Crown’s key issues being examined by the royal commission
Crown’s key issues are being examined by Victorian royal commissioner Ray Finkelstein who has made it clear how concerned he is about the way Melbourne’s only casino is run.
The Sydney Morning Herald reports that over eight weeks of public hearings, the highly regarded Queen’s Counsel and former Federal Court judge had found “misconduct or unacceptable behaviour from people high up and low down and in between” at the casino operator.
“Wherever I look, I see not just bad conduct, but illegal conduct, improper conduct, unacceptable conduct, and it permeates the whole organisation,” he said.
The James Packer-backed group has already been ruled unfit to hold a casino licence once this year.
In January, Patricia Bergin delivered the damning findings of her long-running inquiry into Crown’s new and now mothballed casino at Sydney’s Barangaroo, triggered by a series of investigative reports.
Finkelstein will consider Bergin’s findings, that Crown enabled money laundering and went into business with figures linked to organised crime, when he makes his own judgement on Crown’s Melbourne licence, due by October 15.
Finkelstein has a history of holding corporates to account
The $8 billion group’s executive chairman Helen Coonan said that her “reform” program to fix the company in the wake of Bergin’s eviscerating report was on track to be completed by the same month.
But Finkelstein has uncovered a new cupboard full of skeletons that bring Crown’s suitability into doubt – so many in fact, that he had to request 11 more weeks and a doubling of the inquiry’s budget, to $19.5 million, to examine them all.
Finkelstein has a well known intolerance for corporate wrongdoing: from the bench he famously banned disgraced businessman Steve Vizard from company directorship for a decade, double what the corporate cop asked for.
As the future of Crown’s sprawling Southbank casino hangs in the balance, these are the five problems he will be weighing up: Responsible gambling; tax rorts; credit card ‘scam’; attitude to regulation; and Crown’s future.
Crown Melbourne made around $1.2 billion from its poker machines and table games every year before COVID-19, excluding high-rollers.
But it was caught by surprise when Finkelstein said he would make this one of his key tests to its suitability to hold a licence, which is one of a list of Crown’s key issues.
Punters on 34-hour gambling binges, a responsible gambling team with an annual budget of just $1.9 million and research showing that gamblers were three times more likely to be harmed at Crown than other venues raised immediate concerns.
Tax rorts, credit card casino chips and the role of the VCGLR all under the microscope
Crown’s contribution to the state’s coffers, about 1 per cent of all tax revenue, has often been used to explain the sway it held over successive governments.
That made the bombshell on June 7, that since 2012 it had rorted the government by making illegal deductions to its tax bill, particularly explosive.
By counting the cost of freebies doled out to punters such as food, drinks and hotel rooms as “winnings” from its poker machines, Crown short-changed Victoria anywhere between $8 million and $272 million.
Crown also came clean in June that it sold $160 million of casino chips through its hotel desk and charged customers’ credit cards between 2012 and 2016, in a brazen breach of Victorian law.
Hotel staff created fake invoices and charged them to hotel rooms that didn’t exist, which is one of Crown’s key issues.
Crown knew it was probably breaking the law in 2012 and formulated arguments to defend itself if it got caught.
The practice only came to light because a junior gaming staff member raised it at a training session in March as an example of how “higher-ups” at Crown told staff to find or implement ways to circumvent the law.
The royal commission has also been able to expose the Victorian Commission for Gaming and Liquor Regulation’s role and relationship with Crown, including Crown trying to intimidate a VCGLR officer into dropping his push for strengthened anti-money-laundering controls in 2019.
Who should operate Crown?
Finally, Finkelstein raised an unexpected problem that has cast doubt over the ASX-listed Crown’s future, even if it keeps its licence.
A set of clauses in Crown’s agreements with Victoria make it clear that the Melbourne casino should be “Victorian-run, Victoria-operated with Victoria’s economic and social interests as its principal concern,” he said.
But this has been ignored. Some of the people running Crown Melbourne have been executives or directors in the national group based in Perth or Sydney.
Crown could also be breaching its agreements with Victoria if its new casino in Sydney or its existing one in Perth took business away from Melbourne.
“This is as parochial as you get,” Finkelstein said. In future, Crown needed to be run by “Victorians for Victoria”.