Andrew Demetriou concedes Crown’s culture failed

Crown’s ‘failure of culture’ meant bad news about potential money laundering and concerns about staff in China did not make it to the board, NSW inquiry hears.

Andrew Demetriou gives evidence to NSW Crown casino licence inquiry via video link. Picture: Supplied.

Crown Resorts had a “failure of culture” which meant that some bad news about potential money laundering and concerns about staff in China was not elevated to board level, Crown director and former AFL chief executive Andrew Demetriou has told an inquiry in NSW on Monday.

Mr Demetriou — joined the Crown board in 2015 after stepping down as chief executive of the AFL in 2014 — told the inquiry into Crown's suitability to hold a casino license in NSW, that he was “shocked” at the news of the arrest of 19 staff in China in October 2016, having little knowledge at the time of whether Crown actually had staff in China.

He said as a director of Crown he had no “specific” knowledge about that there were any Crown employees working permanently in China, and the board was “pretty much in the dark” about what had happened within the company in the lead-up to their arrests.

He said he had learned in 2015 that some employees of a casino in South Korea had been arrested in China but did not question whether this could have implications for Crown’s own operations in the country.

Mr Demetriou, who said he regarded Mr James Packer as “something of a visionary” and admitted giving him a detailed briefing after a Crown board meeting in December 2018, insisted several times that he could be considered to be an independent director of Crown despite ties with the Packer family going back to 2001.

His commentary in an email to Mr Packer after the board meeting, which he said was made in accordance with what he understood to be Crown’s agreement to provide information to Mr Packer as the company’s controlling shareholder, prompted an observation from Commissioner Patricia Bergin about whether directors felt free to speak at board meetings given the potential for their conversations to be reported to Mr Packer.

The inquiry, before Commissioner Bergin, a former NSW Supreme Court judge, is considering the suitability of Crown to hold a casino license in NSW in the wake of media allegations made against the company last year and James Packer’s move to sell a 19.9 per cent stake in Crown to Macau casino operator Lawrence Ho.

Under the terms of its license with the NSW government, Crown Resorts was specifically banned from having an association with Mr Ho’s father, Stanley Ho, who died in May this year.

Barangaroo is currently planned to open in December, while the inquiry is due to report its findings by February next year.

In a testy day of evidence before the inquiry, Mr Demetriou rejected suggestions made several times by Counsel assisting Scott Aspinall, that Crown had turned a blind eye to money laundering.

He said Crown had been taking action to tighten its practices around monitoring potential money laundering in its casino and was currently recruiting an executive who would oversee the process and report directly to the board.

But he admitted that he had not personally reviewed the detail of two bank accounts, called Riverbank and Southbank, despite media allegations last year that they had been used for money laundering and concerns expressed about the accounts by the banks involved.

Asked by the inquiry to examine some of the cash transactions in these accounts, he admitted that they could be seen as possible money laundering transactions.

He also said he was not aware of the name of one of the major junket operators which brought customers to Crown’s Australian operations, Mr Zhou Qiyun, who had alleged links with money laundering and had been detained in China in 2012, despite his role as chairman of Crown Melbourne.

While Mr Zhou was reportedly the fifth largest junket operator doing business with Crown’s casinos, Mr Demetriou said he didn’t “expect to know every intricate detail of every single client we deal with”.

Mr Demetriou said Crown had consistently improved its controls around money laundering and its dealings with junket operators, an area where the inquiry has been focusing on.

Crown has suspended its links with junket operators, groups which are used to bring in high rollers to casinos, pending a review, until June next year.

“We constantly review what we do,” he said.

“We are an infinitely better business today than we were yesterday, and than we were a years ago and then we were three years ago,” he said.

But his comments about the lack of information going to the Crown board over key issues led to some sharp questioning by Mr Aspinall on whether directors should have actively asked more questions about the situation in China and on potential areas of money laundering.

At one point the Commissioner intervened, saying the company in future should be concerned that it became more focused on the importance of the needs of regulators and ahead of keeping customers happy, a reference to the apparent money laundering in some accounts.

Ms Bergin also raised questions about whether Crown directors should have had more of an “appreciation” of China’s culture, given its aim of recruiting high rollers from the country to gamble at its Australian casinos.

“Once you have the president of China (Xi Jinping) indicating that it will crack down on corruption and also on overseas people taking gamblers from China, you need to be acutely across that, don’t you?” she asked Mr Demetriou.

“These are the sort of things when organisations take the benefit from overseas jurisdictions, they need to understand the dangers,” she said.

Mr Demetriou told the inquiry that he did not know if Crown had employees in China at the time of their arrest in October 2016.

He said he knew Crown had an office in Hong Kong and also serviced its China operations by people from Australia flying in, but he said if there were any staff in China he believed that there were mainly there to handle visa processing for high rollers.

“I would have been surprised if there were employees in China,” he said of the situation just before he learned of the arrests.

He said that he “did not accept” that Crown knowingly broke the law in China, even after the arrests which saw some staff including Crown executive Jason O’Connor jailed for 10 months for breaking China’s laws against soliciting for gambling.

Mr Demetrious said he first met Kerry Packer when he was head of the AFL in negotiating television rights for 2001 to 2006 with his company PBL, which owned the Nine Network.

He then dealt with Mr James Packer in negotiating future television rights deal with the Nine Network.

He said Mr James Packer had asked him to join the Crown board when he was AFL chief executive, but he declined, before later accepted after he left the AFL.

Mr Demetriou said he saw his role as chairman of Crown Melbourne as partly “ambassadorial.”

Mr Demetriou admitted to the inquiry that it would be easier for Crown if the state gambling regulators reviewed the suitability of junket operators, rather than the casinos themselves having the full responsibility of assessing their suitability.

Mr Demetriou told the inquiry that he was happy with the situation where Crown board members and executives could provide information directly to Mr Packer, after he left the Crown board, because of his experience in the casino industry.

He said he had “always regarded Mr Packer as “somewhat of a visionary” whose insights and advice would be invaluable for Crown.

But he agreed that it would not have been appropriate for Crown directors and executives to have given him information while he was negotiating a major deal such as the one to sell a 19.9 per cent stake in Crown to Lawrence Ho.

Mr Demetriou continues his evidence on Tuesday.