‘We protected our China staff’, says former Crown Resorts boss Barry Felstead

The former Crown boss also said there had been no ‘credible’ explanation for a decision to amalgamate transactions.

Crown’s former CEO of Australian resorts Barry Felstead on Friday. Picture: Colin Murty

The former head of Crown’s Australian resorts says he believed the company’s measures to protect its staff in China were ­adequate at the time 19 of its employees were arrested and charged by Chinese authorities.

Barry Felstead, who stepped down from Crown late last year, appeared before the West Australian royal commission into Crown’s Perth casino on Friday where he was grilled over the company’s efforts to attract customers from China.

Those efforts included the existence of a secret account through which hundreds of millions of dollars were allegedly laundered by Asian criminal ­organisations. The royal commission is also investigating Crown’s suitability to continue holding the state’s only casino licence.

Counsel assisting the commission, Michael Feutrill SC, noted that before the arrests Mr Felstead had been made aware that Crown staff were on “high alert” and some staff had been questioned by Chinese police.

Mr Felstead said he was also aware at the time that South ­Korean casino staff in China had been arrested and there was a higher risk of Chinese authorities taking “arbitrary action” or enforcing the law inconsistently.

Despite those growing risks, there was pressure on Crown’s China staff to win more business from Chinese patrons.

“Would you accept that urging Crown staff to continue to make greater sales in the face of knowledge of the questioning of Crown staff in China by Chinese authorities, the arrest of South Korean casino employees and a crackdown on foreign casinos in China, that it exposed Crown staff to an unacceptable risk of detainment for questioning or worse by Chinese authorities?” Mr Feutrill asked.

Mr Felstead said Crown had taken “adequate” measures to ensure its activities in China were legal and would not put staff at risk. The group received regular legal advice from a large Chinese law firm about the legality of Crown’s activities in China, and had also engaged advisory company Mintz Group, headed by the ex-CIA chief in China.

“My view of the business that the staff were doing in China was that there was always an element of risk in doing business in China,” he said. “There were certainly periods around that when it was more heightened, but generally I was satisfied that the measures put in place were adequate to look after the staff. Hence my frequent visits to China.”

Mr Felstead was also grilled over his knowledge of and response to Crown Perth’s Riverbank Investments accounts, which were allegedly used by international crime syndicates for money laundering.

He said it was common for ­casinos to operate accounts not in the name of the casino, which was done to give patrons “a degree of privacy”.

“Wouldn’t you agree that the word privacy is a euphemism, is it not? The real reason is to prevent the patron from having to disclose to third parties the purpose for which the funds have been used?” Mr Feutrill asked.

Mr Felstead replied: “I don’t disagree with that premise.”

A similar set of accounts was operated by Crown Melbourne under the name Southbank Investments. While their operation required approval of the regulator in Victoria, no such approval was required by WA’s gambling regulator, the Gaming and Wagering Commission.

Mr Felstead was also asked what actions he took after learning that certain individual transactions at the casino were amalgamated when entered into Crown’s system, a move that made it harder for the casino’s anti-money laundering team to identify suspicious transactions.

He said he made no inquiries about it, with Crown Perth’s then chief legal officer, Joshua Preston, instead looking into the matter.

He said Mr Preston had not received any credible explanation for the decision.

The royal commission will continue next week, with departing Crown Resorts executive chair Helen Coonan scheduled to appear on Thursday.