Crown board kept in the dark on potential tax debt, Royal Commission hears

Members of Crown Resorts’ board were shocked when the extent of potential unpaid gaming tax from its Melbourne operations was revealed.

Helen Coonan pose for a photo in front of the Crown Sydney building on the 30th of January 2020. Photographer: Adam Yip

Crown Resorts’ board was “shocked” when the extent of potential unpaid gaming tax from its Melbourne operations were revealed, an inquiry has heard.

Speaking to the Victorian royal commission into the casino operator, board member Nigel Morrison said he had been floored when the allegations were revealed on June 7.

Giving evidence to the royal commission on Tuesday, Crown Board member Nigel Morrison said the board had been meeting when the $200m discrepancy was disclosed.

“I was shocked, I think Bruce Carter was shocked, Toni was shocked, I think Jane Halton was shocked and I must admit I thought Helen Coonan was,” Mr Morrison replied.

It comes after the Victorian royal commission into the company on Monday heard for the first time that Ms Coonan was aware of the potential issue, which only became known to both the commission and the state government earlier this month.

The issue was revealed in The Australian.

“We were in a board meeting when that article broke, we were reading that article and we were all very alarmed by it,” Mr Morrison said.

Helen Coonan directed Crown Melbourne chief executive Xavier Walsh to disclose the groups potential underpayment of gaming taxes as soon as she became aware of the issue, despite the royal commission not becoming aware of it.

Mr Morrison, in response to questioning from Counsel assisting Geoffrey Kozminsky, said he would not be prepared to remain a member of a board to which directors had concealed tax deductions.

“Assume a company is concealing tax deductions from a regulator, assume the directors or the company know about the concealment, in that hypothetical example should those directors remain on the board?,” Mr Kozminsky asked.

“No,” said Mr Morrison.

The potential $272m tax debt arose from Crown’s practice of deducting the cost of loyalty programs, free parking and drinks, from taxable poker machine revenue.

A former chief executive of SkyCity Entertainment group, Mr Morrison was brought in to steady the Crown board in the wake of the turmoil that rocked the gaming business and saw several key figures depart.

Mr Morrison also led Crown Melbourne for seven years until 2000.

The commission heard Crown had received legal advice in 2018 regarding the potential underpayment of gaming tax, when the Victorian Commission for Gambling and Liquor Regulation had audited the gaming tax disclosures.

Mr Morrison said in response to questioning from the VCGLR’s counsel Peter Rozen Crown Melbourne “probably wasn’t as open and honest and consultative”.

“When I was head of Crown Melbourne, my sense of it was we had a pretty good relationship,” he said.

“But I would hope once we get through this we’d have a very open and constructive relationship with the regulator going forward.”

Public hearings will resume Thursday.