Following a month-long inquiry into Crown Resorts anti-money laundering practices, the New South Wales Independent Liquor and Gaming Authority has considered the Australian gaming operator not suitable to operate a new Sydney casino.
The decision effectively means the casino in Crown’s new A$2.2 billion (MOP13,5 billion/US$1.6 billion) skyscraper on Sydney Harbour will be blocked if no operational changes are enforced by Crown.
One of the key elements under analysis by Australian authorities was Crown’s relationship with Macau-linked private junket operators who sourced the company’s VIP clients from overseas, with perceived links to international criminal syndicates.
According to the inquiry Crown’s founder James Packer played a key role in encouraging Crown’s relationships with junkets and was one of the key driving forces in bringing Macau Junkets into Crown’s casinos in Australia.
‘Any applicant for a casino licence 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,’ the report states.
‘It is obvious that such attributes would render an applicant quite unsuitable to hold a
casino licence in New South Wales’.
The inquiry also investigated whether Crown broke any of its regulatory arrangements when former executive chairman James Packer sold a portion of his shares to gaming operator and former local partner, Melco Resorts.
A proposed Melco Resorts purchase deal for a 20 per cent share in Crown Resorts Limited was halted by the company shortly after the inquiry was announced, citing the Covid-19 pandemic as one fo the reasons for the suspension.
Melco was in the process of acquiring 135.35 million shares in Crown Resorts from CPH Holdings – the family investment company of James Packer – for US$1.22 billion (MOP9.8 billion), in two tranches, with the first 9.99 per cent company share purchase already closed on June 6, 2019.
According to the inquiry report, on May 2019, the Finance Director of Consolidated Press Holdings Pty Limited (CPH), Michael Johnston and Crown director Guy Jalland sent a letter on behalf of CPH to Melco in relation to the proposed share sale.
‘The letter recorded that ‘CPH intends to provide Melco with certain confidential information in relation to Crown’ and that CPH would provide that information to Melco if it acknowledged and agreed to various confidentiality undertakings.
After Melco provided the required confidentiality undertakings, Mr Johnston and Mr
Jallandsent a further letter to Melco enclosing ‘certain confidential information in relation to Crown’
Johnston later denied that any of the confidential information provided to Melco was “inside information” under the Corporations Act or the Securities Trading Policy.
Another issue pertained to Australian authorities believing the first phase of the deal had been completed while Melco’s CEO Lawrence Ho was a director of Lanceford Company Limited a company said to be banned from involvement with Crown due to its links with Ho’s father, Stanley Ho.
Due to perceived ties to criminal organizations with the local gaming tycoon, Lanceford was one of 59 companies and people described as associates of Stanley Ho who are banned from doing business with Crown under a previously secret condition of Crown’s licence to build a new casino at Barangaroo in Sydney.
‘Mr Packer claimed that at the time of the negotiations and execution of the Share Sale Agreement he had “forgotten” the provisions of the regulatory agreements aimed at ensuring that the late Mr Stanley Ho or any prescribed Stanley Ho Associate acquired an interest in Crown. When asked whether the truth of the matter was that he had not forgotten that but just “didn’t think about it at all’, the report states.
‘When pressed with the suggestion that he did not give any thought to the regulatory
agreements at the time of the transaction, Mr Packer claimed that he thought that the lawyers would “cover all eventualities”.He finally accepted that at the time of the transaction he did not turn his mind to the fact that there were regulatory agreements in place intended to prevent the late Mr Stanley Ho or a prescribed Stanley Ho entity from acquiring an interest in Crown’
The report issued 19 recommendations, including several changes to the Casino Control Act aimed specifically at addressing money laundering activities which were uncovered during the inquiry.
The company will also have to put forward in the report included forbidding NSW casino operators from dealing with junket operators.
In a statement, Crown stated that is ‘currently considering’ the inquiry report and that it will work with the New South Wales Independent Liquor and Gaming Authority in relation to the findings and recommendations.