Crown to delay Sydney Barangaroo casino
The James Packer-backed Crown Resorts forced to delay its planned opening next month.
The James Packer-backed Crown Resorts will push ahead with the opening of its non-gaming at its $2bn Sydney casino, but faces a battle to retain its casino licence after the NSW gaming regulator expressed serious concerns about Crown’s shock admission that its bank accounts had probably been used for money laundering.
The delay could have serious implications for Crown’s balance sheet, with ratings agency Moody’s late on Wednesday warning it could trigger a downgrade of its credit ratings.
Moody’s noted the decision highlighted the “potential severity of findings by the inquiry, and the risk of meaningful sanctions and/or limitations on Crown’s ownership and operations”.
Following an emergency meeting on Wednesday, NSW Independent Liquor and Gaming Authority chair Phillip Crawford said the decision to defer the planned December 14 casino opening until after the release on February 1 of the findings of the ILGA public inquiry into Crown was made in light of “extremely concerning ongoing evidence” unearthed at the hearings.
Counsel assisting the inquiry into Crown’s suitability to retain its Sydney licence has recommended the company be found unsuitable due to “extensive risk management failures, corporate governance failures, cultural failures and ethical failures” detailed over months of proceedings.
Mr Crawford said that ahead of Wednesday’s meeting, ILGA had proposed that Crown focus on opening only the non-gaming operations at Crown Sydney, but the gaming company had been intent on starting a more limited gaming facility including reducing four planned floors of gaming to only one.
Crown will now negotiate with ILGA on opening its hotel and restaurant operations on December 14.
In a dramatic day of events, inquiry commissioner Patricia Bergin earlier admonished Crown for reversing its position on the likelihood of money laundering occurring through two of its subsidiaries, Southbank and Riverbank Investments, in a letter sent to the inquiry’s lawyers at 11pm on Tuesday evening.
The accounts linked to the Crown shell companies were created 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, has admitted he did not review the accounts despite them being closed on several occasions by different banks.
Crown’s counsel Robert Craig on Wednesday said the company’s position was now that it was open that it could be that money laundering occurred based on reports recently completed 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,” Mr Craig said, referring to a form of money laundering.
Ms Bergin said it was very serious that the documents tabled by Mr Craig also indicated Crown’s legal advisers MinterEllison formed a view that a review of the accounts was not necessary following media reports on them last year, rejecting the protestations of Crown’s former AML boss, Joshua Preston.
She said this evidence 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.
“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,” Ms Bergin said. “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.”
She suggested taxpayer funds had been wasted in the hours of hearings by the inquiry regarding the Southbank and Riverbank accounts and noted that the admissions would be relevant to her decision on Crown’s suitability to retain its Sydney licence.
Crown is currently being investigated by financial crimes regulator Austrac due to suspected failings in its money-laundering controls.
Crown shares went into a trading halt on Wednesday afternoon before the delay was announced and last traded down 6c at $9.64.
“Crown will continue to focus on opening the non-gaming operations at Crown Sydney, in consultation with ILGA, in the absence of the commencement of gaming operations,” the casino operator said in a statement.
On Wednesday, Crown also outlined a range of new structural and organisational changes it had made to improve its anti-money-laundering functions, noting the changes had been endorsed by the Crown board in early November.
On Tuesday, the inquiry heard that Crown would suspend dealings with all junkets — gambling promoters who bring VIP players into Crown’s casinos — unless they were approved by all state gaming regulators.
Additionally, two agreements that allowed confidential information to be shared with Mr Packer and executives of his private company, CPH, through which he owns his 36.7 per cent stake in the company, have been cancelled.
Crown also said on Wednesday that a key Packer lieutenant, CPH nominee director Michael Johnston, had stepped down from all his committee roles other than the audit committee.
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