Crown ‘misled, delayed’ watchdog investigation into China arrests

A compliance offer at Victoria’s gambling regulator has told the Crown Resorts royal commission that the casino group delayed and mislead the watchdog’s investigation into how 19 of its staff were arrested in China in 2016.

Timothy Bryant, a compliance officer at the Victorian Commission for Gambling and Liquor Regulation (VCGLR), told the first day of Victoria’s inquiry into the James Packer-backed group’s Melbourne casino licence he was “frustrated” in his efforts to get to the bottom of the incident.

Crown has formally rejected a takeover offer from US private equity outfit BlackstoneCredit:Chris Hopkins

Chinese police arrested 19 Crown employees in October 2016, of whom 16 were later jailed for illegally promoting gambling in the country, prompting an immediate investigation by the VCGLR which only concluded late last year.

Mr Bryant said he interviewed senior executives at Crown as part of his investigation and in August 2017, Crown’s then-chief legal officer Joshua Preston gave a presentation to the regulator about the advice it had about the safety and legality of its China operations.

That presentation said risk intelligence firm, the Mintz Group, had advised Crown in early 2015 that a widely reported Chinese government crackdown on gambling related to casino customers and corruption rather than casinos.

However, later documents produced by Crown showed that Mintz had in fact warned Crown in early 2015 that the crackdown was targeting casinos trying to lure gamblers overseas to gamble. “For the Mintz advice to change from… ‘people involved in the gambling business’ to narrow it down to ‘people engaged in gambling’, I thought was quite a significant change,” Mr Bryant said.

“If Crown weren’t willing to admit there had been a crackdown on overseas based casinos in China, they couldn’t take the risk mitigation steps that they needed.”

Mr Bryant said that in his interviews with Crown executives Barry Felstead and Jason O’Connor, he presented the two men with a copy of a February 2015 Reuters news article titled “China’s president just declared war on global gambling” .

Both men denied having read the article or having been aware China was targeting casinos operating in the country, he said. However the VCGLR subsequently received Crown emails in which Mr O’Connor was sent a copy of the same article, he said.

Likewise, Mr Felstead told the VCGLR that an incident in mid-2015 in which a Crown employee was detained and interviewed by police in Wuhan related to a customer. But documents Crown finally produced to the regulator in late 2019 showed Chinese police had in fact questioned the Crown employee about allegedly organising gambling tours.

Mr Felstead and Mr Preston both left Crown after appearing at last year’s NSW Bergin Inquiry into Crown. Mr O’Connor – who was the most senior Crown staff member caught up in the 2016 arrests and spent 10 months imprisoned in a Shanghai jail – is still with the group, most recently working on the opening of Crown Sydney.

Mr Bryant told the inquiry that these were two areas in which Crown had misled the VCGLR and had failed to “provide a transparent account of the arrests”.

He said Crown’s responses to its requests for documents and information were delayed, incomplete or piecemeal, and in some occasions were only provided after they had been produced for a shareholder class action launched in response to the arrests.

“It seemed like we were at the back end of the priority list,” he said.

The result was that the investigation took longer than it would have otherwise and that VCGLR was left with a less complete picture of what had gone wrong in China, Mr Bryant said.

Victoria launched a royal commission into Crown Melbourne’s casino licence after the last year’s long running Bergin Inquiry found that Crown was unfit to hold a licence in NSW because of money laundering, criminal infiltration and other probity issues at its Melbourne and Perth casinos.

The inquiry continues.

Business Briefing

Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up here.

Market Recap

A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up here.

Most Viewed in Business

From our partners

Source: Read Full Article