Former Crown Resorts Executive Warned Company of Dealings in China That Led to Arrests

Posted on: August 18, 2020, 01:38h. 

Last updated on: August 18, 2020, 03:13h.

A former senior Crown Resorts executive warned his superiors in March of 2015 that the company’s workers no longer felt safe conducting marketing tailored towards luring high rollers in China to its casino resorts in Australia.

Crown Resorts Sydney casino China
Barry Felstead, CEO of Crown Resorts’ properties in Australia, admits to have received a heads-up regarding the company’s risky actions in China. (Image: The Australian)

On Monday, the New South Wales (NSW) Independent Liquor and Gaming Authority (ILGA) resumed its inquiry into whether Crown Resorts is suitable to operate a casino resort in the state. The gaming and hospitality company plans to open its $1.5 billion Crown Sydney this December in the city’s waterfront Barangaroo district.

Barry Felstead, CEO of Crown’s resort operations in Australia, confirmed to the ILGA this week that he was indeed made aware of unrest among the company’s employees working in China. In March of 2015, Michael Chen, who was then Crown’s president of international marketing, told Felstead that some workers were growing increasingly concerned with the company’s activities in the People’s Republic.

This is one thing that is important to understand when it comes to the China team: they are living in constant fear of getting tapped on the shoulder,” Chen wrote Felstead. “In a country where due process is inconsistently applied, it’s a risky place to be for all our team.”

In October of 2016, Chinese officials arrested 19 Crown staffers in Shanghai and charged them with the illegal promotion of gambling activities. Gambling is illegal in China, the exception being in the country’s Special Administrative Region of Macau. China also operates a state-run lottery.

CEO Denies Wrongdoing

Sixteen of the Crown Resorts employees would go on to serve between nine and 10 months in jail. China’s prisons are some of the most notoriously dangerous incarceration facilities in developed nations.

NSW counsel Adam Bell pressed Felstead as to why he didn’t do more in response to the employees’ fears.

“I was of the view that the risks were being managed adequately in China,” Felstead stated. But the CEO admitted to knowing that China was cracking down on foreign companies marketing their casino operations to mainlanders, something illegal under Chinese law.

“In early February 2015, you became aware, didn’t you, of an announcement by the Chinese government that it was cracking down on foreign casinos recruiting Chinese citizens to gamble in other countries, correct?” asked Bell.

Correct,” answered Felstead. He also agreed with further questioning that it was widely known within the global gaming industry that China President Xi Jinping had ordered law enforcement to go after casinos that it deemed to be unlawfully targeting its citizens.

Jason O’Connor, who was Crown’s head of VIP operations in 2015, was among those arrested and put in prison. Felstead said O’Connor reported directly to him.

Probe Continues

Much has changed since the Crown workers were arrested and detained in China. Melco Resorts has dissolved its relationship with the Aussie casino group, and Crown founder James Packer no longer has an active role within the organization. The billionaire, however, still retains a 36.8 percent stake in Crown.

Crown Sydney is a towering 75-floor structure, the city’s tallest. The building will feature residential units and 350 hotel rooms. The VIP-oriented resort will be without pokies (slot machines) until at least 2041, as rival Star Casino Sydney holds exclusive rights to those gaming terminals in the region.

The NSW inquiry continues tomorrow.