Crown Resorts ‘Unsuitable for Licensing’ in New South Wales, $1.4 Billion Sydney Casino Jeopardized
Posted on: November 4, 2020, 04:09h.
Last updated on: November 4, 2020, 05:42h.
Lawyers assisting an inquiry into Crown Resorts in New South Wales have recommended the company be found unsuitable for licensing in the southeastern Australian state, throwing the $2 billion ($1.44 billion) Crown Sydney into jeopardy.
The company hopes to open the new casino at the end of the year, an impossible feat without a gambling permit. But all is not lost for Crown.
The inquiry’s chairwoman, the former Supreme Court Judge Patricia Bergin, will now deliberate on the recommendations until February 1. After that, she will offer her own recommendations to the state gambling regulator, the Independent Liquor and Gaming Authority (ILGA).
Ultimately, Crown Sydney’s fate lies with ILGA.
The inquiry has been ongoing since January, with interruptions from the coronavirus pandemic. Its focus has been whether Crown allowed itself to become a money laundering conduit by letting high rollers gamble with sports bags full of cash. It also asked whether the company turned a blind eye to criminal elements within the junket groups that were its business partners.
Summing up on Tuesday, Adam Bell said that “the China incident alone” was enough to cast serious doubts on the company’s suitability for licensing.
Bell was referring to the arrest in 2015 and subsequent imprisonment of 19 Crown employees in China for marketing the company’s services in violation of Chinese law.
The inquiry discovered that the workers were encouraged to remain in China to generate profits for the company. That’s despite clear warnings of an imminent crackdown on cross-border gambling by Chinese authorities.
The incident demonstrated “disastrous failures” of corporate governance and risk assessment, Bell said.
It may be that Crown’s license survives this process, but not without the company first making some profound changes. That could mean not only a shakeup at board and management levels, but also a change of ownership.
Billionaire James Packer is the company’s largest shareholder with 36 percent. The former CEO and chairman no longer sits on the board. But the inquiry found that his influence – and that of his personal investment company Consolidated Press Holdings – was pervasive, and not in a positive way.
Last month, the inquiry heard that Packer had threatened violence against private-equity executive Ben Gray for the latter’s refusal to help him take Crown Resorts private.
It also heard that Packer was privy to sensitive information about the financial health of the company, which he was able to relay to Melco Resorts prior to his $1.7 billion sale of his shares in Crown to Melco, a possible breach of securities laws.
A penitent Packer told the inquiry last month that he understood that the divestiture of his shares could be the only way for Crown to emerge with its license intact.