Commissioner Bergin flags Packer backed Crown Resorts may need further internal investigation

NSW’s commissioner flagged Crown may need a more forensic internal investigation, while calling on it to show more industry leadership.

Crown has suspended dealings with all junket operators until June next year. Picture: AAP Image/Michael Dodge.

The former Supreme Court judge heading an inquiry into Crown’s suitability to retain its Sydney casino licence has declared “it is about time” the James Packer-backed company took a leadership position in the industry by refusing to deal with firms linked to organised crime.

Patricia Bergin on Friday gave her strongest indication since the inquiry by the NSW Independent Liquor and Gaming Authority started earlier this year that damning evidence presented to the inquiry about Crown’s risk management, compliance and governance failures could impact the licence conditions for its Barangaroo casino.

Ms Bergin can recommend Crown’s licence for the Sydney restricted gaming facility — which is limited to VIPs — be revoked or that it be subject to restrictions, which could extend to Crown’s directors and its major shareholder Mr Packer.

Mr Packer’s testimony before the inquiry is scheduled for Tuesday afternoon, when he looks set to be questioned extensively about the extent of his control over Crown after revelations he has continued to receive confidential information about Crown’s affairs since ceasing to be a director of the gaming group and his network of private companies more than two years ago.

Mr Packer’s Consolidated Press Holdings owns a 37 per cent stake in Crown and there have been serious questions raised at the inquiry about conflicts of interest of his CPH executives — who are also Crown directors — most notably in the sale of 10 per cent of CPH’s holding in Crown last year to Lawrence Ho’s Melco Resorts group.

The sale put Crown in breach of the terms of its Sydney licence agreement because of Melco’s links to Mr Ho’s late father Stanley, who was banned from any connection to the licence due to his alleged organised crime links.

Mr Bergin is expected to raise questions as to whether Mr Packer is fit and proper to retain a controlling interest in Crown.

On Friday she challenged assertions by Crown that it would continue to do business with Hong Kong junket operator Suncity, that brings international high rollers to its Australian casinos.

This was despite Crown receiving two reports earlier this month that listed numerous concerns about the company and its chairman, Alvin Chau.

Mr Chau was blocked from entering Australia last year due to his suspected links to organised crime and money laundering and Crown received reports in 2016 warning that the US government considered him to be involved in organised crime and that he appeared to be a former member of the “14K Triad” in Macau.

The inquiry has also heard Crown discovered $5.6m in cash stored in a cupboard in the Suncity’s private gaming room at Crown Melbourne and the room was closed in August last year.

“Isn’t the way forward for the board of a company like yours just to lead the way? It doesn’t matter what other people do, surely. If you know someone is connected to triads, really, it’s a simple matter. It’s obviously a costly matter. But you just don’t deal with them; isn’t that right?” She asked former executive chairman John Alexander. Mr Alexander agreed, but noted the key word was “know”.

“Do you know … I think it’s about allegations being proven,’’ he said, which visibly frustrated Ms Bergin.

“Life is full of uncertainties. We all know that. And one of the problems that has been around for years is this business of saying, well, they’re only allegations therefore I won’t stop doing business with them because your competitors might not stop doing business with them and they will steal a march on you,’’ she responded.

“But one of the real things about having a licence from a government like this is that you’re expected to lead the way, and in leading the way you set the parameters for the rest of them. And it’s about time that happened, isn’t it, Mr Alexander?” Mr Alexander accepted her comments.

Crown has now suspended dealing with all junket operators until June next year as it undertakes a comprehensive review of its due diligence procedures, amid evidence that a number of its partners — not just Suncity — had links to organised crime and money laundering.

“One is given cause to pause and consider this business in much more detail,’’ Mr Alexander said.

“As more details have come out and allegations have come out about individual junkets and the like, it makes absolute sense for the board to examine, reflect on whether or not this is an area we want to be in, firstly, and, secondly, if we are going to be in it in any shape or form, what (are) the new protocols. So I think that’s the feeling behind the idea of … the move towards a much greater drilling down in this area.”

On Friday Ms Bergin also flagged that Crown may need to undertake a more forensic internal investigation to ensure it understood how its risk management and compliance procedures failed in recent years, leaving its board totally in the dark about various scandals.

Crown’s chief executive Ken Barton has claimed the company, under new independent chairman Helen Coonan — who took over from Mr Alexander in January — is undertaking an enhanced audit of its anti-money laundering processes and separating its AML function from operations and other compliance functions.

Crown is also hiring a new head of financial crimes, while compliance executive and bank accounts that accept patron deposits will now only be in the accounts of its Melbourne and Perth properties, after damning evidence presented to the inquiry of apparent money laundering through two shelf companies which have now been closed.

Crown is also working with former New South Wales deputy police commissioner Nick Kaldas to establish an industry group allowing the nation’s casinos, casino regulators and law enforcement bodies to share information on organised crime and other issues affecting the industry.

But on Friday Ms Bergin suggested more may needed to be done.

“Any proposal to put structures in place and take third party advice is all very well, but unless you understand what really happened and why it happened, you won’t be able to really put in place a system with good judgment … Do you agree or not agree that it is important to work out how it happened to ensure that that sort of thing doesn’t happen again?’’ Ms Bergin asked Mr Alexander.

He replied: “Yes I agree,” before noting he accepted personal responsibility for the company’s poor culture of risk and compliance, agreeing his role as executive chairman since early 2017 had not been ideal from a governance perspective.

Mr Alexander is not standing for re-election as a director at Crown’s upcoming AGM.

“At the moment, I think the board is ensuring that these sorts of situations will never emerge again, in terms of the gap in knowledge from the ranks of management, however low that goes to the top of the company,’’ he said.