Crown staff ‘low-key’ before China sting

The casino giant’s former Australian Resorts chief executive Barry Felstead took the stand on Friday and faced lengthy questioning over the 19 arrests, which resulted in 16 employees serving jail time.

The probe and a separate royal commission in Victoria were sparked by damning findings from last year’s NSW inquiry that the company facilitated money laundering by VIP high-roller “junkets” at its Perth and Melbourne venues.

The NSW investigation, which resulted in Crown being denied a gaming licence for its new $2.2bn casino in Sydney, was told that Mr Felstead was in 2015 warned by then president of international marketing Michael Chen about staff in China being concerned for their safety and living in “constant fear of getting tapped on the shoulder”.

But that information never made it through to the board or risk management committee.

Counsel assisting the Perth royal commission Michael Feutrill on Friday asked Mr Felstead if he was aware of the legal system in China, where gambling was illegal on the mainland, and where laws could be enforced inconsistently with the risk of arbitrary action by authorities.

Mr Felstead said he was and agreed to the propositions that China was a riskier place to work for Crown staff than Australia and that Mr Chen was urging them to make more sales.

“I think the propositions about China being a riskier place to do business, some of the other propositions you made, I think there would have been broadly understood by the boards,” Mr Felstead said.

Mr Feutrill asked: “You received an email in June 2015 about being on high alert? And you also were advised in July 2015 that some staff had been questioned by Chinese police?”

“I was aware of that,” Mr Felstead replied.

“Taking those matters into account,” Mr Feutrill continued, “and the risks that I took you through earlier … would you accept that urging Crown staff to continue to make greater sales in the face of knowledge of a questioning of staff in China by authorities … and a crackdown on foreign casinos in China, that it exposed Crown staff to an unacceptable risk of detainment?”

“We certainly took measures that I believed at the time were adequate in relation to what we were doing was firstly legal and what we were doing certainly wasn’t going to put the staff at risk,” Mr Felstead responded.

“There was always an element of risk of doing business in China – at particular timeframes, there was a more heightened risk … I was satisfied that the measures we had in place were adequate to look after the staff.”

To that end, Crown had sought and received regular advice from a large law firm in China and also an advisory company headed up by an ex-CIA chief, he said.

“There were also numerous other international casinos operating staff in China – some of them were operating offices in China – so it was a combination of those factors that probably gave me a degree of comfort that we were not breaching Chinese law and we were being sensitive to what was going on on the ground at the time,” Mr Felstead said.

Pressed on what was being done to mitigate the risks to staff, he said: “The staff were informed to keep a low-key approach, which was in line with the advice we were getting.

“We didn’t do offices over there, so it was never an overt presence in China.”

Mr Felstead conceded the risks should have been escalated to the board.

The commission will next week hear from former Crown Resorts chief executive Ken Barton, who was part of a board sweep-out in the wake of the NSW inquiry findings, and interim chair Helen Coonan, who is expected to be replaced by the end of this month.