Former Crown Resorts executive threatened to call minister on casino regulator

A Crown executive threatened a regulator with ministerial heat if he dared pursue changes to junket rules, Victoria’s royal commission has heard.

Commissioner Ray Finkelstein is hearing evidence in Victoria’s casino royal commission.

A former Crown Resorts senior executive threatened to report an employee of the Victorian casino regulator to the state gaming minister for attempting to ensure the company agreed to “necessary and obvious” changes to its junket regulation to stamp out money laundering.

Giving evidence at the Victorian royal commission into the suitability of Crown Resorts to operate its Melbourne casino, Victorian Commission for Gambling and Liquor Regulation auditor Jason Cremona said Crown pushed back on the regulator’s attempt to remove the individual anonymity of junket gamblers.

He said he was “taken aback” by an aggressive phone call from Crown group executive manager of compliance Michelle Fielding in May 2019 after he had sent a note inquiring about Crown’s progress to the company’s former chief legal officer, Joshua Preston.

In an email sent to his superiors on the same day, Mr Cremona said Ms Fielding accused him of misrepresenting Crown and she had told him “Josh was furious” and was considering calling then Victorian gaming minister Marlene Kairouz to complain. “I was clearly taken aback by the tone, the ­aggressive nature,” Mr Cremona said.

Former Crown chief legal officer Joshua Preston. Picture: Marie Nirme

Commissioner Raymond Finkelstein asked Mr Cremona why he believed Crown would push back against moves to make junket gamblers easily identifiable.

“I have views that if Crown were required to obtain information in relation to the source of funds from junket players, that could be the reason for the junket players not to come and gamble at the Melbourne casino and look elsewhere,” he said.

The stoush originated with a recommendation by the regulator in its sixth regular review of Crown Resorts in 2018 that called for Crown to review its internal control statements (ICS) — a documented system of administrative accounting procedures, including those relating to junkets.

Marlene Kairouz was Victoria’s gaming Minister in 2019. Picture: Stuart McEvoy.

Junkets — or gambling tour organisers — are third-party businesses that arrange jaunts for foreign high-rollers to casinos, typically in exchange for a commission on the revenue wagered.

The regulator wanted Crown to seek input on its ICS from financial crimes regulator Austrac and an external adviser to ensure that key money-laundering risks regarding individuals in junkets to wager large amounts anonymously were “appropriately addressed”.

Crown agreed to implement the recommendation by July 2019, Mr Cremona said, but in subsequent meetings company representatives claimed individual junket player knowledge was “not required by the recommendations” — despite the need for it being spelled out on the same page of the report the recommendation was made.

“Noting that the observation is on the same page of the recommendation, it would be almost expected that would be part of the outcome of that review,” counsel assisting Adrian Finanzio SC ­remarked.

It was only after Mr Cremona sent Mr Preston the email that progress was made on the recommendation, with input from Austrac sought and advice from an external consultant obtained — although the regulator had to ask Mr Preston for their own copy of the consultant’s report.

But Crown’s proposed changes to the ICS still did not align with the intentions of the regulator, so the VCGLR determined to give the company a “technical” green tick and conduct a review of what changes should be made itself.

“I had no trust in their want to deliver on the outcome we required,” Mr Cremona said, when Mr Finanzio asked “why didn’t you stick to your guns?”

“It was agreed that it was extremely important that the commission push ahead to address this significant issue.

“My view was of a view of noncompliance would have required Crown to conduct a further review, and I was at the point that there was no confidence in Crown’s ability to reassess the situation and come back with a set of recommendations, or a set of amendments to the ICS that addresses the risk.”

Mr Preston resigned as Crown chief legal officer following his appearances at the NSW Bergin Inquiry, which deemed the company temporarily unsuitable to operate its Sydney casino.

Crown Resorts is also facing a royal commission into its suitability to operate its Perth casino in Western Australia.

The NSW inquiry’s findings were influenced by the “infiltration” of junkets by criminal ­organisations, sparking money-laundering fears.

Last month the VCGLR fined Crown $1m over its failure to adequately probe the junkets it partnered with.

In November, Crown said it would not deal with junkets unless they were approved by regulators, but last week Crown and rival casino company Star Entertainment reached an agreement with the NSW regulator to cease all junket activity.

The Victorian royal commission will resume hearings on Thursday.