NSW watchdog to probe sale of James Packer's Crown stake

Billionaire James Packer’s sale of $1.76 billion of shares in Crown Resorts to Hong Kong gambling tycoon Lawrence Ho is under a cloud as the New South Wales gambling watchdog launches an independent probity investigation that will examine the casino giant’s links to Chinese criminals.

On Thursday night, the state's Independent Liquor and Gaming Authority announced it had served Crown with compulsory orders seeking documents and information and had appointed former Supreme Court judge Patricia Bergin SC to conduct the inquiry.

The inquiry will be conducted in public.

James Packer with Lawrence Ho, the Macau casino magnate who bought a 19.9 per cent share of Crown from Packer for $1.8 billion in June. Credit: Melco Resorts & Entertainment

The large-scale investigation comes amid multiple other state and federal probes launched into Crown’s affairs in the wake of revelations by The Age, Sydney Morning Herald and 60 Minutes that Crown had gone into business with tour companies backed by powerful Asian crime gangs and Chinese foreign influence agents.

Mr Packer, through lawyers, has insisted he played only a "passive" role in the events described in the investigation.

Crown in a statement said it would "fully cooperate" with the NSW regulator's inquiry.

The ILGA said the inquiry was to ensure Crown's soon-to-be-completed VIP casino in Sydney's harbourside Barangaroo precinct, due for completion in 2021, would be "free from criminal influence or exploitation", and that gaming in the casino was "conducted honestly".

Ms Bergin is a former NSW Supreme Court judge who, since retiring from the court in 2017 has served as judge in the Singapore International Commercial Court.

The inquiry will take evidence in public, and also be able to conduct hearings in private to take confidential information from police, with powers similar to a Royal Commission.

Under the NSW legislation, the regulator can require people to answer questions and provide information and documents. Provisions of the act make it clear that, "self-incrimination is not an excuse", though that information cannot necessarily be used against them in a court.

The Authority has issued notices to relevant Crown parties and other parties compulsorily seeking documents and information.

Independent Liquor and Gaming Authority statement

In an aggressive push to recruit wealthy high-roller gamblers from mainland China, Crown struck a series of partnerships with tour companies, known as junket operators, who specialise in marketing overseas casinos in China to high-stakes punters. While some operators are legitimate, others which Crown partnered with had ties to Asian triad societies and other persons of interest to Australian law enforcement on allegations of money laundering, drug running and human trafficking.

Victoria’s gaming minister last week ordered the state regulator to conduct an investigation into the revelations “as a matter of urgency”, while the Morrison government has ordered an inquiry into the conduct of Commonwealth public servants amid revelations Crown staff were instructed to contact certain visa offices known to have softer vetting procedures in order to fast-track applications for Chinese high-roller visitors.

Australia’s peak criminal intelligence agency, the Australian Criminal intelligence Commission, last week also revealed it was probing the infiltration of organised crime in Australian casinos through junket operators.

The NSW watchdog's latest inquiry stemmed from probity concerns as officials believed they should have been consulted about the sale of Mr Packer's sale of a 20 per cent take in Crown to Mr Ho's Mr Ho's Melco Resorts for $1.7 billion, which was announced on May 31.

Its concerns about the transaction widened in light of recent media reports, the regulator said.

"The Authority is inquiring into this transaction under section 35 of the Act together with various matters raised in recent media reports published by the Nine Network, the Sydney Morning Herald and the Melbourne Age relating to Crown Resorts," the ILGA said in a statement.

"The Authority has issued notices to relevant Crown parties and other parties compulsorily seeking documents and information which will assist it in its investigations and be used in the inquiry."

Crown is building a $2 billion casino in Barangaroo, which is set to open in 2021 and cater heavily to Chinese high rollers.

If an adverse finding is made against Crown, or Mr Ho, it could have serious consequences for the company. It's highly unlikely that, under those circumstances, the sale of Mr Packer's shares could be allowed to proceed, even if other state jurisdictions were happy for the sale to go ahead.

Independent MP Justin Field, who on Thursday questioned in parliament the adequacy of the NSW government's initial probity review for Barangaroo, welcomed the inquiry.

"It's hard to accept that an organisation associated with individuals and businesses associated with money laundering and organised crime can be suitable to operate a casino, especially a casino which targets high rollers."