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Australia – Crown could get chance to reform having been found ‘unsuitable’ for NSW

By - 9 February 2021

The New South Wales Independent Liquor and Gaming Authority inquiry into Crown Resorts has said that whilst the Australian operator is not currently fit to run its A$2.2bn ($1.7bn) casino in Sydney’s Barangaroo district, it could reform to become a ‘suitable’ holder for the licence.

The long-awaited Bergin Report, comprising 751 pages, followed allegations in the media in July 2019, including the Nine Network, the Sydney Morning Herald, The Age that Crown engaged in money-laundering, breached gambling laws; and partnered with junket operators with links to drug traffickers, money launderers, human traffickers, and organised crime groups.

Whilst slamming the poor corporate governance, risk management and arrogance shown by Crown, the report found that links to criminal organisations through its ties to Chinese junkets were not ‘wilful.’

Patricia Bergin, a former judge who oversaw the report said: “The very serious problems of the infiltration of Crown subsidiaries’ accounts by organised criminals should send a shiver down the spine not only of any casino regulator but also the community generally. The veracity of the media allegation that Crown was wilfully blind or recklessly indifferent is not established. Blind though they might have been to things that should have been obvious, Crown’s operatives were not wilful. Nor were they indifferent to such links. Rather their consideration was flawed and in some respects rather befuddled.”
The report highlighted that when Crown ceased its operations in China from November 2016 it terminated its relationships with over 100 Junket operators in Mainland China.

“The mere fact of numbers does not equate to wilful blindness or reckless indifference. It is clear that Crown had numerous structures in place to deal with Junket operators. It is also clear that it adjusted those structures from time to time,” Commissioner Bergin said. “There were annual reviews and although the outcome of those reviews may be troubling, the fact is that the process was in place for a proper determination to be made.”

Commissioner Bergin said it was obvious that Crown acted promptly to ban some of its junket operators such as Roy Moo and to serve a WOL on Tom Zhou.

“The only example that requires closer analysis is the Suncity Junket and Alvin Chau,” it explained. “In this particular instance there was a crossover between the due diligence process and the information that was able to be gleaned from what was happening in the Suncity Room. Clearly there were the obvious red flags of very large volumes of cash not under Crown’s supervision in that Room concurrently with publications that the Junket operator had links to organised crime groups. That concurrency should have alerted Crown to the obvious and urgent need to terminate its relationship with Suncity.”

Commissioner Bergin concluded: “Any applicant for a casino license with the attributes of Crown’s stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organised crime groups would not be confident of a positive outcome. It is obvious that such attributes would render an applicant quite unsuitable to hold a casino license in New South Wales.
“These facts and the stark realities may also suggest that it is obvious that the Licensee is not suitable to continue to give effect to the Barangaroo license and that Crown is not suitable to be a close associate of the licensee. They may also present as an irresistible death knell for the Crown Board’s continued existence as it is presently constituted.”

“If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the licensee, Crown could achieve a fresh start and emerge a very much stronger and better organisation.

“One of the mechanisms that could be used to work towards conversion to suitability is for Crown to provide the Authority with a detailed written remediation action plan and undertakings in respect of matters including governance, independent review, accountability and any other relevant matters that the Authority may require of it. It would be appropriate to ensure that such an action plan and undertaking is in the form of an enforceable undertaking.

“Another mechanism that may be used by the Authority is the consensual imposition of conditions on the licence. The conversion to suitability will require a restructure of the Crown Board and the Board of the Licensee. It is suggested that in the circumstances of the findings against Mr Barton, Mr Johnston and Mr Demetriou, the Authority would be justified in entertaining very serious doubts that Crown could be converted into a suitable person under the Casino Control Act whilst they remain as directors; or that the Licensee could be converted into a suitable person under the Casino Control Act whilst Mr Barton remains as a director.”

Crown stated: “Crown is currently considering the Inquiry Report. Crown will work with the New South Wales Independent Liquor and Gaming Authority (ILGA) in relation to
the findings and recommendations of the Inquiry Report as contemplated by the regulatory agreements between Crown, ILGA and the State of New South Wales.”

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