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As the public hearings of Victoria’s royal commission into Crown come to a close, discussion turns to what reforms are needed after reports of tax evasion and money-laundering. By Max Opray.

Inquiry into Crown Resorts

Helen Coonan fronting the royal commission via video link on Thursday.
Credit: Supplied

At the start of the final scheduled week of hearings for Victoria’s royal commission into Crown, Commissioner Ray Finkelstein, QC, had so many lines of inquiry to pursue that he didn’t even know where to begin.

“I see evidence of misconduct or unacceptable behaviour from people high up, low down and in-between,” he told the hearing on Monday. “Wherever I look I see not only bad conduct but illegal conduct, improper conduct, unacceptable conduct.”

The hearings that followed were unlikely to reassure Finkelstein.

Crown’s senior leadership were hauled in by video link to answer for a dazzling array of misconduct claims — from misusing loyalty schemes to possible tax evasion to staff issuing fake invoices to allow illegal purchases of casino chips in probable money-laundering schemes.

The inquiry was sparked by the findings of the Bergin inquiry in New South Wales, which interrogated allegations including Crown’s involvement with illegal “junket” tour operators connected to organised crime.

Tim Costello, chief advocate of the Alliance for Gambling Reform, has heard plenty of tough talk over the years about cracking down on Crown, but he thinks this time the casino giant might have finally run out of luck.

“If Bergin found Crown is enabling organised crime, Finkelstein seems to be edging to the conclusion that Crown functions like an organised crime group itself,” Costello tells The Saturday Paper.

The tax-evasion claims dominated much of the week, after only coming to light because a Crown executive accidentally emailed a spreadsheet detailing underpayments to the commission.

On Monday the commission heard how Crown chose not to tell regulators it may have been evading up to $270 million in taxes through deduction of marketing expenses – such as free parking and drinks offered via its poker machine loyalty schemes – because it did not think the watchdog would notice.

Crown Melbourne chief executive Xavier Walsh admitted he’d known about concerns regarding the deductions since 2018 and said that “there’s potential that we have” underpaid taxes.

That admission prompted Crown director Antonia Korsanos to tell the inquiry on Wednesday that if Walsh had knowingly withheld information on the matter then she “wouldn’t feel comfortable” with him staying in the role.

Korsanos herself is one of only three Crown board members to have survived a cleanout brought on by the Bergin inquiry.

Another was Helen Coonan, who had been on the company’s board for a decade when she was promoted to chairperson ostensibly to clean up the same company.

The Howard-era minister said she came to know then Crown boss James Packer during her time in politics, which is how she made her move into a senior role in an industry in which she’d had no prior experience.

Counsel assisting Adrian Finanzio pointed to internal company emails that he said illustrated Coonan’s recent appointment to chairperson was primarily part of “a comms strategy” that would make it seem like “you were cleaning house”.

He quizzed Coonan about how she could have remained ignorant of the practices documented in the Bergin report’s findings, including allegations of money-laundering and illegal junkets that would bring foreign VIPs to the casino in exchange for a commission.

Coonan asserted that details of such suspect practices were simply never brought to her attention.

“The problem for me was that the way in which the VIP section operated didn’t allow for information to flow to the board,” she said.

Finanzio then asked why she and the board chose to push back against the allegations rather than investigate them, when they were made public in 2019.

Coonan responded that the board decided to adopt a “defensive posture” based on legal advice.

Costello said the scope of the commission actually doesn’t go far enough, arguing it should be expanded to include the role of regulators in facilitating misconduct.

He points to Monday’s Four Corners episode on how casino inspectors who reported suspected illegal activity at Crown had their investigations routinely stonewalled.   (Late on Thursday the Victorian Commission for Gambling and Liquor Regulation announced an independent inquiry into the allegations.)

Costello named former Victorian premier Jeff Kennett, who oversaw the awarding of a casino licence to Crown, and the current premier, Daniel Andrews, as two politicians who should front the royal commission themselves.

“The term ‘Minister of the Crown’ has a sinister meaning when it comes to Victorian politics,” he says. “Crown have been a complete law unto themselves here.”

Costello suspects that the royal commission will find Crown unfit to hold a casino licence, and that Star Entertainment will likely take over.

Given Star already runs casinos from Sydney to Brisbane, Costello believes the time has come for a national regulatory body rather than a patchwork of state regulators.

One proposal made to the royal commission on regulatory reform came from Timothy Falkiner, the former commercial legal officer with the now-abolished Casino Control Authority in the mid-1990s, at a time when Crown was setting up shop in Melbourne.

Falkiner, who also worked in gambling education as the chairman of Know The Odds, expressed amusement at the indignation exhibited by the commissioner over the scale of misconduct at Crown.

“I mean it’s the casino industry, they get away with anything they can,” he tells The Saturday Paper. “Organised crime see the gambling industry as their birthright, and casinos inherently market themselves as slightly scruffy, tawdry, glitzy, which permeates through the entire organisation.”

Falkiner recommended to the commission that the independent Office of Director of Casino Surveillance be re-established.

“It used to be Ian Manning based onsite in the casino, and he’d walk around and make a nuisance of himself, raising issues with the casino boss,” he says. “If the boss didn’t have a good answer, Ian would run the rabbit back to us, we’d take it up with the board.”

Falkiner also wants rules to be introduced that limit casinos to being run by companies totally focused on gambling with no other interests — such as stakes in influential media outlets.

“You need to stick to your knitting and have a lot of focus to run a casino, as they can get out of control in marketing addictive product with a lot of money sloshing around,” he says. “You don’t want some hedge fund with no expertise just treating it as another business, or a media magnate such as James Packer who is too influential to control.”

He also thinks casino owners should be Australian-owned with only domestic interests.

“It gets much more complicated to regulate with multinational companies,” he says. “That’s how you end up with putting questions to James Packer over Zoom while he’s sitting on the poop deck of his yacht in the Pacific with a martini in hand.”

Falkiner is referring to Packer’s memorable testimony via video link before the Bergin inquiry in 2020, where he blamed strong medication prescribed for his bipolar disorder for being unable to provide much in the way of detail.

Packer resigned from the Crown board in 2018, although he remains a major shareholder.

After the Bergin report found Crown unfit to run the Barangaroo casino in Sydney, the NSW Independent Liquor and Gaming Authority came to an agreement with Packer that he would step back and refrain from nominating anyone to the board until October 2024. In exchange, Crown would be allowed  to open the gaming floors at Barangaroo.

The Bergin report in turn prompted not only Victoria’s royal commission, but a similar royal commission in Western Australia, which is also looking at whether the regulation of the Perth casino is adequate.

One escalating problem for Crown is that the various state inquiries are feeding into each other, unearthing new information which in turn triggers expanded investigations.

Prompted by the latest revelations in Melbourne, the royal commission into Crown Perth this week called for information from anyone with knowledge of improper gambling practices such as money-laundering ahead of opening statements for the second stage of the inquiry due to begin July 23.

NSW authorities are also in discussions about whether to reconsider their decision to allow Barangaroo to go ahead, based on the new information out of Victoria.

With Barangaroo due to launch its gambling operations by the end of the year, Australia is set to put to the test that old gambler’s adage and find out whether the house really does always win in the end.

This article was first published in the print edition of The Saturday Paper on Jul 10, 2021 as "Misdeeds of the Crown".

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Max Opray is Schwartz Media’s morning editor and a freelance writer.