What happens to Mosul after Daesh?; Hillary Clinton plays Donald Trump in final debate; Julian Assange’s internet outage. By Hamish McDonald.

China arrests threaten Packer’s Barangaroo

Crown casino owner James Packer.
Crown casino owner James Packer.
Credit: AAP Image / DEAN LEWIS

Many Sydneysiders would have met news that James Packer lost $600 million in paper wealth on Monday, from a 14 per cent plunge in the share price of his Crown casino group following the arrest of 18 staff in China, in the same spirit his grandfather greeted the death of Stalin.

The late Sir Frank Packer had his Daily Telegraph run a front-page cartoon of a crocodile in a flood of tears, under the headline “Stalin Dead Hooray”.

Crown’s shares rebounded a bit, but the business model used to justify the controversial $2 billion casino complex in Sydney’s Barangaroo waterfront development looks shattered. The vision Packer sold to a mesmerised Coalition government in NSW was of a playground devoted to taking money off China’s mega-rich. No pokies for the hoi polloi, who wouldn’t even get in the doors, only tables for high-stake games such as baccarat.

Of course there’s more to the project than that. It is to include a “six-star” hotel and 66 luxury apartments for sale. So it was a real estate play, too. Nonetheless, premiers Barry O’Farrell and Mike Baird have waved it through – okaying a site on what was supposed to be public space, extra floors, and a massive podium across the harbourside walkway – to bring in Chinese high rollers and their cash.

Now Xi Jinping, the Chinese Communist Party chief, has called an end to the party before it’s begun. It’s been a very deliberate strike. In the early hours of October 14, Chinese police rounded up Crown’s spruikers in four cities. Pointedly, they included a visiting Australian-based executive, Jason O’Connor, who was on his way to Shanghai airport.

His inclusion marks a new step in China’s policing of Australian business activity: up to now those arrested have been of Chinese ethnicity, such as Stern Hu and Matthew Ng. This is not to say O’Connor deserves more sympathy than the other two Australian citizens under arrest, c, or the 15 Chinese employees of Crown. But in the calculus behind the crackdown, the likelihood of a greater reaction among the Australian public would have been taken into account and accepted. It makes the strike against Packer look much more calculated.

He should have seen it coming. Since Xi became leader at the end of 2012, his deepening anti-corruption campaign has turned to the gaming tables of Macau, the only Chinese territory where casinos are permitted. Previously, authorities had turned a blind eye to the outflow of Chinese funds, legally obtained or not, via the moneychangers at the Macau border. Packer had a good whack at this, through his Melco Crown casino joint venture. But in the past four years he has increasingly relied on Chinese high rollers taking their bets further away from Chinese surveillance.

Hence the marketing in China. The problem is that soliciting people to gamble is illegal, as is the organisation of 10 people or more for travel to casinos. There is the cover story of promoting Crown’s dining and entertainment facilities in Melbourne and Perth, but no doubt the Chinese cyber police would have picked up mention of the gambling tables. There is also the task of getting punters to pay back the credit advanced by casino cashiers, which might breach other laws.

The Chinese government took public aim at these practices last year. In February 2015, Hua Jingfeng, a deputy director of the Ministry of Public Security, announced “Operation Chain Break” against foreign casino operators setting up offices inside China. In June 2015, the police arrested 13 staff of a South Korean casino group. They are still in custody.

Packer has been one of Australia’s business chiefs highly reliant on China to urge a tilt to Beijing in the great strategic balance, along with Kerry Stokes and Andrew Forrest, but if he thought this provided him with extra political protection he’s been shown wrong. The South Korean casino arrests were his warning shot.

There may be other factors in Chinese thinking, such as cost-free payback for Canberra’s recent rejection of some big Chinese investments. But it also comes amid a wider clampdown on capital movements. An estimated $US700 million in private capital left China last year. The recent reversal of the rise in the yuan, jitters about a domestic financial crash, and the risk of getting caught in Xi’s anti-corruption net will have many of China’s rich thinking of ways to get their money out to safe havens – and officials thinking of ways to block them.

1 . Mosul after Daesh

The battle to wrest the Iraqi city of Mosul from Daesh began on Monday and, yes, Australia will be there in the shape of strike aircraft overhead and an unspecified number of special forces personnel to “advise and assist” their Iraqi army counterparts. This will chiefly be directing air strikes from forward positions.

With the Iraqi army advancing from one side and the Kurdish Peshmerga from another, plus Shiite militias from both Iran and Iraq trying to get in on the action, it’s going to be a hard and messy fight. Daesh fighters have dug tunnels to hide in, set booby traps, sent out suicide bombers, and lit fires to obscure the view from aircraft and drones. About a million civilians are thought to remain.

Capturing the city would be an important blow against Daesh, but then new problems arise. Will the allied air coalition avoid massive destruction and civilian deaths, or start to look like the Russians in Aleppo? Will Shiite soldiers and militia members take reprisals against the mostly Sunni population, and create resentments to support continuing insurgency against the Baghdad government? What then for the Kurds, having expanded their territory across the north of Iraq and Syria, but with Turkey increasingly active in both theatres to thwart creation of a Kurdish state.

The Syrian city of al-Raqqa, the capital of Daesh emir Abu Bakr al-Baghdadi’s caliphate, will be the next big target. Then will come the dispersal of its surviving fighters. ASIO chief Duncan Lewis told parliament this week there were still about 110 Australians fighting with terrorist groups in Iraq and Syria.

2 . Clinton plays Trump

Hillary Clinton came out on top in the final debate of the United States presidential election, needling Donald Trump as a potential “puppet” of Vladimir Putin and as a molester of women.

Trump promised to stack the Supreme Court to get Roe v Wade thrown out, terminate the free trade agreement with Mexico and Canada, and force allies such as Japan, South Korea and Saudi Arabia to pay more for US defence backing. He refused to say he would accept the November 8 election result.

Maintaining a pitying smile, Clinton kept up her line about rejuvenating the US economy through infrastructure spending, advanced manufacturing, technical education and a higher minimum wage. She avoided damage from the latest WikiLeaks hacked emails, revealing cynical calculations balancing interest groups and donors.

With an 8 percentage point lead in the polls, she looks a winner.

3 . Net slips Assange

While the Clinton camp wonders what next from WikiLeaks, the website’s founder Julian Assange had his own internet connection severed in the Ecuadorian embassy in London, where he’s been holed up for four years to avoid extradition to Sweden on possible rape charges.

This was done by his hosts, officially to stop him meddling in US politics, and probably because Ecuador specifically doesn’t like him helping the anti-Latino Trump campaign. However, some innocuous messages sent out by WikiLeaks then got interpreted in some internet circles as a “dead man’s switch” designed to publish stored-up information in the event of Assange’s death.

Conspiracy theories got wilder: Assange had been poisoned with vegan sandwiches brought in by former Baywatch star turned campaigner against animal fur and web porn Pamela Anderson on a morale-boosting visit last Saturday.

Meanwhile, Assange is alive and well, and says he has alternative connections to the net.


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This article was first published in the print edition of The Saturday Paper on October 22, 2016 as "China arrests threaten Packer’s Barangaroo".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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