James Packer-backed Crown Resorts travels long and winding road

Crown Resorts faces the prospect of a long delay before being found suitable to operate its Sydney casino.

James Packer-backed Crown Resorts will travel a long and winding road. Picture: AAP

The James Packer-backed Crown Resorts faces the prospect of a long delay before being found suitable to operate its Sydney casino after a public inquiry was told a comprehensive report by an independent expert endorsed by the NSW gaming regulator was needed to probe the gaming company’s multiple failings.

In the final day of closing submissions by Counsels Assisting an inquiry into Crown by the NSW Independent Liquor and Gaming Authority, it was also claimed that the company may have broken criminal laws by turning a blind eye, not reacting to or “not caring either way” about alleged money laundering through its casinos.

Counsel Assisting Scott Aspinall said Crown should be found unsuitable to retain the Sydney licence because the inquiry was open to find money laundering occurred through two Crown shelf accounts, Southbank and Riverbank Investments.

He also questioned Crown chief executive Ken Barton’s elevation to the top job earlier this year, asserting he had not paid proper attention to issues of potential money laundering through the accounts when he was chief financial officer after bankers had raised questions about suspicious transactions.

He said Mr Barton’s failure to accept the concerns of the banks in a statement to the inquiry last week was a “serious issue” that showed deep cultural problems at the company.

“That is wrong. That fact he cannot see it is wrong is of grave concern,’’ Mr Aspinall said.

“It is not consistent with an organisation which recognises the seriousness which money laundering presents.”

He said the fact Crown may have engaged in criminal acts by “negligently dealing in funds that are the proceeds of crime” at its Melbourne casino was “simply astonishing.”

Crown is under enormous pressure to present a suite of reforms to the inquiry that go beyond the changes its has already proposed to its personnel structure and compliance functions, which have been described as “inadequate”.

The Australian understands the Crown board led by chairman Helen Coonan is considering a range of measures that go further than the reforms already proposed.

The gaming company is also under pressure to delay the opening of its Sydney casino planned for December 14 and NSW Premier Gladys Berejiklian has said she would not rule out taking action to push it back after the inquiry was told Crown and Mr Packer were unsuitable to retain the licence.

A delay or curtailing of the opening will be considered by ILGA on November 18.

On Monday counsel assisting Naomi Sharp said an independent inquiry by an external expert approved by ILGA was needed which covered multiple areas of governance and risk management before a finding of suitability could be made.

They included the independence of directors, the management of Crown’s relationship with its major shareholder Mr Packer, reporting lines within the company, its due diligence in dealing with third parties and other issues of culture, values and financial incentives and bonuses.

She said the independent inquiry should also review the issue of Crown’s future engagement with the casino regulator in NSW and other law enforcement agencies.

Crown, she said, also needed to develop a plan in conjunction with the independent expert to remediate its internal problems with specific outcomes and milestone dates for their achievement.

This would also include plans for the reporting of any future shortcomings in compliance to regulators.

Ms Sharp said Crown could not be considered suitable to hold a casino license in NSW until the review had occurred, its board had accepted its findings and implemented a detailed remediation plan.

She said there also needed to be a provision for reviews by an external auditor that Crown was complying with the “agreed remediation plan”.

Ms Sharp reiterated assertions she made last week that Crown had a culture which was “dysfunctional” and showed an “arrogant indifference to regulatory and compliance risk” and had a culture which had “prioritised the pursuit of profit above all else.”

On Monday she added that Crown had not conducted any “comprehensive review or root cause analysis” to ascertain the reasons for the failures which had been identified by the inquiry.

“Without that we submit there can be no confidence that the causes of the failures that have been identified have been addressed,” she said.

She said problems had included the events which led to the arrest of staff in China, ongoing suspicious transactions which could amount to money laundering, its relationship with junket operators which were run by people of questionable repute and the sale of a shareholding in the company to Macau casino operator Melco which gave rise to a breach of Crown’s casino regulatory agreement in NSW.

Crown’s management of its relationship with its controlling shareholder, James Packer, had had a “deleterious effect” on its corporate governance structures and that the Crown board had failed to show “active stewardship” and to challenge management where necessary, she said.

On Monday Crown Counsel Neil Young challenged submissions presented to the inquiry on Friday that CCTV footage showing a freezer bag full of cash being unloaded in one of the venue‘s high-roller rooms at Crown Melbourne was evidence of money laundering through the casino.

He said it only provided an “indicator” of money laundering and that Crown would detail in its submissions to the inquiry the range of actions it took in an attempt to address the problem, refuting suggestions it turned a blind eye to the issues.

But Mr Aspinall said the NSW casino regulator could not be confident that potential problems of money laundering within Crown would not occur again “because of a lack of recognition of the seriousness of the problems which existed.”

He said Crown had not yet hired all the staff it was proposing to oversee money laundering control issues at its Sydney casino.

At the moment, he said, the NSW regulator could not have confidence that Crown “was in a position to operate within reasonable resilience for the purposes of anti money laundering.”

Mr Aspinall said that there was a “fairly serious culture” within Crown of considering anti-money laundering as a reporting requirement rather than something to be proactively investigated.

“It is not clear that the necessary cultural shift from merely reporting, to understanding the need to act and address to prevent money laundering continuing has gone through this organisation sufficiently.”

“Changes to personnel, systems and structures may go some way to improving that culture, but it is fairly clear that the culture of reporting alone being satisfactory is deeply embedded in this organisation up until even recently.”