Crown employees charged in China with promotion of gambling

Lawrence Ho (left) and James Packer

Crown Resorts Ltd. said its staff held in China have been charged with gambling-related offenses, the most significant development in the case since the employees were rounded up by mainland authorities in October.

“Crown Resorts Ltd. announced today that all its detained employees in China as well as those employees released on bail have now been charged with offences related to the promotion of gambling and their cases have been referred to the Baoshan District Court” in Shanghai, the Melbourne-based company said in a statement to the Australian Securities Exchange.

“As the matter is now before the court, no further comments will be made,” yesterday’s statement added.

Crown’s head of international high-roller operations, Australian Jason O’Connor, Malaysian national Alfread Gomez and 17 others are due to appear in court on June 26 at 9:15 a.m., according to a notice on the Shanghai court’s website.

It’s illegal to gamble or promote gambling in China, other than in Macau, and the detentions raised concern of a renewed clampdown on overseas casino operators that woo Chinese citizens offshore to gamble.

The case’s progression may mark the beginning of a resolution for Crown after the crackdown triggered a slump in high-roller gambling at the company’s Australian resorts and upended the company’s international operations. Billionaire James Packer, who’s the biggest shareholder, returned to the board, replaced the chief executive officer, and made resolving the situation in China his top priority.

The case is key not only because it might shed light on why Crown’s staff were targeted, said Ben Lee, Macau-based managing partner at Asian gaming consultancy IGamiX. Gaming authorities in Australia are also likely to assess the outcome to determine whether Crown is allowed to continue holding casino licenses at home, he said.

The Chairman and CEO of Melco Resorts & Entertainment, Lawrence Ho, said in a recent interview that his former business partner James Packer had upset the Chinese government by recklessly flaunting the promotion of gambling in mainland China. “In all of those instances [Crown and the arrests of the South Korean casino employees in 2015], you had casino sales people running around offering credit, talking about collection…  it wasn’t discreet,” he told the Financial Times. “That’s what caught their attention: ‘like what the hell, you’re deliberately spitting on our faces’.”

Crown shares fell 0.2 percent to AUD12.84 at 1:32 p.m. in Sydney. The shares have jumped 11 percent this year as the company pulled out of Macau, announced a special dividend and pushed on with a stock buyback.

The case is Australia’s highest profile corporate clash with Chinese authorities since 2010. Stern Hu, the Australian who led Rio Tinto Group’s iron-ore unit in China, was found guilty in March of that year of bribery and stealing commercial secrets and sentenced to 10 years in prison by a court in Shanghai.

Australia’s Department of Foreign Affairs and Trade said Tuesday it continued to provide three detained Australians with consular assistance.

Crown’s high-roller gaming in Australia cratered as the crackdown deterred VIP gamblers from visiting its casinos. Packer scrapped a spinoff of overseas assets and sold Crown’s stake in Macau casino operator, formerly known as Melco Crown Entertainment Ltd. Also binned: a proposed initial public offering of a trust holding Crown’s Australian hotels.

Under John Alexander, who replaced Rowen Craigie as CEO in February, Crown is focusing on its hotels and casinos in Australia, including a new AUD2 billion (USD1.5 billion) luxury resort on Sydney’s waterfront. MDT/Agencies