Crown Resorts facing probe after links to Chinese triads made known

Crown Resorts may be investigated by Australia’s parliament after reports that an Asian crime syndicate allegedly laundered money through the Melbourne- based company’s casinos.

The Age and The Sydney Morning Herald newspapers, along with the 60 Minutes television program, reported that Crown used junket operators with links to drug traffickers as it sought to bring higher-roller Chinese gamblers to its Australian casinos.

Citing multiple sources, the Australian media outlets concluded that Crown Resorts had partnered with the criminal syndicate to gain access to the Chinese VIP market, notwithstanding the fact that the partnership would bring the casino operator closer to money laundering, the trafficking of both people and drugs, and influential agents of the Chinese government.

Known simply as “The Company”, the organized crime conglomerate is run by triad bosses who reportedly use Crown-linked bank accounts and VIP rooms to launder money. The Company’s network stretches over at least three Crown-licensed junkets operating in Australia but headquartered in Macau or Hong Kong.

More than a dozen serving and former regional policing sources told the Australian media outlets that they believed the criminal syndicate has wreaked more harm in the country in the past three decades than any other drug importer.

Crown Resorts is part-owned by Australian businessman James Packer, who earlier this year committed to offloading half of his stake in the company to Macau gaming magnate and former venture partner Lawrence Ho.

Packer still owns 36% of the $9.6 billion company (about 77 billion patacas), but is selling down to 20% in September. Meanwhile, Lawrence Ho’s recent acquisition of his own 20% stake is awaiting approval by Australian regulators who say they are investigating alleged ties to Chinese triads.

Crown, which has casinos in Melbourne, Perth and another under construction in Sydney, said it had a comprehensive anti-money laundering and counter-terrorism financing program that was subject to supervision by the financial crimes agency, AUSTRAC.

Crown also said it had a “robust process for vetting junket operators” and that the process is regularly reviewed.

Junket operators are agents who specialize in marketing overseas casinos in mainland China, where advertising gambling activities is prohibited.

They also perform several other essential functions for their typically wealthy clients, such as supplying credit lines to circumvent capital controls on the mainland. Later, the junket – or its satellite organizations on the mainland – will attempt to recover the debt. However, gambling debts are not recognized by Chinese courts, making the money difficult to recover via legitimate means if the borrower refuses to pay up.

According to international law enforcement officials, some junkets conduct a legitimate business, but others are controlled by organized crime groups known as triads.

Macau-based junkets have been under pressure since the 2014 gaming contraction wiped more than a third off the SAR’s annual revenues at its lowest point. There were just 100 operators at the start of this year, down from 235 operating under license in 2013.

According to the reports, two Australian ministers approached domestic border-control authorities in a bid to speed up immigration clearances for Crown’s big- spending overseas customers.

Jacqui Lambie, among the independent lawmakers who collectively hold the balance of power in Australia’s Senate, said the reports showed the country now needs a national anti-corruption body.

Independent lawmaker Andrew Wilkie, a long-time critic of the gambling industry, called on the Australian government to establish a parliamentary committee, which could potentially hold public hearings into the allegations raised in the reports and require witnesses to testify.

“This has reached a point where the Australian government has to pay attention,” Wilkie said.

The Gaming and Wagering Commission of Western Australia, which oversees Crown’s gaming activities in Perth told the Brisbane Times that it had “comprehensive controls” in place to regulate casinos, including the operation of junkets, and had last year introduced new controls to better manage the specific risks of junkets, which include “strict rules on how casinos operate junkets and who they can engage with.”

Individuals that pose a risk of criminal influence on the gaming sector are banned, the regulator added.

“When any issues related to Casino regulation under our act are raised with the regulator they are investigated, as has happened in the past and will continue to do so.”

Meanwhile, Victorian Commission for Gambling and Liquor Regulation said it is “continuing to consider the well-publicized events regarding Crown’s international commission-based business.”

The Victoria regulator has intervened in Crown’s junket relationships twice in the past four years. In one case, it imposed a $150,000 fine for Crown failing to accurately record the details of a junket, while on another it simply demanded that the business relationship be ended.

But for some, the state-level gaming regulators have not been sufficiently attentive.

“The power of the dollar overrules any concerns [regulators] may have had in terms of issuing a ‘carte blanche’ for those people to operate here,” said Ben Lee, a gambling industry consultant based in Macau, as quoted by The Age.

“Junkets are viewed by regulators as travel agents,” an industry source added in conversation with the Brisbane Times. “What the regulator is concerned about is whether the gambling is fair. Money laundering and criminal risks are more of a matter for Border Force, Australian Federal Police and AUSTRAC.”

In a statement, AUSTRAC said it is “actively addressing the significant risks of money laundering through casinos, particularly through casino junkets.” The agency said it wouldn’t comment further on any operational activities.