- »NSW ILGA Dubs Crown Resorts Unfit for Casino License
NSW ILGA Dubs Crown Resorts Unfit for Casino License
The New South Wales Independent Liquor and Gaming Authority (ILGA) issued a stark conclusion this week to wrap the inquiry into Crown Resorts. Attorneys told Commissioner Patricia Bergin that they believe Crown is unsuitable to hold a casino license.
Crown currently holds a casino license for its Crown Casino in Sydney as a part of the Barangaroo project and runs major casinos in Melbourne and Perth.
November 4 Arguments at Inquiry
The public hearings for the Crown Resorts inquiry spearheaded by the NSW ILGA began on January 21, 2020. They continued into February but experienced a massive setback due to the coronavirus pandemic-related shutdowns in March. Hearings eventually resumed in late July and ran fairly regularly through the beginning of November.
Commission Bergin oversaw all of the hearings.
On November 4, the final arguments signaled the end of the hearings, the last chances for Crown Resorts and NSW to plead their cases to Bergin before she writes her final report.
Inquiry Attorney Adam Bell for NSW reiterated some of the testimony provided this year, noting several conclusions:
- Corporate risk profile documents were deficient, neglecting to identify the real nature of risks association with VIP international businesses or of breaching gaming laws.
- Business pressure on VIP international was beyond the capacity to deliver.
- Business highly incentivized performance and the aggressive pursuit of profit.
- Crown Resorts board did not understand and learn the lessons of the past.
- Risk management strategies failed to consider Crown’s fundamental business principles.
- Directors who presided over that failure remain directors of Crown today.
- Mismanagement of legal advice related to China is symptomatic of a culture that didn’t prioritize risk and compliance.
- Dominance of CPH and James Packer compromised the independence of the Crown board.
Bell concluded that the China debacle regarding the arrest and imprisonment of Crown employees is, in and of itself, enough to conclude unsuitability.
November 5 Arguments
Focusing more on the Crown Resorts relationship with Melco Resorts, ala James Packer, Attorney Bell used this day of closing discussions to point a finger at Packer. He purported that “if Mr. Packer is characterized as a director of Crown Resorts in the period leading up to the Melco transaction, then there is a basis to attribute his knowledge of the share sale agreement to Crown Resorts.” He said that would breach regulatory agreements with NSW ILGA.
Bell went on to detail the influence of Packer on Crown decisions and protocols. And some of that influence resulted in hiding information from the rest of Crown’s shareholders.
Despite Packer leaving the board, he nevertheless dictated many business moves and communications protocols long after. He also maintained relationships that allowed special access to proprietary financial forecasts and information.
If Packer did not act in an official directorial capacity, he acted as a “shadow director,” Bell asserted. Commissioner Bergin even interjected that some of Packer’s actions went over and above that of an actual appointed director.
Ultimately, all of this contributes to the unsuitability of Crown to keep its casino license.
November 6 Final Arguments
NSW Inquiry Attorney Scott Aspinall produced a laundry list of reasons that Crown Resorts is unsuitable for a casino license.
Aspinall specifically referred to the Crown partnership with City of Dreams in Macau, one that officially ended in 2017. Attorneys made the case throughout the inquiry that Crown’s careless participation in that project amounted to being a conduit for money laundering.
Further, the City of Dreams terminated the mutual arrangement, not Crown. Aspinall submitted that Crown entered an “obviously risk arrangement” with City of Dreams and continued it for years. “It speaks of a culture of reckless indifference to what would appear to be an obvious risk that it would be used for the purpose of laundering cash.”
Aspinall concluded that an “appropriately managed casino” would not have even considered such an agreement. He said that Crown executives now – during the course of the Inquiry – admitting to mistakes and the need to be more careful is insufficient in the suitability argument.
Conclusions for Bergin to Consider
The NSW Inquiry attorneys suggested several potential courses of action.
- Regulatory action of some sort against Packer and Crown
- Possible temporary or possibly permanent revocation of the Crown casino license
- Forcing Packer to sell his remaining Crown stake and/or refuse to allow his role as registered associate to continue
- Find Packer and Crown in violation of Casino Control Act 1992
At this point, Crown maintains its license to open its Barangaroo casino in Sydney before the end of 2020. Should Crown open its property before Bergin remits her final report, Crown risks a revocation of the license after business is already underway.
NSW ILGA expects to receive Bergin’s final report by February 2021.
Meanwhile, however, NSW Premier Gladys Berejiklian plans to seek “urgent and immediate” advice on the matter to decide what to do about the Crown Sydney license without delay.