Crown Resorts lashed by NSW casino inquiry over money laundering backflip

Crown Resorts has been lashed for reversing its position on the likelihood of money laundering occurring through its accounts.

Commissioner Bergin said Crown should have notified the inquiry earlier that it was reviewing the company’s accounts.

The commissioner of an inquiry into Crown Resorts has lashed the company for reversing its position on the likelihood of money laundering occurring through company accounts, at what was literally the eleventh hour on Tuesday night.

On Wednesday morning Crown’s counsel Robert Craig appeared in front of the inquiry into the company’s suitability to operate a Barangaroo casino licence, to discuss the issue of money laundering, admitting there were “mistakes and shortcomings” in Crown’s money laundering regime.

But he was promptly interrupted by commissioner Patrica Bergin, who said she received a letter from Crown’s legal team at 11pm on Tuesday night, backtracking on its previous submission. Crown had previously argued that it should not be found that “more probably than not” money laundering occurred through the accounts of two Crown subsidiaries.

“Your statement to which you referred was sent across to those instructing the counsel assisting at 11pm last night,” Ms Bergin said.

“And that indication was the first time, as I apprehend what you are going to tell me, that the finding that I had been concerned about -- that more probably than not money laundering had occurred in those accounts -- was now accepted by Crown?”

The accounts linked to the Crown Shell companies of Southbank and Riverbank investments Pty Ltd were created ostensibly for VIP customers to repay gambling debts. But the counsel assisting had identified numerous questionable transactions occurring within them.

Crown’s chief financial officer Ken Barton did not review the accounts despite them being closed on several occasions by different banks.

Mr Craig on Wednesday said that Crown’s position was now that it was open that it could be that money laundering occurred based on reports by independent experts Initialism and Grant Thorton.

“Having regards to the finding in the Initialism report, Crown accepts that there were funds deposited into the Riverbank and Southbank accounts that Initialism had found to be indicative of cuckoo smurfing,” he said, referring to a form of money laundering.

But Ms Bergin was not satisfied: “What are you saying Mr Craig? It’s either indicative money laundering or it isn’t,” she said.

“We say you commissioner should be cautious about embarking on an analysis on whether a criminal offence has occurred,” Mr Craig replied.

Ms Bergin said she had no intention of making such a determination, that her job was to work out if Crown was a suitable licensee of the Barangaroo casino in Sydney.

“What has happened over the last 12 months is that the counsel assisting has trawled through bank accounts with every single witness that has been called,” she said, adding this wouldn’t have been necessary if Crown had made this concession earlier.

“And that is relevant to working out the answer that ILGA has asked me to address.”

“There was no notice of any of this. Initialism has obviously been retained for some time … it just seems to be rather unsatisfactory.

“The reality is this material should have been produced last year or at the beginning of February.”

Ms Bergin also said it was very serious that the documents tabled by Mr Craig indicated Crown’s legal advisers on money laundering MinterEllison formed a view that a review of the accounts was not necessary following media reports on them last year, which CLO Joshua Preston followed.

Ms Bergin said this threw a large portion of the inquiry into doubt as counsel assisting assumed there were no specific reasons behind Crown deciding not to investigate the accounts.

“Part of my concern, as sad as it may be, is because Mr Preston was in the witness box for many days and each of your Crown representatives and witnesses have been asked about whether a review of these accounts was done and what was done in respect of any review of them.

“This evidence now is throwing a most different light - to use a neutral expression - on all that has gone before in respect of why Crown didn’t look at these accounts.

“Now we know that your general manager of AML did look at the accounts and wanted them to be properly reviewed and was prevented from doing so by these decisions.

Ms Bergin said that although she knew Crown is posturing itself as a changed company, this incident was very contemporary:

“This is a present problem and it is one, as I say, has ramifications of the most serious kind,” she said.

Crown Resorts is currently subject to an enforced investigation by financial crimes regulator AUSTRAC due to suspected failings in their money laundering controls.

Earlier in the day the inquiry heard that Crown Resorts non-independent director Michael Johnston will step back from all non-board activities at the company aside from his role as the audit and governance committee.

Mr Johnston, who is a nominee director and executive of James Packer’s CPH company has faced criticism from the inquiry’s commissioner and counsel assisting for the extent of his involvement in the management of the company.

Mr Young said that as a result it had been decided he would take a step back.

In relation to Mr Johnston’s role in regard to what committees and workload he has, Mr Johnston will step back … from every committee other than the audit committee,” he said.

Mr Young said the relationship between Mr Packer’s CPH and Crown would in the future not involve directors becoming managers in the company.

“Going forward the relationship between Crown and its major shareholder will be the stock standard relationship between the company and its major shareholder,” he said.