‘Serious misconduct, illegal conduct’: Crown’s ‘flagrant’ breaches laid bare to royal commission07/20/2021
Crown’s “flagrant” and repeated legal and ethical breaches mean the company has irredeemably lost public trust and is unfit to run a casino in Melbourne, the Victorian royal commission into the gambling giant has been told.
Counsel assisting the royal commission Adrian Finanzio, SC, said on Tuesday the James Packer-backed company put profits above legislative requirements and may need to repay close to $500 million in state taxes.
Crown executive chairman Helen Coonan has signalled her intention to depart the casino operator.Credit:Louie Douvis
Mr Finanzio said the involvement of Crown executive chairman and former Liberal senator Helen Coonan and chief executive Xavier Walsh in the company’s recent history disqualified them from becoming “credible faces for change”.
Six hours after his comments, Ms Coonan, who survived an exodus of board members earlier this year, reaffirmed she was “working towards” a succession plan that would involve her departure by October.
Crown employs thousands of people at its Melbourne complex, more than any other site in the state. It is facing another probe in Western Australia as it seeks to rehabilitate at the request of a NSW inquiry that found it facilitated money-laundering and should not operate Sydney’s Barangaroo casino.
The Andrews government, which says it will rip up Crown’s licence if required, has been criticised by anti-gambling advocates and the state opposition for not calling an inquiry into Crown sooner.
In his final submissions, Mr Finanzio said the company’s efforts to reform itself would probably not be sufficient to regain public trust and it could take years for Crown to improve its corporate governance.
“In this commission, for the first time, a sense of the depth and breadth of misconduct has come to light,” he said.
“The evidence reveals serious misconduct, illegal conduct and highly inappropriate conduct, which has been encouraged or facilitated by a culture which has consistently put profit before all other considerations.”
“This commission has not had the time to explore every corner of Crown, but in the time that it has had available to it, everywhere that it has looked it has unearthed behaviour that is deeply troubling and obviously ingrained.”
The gaming outfit has agreed to pay back $50 million in gambling tax revenue it should have paid to the Victorian government. It may be required to pay an additional $480 million, Mr Finanzio said, if it was found the company wrongly deducted spending on so-called “match play” points that gamers accrue and can use as a virtual currency in the casino.
The scheme to deduct reward payments to gamblers from its revenue in order to pay less tax was a “deception” by Crown officials including Mr Walsh, the counsel assisting said while admonishing Ms Coonan for her “stunning lack of curiosity” when Mr Walsh raised the tax issue with her.
Crown’s alleged systematic legal and ethical breaches have been detailed to the Victorian royal commission. Credit:Scott McNaughton
Mr Finanzio said it was open for royal commissioner Ray Finkelstein, QC, to find Crown suitable to maintain its licence, but said it would be difficult to justify this position.
Doing so would be providing the company a second chance and not giving enough weight to the evidence of wrongdoing, the counsel assisting argued.
The eminent QC and former judge will consider Mr Finanzio’s submissions before making recommendations to the Andrews government in October.
“The company, having acknowledged the error of its ways, recognises what is required of it and is on the path to suitability,” Mr Finanzio said. “That fact in itself can sometimes render a licensee suitable, but this is not a case of isolated or trifling indiscretions or breaches capable of easy and quick rectification.
“This is a case where it would be open to find the misconduct has been so flagrant and so well-publicised and detrimental to Crown’s overall reputation that no amount of restructuring can restore confidence in it as a fit and proper person to hold a licence.”
Counsel assisting the royal commission Adrian Finanzio, SCCredit: Supplied
Victorian Premier Daniel Andrews said it was common for a royal commissioner’s final recommendations to differ from submissions made by counsel assisting, who in effect operates as a prosecutor in a trial.
“That’s not for me to assess or make judgments about their final submissions, that’s for the royal commissioner. He will do that job – I’m very confident, in fact, I’m certain – he will do that job well,” Mr Andrews said.
Mr Finanzio, in a two-hour verbal submission that needled into Crown’s corporate behaviour, said the gaming company time and again acted illegally or unethically and attempted to conceal behaviour from the gaming regulator.
Regarding a scheme to wrongly sell $160 million of casino chips through its hotel desk, Mr Finanzio said senior staff knew of the “illegal and dishonest” activities. On Crown’s underpayment of tax revenue, the barrister said Crown continued with the scheme even after receiving legal advice it was improper.
Patrons at Crown could go up to half a day punting without being spoken to by a responsible gambling officer, Mr Finanzio said. Responsible gambling has unexpectedly become a key focus of the inquiry, and the silk argued Crown had continually been in breach of its obligations. People who have been gambling addicts at Crown have been driven to prostitution and suicide, he said.
He said it was obvious that a casino would be a prime target for criminals given the opportunity to launder large amounts of money. Despite this, Crown only recently began to take its obligations on this front seriously, he said.
“Crown became a place where its banks were actively used for the purpose of laundering money, and where enormous volumes of cash, likely carried by money mules serving criminal interests would be walked in off the street in translucent plastic bags and placed into circulation through the casino,” Mr Finanzio said.
A NSW royal commission found in February that Crown was unfit to operate Sydney’s Barangaroo casino. Credit:Jessica Hromas
Shareholder activist and anti-gambling advocate Stephen Mayne said the positions of Ms Coonan and Mr Walsh were untenable. “It’s now just about the sequencing of their exits. Ms Coonan should be gone by the AGM in October, and Xavier should be pretty promptly marched out of there,” he said.
Peter Cohen, who ran the Victorian Commission for Gambling and Liquor Regulation until 2010 and is now a gambling-focused consultant, said Mr Finkelstein could recommend the licence be cancelled but could not cancel it himself. Only the gambling regulator could take action against Crown, not the Andrews government.
The regulator could choose to either cancel the licence or suspend it. In both cases, the regulator would appoint what is referred to as a “manager” under the casino legislation. The manager, which could be a company that acts similar to a corporate administrator, would be responsible for the running of the casino until either a new company takes it over, or in the case of a suspension, until Crown sufficiently reformed itself.
Under the act, gaming revenue flows directly to the government when a manager is operating the casino. Crown would only receive payment for the costs of using its facilities that it owns. Crown could still operate its hospitality and entertainment venues at the casino complex because these are not underpinned by the casino licence.
Mr Cohen said it would probably take months for the VCGLR to assess whether there are grounds for stripping or suspending the licence.
Mr Finanzio said if the commissioner did not recommend stripping the licence, Crown should be placed under strict supervision and should not be “left to its own devices” to implement reform.
Crown Resorts claimed earlier this month it could default on its debt if the royal commission made negative findings against the casino licence, with “severe consequences” for shareholders and thousands of employees.
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