Crown Resorts admits error in defence advertisement

Crown director defends bombshell newspaper ad rebutting damaging allegations against the firm, but admits it had an error.

The Crown casino in Melbourne. Picture: AFP

A director of the James Packer-backed Crown Resorts has acknowledged there was an error in a bombshell newspaper advertisement provided to the Australian Securities Exchange last year rebutting serious allegations against the company, but has defended the decision to release it.

Michael Johnston, who is also the finance director of Mr Packer’s private company Consolidated Press Holdings (CPH), admitted there was an error in the advertisement in relation to its statement about Crown’s junket partner, the Hong Kong-based Suncity Group.

The advertisement stated Suncity was controlled by a Hong Kong Stock Exchange-listed company, when in fact the junket partnership was actually with Alvin Chau, who is the chairman of the listed company.

Mr Chau was blocked from entering Australia last year due to his suspected links to organised crime and money laundering.

The evidence came at a public inquiry considering whether Crown is fit to retain its Sydney licence, which was also told that a much-anticipated appearance by Mr Packer is now not due to take place until next Tuesday.

The newspaper advertisement was released to rebut media allegations that Crown’s licensed junket operators had links to organised crime, drug and sex trafficking and money laundering.

In addition to Mr Johnston, it was signed by Crown’s board of directors including then executive chairman John Alexander and former politician Helen Coonan, who is now Crown’s independent chairman.

It was also released to the Australian Securities Exchange, opening Crown to potential regulatory action if any statements were incorrect.

“There was certainly an error with respect to the reference to SunCity. Otherwise at the time it was released, we certainly believed all the statements in (the advertisement) to be correct,’’ Mr Johnston told the public inquiry into Crown on Tuesday.

Michael Johnston at last year’s Crown AGM. Picture: Aaron Francis

He defended the decision to release the advertisement because of the company’s then “perilous situation”.

“This was in response to statements that accused Crown and the board of knowingly dealing with criminals, breaking Australia’s border protection and facilitating espionage,’’ he said, noting it was important the directors made the statement to safeguard the company’s stakeholder relationships.

“This was a response that was required to address a fairly immediate need to answer accusations that were going to the very heart of the organisation.”

He said statements in the advertisement about the company’s comprehensive anti-money laundering and counter terrorism financing programs and its due diligence of junket operators were correct at the time.

“I still think the statements are not wrong. We have certainly learnt a lot in the course of this inquiry. We are going to do a fair bit of work in further improving some of our systems . . .

“The statements made in here I still stand by them other than the one I mentioned,” Mr Johnston said.

Mr Johnston was also pressed by the inquiry commissioner Patrica Bergin about the accuracy of other parts of the advertisement.

She said that contrary to the declaration in the advertisement, it had been shown some Crown junket operators were connected to criminal groups and that that two Crown bank accounts used by high rollers had showed evidence of structured deposits to avoid reporting requirements.

Mr Johnston agreed.

He also admitted he never personally investigated the accounts, known as Riverbank and Southbank Investments, but instead relied on what has now been shown to have been inaccurate internal advice that the companies were complying with their reporting requirements.

He agreed that Crown did not have a proactive culture to deal with such issues.

“Whilst there was a compliance culture, they may not have been a proactive culture, in terms of going the next step. That has certainly been the concern at the board. That things have not been appropriately elevated where there have been issues,’’ he said.

The inquiry continues on Tuesday afternoon with CPH chief executive Guy Jalland to be examined.