Crown Resorts must lift its game: probe

The NSW gaming inquiry commissioner has demanded Crown Resorts provide her with ‘real’ measures of ‘reformation’.

Ms Bergin also indicated that Crown had a regulatory obligation not to deal with certain individuals. Picture: NCA NewsWire / Steven Saphore

The NSW gaming inquiry commissioner has demanded Crown Resorts provide her next week with “real” measures of “reformation”, after hearing on Friday that a “culture of denial” and “arrogant indifference to regulatory compliance” in dealings with junket operators and lax money laundering controls made it unsuitable to retain its Sydney casino licence.

A day after the inquiry heard Mr Packer’s Consolidated Press Holdings could potentially retain its 36.7 per cent Crown shareholding if it agreed to dramatically reduce its voting power and influence over the company, commissioner Patricia Bergin suggested Crown’s proposed plans to reform its dealings with controversial junket operators were inadequate.

Counsel assisting Naomi Sharp SC on Friday suggested they were “too little, too late” to address failures in risk management, governance and culture at the company, which would not be “a quick fix”.

“I would be very much helped by some real things. How does one make a regulator comfortable in the light of what has happened, that things will happen at the company? Crown and CPH need to put something to the inquiry as to what a reformation might look like. How does one remediate?” Ms Bergin said.

“It has to be that Crown must put something to say in recognition of all these problems. Not just the appointment of a few people. It is much deeper I think.”

But she said time was running out for Crown, with her report on its suitability to retain its Sydney licence due by February 1.

Despite her concerns Crown is pushing ahead with plans to open its Barangaroo casino in mid-December — a move which is now being reviewed by NSW Premier Gladys Berejiklian amid a growing political backlash.

The NSW Independent Liquor and Gaming Authority will meet on November 18 to decide if the opening should be curtailed.

CPH will be the first next week to put its submissions to the ILGA inquiry. It will be followed by Crown. NSW Customer Service Minister Victor Dominello said on Friday that he was receiving regular updates from the ILGA and was encouraged by the meeting now scheduled for November 18.

Crown will be under pressure to accept suggestions made by counsel assisting Adam Bell on Thursday that it could be made suitable to retain the Sydney licence by reducing CPH’s voting power to 10 per cent, cutting its board seats from three to one and ending its access to Crown’s confidential information.

Mr Bell also suggested there could be “wisdom” in imposing shareholder caps on Crown similar to the 10 per cent restriction on any single investor in its rival Star Entertainment Group.

Ms Sharp on Friday said Crown’s failures to conduct proper due diligence on the identities behind so-called “junkets”, with alleged links to organised crime, represented a failure in its obligations to regulators.

“It’s our submission that Crown Resorts’ dealing with junket operators have rendered it and the licensee unsuitable, and that the limited suite of proposals that Crown Resorts has to date put forward to address the junket problems do not convert it into a position of suitability,” she said.

“We say the failure of Crown Resorts to meaningfully act on these longstanding allegations about the junket operators [it deals with] speaks to a culture of denial and of arrogant indifference to regulatory compliance. This culture permeated the organisation.”

Junket operators arrange tours of offshore VIP gamblers to Australian casinos in exchange for commissions on the large amounts wagered.

Ms Sharp said Mr Packer ­pushed to adopt the junket model, common in Macau, and set a “dubious tone from the top” in dealing with operators with alleged links to crime.

“It should be found that he monitored the VIP international business closely, understood the role of junkets in that process but drove a culture that put the pursuit of profits above all else,” she said.  Ms Sharp said it was only since August this year that there had been explicit recognition by Crown that there had been shortcomings in its junkets due diligence.

The company has now suspended dealings with junkets pending numerous reviews until at least June next year, and is developing a new financial crimes department.

It also engaged Deloitte to review its junkets operations, Del­oitte’s recommendations have been accepted by the Crown board, and it is working with former NSW deputy police commissioner Nick Kaldas on enhanced intelligence gathering and information sharing with regulators.

“The gestures are largely tokenistic,” Ms Sharp said, adding that the Deloitte review did not address root causes of problems arising from dealing with suspicious operators named in media reports.

She also said Crown had failed to say when it would implement the recommendations of that review, or a similar one by the Berkeley Research Group, showing that there was “no certainty about its future intention in relation to junkets”.

Commissioner Bergin agreed.

“Nobody knows what will happen because, I’m told for instance by a couple of the [Crown] directors, that one just has to wait to see what’s going to happen,” she said.

“They’re going to take the next six months to work it out. That’s as good as it gets, I think.”

Ms Bergin also indicated that Crown had a regulatory obligation not to deal with certain individuals.

“If you can’t access it comfortably, as a licensee you have a very big obligation not to deal with them,” she remarked.

In his submission, counsel assisting Scott Aspinall asserted Crown also had a culture that either facilitated money laundering or was recklessly indifferent to whether or not it occurred.

“And that in my submission is wholly unsuitable for a person who holds the privileged position of a licensee,’’ he said.

After giving numerous examples of Crown failing to appreciate the risk of money laundering — and playing now infamous blue freezer bag footage of an individual depositing hundreds of thousands of dollars in cash at the Suncity junket room at Crown Melbourne — Mr Aspinall said Austrac’s recent announcement that it would investigate Crown should be cause for alarm.

“What I do say it indicates is there is an extant indication from the money laundering regulator that it proposes to pursue an enforcement action, and that cannot give the NSW regulator any confidence that Crown Resorts has the ability to operate suitably.”

But in a positive for Crown, Ms Bergin said there was no evidence to support media allegations that it helped bring criminals into the country by sponsoring their visa applications.

Crown shares closed 2.7 per cent higher on Friday at $8.81, their highest level in three weeks.