Australia’s funpark for felons leaves the nation vulnerable to hostile foreign powers

You could be forgiven for thinking that the Bergin report that damned Crown casinos last week was only about greed and crime. It was not. It’s bad enough that Crown casinos effectively had become bankers to some of the world’s worst crime syndicates.

International gangsters have been using Australia’s respectability to turn criminal billions into “clean” money, processed through the gambling tables, that they can then spend and invest with impunity.

Illustration: Dionne GainCredit: SMH

Worse, this Australian funpark for felons could be open to exploitation by hostile foreign powers. ASIO suspects their agents gamble cash in Australian casinos to disguise its origin. They could then give it to politicians and political parties as donations or favours, seeking to buy influence.

Their aim isn’t just business favours. Their aim is to turn Australian policy in favour of a foreign government. In short, to subvert Australian sovereignty. As the former ASIO chief Duncan Lewis put it, the way that foreign interference works is that “you wake up one day and find decisions made in our country that are not in the interests of our country”. Foreign influence “takes over, basically, pulling the strings from offshore”. The threat to Australia was, he told me, “existential”.

As ASIO head, Lewis warned Australian political parties against accepting donations from a real estate billionaire then living in Australia. ASIO suspected Huang Xiangmo might be acting as a conduit for the Chinese Communist Party.

Huang was one of the Crown casino’s biggest and most valued customers. He is a property developer who moved to Australia in 2011, bought a $12.8 million house in Sydney’s Mosman, and set up the Yuhu Group. He emerged as a conspicuously generous political donor to both major political parties.

Among the many politicians he gave money to was the then Labor senator Sam Dastyari. At Huang’s behest, Dastyari advocated that Labor change its policy on the South China Sea to accord with Beijing’s. Their dealings, first exposed by my colleague Latika Bourke, ultimately forced Dastyari out of Parliament. It was a scandal, yet everything Huang had done to influence Dastyari was legal at that time.

And his gambling? Internal emails from Crown, as reported by my colleague Nick McKenzie in 2019, showed exactly why Huang was so valued by the casino. He was gambling $200 million a year. In one casino in a single year. And that was before he moved to Australia.

Once here, his punts at Crown’s tables increased “exponentially”, according to an email written by Crown’s vice-president for VIP lifestyle marketing, Maxwell Wang, in 2015. Huang was gambling some $800 million a year on Crown’s tables. In a single year.

An excited Wang used him as a case study for Crown’s sales staff. Wang described Huang’s move to Australia as a “lifestyle event”. Wang wrote: “Lifestyle events can help your customer increase turnover exponentially.” It is not suggested that Huang was gambling with anybody’s money but his own. But did Crown know this for certain? Nobody asked. Nobody wanted to know. The example shows the frailty of the system.

Huang didn’t restrict himself to Crown. He gambled at The Star casino in Sydney too. We know from hearings at the NSW Independent Commission Against Corruption that one particular day in 2015 he withdrew $3 million from his account at The Star and gambled for a profitable six hours. He left the tables with $4.97 million. Three minutes later, one of his staff withdrew $100,000 cash, noted on casino files at the time as a suspiciously large sum.

The ICAC alleges that on the next working day, Huang took an ALDI shopping bag with $100,000 in cash to the NSW Labor Party’s general secretary, Jamie Clements. Both men deny any such transaction. But NSW Labor banked this exact sum in cash two days later. Property developers are banned donors in NSW. ICAC is still investigating.

In the meantime, the Department of Home Affairs cancelled Huang’s visa on character grounds. He is banned from returning to Australia. He is contesting the decision as groundless. It’s widely reported that the decision was based on ASIO’s advice. Huang now lives in Hong Kong.

The Dastyari affair provoked Malcolm Turnbull to investigate foreign interference operations in Australia. Alarmed by what he found, he introduced foreign interference laws into the federal Parliament saying: “We will not tolerate foreign influence activities that are in any way covert, coercive or corrupt.”

The Turnbull government’s laws, with support of the Labor opposition, are now in force, and ASIO and the federal police have formed a task force to start enforcing them.

Yet the Bergin report reminds us that the channels for covert, coercive or corrupt foreign influence remain wide open. The federal agency that tracks illegal money flows, the Australian Transaction Reports and Analysis Centre, or AUSTRAC, noted in a December report that “transactions indicate that entities who may be of concern from a foreign interference perspective could be using money held in casino accounts to make political donations with a link to foreign interference.

“The provision of political donations in itself is not illegal,” AUSTRAC continues, “however the unusual source of the funds, involving potentially covert international money movement, raises concerns for potential foreign interference.”

In 2019 alone, Crown’s Melbourne casino reported just under 50,000 suspicious transactions to AUSTRAC. Senators last year demanded to know what AUSTRAC was doing to investigate and enforce anti-money laundering laws. The chief executive of AUSTRAC, Nicole Rose, told a Senate estimates hearing in October that it was “incredibly complex”.

And she pointed out the astonishing fact that AUSTRAC cannot get direct access to casinos’ transactions: “When we go into an enforcement action, we then have to request that information from them – volumes and volumes of data; that’s not data that we directly have access to. So it is a lengthy and complex process.” That’s why the Bergin report recommends that the law be changed so that casinos must report their transactions directly to AUSTRAC in future.

Even if Crown loses its licence and it’s bought by another business, Australia remains wide open to illicit foreign cash on an industrial scale. Because money laundering is an industry. And as it stands, hostile foreign powers may revel in the cover it provides to allow them to subvert and corrupt Australia’s political system.

That’s the supply end of the transaction. On the demand side, Australia’s political donations system also remains wide open. The Centre for Public Integrity reported this week that secret or “dark money” donations to federal politicians and parties from unexplained sources hit a record $50 million last year.

Taken together, “it’s a threat to national security”, the chair of the Centre for Public Integrity, former NSW judge Anthony Whealy QC, tells me. “It’s fostered by the gambling industry and casinos and governments. We know that the casinos are very big donors to the political parties. If you have government to protect you because you’ve been giving big donations, you can sail on through scandals and storms.”

The Bergin report needs to be just the beginning of shutting down the gambling-government complex, this glaring invitation to foreign interference and criminal subversion.

Peter Hartcher is international editor.

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