Crown Resorts Ltd. isn’t fit to run its new flagship Sydney casino unless it replaces its chief executive officer and restructures the board, an inquiry recommended after a probe exposed wide-ranging governance and anti-money laundering failures.
Crown is “quite unsuitable” to hold the license, retired judge Patricia Bergin said in an excoriating 751-page report that reserved special criticism for CEO Ken Barton, billionaire shareholder James Packer and long-serving board members.
The Australian gaming group is Melco Resorts & Entertainment’s former partner. In April last year, the Macau gaming group sold its last near 10% stake in Crown, accomplishing its plan to exit the Australian company.
Bergin recommended 10% individual ownership limits at casinos, which would force Packer to reduce his 36% stake. The watchdog will consider her findings at a special meeting Feb. 12.
Crown has “poor corporate governance, deficient risk-management structures and processes, and a poor corporate culture,” she said. “The scorching light of this inquiry has exposed a number of problems that would have otherwise remained unearthed and unresolved.”
The gaming regulator had asked Bergin to oversee an inquiry after a series of media articles in 2019 alleged money laundering took place at Crown’s casinos, and the company used junket operators with ties to criminal gangs. Yesterday’s report leaves the immediate future of the company’s AUD2.2 billion (USD1.7 billion) luxury Sydney resort in the balance. While retail operations at the site are underway, the start of gambling has been on hold since December.
‘Facilitating Money Laundering’
Bergin said it was clear that Crown was “facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals” connected to organized crime groups.
“It is obvious that such attributes would render an applicant quite unsuitable to hold a casino license in New South Wales,” she said.
Crown said in a statement it was considering the report and would work with the regulator in relation to the findings. A spokesman for Packer’s private investment company said it will consider the report in detail before commenting.
It was formerly alleged that the company had breached its New South Wales casino license by agreeing to sell a 19.99% stake in the company to Melco. However, the report did not find the sale of shares by Packer to the Macau operator as a breach to the casino license.
Last year’s inquiry, which heard from senior management, board members and Packer, tore into the mechanics of the company and its ability to detect financial crime. At one stage, Bergin described the company’s lack of transparency as a “debacle.”
Yesterday’s report said Barton “has demonstrated that he is no match for what is needed at the helm of a casino licensee.”
Bergin’s report is one of the most damning critiques of an Australian company in decades, and a rare unvarnished assessment of the way one of Australia’s most storied corporate dynasties – the Packers – does business.
It also caps a torrid period for Crown and Packer himself. In 2016, Chinese authorities rounded up Crown staff on the mainland, before a court convicted 19 current and former employees of illegally promoting gambling. Packer has since tried to sell some or all of his stake in Crown to at least two buyers, including Wynn Resorts Ltd.
Bergin concluded in her report that Crown had prioritized profits above “the safety and welfare of its staff in China, and more broadly its need to comply with Australian law and protect the casino from criminal exploitation.” MDT/Bloomberg
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