Jailed Crown exec says profit may have ‘blinkered’ casino to China risks

A senior Crown Resorts executive told a colleague it would be difficult to convince their bosses to "temper their expectations" of profits from China despite a government crackdown, before he was arrested and jailed for illegally promoting gambling in the country.

Jason O’Connor, the former head of Crown’s international high-roller business, told a NSW government inquiry on Thursday that Crown's senior management and board expected high returns from his team in light of the $2.2 billion spent building a new VIP casino in Sydney's Baranagroo.

Crown Resorts’ former head of VIP operations Jason O’Connor was imprisoned in China for 10 months.

This profit motive "may have blinkered" some at the ASX-listed company to the rising risks of being caught out by authorities in China, where promoting or facilitating gambling is illegal, he said.

Mr O’Connor was the most senior of 19 Crown staff arrested in co-ordinated raids across China in October 2016 and spent 10 months imprisoned in a Shanghai jail. He is now working on the opening of Crown Sydney.

The NSW Independent Liquor and Gaming Authority's inquiry is investigating whether senior Crown executives and its board knew staff were breaking the law in China as it considers whether the company is a suitable licence holder for its new Sydney casino.

The inquiry heard that, after the Chinese government announced a crackdown on foreign casinos promoting gambling on mainland soil, another VIP executive Howard Aldridge wrote to Mr O’Connor in February 2015 asking if they should be concerned about their China-based staff.

Mr O’Connor responded that he was "very concerned" about the near-term prospects of their business team but that their "challenge would be convincing our masters that they need to temper their expectations".

"With the development plans ahead, talk of conservative expectations won’t be well received," he wrote. Under questioning, Mr O'Connor said the "development plans" was a reference to Crown’s new Sydney casino, which it planned to rely heavily on ultra-wealthy Chinese higher rollers.

"I thought at the time there was something of a disconnect between the business volumes and profits our business unit was able to deliver relevant to what was expected," he told the inquiry.

The Chinese government flagged its crackdown on foreign casinos widely and arrested staff from a South Korean casino in October 2015. Police arrested and questioned a Crown staff member on suspicion of organising gambling tours that year.

The inquiry heard that Mr O’Connor had himself been concerned about the safety of Crown staff and recommended that year that senior executives not travel to mainland China in 2015. But he said he was comfortable their activities were within the law after seeking advice from a Beijing law firm.

"I’ll be the first to concede that we overlooked some of the signals," Mr O’Connor said.

"I didn’t fully appreciate the Chinese legal system doesn’t operate the way the Western system does."

Commissioner Patricia Bergin said that "getting caught up in the pressure to chase profit" appeared to be a major factor in Crown not realising the risks it was taking.

"It may have blinkered some, yes," Mr O'Connor said.

The inquiry on Thursday also uncovered a string of internal Crown documents that detailed links between some of the "junket" tour operators they worked with prior to 2016 and well-known Triad criminal gangs. Mr O'Connor approved which junkets Crown partnered with.

"Is it right, Mr O'Connor that you just really didn't care about the probity of the junket operators with which your dealt?" counsel assisting the inquiry Naomi Sharp, SC, asked.

Mr O'Connor rejected that suggestion, but conceded "some of these customers appear to have links", which Crown's due diligence processes did not pick up.

"There does appear to have been failures in our processes; that's been laid pretty clear."

The inquiry will continue its hearings on Friday.

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