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Collapsed Property Empire Pumped Funds into Crown Resorts
Photo by Melissa Walker Horn
A collapsed property funds empire pumped $8 million into a major casino, liquidators discovered.
The Australian Business Review reports the revelations of spending by the company founded by Michael Gu.
Gu led delegations of prospective investors from Asia in luxury jets to Crown Casino and could provide an insight into how some funds from the $611 million collapse were dissipated.
Crown Resorts is under heightened scrutiny from an NSW inquiry into the company’s suitability to operate its Barangaroo casino.
It has declined to comment about any alleged ties with the fallen property tycoon.
Mr Gu has also been reported gambling at The Star Sydney, where he was based.
The Star also declined to comment.
Mr Gu fled Australia with his chief financial officer Harry Huang as his empire collapsed and the company’s lavish spending on a Rolls Royce, McLaren Spider and Ferrari came to light.
Liquidators Cor Coris has called on the corporate regulator and federal government to fund public examinations, which would support actions for recovery and to ban directors, as well as flagging it could seek to bankrupt the pair.
It said in an ongoing review of bank accounts held by the group had identified a large volume of payments to casinos in Australia.
“Notably during the period of approximately August 2014 to May 2017 circa $8 million of group monies appeared to have been transferred to a casino in Australia, based on bank account descriptions only, traces have not been completed as of yet at the time the report was published,” Cor Cordis said.
ASIC and NSW Police called in to investigate
The report said the Australian Taxation Office appeared to have questioned the group previously regarding certain casino-related payments.
It added that dialogue between Mr Gu/Mr Huang and the casino in question has been located in their emails.
“This is currently subject to further review,” the liquidator said.
The report said as investigations progressed the list of potential director breaches was likely to increase, although any actions were likely to be hampered as the pair’s whereabouts were not known, although Mr Gu was last reported to be in the United States.
Both the NSW police and ASIC have been investigating and Cor Cordis has been providing them with information.
The liquidators said its current litigation strategy was formulated around ASIC funding certain public examinations and funding had been sought from the Attorney General’s Department if ASIC declined the application.
The firm has also been in talks with commercial litigation funders and creditors who have shown an interest in backing actions.
Cor Cordis said pursuing an insolvent trading claim against Gu and or Huang was “not currently” being contemplated by the liquidators but was in their ultimate strategy.
“This may also include considering the potential benefits of taking action for Gu and or Huang to be made bankrupt,” the report said.
“It is noted that any creditors which hold a valid personal guarantee from Gu or Huang may also be in a position to commence action to ultimately bankrupt Gu and or Huang.”
Cor Cordis said it was investigating both unreasonable and uncommercial transactions by the directors as well as allegations of falsification of records, false information or misleading statements.
The firm was called in on July 15 and Mr Gu left the country days later as the scale of his problems began to emerge.
The Cor Cordis claims have not yet been tested in court.
Creditors appointed Cor Cordis as liquidators in August after being told that $530 million could be left owing from the collapse of the sprawling iProsperity empire, and this has blown out since related parties were taken into account.
Cor Cordis said it was too early to determine what creditors could expect as a return on their claims in the liquidation and warned that resolution may take several years.