Crown Melbourne Faces Royal Commission
Crown Resorts thought they were over the worst after the Bergin report published last week. They thought wrong. Very wrong. Crown faces a royal commission to determine Crown’s suitability to hold a licence for its Melbourne property.
Raymond Finkelstein QC is the Commissioner and Chairperson of the Royal Commission. Finkelstein and his team will delve into Crown Melbourne’s operations before publishing their findings and recommendations by August 1, 2021.
Crown faces the very real, and potentially damaging, prospect of losing its Melbourne gaming licence. The company’s $2.2 billion complex at Barangaroo, Sydney is operating as a hotel only in the meantime. Findings from the Begrin inquiry showed Crown in a bad light. Accordingly, Crown failed to obtain a Sydney gambling licence.
Helen Coonan, Crown’s Executive Chairman, penned her thoughts in a brief statement to the ASX.
“Crown welcomes the announcement from the Victorian Government as it provides an opportunity to detail the reforms and changes to our business to deliver the highest standards of governance and compliance, and an organisational culture that meets community expectations.”
“Victorians should be assured we recognise the responsibility place on us by the community, governments, and regulators and we will fully cooperate with the Royal Commission.”
Coonan claims Crown welcomes the royal commission but she and Crown have reasons to worry. Melbourne is Crown’s flagship property and losing its gaming licence there would be disastrous for the company. What good is a casino company that isn’t allowed to operate a casino?
Why Is Crown Melbourne Facing a Royal Commission?
The Begrin report, which deemed Crown unsuitable for a Sydney gaming licence, discovered plenty wrong with how Crown runs its Melbourne and Perth properties. Wrongdoings, especially instances of money laundering, were among the biggest failings, according to the report.
Victorian Gaming Minister Melissa Horne went through the 800-page report with a fine-toothed comb. She came to the decision a royal commission is needed.
“The finding in there were so severe that the most appropriate action to protect Victorian interests was the establishment of a royal commission. The Royal Commission will establish the facts and the Government and the VCGLR will take any necessary action at the conclusion of the investigation. We will not tolerate illegal behaviour in our gaming industry.”
This latest investigation doesn’t come cheap because $5 to $7 million of Victorian taxpayers money is the figure touted in the Australian press.
Crown Under Siege; Another Director Flees The Ship
It isn’t only Melbourne where there’s a royal commission because Western Australia has launched one, too. The Begrin inquiry prompted Western Australia official to launch one regarding Crown’s Perth casino. This could be the beginning of the end for Crown Resorts as we know them.
Monday 22 February saw another Crown Director fall on his sword. Harold Mitchell resigned with immediate effect. There wasn’t any thanks or anything similar in the statement to the ASX.
“Crown Resorts Limited announced today that Harold Mitchell resigned as a director of Crown with immediate effect.”
The Begrin inquiry indicated Mitchell isn’t the type of person a casino should have on its board of directors. Furthermore, NSW Independent Liquor and Gaming Authority chair Phillip Crawford mirrored those sentiments.
“We think he needs to move on. There’s an ongoing dialogue here, watch this space.”
Crown only has five board members as a result of Mitchell’s resignation. Guy Jalland, Michael Johnston, Mary Manos, Andrew Demetriou, and CEO Ken Barton resigned last week.
Two other directors find their jobs on unsteady ground. Deputy Chairman John Horvath promised to resign in the wake of a shareholder backlash at Crown’s AGM in October. John Poynton is under pressure to step aside Poynton has a close relationship with Crown’s biggest shareholder James Packer. The inquiry was extremely critical of Packer’s involvement with the company.