Crown considered anti-money-laundering rules a ‘threat’ to VIP business, inquiry hears

Junket operator with links to crime held millions in cash behind its own desk in Crown’s Melbourne casino, but no one told the board, inquiry hears.

Andrew Demetriou, Mary Manos and John Horvath during a Crown AGM in Melbourne. Picture: Aaron Francis

Crown Resorts’ management considered anti money laundering actions by the government and banks a “threat” to the growth of its international VIP client business as late as December 2019, the NSW inquiry into the gaming group has heard.

At a session of the NSW Independent Liquor and Gaming Authority inquiry into the suitability of Crown to hold a casino licence in the state, current deputy chair of Crown’s board and one-time physician to Kerry Packer, Professor John Horvath, was presented with a strategic review of Crown’s VIP business completed in December 2019.

The report, which Professor Horvath said he read at the time, stated that the impending opening of Crown’s Barangaroo casino in Sydney presented an opportunity for the company to acquire a greater share of the international VIP high-roller market.

It outlined a number of “threats” to the growth of the VIP business, including the difficulty of transferring funds into Australia and the “closure of bank accounts,” in reference to a number of accounts linked to Crown subsidiaries that were closed by three different banks over the last decade due to money-laundering concerns.

Counsel assisting the inquiry Naomi Sharp asked Professor Horvath if this meant the management of Crown considered money laundering to be an impediment to business, even when Crow at the time rejected media reports that it had turned a blind eye to money laundering risks. W

“What it looks like, Professor Horvath, is that management is telling the board in December of 2019 that tightening money laundering regulations was actually a threat to the VIP business,” Ms Sharp said.

“That is one interpretation,” Professor Horvath replied.

“My interpretation is this is one of the issues that may or may not make the business more difficult.”

Professor Horvath said when he read the report at the time he did not associate the “threat” of bank accounts being closed to the closure of accounts linked to Crown subsidiaries.

In fact, Professor Horvath said he only “relatively recently” became aware of the accounts even existing, despite media reports being published months prior noting Federal Police suspected they had been used for money laundering.

“I am not sure at what time – I can’t give you a correct time as to when I knew about those accounts,” Professor Horvath said, adding that increased scrutiny of money laundering activity should be seen by Crown as an “opportunity”.

Austrac emails

The inquiry also was told of many other instances where Professor Horvath or other members of the board appeared not have been alerted to potential compliance issues.

Professor Horvath said he was not aware of an email financial crimes regulator AUSTRAC sent to Crown in June of 2017 regarding the Sun City junket’s CEO Alvin Chau and how Crown needed to justify its business relationship with the man, given his links to organised crime.

“It is most likely a compliance issue, and in that circumstance it should have been brought to our [the board’s] attention,” he said.

Ms Sharp then displayed photos from the cash desk Sun City operated in its private room at the Melbourne Crown casino in 2018. The pictures showed large amounts of cash being deposited.

She then displayed a letter from Crown chief legal officer Joshua Preston to Sun City which instructed the junket operator that all cash transactions had to occur at the central cage, and that no more than $100,000 could be held at its own desk.

Two subsequent audits of the Sun City desk found millions of dollars behind the desk, but Professor Horvath said he was not made aware of that, nor had he ever entered the Sun City room despite being the director of Crown Melbourne Limited.

Ms Sharp asked why Sun City’s room wasn’t shut down, given these were all signs of money laundering activity.

“I can‘t speculate on the reasons behind it, but a valid question,” he said.

Lodging visas

Counsel assisting Naomi Sharp also displayed an email from DFAT to Crown in 2010 that stated Crown was lodging visas for "travel operators".

“It appears that Crown has become a visa agent, lodging for travel operators and junket agents. We continue to see significant levels of fraud in the case load,’’ the company was told by the official, noting 10 per cent of the applications lodged by Crown had been refused.

“This does not represent a low level of risk,” the official added.

Professor Horvath said he was not aware of the email, and maintained that he did not know whether Crown was endorsing Visa applicants.

The inquiry continues this afternoon with board member Jane Halton in the witness box.