Crown Resorts’ Jason O’Connor tells of 2012 ‘event’ before China staff pullout

Crown Resorts overlooked “key signals” in China that put staff in danger in pursuit of profits, says a gaming boss jailed there for 10 months.

Crown executive Jason O’ Connor appears before the NSW Gaming inquiry.

The former head of VIP operations for the James Packer-backed Crown Resorts, who spent 10 months in jail in China, has admitted he failed to appreciate that the Chinese legal system operated differently to Western law and as a result the gaming company overlooked some “key signals” that put its staff in danger in the pursuit of profits.

Appearing for the second day at a NSW Inquiry into Crown, Jason O’Connor acknowledged for the first time that there was a “disconnect” in 2014-16 between the expectations of Crown management and what revenues and profits his business unit was able to deliver from its China operations given a government crackdown on foreign casino operators.

In an email produced to the inquiry it was revealed Mr O’Connor had told a fellow Crown staff member in February 2015 that they needed to “temper their masters” because a more conservative business plan would not be well received.

Asked by inquiry commissioner Patricia Bergin if the push for profits might have led Crown’s staff on the ground in China to overlook “key signals” that might have led the company to take action to secure their safety, Mr O’Connor replied: “I will be the first to concede that we overlooked some of the key signals at the time.”

These signals included government warnings and media reports of a crackdown on foreign casino operators soliciting Chinese citizens to gamble overseas and interrogations of Crown staff.

Mr O’Connor stressed he consistently relied on legal advice that claimed that Crown was not breaching two key elements of Chinese law — one banning groups of ten or more people gambling overseas, the other preventing casino operators from receiving commissions or kickbacks for the service.

Gambling is illegal in mainland China.

“I think perhaps one of the mistakes that I made was that I was assessing that legal advice through the eyes of a Westerner with some familiarity of the western legal system. We aren’t offending the law in China so therefore could continue to approach the business the way we were, continuing to maintain our discretion and respect for the authorities and the culture in China. So we would continue to be tolerated as I thought we had been tolerated for quite some time,’’ he told the inquiry.

“That was a mistake on my part. I did not fully appreciate the Chinese legal system does not operate the same way as the Western legal system does. One might feel they are on right side of the strict letter of the law. That does not necessarily mean it is the way it will be applied in China.”

Mr O’Connor described Crown’s then Hong Kong-based international marketing president Michael Chen, who has been dubbed the mastermind of the company’s aggressive strategy of pursuing Chinese high rollers to come to its Melbourne and Perth casinos to gamble, as a “cheerleader” in the way he communicated with his team.

“He was an American, he was very driven and he brought a lot of that culture to the way he managed his team of sales people. I am not sure whether that caused people to be blinkered to some of these signals. It could have had that effect on some.”

Mr O’Connor was released from a jail in Shanghai in August 2017, the last of three Australian Crown employees to be released following the completion of their sentences.

Nineteen Crown staffers were arrested in October 2016, with 16 of the 19 sentenced to fixed jail terms of nine and ten months and fined different amounts.

While most of those arrested were Crown staffers working in China, the Melbourne based Mr O’Connor was detained on his way back to the airport during a visit to Shanghai.

Mr O’Connor was asked about two Crown staff in China being questioned by Chinese police in July 2015, where one was accused of organising people to gamble in Australia.

Crown then authorised the Chinese authorities to be sent a letter confirming the staff member worked for Crown but omitted its involvement in gambling.

Asked why he did not engage with Crown’s risk management processes on the issue, he replied: “I felt at the time we were responding to this adequately to mitigate the risk … I have a slightly different view now given the benefit of hindsight and the experiences I have endured since then.”

He stressed he always believed that Crown would not have received a licence in China for its business activities if it applied for one and that he was comfortable with staff working from their homes or from a makeshift office in a residential apartment building in Guangzhou.

Mr O’Connor was also asked repeatedly on Thursday about Crown’s associations with various Macau-based junket operators in the years leading up to his arrest.

While he denied he turned a blind eye to whether their backers had links to organised crime, he admitted there were failings in Crown’s vetting processes to identify links to triad organisations.

“I concede that there does appear to have been failings in our processes. That has been laid pretty clear,’’ he said.

Earlier Mr O’Connor also revealed Crown pulled some staff out of mainland China in 2012 following concerns about their safety.

“An event in China gave rise to us deciding to bring some staff out of China,” he told the inquiry. He was not asked to elaborate.

On Wednesday the inquiry was told Mr O’Connor was warned as early as March 2014 that Crown should move its staff out of China due to a government crackdown on gambling.

On Thursday he said Crown had received warnings about the situation in China both before and after the email of March 2014.

He said some of these stemmed from reports that of “one of our customers being questioned by the authorities or even detained by the authorities”.

He said this did sometimes “trigger questions” about whether staff should “come out of mainland China for a period of time”.

The inquiry continues on Friday.