Crown chairman warned execs on China risks

Crown chief executive Rowen Craigie and Australian Resorts chief Barry Felstead were told to be on ‘high alert’ for ‘regulatory action’.

The gambling giant is still facing a class action in relation to the Chinese arrests. Picture: AAP

The then chairman of the James Packer-backed Crown Resorts, Robert Rankin, warned the company’s top executives about the risk of its staff being arrested in China only weeks after two South Korean gaming firms had 13 of their staff detained by Chinese authorities in June 2015, an inquiry has been told.

Only weeks before he formally took on the chairman role, Mr Rankin emailed then Crown chief executive Rowen Craigie and Australian Resorts chief Barry Felstead warning the company to be on “high alert” for “regulatory action” and questioned whether the training of sales staff in China should also be reviewed.

But under examination at a public inquiry on Monday reviewing the events leading up to the arrest of Crown’s staff in China in October 2016, Mr Felstead said he did not think to report Mr Rankin’s concerns to the risk management committee of the Crown Resorts board.

This was despite the risk of company staff being arrested for promoting gambling at Crown’s Australian resorts to mainland Chinese citizens being “at the forefront” of his mind. The board was subsequently briefed in the issue by one of its directors representing Mr Packer, Michael Johnston.

Gambling is illegal in mainland China and prior to the Korean arrests, the Chinese government had launched a crackdown on foreign casino operators looking to lure its mainland citizens offshore to gamble.

Staff questioned

The inquiry also heard on Tuesday that two Crown staff in China were questioned by Chinese police in July 2015, where one was accused of organising people to gamble in Australia.

Mr Felstead then authorised the Chinese authorities to be sent a letter confirming the staff member worked for Crown, but the letter made no mention of Crown being a gaming company.

He admitted that neither Mr Craigie or the risk management committee of the Crown board was told about the interrogation of Crown’s staff or the letter provided to the authorities. He only informed Mr Johnston about the issue and was unaware if Mr Johnston told his fellow directors.

“It was clearly a failing on my behalf. It was an error,’’ Mr Felstead told the inquiry.

The inquiry chief, former Supreme Court judge Patricia Bergin also suggested to Mr Felstead that Crown was being “misleading” by not identifying itself as a gaming company in the letter.

But Mr Felstead rejected the assertion, saying he was acting on the advice of the company’s lawyers.

He also challenged Ms Bergin’s assertion that the poor information flows through Crown during the period showed a failure of risk management processes at the company.

“I was responsible for VIP international, there were risks that were highlighted, and I did not report them. I would agree it was more with me than the process involved,’’ he said.

Mr Felstead was also shown an email he sent in February 2016 to Mr Craigie where he advised that a presentation from the company to the Victorian Commission for Gaming and Liquor Regulation (VCGLR) be amended to remove references to the corruption crackdown in China.

Corruption crackdown

The email advised Mr Craigie that it “was not wise to tell” the VCGLR about the issues.

But Mr Felstead said he could not recall why he sent the email.

“I am certainly not in the position of keeping information from regulators,” he said, noting that the slide only detailed public information.

Crown has previously denied any of its staff breached Chinese laws before they were arrested for alleged gambling crimes and it has refuted any suggestion it had knowingly exposed its staff to the risk of detention.

The gambling giant is still facing a class action in relation to the Chinese arrests, which saw share price to dive almost 14 per cent, wiping more than $1.3bn from the company‘s market value.