The inquiry into Crown Resorts’ suitability to hold a casino licence in Syndey continues to dredge up dirt. Crown Chair Helen Coonan finished a second day of intense grilling on Tuesday. She didn’t get an easy ride, that is for sure.
Monday saw the resumption of the New South Wales Independent Liquor & Gaming Authority’s inquiry. It was a day to forget for Crown’s directors and the company’s long-suffering shareholders.
Crown announced it faces a third regulatory probe into potential anti-money laundering compliance failures. The Australian Transaction Reports and Analysis Centre (AUSTRAC) heads the new investigation. It “identified potential non-compliance” with anti-money laundering regulations. Crown’s counter-terrorism financing regulations need brushing up too.
Shares in Crown plummeted from $8.98 per share on October 16 to only $8.07 each. Those same shares were worth $12.52 each on January 17. Coonan has her work cut out trying to turn around the company’s flagging fortunes.
AUSTRAC Contacted Coonan About Compliance in June 2017
The AUSTRAC probe is yet to come and everyone is focused on the current suitability inquiry. Coonan faced two days of intense grilling, which she must be delighted to be over.
The inquiry confronted Coonan about an email from AUSTRAC dated June 2017. It clearly shows AUSTRAC warned Coonan the boss of the Suncity junket was not someone Crown should deal with.
Alvin Chau, the boss of Suncity, ran a VIP gambling room at Crown’s Melbourne property. AUSTRAC labelled Chau, “a politically exposed person” with “substantial criminal activity.”
Coonan attempted denying receiving the email but ultimately said the Crown Board should have been made aware of it.
The panel heard about a 2019 report in the Australian press that Crown facilitated an illegal cash desk. Broadcaster Nine showed CCTV footage of individual handing over bricks of $50 and $100 bills in the Melbourne VIP room. Huge sums of cash bypassed the casino’s main cashier cage.
Crown CEO John Alexander denied Suncity junket members received special cash desk facilities when quizzed last month.
The inquiry accused Coonan of turning a blind eye to Suncity’s activities. She denied this but conceded it should have broken off ties. The failure to do so “may have been ineptitude or a lack of attention to detail but I don’t think it was deliberately turning a blind eye. Coonan claimed it was difficult to agree Crown facilitated money laundering.
Inquiry Opens a Can of Worms
Coonan faced further questions about two special bank accounts set up for junkets. Crown used Southbank Investments and Riverbank Investments to receive and transfer funds to and from customers of its Melbourne and Perth casinos. It did this for four years between 2012 and 2016. An investigation alleged money in these accounts stemmed from Crown’s junket partners.
HSBC closed both company’s bank accounts due to links with money laundering for Mexican drug cartels. Crown set up new accounts which Crown’s internal anti-money laundering team never supervised. Two Australian banks later blocked these accounts.
Coonan agreed the accounts closures should have raised a red flag at Crown. She even suggested Crown stopping using junkets for a period of time before making a statement.
“It’s with great regret that this inquiry has run the course it’s run. Crown is ready to ensure that what we see as the necessary changes are implemented and adhered to if given the privilege to be able to continue.”
Huge changes are possible as early as October 22 when Crown’s Annual General Meeting takes place. Independent directors Jane Halton and John Horvath are up for re-election. As is Guy Jalland, a nominee director from James Packer’s Consolidated Press Holdings.
Reports suggest Packer will use his 36% vote in Crown in favour of the re-elections. Minority investors are likely to vote against.
Perpetual owns 9.3% of Crown will vote against too. Blackstone acquired 9.99% in April. Those shares belonged to Melco International, the shares Packer managed to sell to Lawrence Ho. Their vote could prove vital.