‘Are you serious or not?’ Judge Michael Lee blasts Austrac over casinos, saying it has taken longer than to carve up Europe

Justice Michael Lee says Austrac has given Australia’s big casinos too much time to defend a potential multibillion-dollar lawsuit, saying it’s taken longer than the Congress of Vienna.

A Federal Court judge has questioned the seriousness of the financial crimes regulator’s pursuit of Australia’s biggest casinos, slamming it for taking longer than the carve up of Europe after the Napoleonic Wars.

Austrac is suing Crown Resorts, Star Entertainment and Sky City over countless money laundering breaches, with the regulator outlining its case in thousands of pages of court documents. The company’s face fines totalling potentially billions of dollars, with penalties of up to $22.2m per breach.

But Federal Court justice Michael Lee criticised Austrac – which launched its case against Crown last March before targeting Star and Sky City – for the time it has taken to proceed with the case.

“The Congress of Vienna took nine months to talk about the future of Europe, you’ve had 12 months to talk about admissions,” Justice Lee told Austrac’s lawyers, referring to the series of diplomatic meetings to redraw Europe following Napoleon Bonaparte’s defeat in 1815.

“I’m not going to give any more time for there to be chit-chat between solicitors. We’re going to get the matter on.”

Justice Lee was particularly critical of Austrac for giving Crown until May to submit its defence. The cases against the casinos have been bogged down with negotiations of agreed facts and admissions.

“I just find it astounding. Why on earth would a regulator agree to a timetable like that?” Justice Lee said.

“It’s in the public interests that these proceedings be determined and be determined with alacrity.

“It’s already meandered for a year. I just want to know whether the regulator in this case is serious about running the case or not. Because if they’re serious about running this case, I do not understand why they’re suggesting it’d be 15 months before the court starts managing the case.”

Crown has been negotiating with Austrac, but is yet to make any formal admissions. Picture: Darrian Traynor/Getty Images

Justice Lee was concerned about the expense of running high profile lawsuits, saying “the longer these cases take, the more they cost”.

Austrac’s lawyer Michael Hodge said the regulator was “very serious about running this case”.

“As for the time that’s required … the solicitors who are acting for Crown are extremely experienced in relation to AML, CTF (anti-money laundering, counter-terrorism financing) matters,” Mr Hodge said.

“When they say they will need to have 12 weeks to do the defence … we’re just not in a position as officers of the court on behalf of Austrac to say that’s wrong. That’s the difficulty.”

Crown’s barrister Kane Loxley said it was “very likely that Crown will be admitting to non-compliance” of anti-money laundering and counter-terrorism financing rules.

“But there is a dispute between us at the moment as to whether or not Crown’s Part A program had the primary purpose of doing those things that those provisions require us to do,” Mr Loxley said.

Under anti-money laundering, counter-terrorism financing laws, companies must have a program known as a Part A to identify and manage risks. Austrac alleged that “Crown Melbourne and Crown Perth each failed to adopt and maintain a standard Part A program.”

US private equity group Blackstone acquired Crown for $8.9bn last June, ending the Packer family’s long links to the casino operator. Under the terms of the takeover, Blackstone had an exit clause if the penalty was more than $750m. That made it comfortable enough to proceed with the transaction.

Austrac chief executive Nicole Rose said it could take years to settle its lawsuit with Crown. Picture: Gary Ramage/NCA NewsWire

Austrac chief executive Nicole Rose told Senate Estimates in November that Crown had been liaising with the regulator, but said it could take years before a settlement was reached.

“A civil penalty, of course, for us is the most serious. It does take the longest amount of time because it is so serious and there needs to be a case that’s ready to go before the court, so that will, unfortunately, take a couple of years,” she said.

Despite the negotiations, Mr Hodge said Crown was yet to make any formal admissions.

Star’ lawyer John Sheahan KC said in his experience most cases result in a “complete agreement between the parties”.

“It’s early days with this one. I can’t say that I’ve read to the end of the 2000 pages of the statement of claim, so anything I say about what might happen in the future is necessarily provisional,” he said.

“I don’t see in principle any reason why this case, despite its massive size, could not have the same outcome as the others I’ve been involved in. It is the goal of my client, and I’m sure of Austrac to bring that outcome about.”

But Mr Sheahan said submitting a concise response rather than a defence could “end up being wasted expenses”.

“Our aspiration was to be given by the court the time to proceed a little bit methodically because it requires work towards coming to grips with this and then come back before your honour having done that, engaged with our learned friends, with Austrac, as to how we think a program for making it forward might most efficiently work.”

SkyCity’s barrister Wendy Harris KC said the Auckland-based company will make similar admissions.