Australia's Crown Resorts unfit for Sydney gambling licence - report

The report followed a year-long inquiry commissioned by the New South Wales state gambling watchdog that exposed widespread money laundering and governance failures at Crown. The findings deal a blow to Crown's hopes that it would soon be able to open the casino in the A$2.2 billion ($1.70 billion) Sydney waterfront tower it has spent almost a decade building.

Australian casino giant Crown Resorts Ltd is unsuitable to hold a gambling licence for its flagship new Sydney resort unless it makes sweeping changes to its board and business, according to a highly critical report by an industry regulator. The report followed a year-long inquiry commissioned by the New South Wales state gambling watchdog that exposed widespread money laundering and governance failures at Crown.

The findings deal a blow to Crown's hopes that it would soon be able to open the casino in the A$2.2 billion ($1.70 billion) Sydney waterfront tower it has spent almost a decade building. "Any applicant for a casino license with the attributes of Crown's stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organized crime groups would not be confident of a positive outcome," retired judge Patricia Bergin, who headed the inquiry, wrote in the report.

Bergin recommended a 10% limit on any casino shareholdings in the state without specific approval, a limit that would effectively force Crown's major shareholder James Packer to divest some of his 35.9% share. She also singled out Chief Executive Ken Barton as "no match for what is needed" but acknowledged the company may ultimately make the necessary changes to be allowed to run a casino.

The state regulator, the Independent Liquor and Gaming Authority (ILGA), will meet this month to consider Bergin's report before making its decision on the licence. Crown said in a statement that it was considering the report, and would work with ILGA in relation its findings and recommedations. The company earlier put its shares in a trading halt until Thursday.

Crown has pegged its future growth to the 75-floor tower complex in Sydney after curtailing its offshore expansion plans, including exiting the Asian gambling hub of Macau following the arrest of several staff in China for violating the country's anti-gambling laws. The company pressed ahead with the December grand opening of the tower, which is the city's tallest and houses a hotel, retail shops, restaurants, bars and residential accommodation along with the planned casino.

MONEY LAUNDERING Crown was granted a gambling licence for the tower several years ago, but the ILGA suspended it last year pending an inquiry prompted by media reports that alleged company dealings with organised crime groups at its Melbourne casino.

The company initially denied the reports in full-page newspaper advertisements, but its executives testifying at the ILGA inquiry acknowledged the possibility of money laundering taking place on its premises. Crown had an "unjustified belief in itself and ... unwillingness to entertain the prospect that there was any force in any of the media allegations", Bergin wrote in the report. The company chairman rejected the description of corporate "arrogance ... however it is an apt description," she added.

The fact that Crown only began a third-party investigation into its anti-money laundering processes last October "should cause deep concern" to the regulator, Bergin said. In hearings through 2020, the inquiry also heard about a management structure where Packer requested frequent trading updates despite holding no board or management position, while attempting to take the company private - without disclosing the arrangement to other shareholders.

"It is imperative that this remote manoeuvring must cease for the health of the corporation," Bergin wrote. ($1 = 1.2945 Australian dollars)