NSW gaming authority consider whether Mr Packer should remain as an approved “close associate” of the licensee and noted that he wields the real power at Crown even though he is not a director.

Commissioner Bergin also made a series of recommendations aimed at systemic reform, including:

• Changing NSW’s casino laws so that no single shareholder can hold, acquire or transfer an interest of 10 per cent or more in a casino licensee without being approved by the state’s casino regulator.
• Setting up a specialist, independent casino regulator.
• Barring NSW casino operators from dealing with junket operators.

This is Michaela Whitbourn signing off on the live blog. Thank you for reading and good night.

The findings of the Bergin report into Sydney’s second casino licence are, without doubt, damning for Crown Resorts and for the man who is identified as exercising the real power at Crown, controlling shareholder James Packer.

Former NSW Supreme Court judge Patricia Bergin says in no uncertain terms that Crown is not a “suitable person” to hold its casino licence at Barangaroo - but she does hold out the possibility that it may be in the future.

“If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation,” she says.

Commissioner Patricia Bergin says in her report into the future of Sydney’s second casino licence that it is “obvious” billionaire James Packer exercises the “real power” at Crown Resorts.

Mr Packer is not on the board of Crown Resorts (the parent company of Crown Sydney Gaming, the holder of the Barangaroo casino licence) but holds a controlling 36 per cent shareholding in it.

James Packer giving evidence to the NSW inquiry in October. Credit:

Commissioner Bergin said he exercised the power “both by reason of his personality and also the somewhat supine attitude adopted by Crown’s operatives”.

She suggests the NSW gaming regulator, the Independent Liquor and Gaming Authority, consider imposing a condition on Crown Sydney Gaming and Crown Resorts that any plan to enter into a commercial arrangement with Mr Packer or his private company “either generally or for sharing of confidential information must be notified to and approved by the Authority prior to such entry”.

She also recommends that NSW’s Casino Control Act be amended to provide that a person may not acquire, hold or transfer an interest of 10 per cent or more in a casino licensee in NSW or any holding company of a licenseewithout the approval of a new casino regulator.

After the NSW government tabled a damning report finding a Crown Resorts subsidiary is not a “suitable person” to hold Sydney’s Barangaroo casino licence, federal MP Andrew Wilkie called for Crown to face similar inquiries over its casino licences in Western Australia and Victoria.

But Hamish Hastie reports from Western Australia that the WA gambling regulator won’t consider the NSW report until it meets in two weeks’ time.

The findings from an 18-month into Crown’s Sydney casino licence have been released. Credit: Nick Moir

The Bergin report was tabled in the NSW Parliament on Tuesday and found Crown Sydney Gaming was not suitable to hold Sydney’s second casino licence and its parent company Crown Resorts was not a “suitable person” to be a close associate.

However, it did not recommend the licence be revoked and has suggested the companies may make changes to become suitable.

Read the full report here.

Meanwhile in Victoria, the shadow minister for gaming has tweeted that the state needs to establish an independent, judicial inquiry into whether or not Crown is still fit to hold a licence for Melbourne.

The Bergin report was explicitly tasked as part of its terms of reference with examining whether a Crown Resorts subsidiary was a “suitable person” to hold Sydney’s second casino licence, with reference to allegations aired in media reports.

The terms of reference referred to reports by the Nine Network, The Sydney Morning Herald and The Age - all owned by Nine Entertainment Company - that Crown engaged in money-laundering and “partnered with junket operators with links to drug traffickers, money launderers, human traffickers, and organised crime groups”.

Crown’s relationship with junkets - which arrange for wealthy Chinese gamblers to travel to overseas casinos - is what got it in this mess in the first place, after Nine mastheads revealed in 2019 that many of its most important junket partners were closely linked to powerful Asian crime gangs.

Commissioner Patricia Bergin.Credit:

Commissioner Patricia Bergin examined the junket allegations in her report and concluded that “the veracity of the Media Allegations that there were Junket operators with which Crown partnered that had links to organised crime is established”, but she did not find the company was wilfully blind or recklessly indifferent to this.

“In August 2020 the Crown Board resolved to suspend its relationships with all Junket operators, and on 17 November 2020 decided to end its Junket operation altogether subject to certain conditions,” the report said.

Commissioner Bergin recommended that the NSW Casino Control Act be amended to prohibit casino operators in NSW from dealing with junket operators.

“The extant and developing threats of the infiltration of organised crime into casinos is such that the [NSW gaming] Authority and the Government would be justified in prohibiting the operation of Junkets in New South Wales casinos,” the report said.

“This is really the only way that the Authority, the Government, the casino operators and the community can be sure that such infiltration does not occur through these mechanisms.”

Commissioner Bergin said Crown had adopted an approach that it was “deeply wronged by a shocking and deceptive media campaign against it”, but the junket allegations were true.

Crown Resorts has released a brief statement saying it is currently considering the Bergin report, which found its subsidiary Crown Sydney Gaming is not a “suitable person” to hold Sydney’s second casino licence.

Commissioner Patricia Bergin indicated both companies may be able to adopt changes that will make them suitable to hold the licence or to be a close associate of the licensee.

Crown Barangaroo is under scrutiny.Credit: Nick Moir

The future of James Packer’s controlling 36 per cent stake in Crown Resorts is not the subject of explicit findings, but Commissioner Bergin says the NSW gaming regulator may consider whether he remains an approved “close associate” of the licensee.

“Crown will work with the New South Wales Independent Liquor and Gaming Authority (ILGA) in relation to the findings and recommendations of the Inquiry Report as contemplated by the regulatory agreements between Crown, ILGA and the State of New South Wales,” the company said in a statement to the ASX.

Commissioner Patricia Bergin says in her report into the future of Sydney’s second casino licence that “the Crown name is for many people synonymous with the Packer name”.

Packer is a controlling shareholder of Crown Resorts, with a 36 per cent stake in the company. Crown Resorts is the parent company of Crown Sydney Gaming, the company that was granted the Barangaroo casino licence in 2014.

James Packer giving evidence at the NSW inquiry into Crown Resorts.

A major question is whether Packer will be allowed to keep his Crown shareholding after the findings of the Bergin report, and the commissioner does not make any direct recommendations on this point.

However, she says the NSW gaming regulator will have to consider whether he remains an approved “close associate” of Crown Sydney Gaming in light of the explosive revelation that he sent a threatening email to a Melbourne businessman in 2015 when a privatisation deal fell apart.

Mr Packer told the inquiry that his behaviour - which he agreed was “shameful” and “disgraceful” - was the result of his bipolar disorder.

“There is no doubt that the conduct was both serious and disgraceful,” Commissioner Bergin says.

“Equally there is no doubt that it was conduct that was inconsistent with that expected of a director of a public company and certainly a close associate of the Licensee. There is obviously no doubt that Mr Packer has suffered ill health since that time.”

Commissioner Bergin also recommends that NSW’s casino laws be changed so that no single shareholder can hold, acquire or transfer an interest of 10 per cent or more in a casino licensee without being approved by the state’s casino regulator.

She says Mr Packer’s threatening email in 2016 and his evidence that he “forgot about the Undertaking that Crown had provided to the Authority in relation to preventing the late [Macau casino kingpin] Mr Stanley Ho from acquiring an interest in Crown would be a proper basis upon which the Authority could decide” to consider whether he remains a close associate of Crown Barangaroo.

While the Bergin report focuses squarely on Sydney’s second casino licence and its holder, the Crown Resorts subsidiary Crown Sydney Gaming, its recommendations are aimed at systemic reform.

Commissioner Patricia Bergin recommends NSW establish the Independent Casino Commission, a “dedicated, stand-alone, specialist casino regulator with the necessary framework to meet the extant and emerging risks for gaming and casinos”.

NSW inquiry Commissioner Patricia Bergin.Credit: Australian Financial Review

The ICC would have the powers of a standing royal commission and each casino operator would be required to “engage an independent and appropriately qualified Compliance Auditor approved by the ICC, to report annually to the ICC on the casino operator’s compliance with its obligations under all regulatory statutes ... and the terms of its licence”.

Commissioner Bergin also recommends NSW’s Casino Control Act be amended to amended to include a new object of “ensuring that all licenced casinos prevent any money laundering activities within their casino operations”.

Andrew Wilkie, independent MP for the federal seat of Clark in Tasmania, has seized on the findings of the Bergin report to push for Crown Resorts to face inquiries into its casino licences in Victoria and Western Australia.

“Surely it’s self-evident that Commissioner Bergin’s findings mean the company is unfit to continue to operate any casino in Australia,” Mr Wilkie said.

Independent MP Andrew Wilkie.Credit: Alex Ellinghausen

In her report today into Sydney’s second casino licence, Commissioner Patricia Bergin found Crown Sydney Gaming, a subsidiary of Crown Resorts, was not a “suitable person” to hold its Barangaroo casino licence. However, she set out potential pathways to the company converting itself into a suitable person to keep the licence.

Mr Wilkie said he “call[ed] upon the premiers of Victoria and Western Australia to suspend Crown’s casino licences in their jurisdictions, and to immediately establish commissions of inquiry to get to the bottom of what is now a genuinely national issue.

“I also call on the Prime Minister to revisit my repeated calls in the Federal Parliament for a Royal Commission into the casino industry. These have so far been blocked by both the Government and the Opposition, and the question hangs heavy in the air, ‘What have they got to hide?’”

Customer Service Minister Victor Dominello, who oversees the regulation of gambling in the state, welcomed the Bergin report and said it raised serious issues relating to organised crime and money laundering in NSW.

“In 2019 the Independent Liquor & Gaming Authority commissioned this report giving the Honourable Patricia Bergin SC the powers of a Royal Commission,” he said.

Customer Service Minister Victor Dominello.Credit: Jessica Hromas

“I would like to thank the Commissioner, her assisting counsel and the Independent Liquor and Gaming Authority for their tireless work. Among other things, the report raises serious issues relating to organised crime and money laundering in our community. We will consider its recommendations very carefully before providing a formal response in due course.”