The Age, Sydney Morning Herald and 60 Minutes respond to Crown Resorts

In an advertisement submitted for publication to media organisations on Wednesday, the board of Crown Resorts sought to set “the record straight in the face of a deceitful campaign against Crown”.

The Age and Sydney Morning Herald declined to run the advertisement. A response to Crown's claims is included below.

Crown executive chairman John Alexander.Credit: Pat Scala

Crown’s claim: As a Board, we are extremely concerned for our staff, shareholders and other stakeholders, as much of this unbalanced and sensationalised reporting is based on unsubstantiated allegations, exaggerations, unsupported connections and outright falsehoods.

Response: The stories were carefully sourced using Crown’s internal documents, former employees, credible commentators, dozens of sources from the industry, law enforcement and elsewhere, and careful verification. Our reporters sought balance by asking Crown to provide an executive or spokesman for an interview or, failing that, to answer 63 detailed emailed questions. The questions outlined the core allegations days in advance. Crown Resorts responded with a short statement saying: “Crown does not comment on its business operations with particular individuals or businesses. Crown notes that it has a comprehensive AML/CTF program which is subject to regulatory supervision by AUSTRAC.”

Crown’s claim: Crown operates in one of the most highly regulated industries in Australia and takes its responsibility to comply with its obligations very seriously.

Response: The fact that the Australian Criminal Intelligence Commission has launched an investigation into “significant risks of money laundering through casinos, particularly through casino junkets” suggests regulations are not working.

Crown’s claim: It was wrongly inferred [sic] that the Chinese President’s cousin was found on Crown’s private jet by Australian law enforcement authorities, when in fact the jet was not owned or chartered by Crown.

Response: Our reports did not say it was a Crown jet.

Crown’s claim: CCTV video footage from 2012 was aired, showing a person alleged to be receiving a plastic bag of cash at a vegetable market, but there was no mention of the fact that the individual was excluded from the casino by Crown acting on its own volition more than six years ago.

Response: The person (a Crown licensed junket representative) on the CCTV and his activities were uncovered as a result of an AFP investigation which led to his jailing. After he was jailed, the criminal syndicate using him to launder money switched to a different Crown junket operator. The syndicate is suspected by police to have continued to launder drug funds through Crown after this. In 2015/16, Crown paid a member of the syndicate more than $200,000 for his work as a junket.

Crown’s claim: Extensive references in the 60 Minutes program to alleged criminal connections of an organisation said to be called ‘The Company’. Crown has had no dealings or knowledge of any organisation of that name or description.

Response: The point of much of the reporting has been to establish Crown’s failure to conduct adequate due diligence on its junket partners.

Crown’s claim: There was no sense conveyed ... that junkets are an established and accepted part of the operations of international casinos.

Response: The Australian Criminal Intelligence Commission has released a detailed statement on Wednesday night comprehensively detailing the major criminal risks involving junkets. In our reporting we note: "Industry analysts, the US government and Australian law enforcement officials say some junkets are legitimate, but others are controlled by Asian organised crime groups known as triads".

Crown’s claim: One of the junket operators facing allegations of organised crime links, the SunCity junket, is a large, global company listed on the Hong Kong Stock Exchange.

Response: Despite being a major international junket operator which has long denied criminal connections, SunCity was last year black-banned by one of the world’s largest bookmakers, the Hong Kong Jockey Club. A security and intelligence report obtained by The Age, The Sydney Morning Herald and 60 Minutes reveals that key SunCity executives were deemed to pose “tangible criminal as well as reputational risks”. The document also states that SunCity staff were persons of interest to Australian authorities in relation to money-laundering activities. Being a listed company in Hong Kong is not a guarantee of the company’s integrity, nor should it be, given the obvious risks documented by US and now Australian government entities about junkets.

Crown’s claim: Crown does not now deal with any of the other junket operators or players mentioned in the program, apart from one local player, and none of the international players mentioned have gambled at Crown venues for at least three years.

Response: SunCity Junket continues to be a major partner of Crown. If it is true that Crown has stopped paying the junkets run by alleged criminal figures, including Tom Zhou, this is welcome. However, it does not absolve Crown of its failure to conduct basic due diligence on Mr Zhou when he was its major Melbourne junket partner.

Crown’s claim: The junket operators were referred to as ‘Crown’s junket operators’, whereas they are in fact independent operators who arrange for their customers to visit casinos globally.

Response: Our reporters have not implied the junket operators are owned by Crown Resorts. They are, however, repeatedly listed in Crown’s own corporate documents as “partners”. The company pays major commissions to these partners to recruit high-stakes Chinese gamblers to Australia, often many millions of dollars a year. The junket operators are also licensed by Crown. They have special privileges to operate in its Casinos. SunCity has its own high-roller gaming room.

Crown’s claim: Macau-based junkets are required to be licensed there and are subject to regulatory oversight and probity checks. There are also other casino regulators in Australia and overseas which review junket operators and their dealings with licensed casinos.

Response: Macau’s system of registering junkets is not robust. The US government in 2013 released a report that found that organised crime infiltration of Macau junkets was entrenched.

Crown’s claim: Crown itself has a robust process for vetting junket operators, including a combination of probity, integrity and police checks, and Crown undertakes regular reviews of these operators in the light of new or additional information.

Response: Our reporters found open source documents from court cases in Australia and China, and other sources of information, that reveal Crown has failed to conduct adequate due diligence on its junket partners. For instance, some have been identified in court cases or media reporting as alleged criminals or parts of triad gangs.

Crown’s claim: The program also made various allegations of money laundering, implying that Crown facilitates it, or turns a “blind eye” to it. In fact Crown has a comprehensive anti-money laundering and counter-terrorism financing program which is subject to ongoing regulatory supervision by AUSTRAC. Crown takes its regulatory obligations very seriously, and works closely with all of its regulatory agencies, including state and federal law enforcement bodies. Crown provides a range of information in a proactive manner in accordance with its regulatory obligations, including the reporting of all transactions over $10,000 and the reporting of suspect transactions of any value.

Response: The statement by the Australian Criminal Intelligence Commission states clearly that Australian casinos, through their dealings with junkets, are exposed to major criminal risks. For instance, the ACIC has found that “the structure of junket operations enables opaqueness around the source of beneficial ownership of funds presented as buy-ins and represents a significant money laundering risk".

Crown’s claim: Detentions in China in 2016: The foundation of the criticism of Crown in the program is that Crown knew that the conduct of its staff constituted an offence in China and that it deliberately flouted the law. This is wrong. Crown was not charged with or convicted of any offence in China.

Response: 18 Crown staff were convicted of gambling offences in China.

Crown’s claim: The relevant prohibition under Chinese law is contained in Article 303 which concerns arranging "gambling parties". At all times Crown understood that its staff were operating in a manner which did not breach that provision. Also, at all relevant times, Crown obtained legal and government relations advice from reputable, independent specialists. The fact that staff were nevertheless detained and convicted is not an indication that the advice was wrong or disregarded, but an illustration of the challenges involved in anticipating how foreign laws can be interpreted and enforced.

Response: 18 Crown staff were convicted of gambling offences in China and multiple experts, including the former chief of intelligence for the Royal Hong Kong Police, have said publicly that Crown’s dealings in China were foolhardy, high-risk and in potential breach of the laws the Crown staff were ultimately found to have broken. Crown’s own internal files reveal they suggested to Chinese staff they obtain foreign work permits so it would appear they were not working in China when, in fact, they were.

Crown’s claim: The [reports] featured a former employee and her views of what occurred in China in 2016. It did not disclose her very junior position, or that she had unsuccessfully demanded that Crown pay her a sum exceeding 50 times her annual salary as compensation. Whether she was paid for the ‘60 Minutes’ interview and Fairfax articles was also not disclosed.

Response: Jenny Jiang was not paid for her interview. Nor did she seek payment. Her staff certificates and internal company appraisals describe her employment in glowing terms. Crown sought to pay her $60,000 after her arrest in return for Ms Jiang not criticising the company. She refused this offer. The program accurately reflected her position and job title.

Crown’s claim: Crown has not sought to circumvent visa requirements or compromise any process of identification or verification for immigration purposes. Crown is a highly reputable Australian and global tourism operator.

Response: The federal Attorney-General Christian Porter has referred serious allegations about Crown, Crown junkets and border security to the Commonwealth corruption commission. Crown’s own internal emails reveal they were vouching for Chinese nationals to get visas who were associates of alleged criminals.

Crown’s claim: Crown is one of Australia’s largest and most recognisable entertainment/ tourism operators, with over 18,000 people working at its Australian resorts, and it makes a major contribution to the Australian economy. Moreover, Crown recognises its responsibility to the community and with the Packer Family Foundation is donating $200 million to Australia’s charitable, arts and medical sectors. As an ASX listed company and a Board we are always striving to ensure we have the highest levels of governance and a commitment to the highest standards. It is deeply disappointing that the media involved in these inflammatory stories have not upheld the same principles.

Response: Susheela Peres da Costa, from governance advisory firm Regnan, on Wednesday questioned the board’s oversight given some directors' significant outside commitments and the fact Crown was run by an executive chairman, John Alexander. Safeguards to ensure proper conduct by management were compromised “when a chair - the one supposed to monitor this on behalf of shareholders - is the same as management,” Ms Peres da Costa said.

Vas Kolesnikoff, head of research at proxy advisor firm ISS, said it was “an oxymoron for a CEO to be able to oversee himself if he’s the chairman”.

“One of the principles of being a director is to exercise sufficient skepticism in asking questions, getting responses and keep following it through," Mr Kolesnikoff said. “These are all the types of things that should have been happening. Now the question is whether it did happen. From what I can see, there’s probably an argument that they haven’t”.