Crown Resorts Failed to Review China Arrest Scandal, Says It Would Weaken Case in $100 Million Lawsuit

Posted on: October 16, 2020, 11:51h. 

Last updated on: October 19, 2020, 12:12h.

Crown Resorts has never held an internal review into the 2016 scandal that saw 19 of its staff detained in China for “gambling crimes.” That’s because the company is still facing a class-action lawsuit brought by disgruntled shareholders over the incident and the results of such an investigation might harm its defense.

Crown chair Helen Coonan gave evidence to a suitability inquiry via video link on Friday. She is seen here in Jan 2020. (Image: AAP Newswire)

The revelation comes from Crown Resorts chairwoman Helen Coonan. She testified in front of a public inquiry to determine the company’s continued licensing suitability in the Australian state of New South Wales.

Coonan was asked by the chair of the inquiry Patricia Bergen whether there had been a “proper look back at what happened to try to take from those events steps forward to ensure that it doesn’t happen again.”

She admitted there had not been a “bottom-up, forensic pulling apart of it” because the company had been advised not to do so by its lawyers.

Shareholders Sue Crown

Crown is being sued for at least $100 million by disgruntled shareholders who lost money when the company’s share price collapsed in the wake of the China arrests. The lawsuit alleges that bad corporate governance and poor risk management were responsible for the arrests.

The 19 staff members included then VP executive vice president of Crown’s VIP International division Jason O’Connor. Sixteen, including O’Connor, served sentences of nine or ten months in a Shanghai prison for marketing Crown’s services to citizens of the Chinese mainland, where casino gambling is illegal.

Earlier in the month, O’Connor testified that there had been warnings about China that the board should have heeded. Crown CEO Barry Felstead has also testified that he was personally warned the Chinese team was living in fear of feeling a “tap on their shoulder,” prior to their arrests.

On Wednesday, Felstead announced he would be taking early retirement.

Attack on Employee

On Friday, Coonan also admitted it was inappropriate for the company to take out a full-page newspaper advertisement attacking the integrity of a former employee, Jenny Jiang, who was the first of the detainees to break her silence.

Jiang told Australian current affairs show 60 Minutes that she had refused a $60,000 payment to keep quiet about her ordeal.

The newspaper ad had been a response to wider allegations by 60 Minutes and other sections of the Australian media that accused Crown of widespread anti-money laundering failures. and of turning a blind eye towards the criminal elements within its junket operator business partners.

These allegations are the main focus of the inquiry as it seeks to determine the fate of Crown’s license for the Crown Sydney, a $2 billion casino it plans to open at the end of this year.